Building Alliances

To Improve Lives
2019 ANNUAL REPORT
CORPORATE PROFILE

Alliance Bank Malaysia

Berhad (Alliance Bank) was Our Our
incorporated in Malaysia on Vision Brand Attributes
3 August 1982 under the name • Innovative
Building Alliances to
of Malaysian French Bank • Fast, Simple & Responsive
Improve Lives
Berhad. In 1996, it assumed • Aligned to Customers’ Needs
the name of Multi-Purpose
Bank Berhad. Following
the successful merger of
Our
Key Behaviours
seven financial institutions
in January 2001, the Bank
assumed its present name.
On 26 September 2017, the Bank was
Commit to Take Collaborate
listed on the Official List of the Main Market
of Bursa Malaysia Securities Berhad by Excellence Ownership
assuming the listing status of its then
holding company, Alliance Financial Group
Berhad upon the completion of a corporate
re-organisation exercise.

Today, Alliance Bank and its two principal

Understand Innovate &
subsidiaries, Alliance Investment Bank
Berhad and Alliance Islamic Bank Berhad, & Act Simplify
is a dynamic, integrated financial services
group offering banking and financial
solutions through its consumer banking,
SME banking, corporate and commercial
banking, Islamic banking, investment
banking, and stockbroking businesses.

The Bank provides fast, simple and

responsive services that meet the needs
of its customers via multi-pronged delivery
channels which include retail branches,
Privilege Banking Centres, Business
Centres, and Investment Bank branches
located nationwide, as well as mobile and
Internet banking.

VIEW OUR REPORT ONLINE

Our Annual Report, Accounts and other information about Alliance Bank Malaysia Berhad can be
found at https://www.alliancebank.com.my

Indicates a page or note where Indicates a website reference

more information can be found. where more information can be found.
CONTENTS

SECTION SECTION SECTION

1 2 3
CORPORATE PERSPECTIVES GOVERNANCE

Corporate Profile 12 Statement by Chairman of 62 Corporate Governance Overview

Our Vision, Key Behaviours & Alliance Bank Malaysia Berhad Statement
Brand Attributes 14 Management Discussion & Analysis • Leadership and Effectiveness
2 Corporate Information 27 Sustainability Statement - Board of Directors
4 Corporate Structure 50 Calendar of Significant Events - Senior Management
5 Products and Services • Audit and Risk Management
10 Financial Highlights - Group Audit Committee
Report
- Shariah Committee of
Alliance Islamic Bank
Berhad
• Relations with Shareholders
96 Statement on Risk Management and
Internal Control
97 Risk Management
104 Additional Compliance Information

SECTION SECTION SECTION

4 5 6
FINANCIAL ADDITIONAL NOTICE AND FORM
INFORMATION

106 Statement of Board of Directors’ 340 List of Properties 351 Notice of 37th Annual General Meeting
Responsibilities 342 Directory Form of Proxy
107 Financial Statements 347 Analysis of Shareholdings
- Directors’ Report 349 Substantial Shareholders
- Statement by Directors 349 Directors’ Shareholdings
- Statutory Declaration 350 Senior Management’s Shareholdings
- Independent Auditors’ Report
- Statements of Financial Position
- Statements of Income
- Statements of Comprehensive
Income
- Statements of Changes in Equity
- Statements of Cash Flows
- Notes to the Financial
Statements
285 Basel II Pillar 3 Report Disclosure
2 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE INFORMATION
as at 31 May 2019

BOARD OF DIRECTORS EXECUTIVE COMMITTEE GROUP AUDIT COMMITTEE*

TAN SRI DATO’ AHMAD BIN MOHD DON LEE AH BOON (Chairman) THAYAPARAN S. SANGARAPILLAI
Chairman of the Board, Non-Independent Non-Executive Director (Chairman)
Independent Non-Executive Director Independent Non-Executive Director
DATUK WAN AZHAR BIN WAN AHMAD
KUAH HUN LIANG Independent Non-Executive Director KUAH HUN LIANG
Senior Independent Non-Executive Director Independent Non-Executive Director
LEE BOON HUAT
OU SHIAN WAEI Independent Non-Executive Director DATUK WAN AZHAR BIN WAN AHMAD
Independent Non-Executive Director Independent Non-Executive Director
OU SHIAN WAEI
LEE AH BOON Independent Non-Executive Director HO HON CHEONG
Non-Independent Non-Executive Director Non-Independent Non-Executive Director
TAN CHIAN KHONG
DATUK WAN AZHAR BIN WAN AHMAD Independent Non-Executive Director TAN CHIAN KHONG
Independent Non-Executive Director (Appointed on 1 April 2019) Independent Non-Executive Director

LEE BOON HUAT

Independent Non-Executive Director GROUP NOMINATION & REMUNERATION GROUP RISK MANAGEMENT COMMITTEE*
COMMITTEE*
HO HON CHEONG LEE BOON HUAT (Chairman)
Non-Independent Non-Executive Director OU SHIAN WAEI (Chairman) Independent Non-Executive Director
Independent Non-Executive Director
THAYAPARAN S. SANGARAPILLAI HO HON CHEONG
Independent Non-Executive Director TAN SRI DATO’ AHMAD BIN MOHD DON Non-Independent Non-Executive Director
Independent Non-Executive Director
TAN CHIAN KHONG THAYAPARAN S. SANGARAPILLAI
Independent Non-Executive Director DATUK WAN AZHAR BIN WAN AHMAD Independent Non-Executive Director
Independent Non-Executive Director
SUSAN YUEN SU MIN TUAN HAJI IBRAHIM BIN HASSAN
Independent Non-Executive Director LEE AH BOON Independent Non-Executive Director of
(Appointed on 15 October 2018) Non-Independent Non-Executive Director Alliance Islamic Bank Berhad

SUSAN YUEN SU MIN MAZIDAH BINTI ABDUL MALIK

Independent Non-Executive Director Independent Non-Executive Director of
(Appointed on 1 April 2019) Alliance Investment Bank Berhad

SHARIAH COMMITTEE^

ASSOCIATE PROFESSOR DR BADRUDDIN

BIN HJ IBRAHIM (Chairman)

TUAN HAJI MD ALI BIN MD SARIF

USTAZ ZAHARUDIN BIN MUHAMMAD

DR AZRUL AZLAN BIN ISKANDAR MIRZA

USTAZ AHMAD FAUWAZ BIN ALI @ FADZIL

Notes:
* Operate on a Group basis covering the Bank and its principal subsidiaries, namely
Alliance Islamic Bank Berhad and Alliance Investment Bank Berhad.
^ Resides in Alliance Islamic Bank Berhad.
 2019 Annual Report 3

GROUP CHIEF EXECUTIVE OFFICER

JOEL KORNREICH

GROUP COMPANY SECRETARY

LEE WEI YEN (MAICSA 7001798)

REGISTERED OFFICE
3rd Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia

Tel : 03-2604 3333

Fax : 03-2694 6200
Website : www.alliancebank.com.my
Email : enquiry@alliancefg.com

REGISTRAR
ShareWorks Sdn Bhd
No. 2-1, Jalan Sri Hartamas 8
Sri Hartamas
50480 Kuala Lumpur, Malaysia

Tel : 03-6201 1120

Fax : 03-6201 3121

AUDITORS
PricewaterhouseCoopers PLT
Level 10, 1 Sentral, Jalan Rakyat
Kuala Lumpur Sentral
50706 Kuala Lumpur, Malaysia

PRINCIPAL BANKER
Alliance Bank Malaysia Berhad

BURSA MALAYSIA
STOCK NAME/CODE
ABMB/2488

INTERNATIONAL SECURITIES
IDENTIFICATION NUMBER (ISIN)
MYL2488OO004
4 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE STRUCTURE
as at 31 May 2019

100% Alliance Islamic Bank Berhad

100% Alliance Investment Bank Berhad

51% AllianceDBS Research Sdn Bhd

100% Alliance Direct Marketing Sdn Bhd

100% AllianceGroup Nominees (Tempatan) Sdn Bhd

100% AllianceGroup Nominees (Asing) Sdn Bhd

100% Alliance Trustee Berhad*

This chart features the main operating companies and does not include inactive companies and companies that are under members’ voluntary liquidation.

* 20% shares are held by Alliance Bank Malaysia Berhad and the remaining 80% are held by its wholly-owned subsidiaries namely, Alliance Investment
Bank Berhad (20%), Alliance Direct Marketing Sdn Bhd (20%), AllianceGroup Nominees (Asing) Sdn Bhd (20%) and AllianceGroup Nominees (Tempatan)
Sdn Bhd (20%).
 2019 Annual Report 5

PRODUCTS AND SERVICES

ALLIANCE BANK MALAYSIA BERHAD

PERSONAL BANKING Wealth Management

allianceonline Bancassurance
• Elite Cash Saver
allianceonline Internet Banking • Elite Credit Shield
(24x7 service availability) • Elite Income Saver
• Account Overview • Elite Legacy Builder
• Alliance SavePlus Account Opening • Elite Life Guard
• Bill Payment (JomPAY) • Elite Max Saver
• Credit Card Balance Transfer & Fast Cash • Elite Smart Kids
• Credit Card Payment (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • Fire/House Owner (Conventional & Takaful)
• eFD • Home Content
• E-Foreign Telegraphic Transfer • Mortgage Level Term Assurance
• eIPO • Mortgage Level Term Takaful
• e-Statement • Mortgage Reducing Term Assurance
• Foreign Remittance • Mortgage Reducing Term Takaful
• FPX Payment • Motor Insurance (Conventional & Takaful)
• Fund Transfer (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • Personal Accident
• Loan Payment (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • Personal Loan – Group Credit Family Takaful
• Prepaid Reload • Personal Loan Reducing Term Assurance
• Stock Trading Sign On • Safe Deposit Box Insurance
• Transaction History • Travel Insurance

allianceonline Mobile Banking Deposits

(24x7 service availability) • Alliance Buddy
• Account Overview • Alliance FDGold
• Alliance SavePlus Account Opening • Alliance Hybrid Account/Alliance Premium Hybrid Account
• Bill Payment (JomPAY) • Alliance My eSaving Account
• Credit Card Payment (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • Alliance SavePlus Account
• eFD • Alliance Senior Savers
• Fund Transfer (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • Alliance Xchange Account/Fixed Deposit
• Loan Payment (Pay to Alliance Bank/Interbank/DuitNow/GIRO) • AllianceSave
• Mobile Signing Approval (MSA) & Mobile Signing Code (MSC) • AllianceSave Pendidikan
Transaction Authorisation • Current Account/Basic Current Account
• Prepaid Reload • Fixed Deposit
• Transaction History • Foreign Currency Current Account
• Transaction Push Notification • Foreign Currency Fixed Deposit
• Savings Account/Basic Savings Account
allianceonline Cash2Home
(24x7 service availability) Unit Trust
• Account Overview • Balanced Funds
• Foreign Remittance • Bond Funds
• Prepaid Reload • Equity Funds
• Transaction History • Money Market Funds
6 Alliance Bank Malaysia Berhad (88103-W)

PRODUCTS AND SERVICES (Cont’d)

Retail Broking & Investment Lending Debit Cards

• Alliance One Invest stock trading platform for retail clients (available • Alliance EcoWorld Debit Card
on web and mobile app) • Alliance Hybrid AP Platinum Debit Card
• Dedicated Omni-Channels to serve our customers • Alliance Hybrid PB Platinum Debit Card
– Call N Trade through Alliance Bank’s Share Trading Centres • Alliance Hybrid Standard Debit Card
(STC), relationship managed and serviced by Equity Specialists • Alliance My eSaving Debit Card
– Daily research reports, stock trading ideas & Model Portfolio
from ADBS Research BUSINESS BANKING
– Online share trading via Internet & Mobile
• Share Margin Financing SME
– ESOS/IPO/Placement Financing Account
– External Margin Account Bancassurance
– Foreign Share Margin • Business Credit Life Insurance/Refund of Premium (ROP)
– Portfolio Financing Account • Business Shield for Merchant
– Share Margin + Trading 2-in-1 Account • General Insurance Products
• Share Trading Account
– Cash Upfront Trading Account Business Credit Card
– Collateralised Trading Account • Business Platinum Credit Card
– Flexi 7 Account (i.e.T+7 Trading Account) • Visa Infinite Business Credit Card
• Foreign Share Trading
Cash Management
Retail Securities • Account Management (via Alliance BizSmart)
• Foreign Currency Retail Bond – Consolidated Account Overview
• MYR-denominated Retail Bond – e-Statement
– Tax Invoice/Merchant Report
Structured Investment – Transaction History Download
• Basket Equity-Linked Knock-In Knock-Out Structured Investment • Alliance BizSmart Online Banking
• Dual Currency Investment • Collection Management
• Equity Linked Convertible Structured Investment – Auto Debit Service
• Equity Linked Structured Investment – Biz-Xpress Card: With functions such as Deposit, Local Cash,
• Fund-Linked Structured Investment Withdrawal, mydebit (local purchases) and overseas cash
• Interest-rate Linked Structured Investment withdrawal via Cirrus network
– JomPAY Collection
Conventional Loans – Payee Corporation Service (FPX Payment)
• Deposit Account Offering
• Alliance CashFirst Personal Loan – Business Current Account
• Alliance Conventional Commercial Property Loan – Business Fixed Deposit
• Alliance Conventional Home Loan – Business Foreign Currency Current Account
• Alliance Conventional Oil Palm Plantation Financing – Business Foreign Currency Fixed Deposit
• Alliance One Account • Liquidity Management
– Auto Sweeping Service
Cards – Business Rewards Services
• Payment Management (via Alliance BizSmart)
Credit Cards – Bill Payment (JomPAY/Direct Bill)
• Alliance Basic Credit Card – Bulk Payment
• Alliance Business Platinum Credit Card • Deposit Account Offering
• Alliance Gold and Classic Credit Cards – Bulk Payment with Payment Advice
• Alliance Platinum Credit Card – Business Current Account
• Alliance Visa Infinite Business Credit Card – Business Fixed Deposit
• Alliance Visa Infinite Credit Card – DuitNow/Instant Transfer
• Alliance You:nique Rates Credit Card – E-Dividend Payment
• Alliance You:nique Rebates Credit Card – Foreign Telegraphic Transfer
• Alliance You:nique Rewards Credit Card – Fund Transfer (Pay to Alliance Bank/Interbank GIRO/RENTAS)
– MyGST Payment
– Payroll (Salary/EPF/SOCSO/SOCSO-EIS/Monthly Contribution/
PCB-LHDN Payment)
– Prepaid Reload
– Zakat Selangor
 2019 Annual Report 7

Credit Facilities • Liquidity Management

• Business Premises Financing – Auto Sweeping Service
• Equipment Financing – Business Rewards Services
• Foreign Exchange • Payment Management (via Alliance BizSmart)
• Oil Palm Plantation Financing – Bill Payment (JomPAY/Direct Bill)
• Schemes promoted by CGC/BNM/Government – Bulk Payment
• SME Express Cash – Bulk Payment with Payment Advice
• Working Capital Financing – DuitNow/Instant Transfer
– E-Dividend Payment
Employee Account Opening – Foreign Telegraphic Transfer
• Employee Account Opening for Local and Foreign Workers (via – Fund Transfer (Pay to Alliance Bank/Interbank GIRO/RENTAS)
BizSmart) – MyGST Payment
– Payroll (Salary/EPF/SOCSO/SOCSO-EIS/Monthly Contribution/
Trade Facilities PCB-LHDN Payment)
• Bank Guarantees (BGs) – Prepaid Reload
• Bankers Acceptances – Zakat Selangor
• Collection Bills
• Export Bills Purchased/Discounting Credit Facilities
• Export Credit Refinancing • Bridging Loan
• Export LC Advising/Confirmation • Business Premises Financing
• Export LC Negotiation • Foreign Currency Loan
• Foreign Currency Trade Loan • Syndicated Loan
• Letter of Credits • Term Loan
• Promissory Notes • Working Capital Financing
• Shipping Guarantees
• Trust Receipts Foreign Exchange
• Vendor Financing
Interest Rate Swap
Corporate & Commercial
Trade Facilities
Bancassurance • Bank Guarantees (BGs)
• Business Credit Life Insurance/Refund of Premium (ROP) • Bankers Acceptances
• General Insurance Products • Collection Bills
• Export Bills Purchased/Discounting
Business Credit Card • Export Credit Refinancing
• Business Platinum Card • Export LC Advising/Confirmation
• Visa Infinite Business Credit Card • Export LC Negotiation
• Foreign Currency Trade Loan
Cash Management • Letter of Credits
• Account Management (via Alliance BizSmart) • Promissory Notes
– Consolidated Account Overview • Shipping Guarantees
– e-Statement • Trust Receipts
– Tax Invoice/Merchant Report • Vendor Financing
– Transaction History Download
• Alliance BizSmart Online Banking FINANCIAL MARKETS
• Collection Management
– Auto Debit Service • Banker Acceptances
– Biz-Xpress Card: Deposit cum Withdrawal function via • Equity Linked Investments
Self-Service Terminals (ATM/CDM/CES) • Foreign Exchange Transactions
– Bank Cheque Collection Service • Hedging Solution
– Cash Concentration Solution – Cross-currency Swap
– Cash in Transit – Currency options
– JomPAY Collection – Interest Rate Swap
– Payee Corporation Service (FPX Payment) • Money Market Deposit
– Business Foreign Currency Current Account • Negotiable Instrument of Deposit
– Business Foreign Currency Fixed Deposit • Structured Investments
8 Alliance Bank Malaysia Berhad (88103-W)

PRODUCTS AND SERVICES (Cont’d)

ALLIANCE ISLAMIC BANK BERHAD

Bancatakaful • Basic Current Account-i

• i-Great Bakti • Basic Savings Account-i
• Takaful Optimuz • Current Account-i
• e-Alliance Term Deposit-i (via allianceonline)
Business Financing • Junior Smart Saver-i
• Business Premise Financing-i • Junior Smart Term Deposit-i
• Cashline Facility-i • Savings Account-i
• Commodity Murabahah Revolving Credit-i
• Commodity Murabahah Term Financing-i Financial Markets
• Industrial Hire Purchase-i • IPRS Murabahah-i
• Revolving Credit Facility-i • Islamic Acceptance of Bills
• Schemes promoted by CGC/BNM/SME Corp/Government • Money Market Deposit-i
• Negotiable Islamic Deposits Certificate
Cards
• Alliance Hybrid AP Platinum Debit Card-i Trade Financing and Services
• Alliance Hybrid PB Platinum Debit Card-i • Accepted Bills-i
• Alliance Hybrid Standard Debit Card-i • Bank Guarantee-i
• Alliance Junior Debit Card-i • Export Bills for Collection-i
• Alliance My eSavings Debit Card-i • Export Bills Negotiated-i
• Export Bills Purchased-i/Discounted-i
Consumer Financing • Export Credit Refinancing-I (Pre-shipment/Post-shipment)
• Alliance One Account • Export LC-I (Advising/Confirmation/Transferring)
• Cashline Facility-i • Import Bills for Collection-i
• CashVantage Financing-i • Letter of Credit-i
• i-Wish Home Financing-i • Murabahah Trust Receipt-i
• Term Financing-i • Murabahah Working Capital Financing-i
• Shipping Guarantee-i
Deposits
• Alliance Cash2Home Unit Trust
• Alliance Hybrid Account-i • ASNB Fixed Price Funds
• Alliance My eSavings Account-i • ASNB Variable Price Funds
• Alliance SavePlus Account-I (via allianceonline) • Islamic Balanced Funds
• Alliance Term Deposit-i • Islamic Equity Funds
• allianceonline Banking • Islamic Money Market Funds

ALLIANCE INVESTMENT BANK BERHAD

Corporate Banking Corporate Finance

• Credit Facilities • Independent Advice to Minority Shareholders for related party
– Bridging Loan transactions, General Offers and General Offer Exemption
– Foreign Currency Loan • Initial Public Offerings
– Syndicated Loan – Involving public issues of new securities and/or offers for sale
– Term Loan of existing securities in companies seeking listing and quotation
– Working Capital Financing on the Main Market, the ACE Market and the LEAP Market of
• Trade Facilities Bursa Malaysia Securities Berhad
– Bank Guarantees • Merger, Takeover, Acquisition and Corporate Restructuring Advisory
– Bankers Acceptances • Other General Corporate Advisory such as bonus issue, share split
and employee share option scheme
 2019 Annual Report 9

• Secondary Offerings Islamic Banking

– Involving raising of funds subsequent to the initial public • Islamic Accepted Bills
offerings through rights issues, restricted issues, private • Kafalah Bank Guarantee
placements and special issues of both equity and equity linked • Murabahah Working Capital Financing
instruments
Stockbroking
Debt Capital Markets
• Advisory and arrangement of Corporate Bonds and Sukuk (CBS) Alliance Retail Broking
involving: • Alliance One Invest stock trading platform for retail clients (available
– Asset Securitisation on web and mobile app)
– Commercial Papers Programmes • Corporate Action Services
– Guaranteed Bonds and Sukuk • Dedicated Omni-Channels to serve our customers
– Medium Term Notes Programmes – Call N Trade through Alliance Investment Bank’s Branches,
– Project Financing relationship managed and serviced by Trading Representatives
– Structured Financing such as Dealers or Remisiers
– Unrated Bonds and Sukuk – Self Directed clients are supported by Centralised Dealing Team
• Arrangement of Syndicated Corporate Loans and Financing – Online share trading via Internet & Mobile
– Daily research reports, stock trading ideas & Model Portfolio
Equity Syndication from ADBS Research
• Book-Building/Accelerated Book-Building of Equity and Equity- • Share Margin Financing
Linked Instruments • Share Trading Account
• Primary and Secondary Private Placements of Equity and Equity- – Cash Upfront Trading Account
Linked Instruments – Collateralised Trading Account
• Underwriting and Private Placements of Real Estate Investment – Flexi 7 Account (i.e. T+7 Trading Account)
Trusts (REITs) – Foreign Share Trading
• Underwritings and Private Placements of Initial Public Offerings • e-Services
• Underwritings of Rights Issues – Direct Credit
– e-Dividend
Financial Markets
• Cross-currency Swap Institutional Stockbroking
• Currency Options • Institutional Share Trading
• Equity Linked Investments • Inter-broke Services
• Hedging Solution • Direct Market Access (“DMA”)
• Interest Rate Swap
• Money Market Deposit
• Negotiable Instrument of Deposit

ALLIANCEDBS RESEARCH SDN BHD

• Corporate Research
• Economic Research
• Equity Research
• Industry Research
• Investment Advisory Services

ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

ALLIANCEGROUP NOMINEES (ASING) SDN BHD

10 Alliance Bank Malaysia Berhad (88103-W)

FINANCIAL HIGHLIGHTS

FINANCIAL YEAR ENDED 31 MARCH 2019 2018 2017 2016 2015

OPERATING RESULTS (RM MILLION)

Net income 1,622 1,572 1,469 1,424 1,383
Profit before taxation 708 685 681 695 703
Net profit after taxation 538 493 512 522 531

KEY BALANCE SHEET DATA (RM MILLION)

Total assets 56,521 53,938 54,089 55,627 53,142
Gross loans, advances and financing 42,730 40,307 39,336 38,748 36,923
Total liabilities 50,788 48,479 48,975 50,785 48,646
Deposits from customers 45,018 42,740 45,228 46,025 44,607
Paid-up capital 1,548 1,548 1,548 1,548 1,548
Shareholders’ equity 5,733 5,460 5,114 4,842 4,495
Commitments and contingencies 24,182 22,641 26,494 21,832 22,746

SHARE INFORMATION AND VALUATIONS

Share Information
Earnings per share (sen) 34.7 31.9 33.5 34.2 34.8
Diluted earnings per share (sen) 34.7 31.9 33.5 34.2 34.8
Dividend per share (sen) 16.7 15.3 16.0 14.5 15.4
Net assets per share (RM) 3.70 3.53 3.30 3.13 2.90
Share price as at 31 March (RM) 4.09 4.37 4.08 4.15 4.79
Market capitalisation (RM million) 6,332 6,765 6,316 6,425 7,415
Share Valuations
Dividend yield (%) 4.08 3.50 3.92 3.49 3.22
Dividend payout ratio (%) 48.1 48.0 48.4 43.0 45.0
Price to earnings multiple (times) 11.8 13.7 12.2 12.1 13.8
Price to book multiple (times) 1.1 1.2 1.2 1.3 1.6

FINANCIAL RATIOS (%)

Profitability Ratios
Net interest margin on average interest-earning assets 2.5 2.4 2.2 2.1 2.2
Net return on average equity 9.9 9.5 10.5 11.2 12.3
Net return on average assets 1.0 0.9 0.9 1.0 1.0
Net return on average risk-weighted assets 1.5 1.4 1.5 1.5 1.6
Cost to income ratio 47.8 50.5 47.1 48.4 46.8
Asset Quality Ratios
Loan loss coverage 142.91 96.71 136.71 109.11 102.7
Gross impaired loans ratio 1.1 1.4 1.0 1.3 1.0
Net impaired loans ratio 0.6 1.0 0.6 0.8 0.6
Liquidity Ratios
CASA ratio 35.5 37.3 34.2 32.1 33.6
Loan to Deposit ratio 94.9 94.3 87.0 84.2 82.8
Loan to Funds ratio 86.6 85.3 83.8 80.1 81.6
Capital Adequacy Ratios
Common Equity Tier I (CET I) capital ratio 13.39 13.39 12.55 11.78 11.11
Tier I capital ratio 14.07 13.82 12.55 11.78 11.11
Total capital ratio 18.51 18.34 17.18 17.36 12.97

1
Including Regulatory Reserve provision.
 2019 Annual Report 11

Improved Earnings Steady Balance Sheet Growth Enhanced Shareholders Value

Profit After Taxation Total Assets Dividend Per Share

(RM million) (RM million) (sen)

538 493 512 522 531 56,521 53,938 54,089 55,627 53,142 16.7 15.3 16.0 14.5 15.4

2019 2018 2017 2016 2015 2019 2018 2017 2016 2015 2019 2018 2017 2016 2015

Net Return on Average Equity Gross Loans, Advances and Financing Market Capitalisation
(%) (RM million) (RM million)

9.9 9.5 10.5 11.2 12.3 42,730 40,307 39,336 38,748 36,923 6,332 6,765 6,316 6,425 7,415

2019 2018 2017 2016 2015 2019 2018 2017 2016 2015 2019 2018 2017 2016 2015

Earnings Per Share Deposits from Customers Net Assets Per Share
(sen) (RM million) (RM)

34.7 31.9 33.5 34.2 34.8 45,018 42,740 45,228 46,025 44,607 3.7 3.5 3.3 3.1 2.9

2019 2018 2017 2016 2015 2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
12 Alliance Bank Malaysia Berhad (88103-W)

STATEMENT BY CHAIRMAN
OF ALLIANCE BANK MALAYSIA BERHAD
Alliance ONE Account continues to be popular
among customers seeking to consolidate their
loans and strengthen their financial position.
We enhanced our SME Banking portfolio to
help business owners grow their businesses
with solutions such as the SME Express
Loan and programme lending. We have also
launched digital local employee onboarding
for Alliance@Work, which is a fully paperless
process. We also enhanced training and
onboarding programmes for new front-liners
(e.g. AOA, SME Banking, Alliance@Work),
covering technical skills, sales and service,
soft skills, and compliance.

Building on our Transformation initiatives are

our digitisation efforts, which help streamline
and automate our processes bank-wide. This
enables us to offer better, faster and simpler
service.

During the financial year, we continued to

strengthen our business resilience with
proactive risk management. Mr Joel Kornreich,
our Group Chief Executive Officer, presents
more of our initiatives and outcomes for the
TAN SRI DATO’ AHMAD BIN MOHD DON financial year in his Management Discussion
Chairman, Alliance Bank Malaysia Berhad and Analysis on pages 14 to 26 of this Annual
Report.

Dear Shareholders, LEVERAGING ON OUR UNIQUE STRENGTHS As a result of our efforts, the Bank recorded
TO DRIVE GROWTH revenue growth of 3.2% to RM1.62 billion,
which puts us among the Top 3 in the industry.
It is my pleasure to present to you our
We remained on track with our strategy to
Annual Report for the financial year Our net interest margin continued to register
be the most important relationship for the
ended 31 March 2019 (FY2019). financial success of business owners, in line strong improvement, up 10 basis points
with our vision of building alliances to improve year-on-year (YOY) to 2.50%. Net profit after
The Bank recorded stronger lives. With SMEs and consumers as our key tax grew by 9.0% YOY to a five-year high of
performance for the year under customer segments, the Bank has been laying RM537.6 million.
a stronger foundation for future growth and
review, delivering on our commitment
accelerating core businesses.
to create greater shareholder value. ENHANCING SHAREHOLDER VALUE
This has been the result of our focus To communicate our brand attributes of
on executing our Transformation Innovative, Fast, Simple, Responsive and The Bank’s earnings per share for FY2019 was
initiatives, while we are digitising Aligned to Customers’ Needs, we launched 34.7 sen with a return on equity of 9.9%. Our
products and processes to enhance a new brand campaign in early 2019. capital position remains one of the sector’s
Complementing that, we accelerated strongest, with a Common Equity Tier 1 (CET 1)
operational efficiency. Despite the
momentum for our Transformation initiatives, ratio at 13.4%, and total capital ratio at 18.5%.
Malaysian banking sector’s subdued We maintained our approach of conserving
i.e. Alliance ONE Account (AOA), SME
growth in FY2019, our revenue was Banking, and Alliance@Work. We supported CET 1 capital through earnings retention net
one of the fastest growing in the our market expansion efforts with a strong of dividend, and managing Additional Tier 1
industry. Our capital levels and asset customer service culture which focused on and total capital through capital programmes
quality remained among the sector’s improving customer experiences and offering to support future business expansion.
better financial advice. Consequently, our
strongest.
Net Promoter Score improved across all In FY2019, we issued RM100 million Additional
touchpoints, and is among the highest in the Tier-1 Capital Securities, and Alliance Islamic
industry. Bank Berhad (AIS) issued RM100 million
 2019 Annual Report 13

Islamic Additional Tier-1 Sukuk Wakalah. Syariah, and supports three of the 17 United Investment Bank Berhad (AIBB) effective
This helped to strengthen the Bank’s and Nations’ Sustainable Development Goals of 1 January 2019. We are indebted to him for
AIS’ Tier-1 capital ratio to 14.1% and 12.6% poverty eradication, decent work and economic his 12 and a half years of service, having
respectively. growth, and partnerships for the goals. been a Board member since April 2006. We
also thank Dato’ Albert Yeoh Beow Tit for
For FY2019, the Board of Directors has Our Sustainability Statement which has been his service as Director of AIBB. Dato’ Albert
declared a second interim dividend of 8.2 sen. prepared in accordance with Bursa Malaysia retired on 16 May 2019, having joined AIBB
Together with the first interim dividend of 8.5 Securities Berhad’s (Bursa Malaysia) business in May 2016.
sen per share paid out on 28 December 2018, sustainability reporting framework, provides
the total dividend for FY2019 amounts to 16.7 details of our EES initiatives and outcomes for Our collective gratitude also goes to
sen per share. This amounts to a total dividend the year. Dato’ Majid Mohamed, a Director of AIBB who
payment ratio of 48% or RM258.5 million. retired on 28 February 2018 and a Director
More information can be found on of AIS who resigned on 31 December 2018.
pages 27 to 49. We thank him for his strategic guidance in
STRENGTHENING OUR SUSTAINABILITY steering our Group’s direction. Dato’ Majid
COMMITMENT has taken on a significant role on the Board of
OUR STRATEGIC COURSE FOR FY2020 another financial institution, and we wish him
The Bank views Economic, Environmental all the best in his future endeavours.
and Social (EES) sustainability matters as Our plans for the year ahead will focus on
important components of our long-term enhancing customer propositions to offer On the new directors who have joined
business sustainability. We create real value them faster, simpler, more responsive and us in FY2019, I would like to welcome
for our stakeholders by integrating EES into innovative products and services, which are Ms Susan Yuen Su Min who was appointed
the Bank’s product and service portfolio, aligned with their business and personal as Independent Director of Alliance Bank
as well as our customer service and public financial goals. We will continue to drive Malaysia Berhad on 15 October 2018,
outreach programmes. growth in our core Transformation initiatives Datin Ooi Swee Lian who was appointed as
of Alliance ONE Account, SME Banking, Independent Director of AIBB on 1 November
Our signature sustainability programmes and Alliance@Work, by offering unique 2018, and Dato’ Ahmad Hisham Kamaruddin
serve different community segments, and value-added propositions which differentiate who was appointed as an Independent
reflect our vision of “Building Alliances to us in the market place. The new focus will be Director of AIS on 15 February 2019. We
Improve Lives”. We help empower people on broad-basing customer acquisition through look forward to working with them, and the
with the right financial skills and knowledge strategic ecosystem partnerships and new strategic insights and wisdom they have to
through our AEIOU programme for school digital propositions. share with us.
children and Program Bimbingan Kewangan
for civil service employees. Our SME-oriented More information can be found on On behalf of the Board, I wish to thank the
initiatives include the entrepreneurial-driven pages 14 to 26. Group’s Senior Management for effectively
BizSmart Challenge and environmentally leading and implementing our strategic
themed Eco-Biz Dream Project. priorities. I also thank all our staff members
ACKNOWLEDGEMENTS for their hard work and commitment in
Continuing with our vision of building delivering results and values.
alliances to improve lives, in May 2019, our On behalf of the Board, I wish to express our
Islamic banking arm, AIS, launched a new deepest gratitude to our valued shareholders, Lastly, I wish to extend our gratitude to
social crowdfunding digital platform known customers and business partners. our customers and shareholders for their
as SocioBiz. To do this, AIS partnered with continued support and faith in the Bank.
three charity organisations, namely Yayasan I also wish to extend our appreciation to Bank
Kebajikan Negara, Yayasan Noor Al-Syakur Negara Malaysia, the Securities Commission As we continue with our business journey,
and Pertubuhan Kebajikan Islam Malaysia, as Malaysia, Bursa Malaysia, and other regulatory I am confident that together we will
well as a FinTech company, Ethis Ventures. authorities for their guidance and assistance. create long-term growth and value. To all
Open to all members of the society, and not our shareholders and stakeholders, we
just Muslims, SocioBiz provides the public Thank you to my fellow Board members for re-affirm our commitment to continue
with the opportunity to channel their donations their efforts to drive the growth of the Bank by pursuing excellence in all our efforts.
to help the financial disadvantaged segment sharing their industry insights and contributing
start or expand a business, or learn a skill to to our strategies. Thank you.
earn a sustainable livelihood. AIS will match
all contributions raised on SocioBiz dollar- On behalf of the Board, I wish to thank
for-dollar. SocioBiz abides by the Islamic Mr Kung Beng Hong who has retired as Director AHMAD BIN MOHD DON
principles encapsulated within Maqasid of Alliance Bank and Chairman of Alliance Chairman, Alliance Bank Malaysia Berhad
14 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS

Dear Shareholders,

Alliance Bank Malaysia Berhad

recorded strong performance for the
financial year ended 31 March 2019
(FY2019), with a profit growth of 9%
to RM537.6 million from RM493.2
million in FY2018.

We have enhanced our sales capacities,

scaled up digital efforts, and restructured
for greater efficiencies as part of our
Transformation initiatives. We are on track
with our Transformation strategy, and are
constantly refining it to obtain greater
growth and profitability in the medium to
long-term.

This Management Discussion and Analysis

provides an account of our strategies,
initiatives and outcomes of our growth
MR JOEL KORNREICH
journey in FY2019.
Group Chief Executive Officer

MARKET ENVIRONMENT There is also a growing affluent and enables us to identify and provide them with
emerging affluent population in Malaysia. the financial products and services they
In the past few years, the banking sector This segment is earning enough to both require to finance and grow their business,
has faced several external factors which save and invest, and have more discerning and improve their competitiveness. The
will continue to shape the industry in the investment objectives and needs. The Bank also seeks to answer the needs of
foreseeable future. These factors come affluent and emerging affluent segments the business owners’ stakeholders, namely
with both challenges and opportunities for of the population are expected to increase their families, employees and retail clients.
growth. from approximately 8.9 million in 2015, to
around 11.6 million by 2020. In FY2019, we launched a new brand
Digital adoption by consumers who seek campaign to communicate our four
the convenience of digitalised lifestyles SME’s contribution to Malaysia’s Gross key attributes of speed, simplicity,
is accelerating. Consequently, digital Domestic Product (GDP) has also increased responsiveness, and innovation. Bearing
banking penetration has grown from 41% significantly in recent years. Between 2011 in mind current digital lifestyles, we
three years ago to 64% this year. There is, and 2016, SMEs in Malaysia grew at 7% per increased the weight of marketing and
however, still significant upside for digital annum. SME’s contribution to GDP could branding activities in social media and
banking sales, with the current proportion reach 41% by 2020. digital channels. By expanding our media
of digital sales standing at 10%, compared engagement, we were able to amplify our
to e-commerce penetration of 46%. brand presence.
IMPLEMENTING OUR STRATEGY, VISION
Banking institutions and FinTech companies AND BRAND PROMISE – “BUILDING We employed a financial education approach
have expanded their digital propositions ALLIANCES TO IMPROVE LIVES” for the content in our marketing campaigns,
to capture growth opportunities. Banks to increase consumer awareness on how
are pursuing digitisation initiatives within The Group’s strategy is To Be the Most they can use the Bank’s product and
areas such as payments and lending, while Important Relationship for the Financial service portfolio to drive business growth,
over 160 FinTechs are currently operating Success of Business Owners with a vision and increase their financial wealth. We also
in Malaysia, with more than 35% of them of Building Alliances to Improve Lives. We engaged with different consumer segments
focusing on payments. focus on the needs of business owners. This by leveraging on our various Corporate
 2019 Annual Report 15

Responsibility initiatives as a reflection of margins of finance and a strict focus on Leveraging on automation and digitisation,
our brand promise to create value in their repayments from major business accounts the Bank improved processes in our different
lives. within business premises financing led to the business segments. To enhance service at
GIL ratio improving to 2.1%. In the mortgage our branches, we focus on service rituals
Our efforts resulted in the Bank increasing business, which includes Alliance ONE such as daily briefings and staff coaching
its brand awareness, with spontaneous Account, we continued with our proactive to cultivate a strong service culture. We
awareness rising from 20% in FY2017 to collection programme, while ensuring the also introduced the Branch Recognition
27% in FY2019. Debt-Service-Ratio (DSR) is comfortable Programme to motivate branches to
enough for consumers to manage their embed the delivery of excellent customer
obligations. This resulted in GIL ratio experience in their daily engagements with
ENSURING A STRONG FOUNDATION improving to 1.3%. The delinquency within customers.
business premises financing continued on a
Efficient Balance Sheet Management downtrend, and stabilised for the mortgage Two years ago, we implemented a
and AOA portfolios. bank-wide Customer Service Council as a
We continued to practise efficient balance platform for all key internal stakeholders
sheet management which led to healthy In the corporate and commercial segment, to significantly improve our Net Promoter
funding and liquidity positions. Customer- impairment continued to improve, with a Score (NPS) results, and improve customer
based funding based on total customer GIL ratio of 0.7%. We continue to review service levels. We have implemented
deposits and structured investments grew our underwriting standards for real estate enhanced contact strategies in both the
5.3% for the year to RM46 billion. We used and practise a selective approach in new consumer and SME segments to improve
fixed deposit growth from the consumer property proposals. engagements with our customers.
segment to fund growth in better Risk
Adjusted Return (RAR) loans portfolio such The delinquency and impairment trend As a result, by the fourth quarter of FY2019,
as Alliance ONE Account (AOA) and personal within the SME programme stabilised with NPS has improved substantially across
financing. Our proportion of better RAR the implementation of a new SME scorecard. all nine touch points we measure from a
loans have improved from 27% to 43% GIL ratio improved to 1.7% in FY2019, from FY2018 baseline. Highlights of our NPS
since FY2015. Our Liquidity Coverage 2.2% in FY2018. For our personal financing achievements within our different touch
Ratio (LCR) and loan to fund ratio remained portfolio, we recorded GIL ratio of 2.2% due points are as follows:
healthy at 154.3% and 86.6% respectively. to our stringent underwriting policies for
higher risk segments. • Improving contact centre
Practising Proactive Credit Management engagements, supported by customer-
Enhancing Customer Service centric contact centre vision, service
We stabilised credit cost in line within our promise and culture resulted in NPS of
guidance of <35.0 bps, coming in at 31.5 Providing excellent and consistent customer 26, from 17 in FY2018.
bps for the year. Personal financing and service has been one of the key drivers • Quicker turnaround time on Current
mortgage portfolios were the main drivers of growth within our various business Account/Savings Account (CASA)
of credit cost, partially mitigated by write segments. To strengthen our relationship openings and improvements in
backs from major business accounts in managers’ product knowledge and client service levels at branches resulted in
SME, corporate, and commercial segments, service management capabilities, we NPS of 27, compared to NPS of 8 in
as we continue to implement measures enhanced our staff onboarding and credit FY2018.
to keep loans well under control. The training programmes, as well as maintained • Structured SME onboarding and
Bank’s Gross Impaired Loan (GIL) ratio of continuous learning programmes. engagement programmes, as well
1.12% is one of the lowest in the industry. as quicker turnaround on loan
The ongoing regularisation of residential In the SME segment, we improved disbursements through a new loan
properties portfolio through proactive customer experience by providing better origination system led to SME
collection efforts and several repayments advisory services. In this respect, the Bank Borrowing NPS improving to 30, from
in the non-residential properties portfolio implemented a systematic method known 20 in FY2018.
contributed to the lower GIL in FY2019. as the SME Alliance Way. For example, we
launched our Financial Health Calculator in More information on our customer-
We improved our credit policy by enhancing the fourth quarter of FY2019. Complementing facing initiatives can be found in
our early warning system, automating that were initiatives that focused on our Sustainability Statement on
reports, and improving process for both improving the speed of complaints resolution page 27 of this Annual Report.
credit collection and remedial. Tightened at first point of contact.
16 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

Embedding an Innovation Culture

In January 2019, we set up rotating

innovation teams made up of Management
Trainee graduates called Innovation Marvels.
The Innovation Marvel teams champion
ideas generated by our staff in our weekly
bank-wide huddle. They seek to identify
and implement new approaches to improve
processes in line with our growth ambition.

One of the ideas implemented is the

introduction of the Alliance Remedial
Collection Sharing Portal. The new proposed
solution consolidates data from three
external applications onto one screen, thus
reducing work duplication. This helps to
increase productivity per staff by 30%, and
considerably improve client experience by
ensuring a unified approach.

Another initiative is the Alliance ONE

Account (AOA) referral campaign. This is
being done through a staff onboarding and
awareness programme utilising mobile
phones as the communication platform to
enhance our staff’s product knowledge,
and also serves to increase the number of AOA’s volume tripled during the year, with Digital marketing efforts accounted for 17%
Alliance Mortgage Partner-in-Sales. loan balances exceeding RM3.2 billion as of AOA approvals for the year, the result
at end FY2019, compared to RM1.0 billion of renewed focus on digital channels to
More information on our innovation the previous year. Its risk adjusted return engage with potential customers. Efforts
efforts can be found in our improved by 27.3%, with improvements in from the Alliance Mortgage Partner-in-Sales
Sustainability Statement on page 27 the loan mix. contributed 32%. Year-on-year (YOY), we
of this Annual Report. recorded 36% growth in loan approvals and
Growth is attributable to the efforts of 102% in loan disbursements. In total, 89%
our Mortgage Specialist team, our digital of AOA customers were new to the bank.
PROGRESSING WITH OUR marketing channel, and the expansion of
TRANSFORMATION TO ACCELERATE our Alliance Mortgage Partner-in-Sales More information on AOA can be
BUSINESS GROWTH programme. found in our Sustainability Statement
on page 27 of this Annual Report.
Alliance ONE Account The Alliance Mortgage Partner-in-Sales
programme is a fast and simple online SME Banking
Alliance ONE Account (AOA) is our consumer mortgage referral platform for business
refinancing product which offers customers associates comprising solicitors, real estate Our efforts to expand the SME Banking
the simplicity and convenience that comes agents, mortgage brokers and developers. business has resulted in 11% YOY growth
with a hassle-free loan consolidation Launched in FY2018, it has become a in SME loan balances despite a loan
service. By consolidating their various valuable source of leads for the growth of contraction in the overall SME market.
loans into one mortgage account consisting AOA. In FY2019, we increased our Partner- We launched a new system, the Alliance
of part term loan and part overdraft, our in-Sales to 1,157 by the fourth quarter of Origination System (AOS) in July 2018. We
customers enjoy greater savings on interest FY2019, from 455 in the first quarter of the now register 95% of our new SME loan
rate per annum, and more flexibility to make year. applications in FY2019 on this new system.
investments and cater to family needs with The new loan origination system allows for
the cash they have in hand.
 2019 Annual Report 17

most of the data fields to be automatically During the year, we also rolled out our digital We also extended the Cash2Home app
populated from validated external sources. local employee (LEO) application to enable a to domestic helpers via our partnership
As part of our digitisation efforts, AOS has completely paperless onboarding process. with a foreign embassy. This proposition
simplified the loan disbursement process This helped us grow Alliance@Work employee has benefited the industry as it provides
allowing for faster turnaround time. CASA to RM105 million in FY2019, compared transparency and flexibility.
to RM24.8 million the previous year.
Additionally, our SME Express Loan product Local employees and foreign workers enjoy
provides short-term loans which SMEs can The foreign workers’ onboarding process is preferential rates for remittance, credit
use to cover any gaps in working capital. managed through our Cash2Home mobile cards, deposits, and more. There is no fee
The product reduces the bureaucracy of app, a digital tool which uses biometric facial for using the Malaysian Electronic Payment
the loan process and offers SMEs a simpler recognition and optical character recognition System (MEPS), and they receive waivers on
loan application method. These efforts led technology for faster turnaround time. In initial deposit requirements.
to SME loan disbursements growing by 39% addition to the simple and paperless on-site
to RM2.35 billion in FY2019. mass onboarding in less than an hour, foreign Business owners are able to enjoy
workers can also activate their ATM card at preferential rates on services provided
In FY2019, we piloted a digital onboarding the companies’ premises. by our partners when they log on to our
process for Business CASA accounts. The partner portal. The portal was created via
aim is to activate Business CASA within a The app has proven to be popular within the our cash management system, BizSmart,
day, from an average of two weeks, by the foreign worker segment as it addresses their and includes services related to accounting
end of FY2020. financial needs and encourages cashless software, human resource systems,
transactions. It also provides remittance services intellectual property registration, and tax
We also launched the Credit Guarantee for workers to transfer money back home. The advisory services.
Corporate (CGC) scheme in November app is available in five languages, and can be
2018 with a portfolio of RM50 million, downloaded on both Android and iPhone.
and quickly utilised the portfolio limit. The
CGC assists SME entrepreneurs who have
viable businesses but lack the collateral
to obtain the required credit facility for
funds to expand their business by offering
a guarantee on a portfolio basis. Due to its
success, we extended the scheme with an
additional portfolio of RM100 million.

Alliance@Work

Alliance@Work, which was launched

in FY2017, provides payroll services to
companies by onboarding their local
employees and foreign workers, and providing
them with the Bank’s products and services.

In FY2019, we opened 1,392 company

payroll accounts (FY2018: 471). The number
of individual payroll accounts increased to
35,841 in FY2019, as compared to 10,709 in
FY2018. This was driven by improved referrals
from our business banking units in the SME,
corporate, and commercial segments, the
consumer banking unit, as well as from other
external sources.
18 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

During the year, we implemented a Customer Business current account openings can be As a result of our sustained efforts in social
Journey map to keep our customers done within the day through a pilot project media and digital channels since July
informed on the Bank’s latest products and launched during the year. 2018, we have increased our social media
services, campaigns, and required regulatory engagement rate. We now have a digital Share
information. Backroom processes include AOS for loan of Voice of almost 30% based purely on key
applications which has freed up our relationship banking product segments – AOA, Personal
For FY2020, we plan to enhance our value managers’ time by allowing data fields to be Loans, and Alliance SavePlus Account.
proposition to business owners, and their local automatically populated from sources such
employees and foreign workers, by simplifying as CTOS and Company Registry. As a result, Our mobile banking app, allianceonline
and digitising processes for faster turnaround our relationship managers now have more Mobile, which we launched in April 2018,
time, and strengthening our product line-up. time to focus on valuable engagement with has simplified and enhanced our customers
customers, in line with customer service overall banking experience, by offering access
More information on Alliance@Work enhancements conducted during the year. to online banking services including viewing
and Cash2Home can be found in our Quicker turnaround times supported a 39% account balances, transaction flows and
Sustainability Statement on page 27 growth in loan disbursements. e-deposit payments in a hassle-free manner.
of this Annual Report. As at the end of FY2019, there were more
Digital marketing has become an increasingly than 52,000 sign-ups. Our plans for FY2020
Digitisation of Processes important component of our marketing include launching a mobile BizSmart app to
efforts, focusing on performance marketing enable SMEs to make faster decisions on
Digitisation of our processes enables us to to generate leads and a digital branding time-sensitive payments and transactions at
provide faster, simpler, and more responsive campaign to expand our market reach. Our their convenience. We will also be enabling
service to our customers. Examples of how partnership with a FinTech firm for lead paperless branches in the near future, while
we did this in FY2019 can be seen throughout generation targets non-borrowing customers continuing to streamline our back office
all our business segments. Customer-facing using propensity modelling and machine processes to accelerate growth.
initiatives include individual CASA opening learning. We are able to identify opportunities
which can now be completed in less than 20 for existing SME non-borrowing customers to More information on our digitisation
minutes, from 45 minutes previously, while offer relevant credit facilities. initiatives can be found in our
Sustainability Statement on page 27
of this Annual Report.

PERFORMANCE HIGHLIGHTS

The Bank recorded strong performance in FY2019. Net interest income grew 8.9% due to the expansion of total loans and improved loan mix from better
risk adjusted return loans. The Bank recorded growth in net profit after tax of 9% to RM537.6 million.

FY2019 FY2018 Growth

Summarised Income Statement RM million RM million RM million Growth %

Net Interest Income 998.1 925.2 72.9 8

Net Income from Islamic Banking business 359.1 318.2 40.8 13
Other Operating Income 265 328.6 (63.7) (19)
Net Income 1,622.1 1,572 50.1 3
Other Operating Expenses (774.9) (794) (19.1) (2)
Allowance for Loans & Impairment (139.2) (93.4) (45.8) 49
Profit before Taxation 708 684.6 23.4 3
Taxation (170.4) (191.4) 20.9 (11)
Net Profit after Taxation 537.6 493.2 44.4 9
 2019 Annual Report 19

FY2019 FY2018 Growth

Summarised Balance Sheet RM million RM million RM million Growth %

Net Loans, Advances and Financing 42,320.3 39,989.5 2,330.8 6

Investment and Dealing Securities 9,944.6 8,862.6 1,082.8 12
Total Assets 56,520.9 53,938.3 2,582.6 5
Deposits from Customers 45,017.6 42,740.5 2,277.1 5
of which: CASA 15,960.9 15,953.8 7.1 0
Shareholders’ Funds 5,732.8 5,459.6 273.3 5

Creation of Value for Business Owners PERFORMANCE BY BUSINESS SEGMENTS the first phase of our paperless branch
and Stakeholders initiative, where the Bank is aiming to drive
Consumer Banking efficiencies through the digitisation of product
As part of our continuous proactive applications and services.
capital management to support the future In the consumer banking segment, the Bank
business expansion of all our entities, we recorded incremental improvement in revenue The Alliance SavePlus account which was
completed our Additional Tier-1 Capital by 1.5% to RM563 million, compared to launched in FY2018, performed well during
Securities issuance of RM100 million out RM555 million in FY2018. Net interest margin the year. The product’s value proposition of
of the existing RM1 billion Additional Tier-1 improved by 16 basis points. offering enhanced interest rates has proven
Capital Securities programme for Alliance attractive within the emerging affluent
Bank Malaysia Berhad in March 2019. Customer-based funding grew 4.4% YOY, customer segment. In FY2019, we acquired
Together with the previous issuance of with CASA ratio at 31.9%. We significantly more than RM1 billion in deposits, with more
RM150 million, the Bank has a total RM250 improved the CASA opening process to 20 than 60% being fresh funds.
million Additional Tier-1 Capital Securities. minutes using digital onboarding. This formed
This strengthened our Tier-1 capital ratio
to 14.1%. We maintained our strong
capital levels with Common Equity Tier-1
(CET 1) ratio at 13.4% and total capital ratio
at 18.5%, which is among the strongest in
the sector.

To support our Islamic Banking business,

Alliance Islamic Bank Berhad (AIS) has also
successfully completed its first Additional
Tier-1 Sukuk Wakalah of RM100 million
out of the newly-established RM500
million Additional Tier-1 Sukuk Wakalah
programme. This strengthened AIS Tier-1 Having a chat with our business partner, CompareHero.my
capital ratio to 12.6%.

Our net asset per share has grown with a

four-year Compound Annual Growth Rate
(CAGR) of 6.3% to RM3.70. For FY2019, the
Bank declared a second interim dividend
of 8.2 sen per share. Together with the
first interim dividend of 8.5 sen per share
paid out on 28 December 2018, the total
dividend for FY2019 amounting to 16.7 sen
per share. This represents a dividend payout
ratio of 48% or RM258.5 million. The Bank
has been maintaining its dividend payout
ratio of 48% over the last three years. With our business partner, RinggitPlus
20 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

Our Alliance@Work proposition broadened our knowledge, so they could offer customers FY2019 has been a year of rebuilding towards
consumer banking segment customer base, advice and guidance on how they should accelerating acquisition of new CASA via
and we acquired more than 20,000 new-to- invest despite the economic downturn. By the Alliance@Work and Alliance SavePlus, as
bank CASA. end of FY2019, we began seeing an upturn in well as expanding the wealth management
customer investments. We expect this trend to business. We launched the Wealth Academy,
Our mortgage portfolio comprising Alliance continue in the year ahead. a structured programme conducted on a
ONE Account (AOA) and traditional mortgages quarterly basis for our relationship managers.
grew 5.5% to more than RM18 billion in Within the bancassurance business, we
ending net receivables. AOA doubled its YOY worked with Manulife Insurance Berhad We improved sales performance management
disbursements to RM2.45 billion, driven by on a review to improve our product range through a daily process. As a result, our staff
its value proposition of loan consolidation to and suitability to our clients’ current needs. productivity increased by 18%.
provide the convenience of one consolidated We explored propensity models to identify
account, lower monthly payments, more cash customers with a higher likelihood of We had embarked on the first phase of our
in hand, and lower rates to our customers. purchasing insurance products, to better digital marketing channel roadmap the
serve our existing customer base, and cross- previous year by activating multiple digital
To accelerate AOA growth, we embarked sell our other banking products such as marketing channels on social media. In
on our Alliance Mortgage Partner-In-Sales wealth management. Complementing this, FY2019, we progressed into the second phase
channels involving partnerships with we also enhanced training for our relationship which employs a refined approach of targeting
real estate agents, independent financial managers. the emerging affluent segment, and creating
consultants and insurance agents. This
resulted in more quality leads and an increase
in lead conversion. As a result, contributions
from the Partner-In-Sales channel improved to
32% in the fourth quarter of FY2019.

Our personal loans business has grown faster

than industry over the past two years. In
FY2019, we recorded YOY loan disbursement
growth of 40% with a total of RM938 million
in loan disbursements in FY2019, compared
to RM664 million the previous year. New-to-
bank customers increased to 14,270 from
11,786 previously. This was primarily due to
the increase in sales capacity and productivity,
thanks to better leads management, training, At our client’s premises, Modu System (M) Sdn Bhd
and sales planning. We continued our
partnership with CTOS Data System (CTOS)
and launched Version 2 of the CTOS scorecard
which offers better predictive analytics for
unsecured loans and credit card. This has
helped strengthen our credit business.

Due to downtrends in the macroeconomic

outlook, the majority of our customers took
a cautious approach in their investment
decisions. As a result, our client-based
fee income declined in FY2019. Wealth
management fees were lower by RM14.4
million.

Nevertheless, we implemented a number of

initiatives to improve our investment services.
This included a renewed focus on enhancing
our sales staff’s soft skills and product With our client, OEM Autoseats Malaysia Sdn Bhd
 2019 Annual Report 21

more awareness in the marketplace through We implemented AOS as planned in FY2019, or subsidised tools and apps such as human
above-the-line and digital campaigns. We are which embedded company data into a digital resource apps for our SME customer segment.
on track with our digital marketing strategy, application to improve credit workflow
having increased our leads conversion processes. By streamlining data input and FY2020 Outlook
success rate by 13%. automating processes, we reduced the
turnaround time for SME loan approvals to For FY2020, our plan is to enhance the
FY2020 Outlook nine days from up to 20 days previously. competitiveness of our credit programme and
increase our efforts in digitising processes for
Our focus for FY2020 is to modernise and To ensure consistent levels of service among better customer experience. We also plan to
digitise our processes by enabling our branch- our relationship managers, we launched expand into sectoral-based lending, and offer
in-a-tablet initiative. With this, we will be able Alliance SME Way in March 2019, a sales and tailored programmes.
to offer digital CASA account openings and service programme to deliver a structured
electronic service requests. and meaningful customer experience. It More information on Alliance SME
complements our digital value-add efforts Way and BizSmart Challenge can be
More information on the Wealth such as offering financial advice with the found in our Sustainability Statement
Academy can be found in our Financial Health Calculator, and offering free on page 27 of this Annual Report.
Sustainability Statement on page 27
of this Annual Report.

SME Banking

The SME Banking segment continued with

strong growth in FY2019, contributing more
than 25% to Group’s profit before tax. SME
loans comprised 26% of the Bank’s total loans.
This was driven by our value proposition of
providing products in the right loan quantum and
competitive value. Along with this, we offered
better business advisory, as well as speedier
processes based on our digitisation efforts.

Our SME loans grew 8.8% to RM11.1 million

YOY. Profit before tax improved by 37% to
RM183 million, due to better pricing and
focus on better RAR loans. Net interest margin With our customer, Glocomp Systems (M) Sdn Bhd
improved by 11 bps in FY2019.

In April 2018, the Bank set up a new acquisition

team targeting emerging businesses. Existing
team productivity improved by approximately
33%, as a result of our focused training
programmes for relationship managers, in
particular the Alliance SME Way.

The fifth iteration of the BizSmart Challenge

debuted as a reality TV business challenge
programme, the first by a financial institution in
Malaysia, with 1.5 million viewers nationwide.
The Bank’s flagship programme continues to
help SMEs take their businesses to the next
level through business training, coaching,
mentoring, and networking opportunities. The
programme helps young entrepreneurs and
brands gain more prominence, and increases
the Bank’s brand awareness. At Ann Joo Resources Berhad office
22 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

Corporate, Commercial and Transaction In FY2019, a number of geo-political and FY2020 Outlook
Banking macroeconomic factors impacted the
GFM segment. The trade war between the Our focus for the year ahead is to grow
In FY2019, the Corporate, Commercial and United States and China, as well as post- the non-interest income space, particularly
Transaction Banking segment recorded Brexit implications contributed towards within client-facing activities such as
marginal growth of 1.2% in net profit before uncertainties in global and local financial consumer wealth management and SME
tax, driven by loan assets growth of 3.6%. We markets. The normalisation of interest rates Banking activities. While traditional FX
maintained our momentum in trade finance towards the end of the year 2018, along hedging activities continue to face margin
within the Transaction Banking segment and with volatility in the international equity compression, we will put in place innovative
achieved growth of 10% YOY. market led to fund flows being diverted, structured solutions to provide more hedging
especially within emerging markets. These instruments to our clients.
In line with the Bank’s Transformation priority had a knock-on effect on trading and sales
of enhancing customer service, we conducted orientation, leading to investment portfolio
a series of trade and foreign exchange adjustments. Within Malaysia, the inevitable INVESTMENT BANKING
seminars nationwide. At these seminars, we adjustments post-General Election 14 led
shared our industry insights and provided to cautious market sentiment, as investors Our investment banking arm, Alliance
updates on the economic climate and global sought clarity in the market outlook. Investment Bank Berhad (AIBB), provides
foreign exchange (FX) trends. These efforts a spectrum of services covering stock
have helped to strengthen relationships To mitigate the impact these uncertainties broking, corporate advisory, underwriting
with our clients, and secure a pipeline of had on the GFM segment, we led with a and placement of equity securities, corporate
new clients. As a result, the Bank recorded light trading portfolio which focused on bonds and sukuk, loan syndication, as well
a robust trade assets growth of 10% YOY, client-based activities. We also created as corporate banking and treasury services.
and maintained our trade facility utilisation awareness among our clients on the need We also offer equity research through our
at above 65%. to hedge within both foreign exchange (FX) 51%-owned joint-venture with DBS Vickers
and derivatives to protect their assets and Securities Pte Ltd, AllianceDBS Research Sdn
FY2020 Outlook investments. This effectively translated to Bhd.
greater business opportunities for the GFM
We are currently piloting digital onboarding segment. However, this was offset by margin In FY2019, AIBB registered a net profit after
for BizSmart accounts, which will enable compression as a result of stiffer competition tax of RM1.4 million. Net interest margin
same day account opening. We plan to rollout in the marketplace. grew marginally to 2.2%. Other operating
the solution nationwide in FY2020. We will income reduced marginally to RM35.4
also be digitising other front-end interactions Consequently, our revenue trajectory was million, yielding a total revenue of RM72.6
with our customers, towards delivering faster impacted, and YOY revenue improved million. Operating expenses decreased to
turnaround time. marginally by 2.3%. While the overall RM41.5 million.
trading portfolio recorded flat growth, active
Continuing with our digitisation journey, we portfolio rebalancing led to greater revenue Stockbroking
plan to introduce the Mobile BizSmart app from investment income. Consequently, the
in FY2020 to enable SMEs to make faster segment recorded revenue of RM289 million The bullish trend which marked the first
decisions on time-sensitive payments. The in FY2019, compared to RM282 million in half of FY2019 as a result of robust trading
app will be a valuable addition to our digital FY2018. in the securities market took a downturn
product portfolio and enables us to increase and was more subdued by the second
our digital engagement by driving wider Liquidity and Funding half of the year. This was due to prevailing
adoption among smaller SMEs. market uncertainties based on global
The Bank maintained a healthy liquidity macroeconomic challenges, coupled with
position for FY2019. Our liquidity ratios have ongoing domestic policy reforms. By year
GROUP FINANCIAL MARKETS consistently recorded above the regulatory end FY2019, trading on Bursa Malaysia had
threshold for Liquidity Coverage Ratio (LCR) settled lower, pressured by weak corporate
The Bank’s Group Financial Markets (GFM) with a minimum of 100% and net stable earnings and profit-taking activities resulting
segment cuts across four core areas of funding ratio (NSFR) at above 105%. We in declining Small Cap and ACE market
funding and investment, trading and market- maintained our loan to fund ratio at below indices.
making, client-based activities, and asset 88%.
and liability management.
 2019 Annual Report 23

Consequently, trading value on Bursa domestic demand will continue as the main services aimed at fulfilling the needs of our
Malaysia declined by 7.4% to RM1,178.2 driver of growth, underpinned by continued consumer and business customer segments.
billion (FY2018: RM1,272.6 billion). expansion in private sector activity. These are compliant with the Islamic Financial
Institutional trading value reduced by 6.0% Services Act 2013, Bank Negara Malaysia’s
to RM801.8 billion (FY2018: RM853.2 Bearing in mind these external challenges, (BNM) Shariah Governance Framework, and
billion), while retail trading value reduced by AIBB will capitalise on revenue opportunities Shariah standards and regulations.
10.2% to RM376.4 billion (FY2018: RM419.4 by focusing on core business activities and
billion)1. client segments. We will continue to drive AIS’ portfolio focuses on enabling SMEs drive
growth in the corporate finance and debt their business growth with Halal solutions
As a result, stockbroking net income capital markets business through intra-Bank and advisory. A total of 21% of AIS customers
contracted by 16.6% YOY mainly attributed collaborations with the Group Corporate, comprise SMEs, while the bulk of clients
to the lower brokerage income by 16.0%, Commercial and Transactions department. consist of consumers.
and net interest income of share financing
reduced by 11.5%. We will maintain our operations review In FY2019, AIS’ focused execution of its
to ensure efficiencies and productivity growth strategies resulted in its excellent
Corporate Advisory gains. These include expanding our digital performance. Net profit after tax recorded
stockbroking capabilities to enhance our double-digit growth of 35.4% YOY, while
In FY2019, fundraising activities in the customers’ onboarding experience and its other operating income ratio increased
Malaysian capital market moderated in improve activation rates for new accounts. to 8.7%. AIS recorded a return on equity of
comparison to the previous year. A total of We will be selectively adding loans on to 13%.
RM105.4 billion was raised in the corporate our balance sheet which meet risk adjusted
bond and sukuk market in 2018 (2017: returns in line with the Bank’s risk appetite. In FY2019, AIS contributed RM280.4 million
RM124.9 billion), while only RM9.2 billion in Islamic net finance income, and RM26.6
was raised in the equity market in 2018 million in Islamic other operating income
(2017: RM21.7 billion)2. Despite this, we ISLAMIC BANKING towards the Bank’s income base. This
completed one bond deal and two syndicated represents a YOY increase of 14.9% in
loan transactions during the year. Our Islamic Banking arm, Alliance Islamic Islamic net financing and 21.4% in Islamic
Bank Berhad (AIS), has a portfolio of Shariah- non-financing income from the previous year.
In July 2018, AIBB successfully listed Radiant based financing, deposits and transaction
Globaltech Berhad on the ACE Market of
Bursa Malaysia Securities Berhad, with an
Key Highlights FY2019 vs FY2018 Growth Drivers
IPO market capitalisation of RM120.8 million.
Additionally, we completed 10 non-IPO deals, Profit & Loss
as well as the privatisation of MWE Holdings Revenue +15.5% • Driven by financing growth (+15.9%) and
Berhad via the selective capital repayment other operating income (+21.4%)
method.
Net Profit Margin Declined to 2.48% • Impacted by higher cost of funds (+31bps)
We maintained our strong performance from 2.51% due to SavePlus-i and a large volume of term
despite capital market challenges to grow deposits
our revenue by 20.4% or RM1.12 million to Cost-to-income Improved to 38.4% • Improvements in cost efficiency
RM6.5 million (2018: RM5.4 million). ratio from 38.7%

FY2020 Outlook
Balance Sheet
We expect capital market challenges to
Financing +15.9% • Growth in AOA-i
continue in FY2020 as dampened external
demand, slowing global growth and domestic CASA +10.7% • Growth in SavePlus-i
political uncertainties continue to weigh in on CASA Ratio Improved to 30.7% • Growth in SavePlus-i
the Malaysian economy.
from 29.1%

Factors related to trade policy uncertainties Total Capital Improved to 15.4% • Issuance of RM100 million Additional Tier-1
and weakening market sentiment are risks from 15.1% Sukuk Wakalah on 29 March 2019
to global economic growth. Within Malaysia,

1
Bursa Malaysia website, Market Statistics, Key Indicators and Trading Participation by Category of Investors.
2
Annual Report 2018, Securities Commission Malaysia, Part 4: Capital Market Review and Outlook.
24 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

In FY2018, AIS embarked on a three-year Solution. We also hold Halal Talks to provide in place a certification support platform for
plan to drive its business growth within the SMEs with the knowledge and support they SMEs seeking to obtain Halal certification.
Islamic finance sector. Its strong performance require to advance into the Halal business
in FY2019 was the result of the successful sector. In May 2019, AIS launched its social
execution of its plan over the past two crowdfunding platform, SocioBiz. Through
years. As part of its plan, AIS strengthened Our Shariah-compliant Portfolio this platform, AIS will help financially
its brand by executing unique Halal-themed disadvantaged individuals seeking to raise
programmes, support for social enterprises, AIS focused on generating growth by aligning funds to start or expand a business, or
and social funding platforms. its propositions to the Bank’s Transformation learn a skill to earn a sustainable livelihood.
priorities of Alliance ONE Account, SME SocioBiz’s beneficiary partners are Yayasan
In FY2019, AIS’ gross financing growth Banking expansion, Alliance@Work, and Kebajikan Negara, Yayasan Noor Al-Syakur,
exceeded RM1 billion. Alliance SavePlus deposits. In FY2018, AIS introduced the and Pertubuhan Kebajikan Islam Malaysia.
Account-í’s growth doubled to RM426 Shariah-compliant Alliance One Account-i AIS has committed to bearing 100% of the
million. (AOA-i), Alliance SavePlus Account-i administration fees, as well as help raise up
(ASA-i), restricted investment account to to RM150,000 for individuals seeking funds.
AIS’ unaided brand awareness doubled to cater for large Shariah-compliant financing
6% in FY2019, from a FY2018 baseline of requirements, and Alliance Cash2Home-i for Also in the pipeline are plans to launch
3%. The primary drivers of its branding blue-collar foreign workers. Do-Good-As-You-Go (DGAYG), a unique
activities, namely the AIS Zakat programme proposition which gives customers the
and Eco-Biz Dream Project 3, successfully Diversified Islamic Wealth Management opportunity to create a positive impact
communicated AIS’ brand attributes through on society through their daily banking
increased media coverage. Within the Islamic Wealth Management transactions. DGAYG is a fixed deposit
segment, AIS launched three new funds, campaign where customers have the option
AIS improved its operations by incorporating namely the Amanah Saham Nasional of donating a portion of their interest to a
a granular Management Information System Berhad (ASNB) Funds and, in line with the charity of their choice, for which AIS will
(MIS) which allows for better performance bank’s open platform concept, two award- match the amount.
management and interventions when winning Bank Islam Malaysia Berhad (BIMB)
necessary. To motivate employees, it rolled Investment Management Funds of BIMB- More information on employee
out a rewards and recognition programme Arabesque iGlobal Dividend Fund 1, and training and development, the
for top Islamic sales performers, and initiated BIMB-Arabesque Malaysia Shariah ESG Zakat programme, Eco-Biz Dream
the Alliance Islamic Banking Fundamentals Equity Fund. Project 3, One-Stop Halal Business
(ALIF) training which enhances staff Solutions, financial outreach
capabilities by providing them in-depth Sukuk Programme programmes, and SocioBiz can be
knowledge of the Islamic banking system, found in our Sustainability Statement
processes and products. During the year, AIS put in place the on page 27 of this Annual Report.
mechanism to roll out its sukuk programme,
New Business Initiatives in line with its expectations that growth in
Islamic business will outpace conventional BUSINESS RISKS
AIS differentiated itself from other players business within the next three years.
in the Islamic financing sector by adding In FY2019, we continued to strengthen our
financial outreach programmes such as In March 2019, AIS made its maiden risk management controls and processes.
Health and Wealth (Program Bimbingan issuance of RM100 million Islamic Additional We reviewed our products, policies and
Kewangan) events for civil service officers, Tier-1 Sukuk Wakalah (AT1 sukuk) under limits, as well as changes in our business
and Halal Talks for SMEs to its existing this programme. AIS will utilise the proceeds and regulatory landscape. Our thematic and
community engagement efforts. Following on of the AT1 sukuk to fund the growth of its portfolio reviews centred on areas such as
from AIS’ status as an emergent Value-Based Shariah-compliant portfolio and future plans post-election sectoral impact, and SME
Intermediation (VBI) practitioner validated in the Halal and VBI space. business and property sector reviews. The
by BNM, it conducted the VBI Scorecard results were shared with Senior Management
assessment in August 2018. FY2020 Outlook and the Board of Directors (Board).

To help SMEs grow their business, we offer For FY2020, AIS will focus on expanding its The Bank took into account requirements of
business advisory, halal certification, and One-Stop Halal Business Solutions offerings the Malaysian Financial Reporting Standards
opportunities to tap into larger customer by partnering with Jabatan Kemajuan Islam (MFRS) 9 which were introduced during the
base with our One-Stop Halal Business Malaysia (JAKIM) and other agencies to put year. We realigned our policies and financial
 2019 Annual Report 25

models to suit these new accounting as well as skillset training. Our talent our efficiency and enhance the way
requirements. Within the Bank’s product and management initiatives to upskill we do business, as well as improve
service portfolio, we looked into new service our current managers, and groom the lives of our customers through
offerings for our customers. These focused our next generation of leaders and seamless and simple processes.
on more efficient mediums such as mobile supervisors, extend to providing Underlying these are controls we have
banking, without compromising on key further skills training to staff we have established to protect our customers’
controls. identified as having good potential. A data and privacy.
good example of this is the Alliance • Our efforts to build and grow our
In implementing these measures, our aim Leaders’ Programme. customer base are focused on
was to ensure that our business activities • We have in place a structured check providing suitable value-added
were aligned to our risk appetite. These and balance system. We practise products and services. Our investment
were balanced against our goal of driving good governance by ensuring active products take into account our
sustainable growth, while continuing to Board oversight. Board oversight customers’ assessed risk profiles.
provide excellent customer service. is complemented with assistance With regards to our financing products,
from designated Board and Senior we conduct affordability assessments.
The Bank faces a multitude of risks in its Management committees. All our • We diligently monitor the health of our
day-to-day operational activities. These governance processes emphasise credit portfolios and balance sheet.
include risks pertaining to credit, market, close monitoring, supervision and This is conducted through continuous
liquidity, operations, regulatory, and Shariah guidance. We establish appropriate tracking of key ratios and early
compliance. Improper management of these layers of physical security, dual warning indicators. Results are then
risks could have a major impact on the Bank’s controls, limit controls and a mix reported to Senior Management and
reputation. To ensure that we maintain our of automated and semi-automated the Board.
organisational and business sustainability, controls, within our on-the-ground
we employ a multi-pronged strategy: operational activities. More information on employee
• We proactively manage our business training and development
• We strongly emphasise good and risks, bearing in mind the need programmes can be found in our
governance by setting the right “tone to maintain a good balance between Sustainability Statement on page 27
from the top”. This is actualised risks and controls. We conduct of this Annual Report. For full details
through our Code of Conduct ongoing reviews of our lending of the Bank’s risk management
guidelines. Both the Management policies and operational practices, process and mitigations, please
and the Board reinforce this through which take into consideration evolving refer to the Statement on Risk
frequent internal communication business conditions, emerging risks Management and Internal Controls
messages. and business trends. on page 96, as well as Risk
• We supplement these measures • We promote an innovation-led culture Management on page 97 of this
by providing our employees with by adopting new technologies into our Annual Report.
orientation and motivation training, processes. Our dual aim is to improve

2018 Asian Institute of Chartered Bankers Graduates

26 Alliance Bank Malaysia Berhad (88103-W)

MANAGEMENT DISCUSSION & ANALYSIS (Cont’d)

OUTLOOK AND PROSPECTS Despite the uncertain outlook, we are confident that our Transformation initiatives have put us on
a stronger footing to accelerate our growth. We will also focus on widening our franchise through
Global economic growth is expected to strategic ecosystem partnerships. In addition, we will continue to amplify the brand through
moderate slightly from 3% to 2.9% in various media channels, and increase the weight of digital channels to support our sales and
2019 due to intensifying trade tensions and marketing activities throughout the Bank.
tightening financial conditions in emerging
markets. Within advanced economies, a Our focus will remain on Business Owners as our key area of growth, and extending our financial
growth of 2% is forecast due to slowing products and services to their stakeholder base of families, employees, business partners, and
external demand, rising borrowing costs and retail clients.
persistent policy uncertainties.
Underscoring all our efforts is our brand promise to deliver Fast, Simple, Responsive, and
Global macroeconomic and geo-political Innovative products and services that are Aligned to Our Customers’ Needs.
headwinds are expected to persist, namely
the trade war between the United States and
China, Brexit, and the weakening Chinese APPRECIATION
economy. These would dampen external
demand for Malaysia’s manufacturing Our sustained growth trajectory in FY2019 would not have been possible without the hard work
exports, especially within the electrical and and efforts of our Board, Management team and employees.
electronics manufacturing, and the oil and
gas sectors. To our employees and Management team, thank you for your unfailing dedication and commitment
to keep the Bank on track with our value creation efforts.
Weaker global growth and declining
international trade activities will affect We are indebted to our Board of Directors for sharing their insightful advice and perspectives,
Malaysia’s GDP. For the year ahead, Bank which have steered us through the challenges of the past year. In particular, I would like to thank
Negara Malaysia (BNM) has projected steady our Chairman, Tan Sri Dato’ Ahmad Bin Mohd Don for his support, wisdom, and guidance in
GDP growth of between 4.3% and 4.8% keeping us on course with achieving our Vision.
(2018: 4.7%).
We would like to extend our appreciation to the regulators, policymakers and corporate
Growth will primarily be driven by private governance custodians for their continued guidance and support of the Bank’s business
sector spending, underpinned by steady activities. I would especially like to thank BNM, the Securities Commission Malaysia, and Bursa
private consumption due to stable labour Malaysia Securities Berhad for their co-operation and assistance.
market conditions. Private investment is
expected to be supported by ongoing and On behalf of everyone here at the Bank, I would like to express our sincere appreciation to our
new capital investment, especially within the customers and business partners, for the sustained faith in our brand promise and continuing
manufacturing and services sector, as well their journey of growth with us.
as the repayment of corporate tax refunds.
We affirm our commitment to continue to create value for all our stakeholders, as we continue
Export growth is projected at 3.4%, with our vision of Building Alliances to Improve Lives.
compared to 6.8% in FY2018 as a result of
weaker demand from trade partners and Thank you.
the impact of ongoing global trade tensions.
BNM’s monetary policy for FY2020 will focus
on ensuring sufficient liquidity to support JOEL KORNREICH
financial intermediation activity. Group Chief Executive Officer
 2019 Annual Report 27

SUSTAINABILITY STATEMENT

At the Grand Finale of BizSmart Challenge 2018

We believe that embedding SCOPE

sustainability into our business This Sustainability Statement provides an account of our EES

strategies ensures our long-term initiatives and outcomes across our various business segments for
the period covering 1 April 2018 to 31 March 2019 (FY2019).
business resilience. We take into
Our Sustainability Statement is in compliance with the Main Market
account Economic, Environmental Listing Requirements of Bursa Malaysia Securities Berhad (Bursa
and Social (EES) risks and Malaysia) relating to Sustainability Statements in Annual Reports
published in 2016. The Bank’s corporate responsibility strategy is
opportunities, as well as financial also aligned with the requirements of Bank Negara Malaysia (BNM).
implications. Additionally, it takes into account our position as a constituent of the
FTSE4Good Bursa Malaysia Index (FTSE4Good).
Our sustainability initiatives reflect our vision of Building Alliances to
Improve Lives. Our efforts differentiate us in the marketplace, as we This Sustainability Statement has been prepared in accordance to
seek to create meaningful impacts in our stakeholders’ lives. the Second Edition of Bursa Malaysia’s Sustainability Reporting Guide
published in 2018.
28 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

OUR APPROACH TO SUSTAINABILITY Towards the end of FY2019, we appointed an external independent sustainability consultant
to advise us on enhancing our sustainability framework, governance and management. This
Given the role of the Bank as a financial exercise will enable us to identify an appropriate sustainability governance structure which
institution, we believe we are able to will be implemented in FY2020 and beyond. We will also assess gaps in compliance with
contribute to the empowerment and well- FTSE4Good requirements and identify areas for improvement, as well as develop a three-year
being of our various stakeholder groups sustainability roadmap. All these improvements will be rolled out in the years ahead.
through our EES initiatives.

Our EES initiatives have been created and MATERIALITY MATRIX

implemented to address issues that are
important to our stakeholder groups. Our In FY2019, we identified the following sustainability matters as being the most relevant to us
materiality assessment and stakeholder and our stakeholders:
engagements conducted in FY2019 form
the basis of our report. 1. Economic Performance
2. Digitisation
The outcomes of our materiality assessment 3. Customer Data Privacy
and stakeholder engagements were also 4. Corporate Responsibility
used to refine our existing EES initiatives. In 5. Talent Attraction and Retention
FY2019, we rolled out new programmes in 6. Employee Engagement and Wellness
response to issues identified. 7. Customer Experience

MATERIALITY MATRIX
HOW WE GOVERN SUSTAINABILITY
Most Influential

Our Corporate Responsibility (CR) initiatives Economic

Performance
are planned, implemented and managed 3
2 Customer
by the Bank’s Corporate Responsibility and Digitisation Data Privacy
Event Management (CREM) unit, which
Influence of Sustainability Matters on

6 7
Employee Customer
reports to the Group Chief Marketing and
Alliance Bank’s Stakeholders

Engagement & Experience

Customer Experience Officer. Wellness 5
4
Talent Attraction
Very Influential

Corporate & Retention

Our sustainability agenda is incorporated Responsibility

into the Bank’s Transformation initiatives.

This is evident from the various enhanced
product and service propositions we
have introduced since embarking on our
Transformation journey in FY2016. These
products and services have been referred to
in the Management Discussion and Analysis
on page 14 of this Annual Report. We have
Influential

provided further elaborations within the

relevant sections in this Sustainability
Significant Very Significant Most Significant
Statement.
Significance of Sustainability Matters
to Alliance Bank
Economic Social
 2019 Annual Report 29

STAKEHOLDER ENGAGEMENT

We conduct our stakeholder engagement activities through inclusive interactions. In all our communications with our stakeholders, we aim to
further our strategy to be the most important relationship for the financial success of business owners. This also encompasses our customers’
stakeholders comprising their families, employees and retail clients.

In FY2019, we held the following stakeholder engagement activities:

Stakeholder Key Areas of Focus Platforms and Tools Utilised

Shareholders/ Business direction • Regular shareholder communications and announcements to Bursa Malaysia and on the Bank’s corporate
Bankers and of the Bank and website
Investors key corporate • Annual General Meeting
developments and • Quarterly and annual financial statements
relationship building • Periodic engagements with equity analysts and fund managers
Government/ Regulation, • Frequent dialogues between BNM and Compliance Officers Networking Group to discuss issues related
Regulators and compliance and to regulations and new requirements
Policy Makers relationship building • Participation in BNM’s Compliance Conference by Board of Directors, Senior Management and Group
Chief Compliance Officer to keep abreast of latest development, or emerging threats in the industry
• Frequent dialogues with BNM, Bursa Malaysia, Securities Commission, Personal Data Protection
Commissioner, and Inland Revenue Board Malaysia by Senior Management and Compliance Officers
via forums organised by The Association of Banks in Malaysia (ABM), Association of Islamic Banking
Institutions Malaysia (AIBIM), Malaysian Investment Banking Association (MIBA), and Association of
Stockbroking Companies Malaysia (ASCM)
• Alliance Investment Bank Berhad (AIBB) participated in the Annual Securities Commission Dialogue with
Members of MIBA to discuss issues affecting the Capital Markets and Stockbroking industry
Customers, Innovative products • Innovative customer-oriented solutions that are fast, simple and responsive; product or service-specific
Suppliers and and services, communications on the Bank and its subsidiaries’ websites
Partners business direction, • Customer or industry meetings, talks, exhibitions, tradeshows, roadshows, networking events and
knowledge sharing, appreciation events
business guidelines • Regulatory reminders highlighting anti-money laundering, personal data protection and procurement
and relationship guidelines
building
Employees Human capital • Regular communications via email
development, • Training and development initiatives such as Alliance Bank Leadership Excellence (ABLE) Academy,
safety, governance, Alliance Leaders’ Programme, Alliance Impactful Managers programme, Management Trainee
corporate Programme, Accelerated Strengths Coaches initiative, Train the Trainer programmes, G.R.E.A.T @
developments and Alliance, Working with Strengths programme, Alliance Islamic Banking Fundamentals (ALIF), Wealth
relationship building Academy, Alliance SME Way, and Global Leaders Talkshop
• e-learning modules covering Anti-Money Laundering (AML), Code of Conduct, Information Risk
Management and Cyber Security, and Personal Data Protection Act (PDPA) 2010
• Social activities and work-life balance initiatives via the AFG Recreational and Sports Club and Fit@
Alliance
• Rewards and recognition programmes
• Voluntary participation in corporate responsibility programmes for the community
• Weekly and quarterly employee engagement activities, e.g. Huddles and department meetings
• Allies of Alliance microsite as a platform for employees to contribute and discuss new ideas to improve
products and processes, as well as the work environment at the Bank
• Innovation Marvels, the employee innovation platform that empowers staff to conceptualise and
implement innovative ideas
• inAlliance portal, an internal channel that allows for sharing of information and knowledge between
departments, and repository of manuals and procedures
Local Education, and • Financial literacy outreach programmes, e.g. AEIOU Challenge, Buku Wang Saku, and Program Bimbingan
Communities community-building Kewangan
initiatives • Digital financial inclusion and empowerment such as the Cash2Home app
• Supporting the SME community through platforms such as Alliance BizSmart Challenge, One-Stop Halal
Business Solutions, and Credit Guarantee Corporate (CGC) scheme
• Advocating social enterprise initiatives that have a positive impact on communities via the Eco-Biz
Dream Project and social crowdfunding platform, SocioBiz
30 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

THE THREE PILLARS OF SUSTAINABILITY

We believe we play an important role in contributing to the EES sustainability of our communities, as we help people sustain their lives and
livelihoods.

ECONOMIC

Our economic sustainability initiatives are centred on contributing towards more equitable wealth distribution in society. It comprises programmes
that support the growth of SMEs, providing impact investment funds which are aligned with Environmental, Social and Governance (ESG)
objectives, and helping to reduce Malaysian household debt.

Our digitisation efforts provide our customers with accessible and speedier platforms to manage their financial needs. The Bank’s commitment
to customer data privacy ensures that we maintain our customers’ trust in protecting their personal and financial information.

Stable Financial Operations

The Bank’s product and service portfolio provides both businesses and individuals with the financial tools to grow their business and personal
wealth. The Bank’s economic contributions are conducted through the taxes we pay to the government, dividends to our shareholders for their
investment, community investments, and salaries paid to our employees.

Our lending and investment activities cover our business and personal loans portfolio, as well as the CGC scheme which was launched in
FY2019. To ensure that we are able to deliver on our financial duties to our customers, we maintain adequate capital and liquidity to support
these activities.

Our capital and liquidity management is guided by BNM’s Capital Adequacy Framework (Capital Components) and the Capital Adequacy Framework
(Basel II – Risk Weighted Assets). The Group maintains a strong capital base to support current activities and future growth, to meet regulatory
capital requirements at all times, and to buffer against potential losses. The capital management process involves monitoring of capital levels,
estimation of capital requirements based on annual budgeting process, and regular reporting of the capital position to senior management and
the Board.

We implement stress testing to estimate the potential impact of extreme but plausible events on our earnings, balance sheet, and capital. The
results of these stress tests help us formulate the necessary contingency plans.

We maintain our liquidity coverage ratio in compliance with BNM’s Basel III requirements. The Group continues to maintain sufficient liquidity to
fund daily operations and mitigate contingencies.

To ensure a strong balance sheet which optimises value for our shareholders, we have in place ongoing management reviews as follows:
• Weekly and monthly production management with all our business segments, with action plans to address identified gaps
• Updating the Board of Directors on a monthly basis on business performance.

FY2019
RM Million

Direct economic value generated: Revenue 1,662.1

Economic value distributed:
i. Operating costs (excluding personnel expenses and community investments) 285.3
ii. Employee wages and benefits 489.6
iii. Payments to providers of capital – cash dividends paid to shareholders 236.9
iv. Payments to Government – taxation and zakat 170.4
v. Community investments (administration expenses – donation) 0.4
vi. Net bad debts 139.2
Sub-total 1,321.8
Economic value retained 300.3
 2019 Annual Report 31

Supporting the Growth of SMEs

ALLIANCE BANK BIZSMART CHALLENGE
Our purpose as a responsible financial organisation is to contribute to the
renewal and growth of enterprises, as well as the greater Malaysian economy.
This is achieved through our efforts to support SMEs through our various
financial products and services.
Total Ranked as
SMEs provide jobs for an estimated 66%1 of the population, and contribute
TV viewership of one of the
more than 37%1 to the national Gross Domestic Product (GDP). Considering
that SMEs comprise our main customer segment, the Bank is committed to
offer SME businesses the financial advice and support they require to grow
their business.
1.5 million
across Astro Awani and AXN
Top 10
shows on AXN

Alliance Bank BizSmart Challenge

Our flagship programme, the Alliance Bank BizSmart Challenge, was

launched in 2013 as a programme to champion the cause of Malaysian SMEs
with high development potential. SMEs participating in the Challenge are Total press Strong social media
given business training, coaching and mentoring to help them achieve their public relations value of buzz, with total reach of

RM2.5 3.9
growth ambitions. Participants also have access to industry icons, as well
as networking opportunities. The programme involves giving SME owners million
business challenges to tackle, with winners receiving attractive prizes. million

Since its inception, we have received more than 1,300 submissions from
SMEs nationwide, signifying its popularity and relevance to the SME business
community. More than 110 young SMEs have been discovered and groomed
to achieve greater heights in their businesses, both in Malaysia as well as
abroad.
7.7 million social media impressions

In FY2019, the Alliance Bank BizSmart Challenge became the first reality TV business programme in Malaysia by a financial institution. Over 400 SMEs
from a cross-section of industries applied for the programme. Winners received a total of RM1 million in cash and media coverage prizes. To help these
SMEs grow their business, the Bank extended up to RM5 million in unsecured loans to the Top 20 finalists of the BizSmart Challenge.

The Bank leveraged on social media channels to engage viewers, and encourage a loyal following for the programme.

Our efforts have resulted in participating SMEs receiving the exposure they need to drive their business growth. Through the structured business
coaching programme, we have been able to nurture and grow the Malaysian SME sector. The programme has also inspired other young SME owners to
stay on course to achieve their business ambitions.

Nurturing Young SMEs

The aim of the Alliance Bank BizSmart Challenge is to create a sustainable platform for young businesses to advance within their sectors, and thus
contribute to the Malaysian economy.

We put in place new partnerships for the Challenge in FY2019, which has strengthened its proposition for young SMEs. The Bank co-partnered with
Eco World Development Group Berhad. Other programme partners included Manulife Insurance Berhad, Visa Malaysia, BFM89.9 – The Business
Station, and Astro Malaysia Holdings Berhad.

The Challenge is open to Malaysian SMEs which have been in operations between 18 months and 5 years. Of the 400 applications received, 20
were shortlisted to undergo structured business coaching. We also provided them mentoring sessions and networking opportunities. Of these 20,
a final 12 were selected to be featured in the seven-episode series which began airing in early October 2018.

In the FY2019 Challenge, a number of alumni from past Challenges returned as advisors to the Top 12 finalists. Our alumni provided positive
feedback on how participating in the Challenge gave them greater business knowledge and insight, as well as brand exposure. It also enabled
access to networking opportunities to further their business ambitions.

Source: Department of Statistics Malaysia, August 2018.

1
32 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

WINNERS OF THE ALLIANCE BANK BIZSMART CHALLENGE 2018

Brand Type of Business Awards

Chriszen Malaysia Sdn Bhd Local beauty and skincare brand • Grand Prize – RM250,000 cash
• Astro Media Award – RM200,000 in media coverage

Klezcar Car rental service company • First runner-up – RM200,000 cash

OhMostWanted Cosmeceutical brand (products that combine cosmetics • Second runner-up – RM150,000 cash
with pharmaceutical properties)

Homegrown Farms Semenyih Sustainable farming service provider • Manulife Sustainability Award – RM100,000 cash

IGL Coatings Eco-friendly cleaning and protection products for cars, • Visa Retail Award – RM100,000 cash
household and industrial use

Winners, Judges, and sponsors of BizSmart Challenge 2018

Bridging Businesses into the Halal Space

In FY2019, our Islamic Banking business, Alliance Islamic Bank Berhad (AIS), introduced the concept of One-Stop Halal Business Solutions. The objective
is to help SMEs grow their business in the Halal segment.

The Halal economy in Malaysia is currently ranked number one in the world, with a comprehensive ecosystem in place. Malaysia’s Halal business sector
has huge growth potential. The Government has announced its intention to position the country as the Halal hub in the Asian region. Support is available
in the form of Halal certifications by Jabatan Kemajuan Islam Malaysia (JAKIM), and the Malaysia External Trade Development Corporation (Matrade)
marketing the industry globally.

Prior to setting up our One-Stop Halal Business Solutions, we had conducted a Halal market insight research. Our research revealed that many SMEs
needed help obtaining Halal certification as they are unfamiliar with the application process and certification requirements.

To help address this, we piloted Halal Talks in partnership with JAKIM, Halal trading Business-to-Business portal DagangHalal, and the International
Institute for Halal Research and Training (INHART) during the year. The talks provided SMEs with the right knowledge, and helped them to establish
relationships with key Halal agencies and partners. We plan to continue with the Halal Talks in FY2020, and will be putting in place a support platform
for SMEs seeking to obtain Halal certification.

Assisting SMEs through the Credit Guarantee Corporate Scheme

In November 2018, we collaborated with CGC to launch a Portfolio Guarantee scheme offering unsecured loans to SMEs with promising growth prospects.

The scheme reaches out to the underserved SME segment which lacks the necessary collateral to secure credit facilities. The initial portfolio size of RM50
million was quickly fully utilised. In February 2019, we extended the scheme with an additional portfolio limit of RM100 million.
 2019 Annual Report 33

SUPPORTING SOCIAL ENTREPRENEURS Students and their professors attended a one-day Design Thinking
Workshop where they learnt ideation and creative thinking. The workshop
Social entrepreneurs use private sector business models to bring about was conducted by the Asia School of Business (ASB), in collaboration with
positive social, cultural and environmental change. It is a relatively new MIT Sloan Management. The teams also met the Kerayong River community
sector in Malaysia, with tremendous potential for growth. to gain a better understanding of issues faced.

Eco-Biz Dream Project After the workshop, the teams used their knowledge to fine tune their ideas
and present their proposals to the Eco-Biz Dream Project panel of judges.
Eco-Biz Dream Project is Malaysia’s first environmental-themed business A total of 10 teams were then selected to advance to the final round. The
plan competition. It is designed to help nurture forward-looking social finalists selected were given business coaching and mentoring by experts
entrepreneurs who can create positive impact for the economy, environment from Malaysian Green Technology Corporation (GreenTech Malaysia)
and community. The challenge is open to public and private university and ASB. Winners were selected based on a number of different criteria.
students in Malaysia to propose sound and sustainable business solutions These included the creativity and purposefulness of the business solution,
to address socio-economic and environmental issues. social impact, strength of the business plan and execution strategy, and
entrepreneurial awareness and teamwork capabilities.
The contest in FY2019 was the third season. We have enhanced the
challenge by helping the winners create a live proof of concept of their In January 2019, the Green Team from Universiti Malaysia Sarawak
business plan. To facilitate viable ideas, we had a specific theme for Eco-Biz (UNIMAS) won the Eco-Biz Dream Project 3. Today, we are helping the
Dream Project 3, namely to help revitalise the Kerayong River corridor in Green Team, now known as GT Envirosentry Sdn Bhd, bring their idea to
the Klang Valley. life through a strategic alliance made up of civic and corporate enterprises.

Kerayong River is one of the eight rivers identified under the national River In addition to the winning prize of RM10,000 cash, we have set aside
of Life (ROL) initiative. The objective of the ROL programme is to improve the RM200,000 in seed funding to execute the winner’s business plan.
water quality of rivers, and ensure that it is safe for recreational purposes. Complementing this, the winning team will be provided business and
financial management training to help them actualise their plan effectively.
To turn the challenge from an academic exercise into a real-life application, We have established an Implementation Steering Committee which will
we introduced a new framework comprising a series of structured activities oversee the team’s performance. The RM200,000 funding will be disbursed
to help students progress with their ideas. In the initial Ideation Phase, in tranches based on performance-based milestones.
participating students from local universities came up with practical
business solutions to address environmental concerns associated with the Throughout the challenge, we maintained a high profile on social media
Kerayong River. channels and through public relations activities. These showcased the
students and their environmental business solutions.

The Green Team from Universiti Malaysia Sarawak

34 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

ECO-BIZ DREAM PROJECT 3 WINNERS

Team School Winning Prize

Green Team Universiti of Malaysia Sarawak (UNIMAS) Winner: RM10,000 cash + trophy + certificate

Monash Green Lab Monash University First runner-up: RM5,000 cash + trophy + certificate

Aqua Plethora Universiti Putra Malaysia (UPM) Second runner-up: RM3,000 cash + trophy + certificate

Sungai Savers Xiamen University Malaysia Consolation Prizes: RM1,000 cash + trophy + certificate

Adiawangsa Universiti Kebangsaan Malaysia Consolation Prizes: RM1,000 cash + trophy + certificate

Bringing Green Solutions to Life

Eco-Biz Dream Project 3 is a unique social entrepreneurship activation initiative conducted in collaboration with the Bank’s partners. The winning
project came from UNIMAS’ Green Team comprising team leader Norzafirah Azriah Mohd Fadzli (25), Mohd Fakharuddin Muhamad (25), Dayang
Siti Herdawati Abang Hardin (24), and Lennevey Kinidi (25).

The students worked on their idea with guidance from Professor Madya Dr Shanti Faridah Salleh, Director of Centre for Academic Assurance and
Academic Development at UNIMAS. They were inspired to develop a sustainable solution to tackle pollution. Their end goal is to inspire behavioural
change within the Kerayong River community.

The team proposed a simple yet innovative solution using BioChar, in a plug-and-clean filter that will be used at wet markets situated at the
Kerayong River. The aim is to reduce the amount of untreated effluents associated with high Chemical Oxygen Demand and nutrients going into
the river. The waste collected is then recycled as fertiliser, thus bringing value back to the environment.

Since they were awarded the prize, the team has been given training in business and financial management. These included providing them support
for Intellectual Patent filings. They also conducted a field investigation and lab analysis of samples collected. Upon completing the planning stage,
they then proceeded with business set up. Future plans in the pipeline involve constructing, installing and commissioning the plug-and-clean filter.

Throughout this process, the Bank’s alliance of partners are providing the team with the support they need to take their idea to the next level.
Should more funding be required which exceeds the RM200,000 set aside, the Bank will help them explore crowdfunding platforms alternatives as
a source of working capital funds. External parties have also expressed interest in the technology utilised for the project, which has the potential
to be used throughout the country should it be successful.

SocioBiz

In FY2019, Alliance Islamic Bank Berhad (AIS)

collaborated with FinTech company, Ethis
Ventures, to set up a social crowdfunding
platform named SocioBiz. This platform provides
the public with the means to donate funds to
individuals who want to start a new business,
expand an existing business, or learn a new life
skill so they can attain economic empowerment.

SocioBiz’s beneficiary partners are Yayasan

Kebajikan Negara (YKN), Yayasan Noor Al-Syakur
(YANAS), and Pertubuhan Kebajikan Islam
Malaysia (PERKIM).

For 2019, AIS has committed to bearing all

administrative costs, ensuring that 100% of the
funds collected are channelled to the recipients. At the launch of SocioBiz
 2019 Annual Report 35

PROVIDING CUSTOMERS WITH IMPACT INVESTMENT OPTIONS allianceonline Mobile

In line with its BNM validated status as an emergent Value-Based In the first quarter of FY2019, we strengthened our digital banking presence
Intermediation (VBI) practitioner, AIS launched two impact investment by launching our first mobile banking application, allianceonline Mobile. The
funds in FY2019. These comprised two BIMB-Arabesque Shariah ESG aim was to simplify and enhance our customers’ overall banking experience.
equity funds, namely the BIMB-Arabesque iGlobal Dividend Fund 1 and The app offers our customers convenient and easy access to online banking
the BIMB-Arabesque Malaysia Shariah ESG Equity Fund. These award- services including viewing account balances, transaction flows and e-deposit
winning funds integrate ESG elements with financial and momentum placements.
analysis.
The app features cutting edge technologies to enable a more user-friendly
Both these funds integrate the United Nations Global Compact (UNGC) banking experience. These include:
principles and values, and prioritise capital preservation as their main • Smart Reminder – the first-of-its-kind feature within a mobile banking
objective. app in Malaysia, which uses machine learning to identify users’
payment behaviours. Smart Reminder serves as a personalised
payment assistant that reminds customers of payments due. It allows
HELPING TO REDUCE MALAYSIAN HOUSEHOLD DEBT our customers to track their payments for bills, transfers, credit cards,
loans, and top-ups
As at December 2018, Malaysian household debt accounted for 83.0% • Easy Search – a search facility that helps customers with recurring
of the country’s nominal Gross Domestic Product2. Factors such as debt payments look up past transactions based on name, account number,
repayment capacity and financial resilience have a huge impact on the or purpose of payment. It eliminates the need to recall lengthy payment
well-being of the average family. In many cases, households have a details when conducting a transaction
variety of loans to service such as personal loans, hire purchases, credit • Mobile Secure Approval – strengthens the security of web and mobile-
card payments, and mortgages. This results in the average household based transactions by turning customers’ mobile phones into a
making multiple loan repayments to different banks, resulting in having security token unique to them via push notifications
less cash in hand for their daily needs.

Our Alliance ONE Account (AOA) and the Shariah-compliant Alliance

ONE Account-i were designed to help alleviate the financial burden of
households with multiple loan repayments. AOA consolidates all our
customer’s loans into a single mortgage loan. It is a more prudent way to
pay off high interest loans. Among other worry-free propositions they can
enjoy is the greater savings on interest or profit rate per annum, or having
cash in hand when faced with family emergencies.

DIGITISATION

The Bank’s digitisation initiatives are part of its Transformation strategy.

Through our various initiatives, we aim to provide our customers with digital
value propositions in line with the increasingly mobile lifestyle of tech-savvy
Malaysians.

Our digitisation efforts reflect our brand attributes of Innovative, Fast, Simple,
Responsive, and Aligned to Customers’ Needs. Aimed at moving the Bank
towards a paperless branch offering higher efficiencies, they comprise of two
primary thrusts:
• Customer-facing digitisation initiatives to migrate customers from
traditional over-the-counter transactions to digital channels
• Digitisation of back-end processes and systems to ensure simpler and
speedier processes

2
Source: CEIC Data
36 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Alliance BizSmart SME Solution • Individual Current Account/Savings Account (CASA) – utilising a
tablet, our staff can assist customers with the onboarding process
We launched the Alliance BizSmart SME solution to provide our business quickly. Digital Know-Your-Customer (e-KYC) process leverages
customers with an online banking portal which business owners can on facial recognition and optical character recognition (OCR)
adapt to suit their business needs. Business owners can access the range technologies to capture customer information. This has shortened
of secured banking services at their convenience anytime, anywhere. individual CASA openings to under 20 minutes, compared to 45
The solution addresses the challenges faced by businesses of all sizes in minutes previously
various sectors and industries. • Business CASA accounts – a pilot programme was launched in
April 2019 using a number of different digital technologies. The
Alliance BizSmart’s innovative features have won several regional awards system automatically identifies the company and populates the
including “Best Digital Sales Initiative, Application or Programme” at the data fields with verified data from third party databases. OCR
prestigious Asian Banker’s International Excellence in Retail Services technology captures customer information, while e-KYC utilises
Awards 2018. It also won the “Excellence in Service Innovation” and facial recognition technology for identity card information, selfie
“Excellence in Business Model Innovation” awards at the RBI Asia images, declarations and e-signatures. The process reduces the
Trailblazer Awards 2018. number of signatories required from seven to only one. Also, the
number of documents required has halved from six to three. The
digitised process will improve Business CASA activations to within
a day, from two weeks previously

Reaping the Benefits of Robotic Process Automation

Our purpose in digitising our processes is to provide our customers

with faster and more efficient turnaround time. We also provide
them more accurate reports and data. One of the initiatives we
successfully launched in August 2018 was Phase One of the Robotic
Process Automation (RPA).

RPA uses software robots that captures repetitive processes which it

then automates by repeating those tasks within existing interfaces,
software applications and structures. Among the processes
automated are updating real-time information, navigating multiple
systems to retrieve information, copying, and auto-printing reports
and files.

Using RPA has freed up a substantial portion of our staff’s time

which was previously spent doing these same processes manually.
With the extra time on their hands, our employees have been able
Alliance Origination System
to be more productive on their jobs, by focusing on more complex
matters. RPA also saves on costs, increases process efficiency and
In July 2018, the Bank launched the Alliance Origination System (AOS) to
optimises business processes. Additionally, it reduces turnaround
simplify its credit workflow process. AOS streamlines data input from third
time and human error, as well as improves accuracy and quality
party databases, allowing for most of its data fields to be automatically
of output.
populated.
Outcomes achieved in the Phase One launch include:
AOS significantly reduces paperwork, freeing up our relationship
• Improved processing time from two hours to five minutes
managers’ time to focus on serving our customers better. Its automated
• Reduced turnaround time from two days to same-day
processes also enable faster turnaround time on loan disbursements.
fulfilment
• Reduced human error, and repetitive work and actions
Digital Onboarding
In Phase Two, RPA will be expanded to units such as the Centralised
During the year, we launched digital onboarding for three of our key
Process Centre, e-banking, Remittance, and System Access Control.
product lines to speed up turnaround time:
By automating manual processes within these areas, the Bank will
be able to further improve its efficiencies.
• Alliance@Work’s Local Employee Onboarding (LEO) enables payroll
account opening at the workplace with immediate activation of
ATM/debit card and allianonceline Mobile account
 2019 Annual Report 37

CUSTOMER DATA PRIVACY ENERGY MANAGEMENT

We take our duty and responsibility to protect our customers’ financial We manage our energy consumption at our headquarters and branches to
information and personal data seriously. Towards ensuring that Customer ensure efficient energy use. A significant portion of electricity is consumed
Data Privacy is protected at all times, we have in place a Privacy Policy by air conditioning systems at all our premises. Our measures in reducing
in relation to the collection, use, and management of our customers’ energy consumption in air-conditioning comprise the following:
personal data. Our policy is in compliance with prevailing legislation,
namely the Personal Data Protection Act (PDPA) 2010, Financial Services • Temperature setting optimisation of Computer Room Air-
Act (FSA) 2013 and the Islamic Financial Services Act (IFSA) 2013. Conditioning (CRAC)
- Our target is to reduce energy consumption by 5% by setting
We have upgraded our cyber protection systems in line with our digitisation the temperature one degree Celsius higher on CRAC units
drive. Our enhanced systems reduce the risk of cyber-attacks in the form - Initiated in 2015, it covers all CRAC units located at
of unauthorised access, security breaches and information leaks. communications and server rooms located at the Bank’s
headquarters in Capital Square, Cyberjaya, and Strateq
Customer data is available in printed form, or as digital information within • Not increasing the number of split air-conditioning units at offices
our system. We restrict access to printed data to authorised personnel with centralised air-conditioning
only. These are kept in locked cabinets in a secured storage area. Printed - Since 2014, we have maintained strict control on new air-
data which is not used is destroyed in a paper shredder. conditioning split units installed by getting Group Heads to
approve all requests
We strictly control data available in digital form. System access is only - Exceptions are only made if non-installations will significantly
granted according to job function, with requests requiring approval from impair operations
the relevant authority. We inculcate a culture which prioritises customer
data. This includes advising employees to lock their personal computers Lighting at all our premises is another large source of electricity
when they are not at their desk, and to treat customers’ personal data consumption. We have set a target to reduce lighting energy consumption
with integrity and as their own. by 10%. Since 2016, we have been working towards this by fitting LED
lights at all our new offices and branches. We have also expanded this
effort to renovations we conduct.
ENVIRONMENTAL

The Bank’s environmental initiatives reflect our commitment to uphold

our environmental stewardship obligations as a responsible corporate
10%
reduction in electricity consumption for light fittings
citizen. We have in place a range of internal workplace initiatives at the
Bank’s offices which help reduce our carbon footprint.
Using Environmentally-Friendly Materials
Prohibitive Lending Policies
Since 2016, we have been using eco-friendly materials as much as
The Bank’s policy prohibits lending to illegal business activities that will possible within our organisation as follows:
cause environmental harm.
• Replacing R20 refrigerant equipment for air-conditioning units with
Internal Workplace Initiatives to Reduce Carbon Footprint more environmentally friendly substitutes, such as R22, R410, or
R32
We have in place internal programmes which we monitor on an ongoing • Within all our office renovation projects, using eco-friendly
basis to ensure that we minimise our environmental impact. materials for renovation, in compliance with US-based Leadership
in Energy and Environmental Design (LEED), UL Environment’s
GREENGUARD Green Certified products, Australian-based GECA
standards or equivalent certifications. This extends to using
environmentally-friendly furnishing such as workstations, chairs
and carpets.
38 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Reducing Paper Use Our Human Capital Base

We believe in doing our part to aid in conserving our planet’s trees by The Bank has in place a range of policies to ensure a conducive work
carrying out paper recycling programmes and reducing paper use. Since environment, which respects its employees’ rights.
2016, we have been recycling used paper at our offices. To responsibly
manage our paper use, we encourage our employees to reduce printing. Workforce Diversity, Equal Opportunities and the Bar on Discrimination
Measures we have in place include password controls on our paper copier at the Workplace
machines, and generating a monthly report on printing volume sent to the
respective businesses. We believe in a diversified and inclusive workforce and practise equal
employment opportunity. We support the TalentCorp Career Comeback
programme, as our commitment to aid in national economic transformation.
Annual printing reduced to
The programme encourages women to return to the workforce after career

2.8 million
copies in FY2019, from 3.3 million copies in FY2018
breaks, and assists in the transition process. Under this programme, we
have successfully recruited several female employees.

In pursuit of diversity and equal gender participation in our workforce,

61% of our employees are women. Of the total female workforce, 79%
SOCIAL hold management positions (Senior Executives and above) and 16% of
that hold Senior Management positions (Senior Vice President and above).
The Bank’s social initiatives and programmes are centred on our
workforce, customers and communities. The Bank promotes a culture of tolerance and mutual respect, beginning
with the recruitment process. Each candidate is assessed and evaluated
We provide our employees a supportive and conducive work environment in a fair manner. We reject all forms of discrimination based on gender,
through a range of policies, workplace initiatives, and talent development race, religion, age, or sexual orientation.
platforms. Our customer engagement programmes are designed to offer
excellent service, as well as provide customers with the information they We practise this same culture in staff career advancement. We assess
require to grow their financial wealth. In our engagements with society our staff on behavioural and professional criteria for career progression.
at large, our aim is to empower communities through financial literacy Decisions on promotions and financial compensation are made by a varied
programmes, as well as digital financial inclusion and empowerment and diverse senior management committee. Complaints of discrimination
initiatives. of any kind are investigated thoroughly via the Bank’s disciplinary
processes and consequence management is applied accordingly.

EMPLOYEES
WOMEN IN THE WORKFORCE
The labour market is defined by a continuously evolving workforce, with
dynamic employment sentiment. Employees, especially the Millennial
generation, are looking for employers who offer them a supportive and
79%
of our female employees
conducive workplace environment.
hold management positions;

The Bank has streamlined its efforts and initiatives to ensure that the
workforce, being the most important intangible asset, remains dynamic 16%
hold Senior Management positions
and relevant. We place great importance on employee engagement, and
support our people’s professional and personal growth. Underscoring this
is our aim to cultivate a highly ethical workforce and sustainable business
practices.
 2019 Annual Report 39

Addressing Bullying and Harassment at the Workplace on our corporate website. Managers and employees alike are educated
on the importance and utilisation of the Whistle Blower platform via
We continuously enhance and revise our Whistle Blower Policy in staff induction programmes, staff communications, and Huddle letters.
response to industry and situational changes. Our most recent revision The Bank’s strong stand on this extends to the inclusion of a whistle
was conducted in March 2018. The Bank’s Whistle Blower Policy and blowing and complaints reporting clause in all third-party contracts and
the Speak Up Statement is positioned to highlight instances of unethical agreements which the Bank is party to.
conduct, harassment, and unreasonable behaviour by all parties.
Aggrieved individuals have recourse to internal and external reporting Employee Composition & Workforce Strength
channels. Our Whistle Blower Policy has an in-built mechanism which
maintains the strictest of confidence with regards to all complaints made The Bank believes in the importance of a diverse workforce which offers
in good faith. us the benefits of a spectrum of different perspectives and insights. As at
30 April 2019, we have a total of 3,590 employees of differing age groups
The Whistle Blower Policy can be accessed by staff on the Bank’s and varying backgrounds.
inAlliance intranet portal, while the Speak Up Statement can be found

WORKFORCE STATISTICS AT A GLANCE

EMPLOYEE AGE PROFILE GENDER COMPOSITION EMPLOYMENT STATUS

43% 98%
38%

Male Female
61% 39%

11%
8%
Permanent staff
2%
20-25 Yrs 26-35 Yrs 36-50 Yrs >50 Yrs Contract staff

DIVERSITY IN TENURE RECRUITMENT BY AGE AND GENDER TURNOVER BY AGE AND GENDER
FY2019
54%

162
179

27%
76 71
11%
201 88 183
7% 30
103 6 85 18
55 43
7 20
≥25 yrs 26-35 yrs 36-50 yrs >50 yrs 20-25 yrs 26-35 yrs 36-50 yrs >50 yrs
<5 yrs 6-10 yrs 11-15 yrs >16 yrs
Male Female Male Female

RECRUITMENT BY STATE FY2019

412

187

37 26 23 15 7 4 2 1 1

Wilayah Selangor Pulau Johor Sabah Sarawak Kedah Melaka Perlis Negeri Pahang
Persekutuan Pinang Sembilan
40 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Employee Engagement and Wellness

We proactively engage with our employees on a variety of platforms to ensure a sustainable and engaging experience at the workplace.

Voice of Employee

The Bank’s annual employee engagement survey, “Voice of Employee” (VOE), has been instrumental in providing honest feedback from employees at
all levels within the organisation. We have used employee feedback to guide our initiatives and management decisions. Our approach has resulted in
significant improvement in employee engagement and sentiment as follows:
• Sustainable Engagement Index improved by 1 point to 88% in FY2019 from 87% in FY2018
• Performance Management improved significantly to 79% in FY2019 from 74% in FY2018
• The Bank’s Image and Competitive Position rose to 54% in FY2019 from 50% in FY2018
• Net Promoter Score (NPS) in terms of recommending others to be customers of the Bank improved from -6 to 0
• The Bank’s internal NPS improved from -13 to -7 in terms of recommending others to be employees of the Bank

In addition to the annual VOE, the Bank carries out quarterly VOE Surveys to gauge employee engagement regularly.

FY2019 COMMUNICATION AND ENGAGEMENT INDEX – ABOVE INDUSTRY BENCHMARKS

COMMUNICATION INDEX @ BANK LEVEL SUSTAINABILITY ENGAGEMENT @ BANK LEVEL

85% 84% 80% 78% 88% 87% 86% 86%

2019 2018 2017 Malaysia Bank 2019 2018 2017 Malaysia Bank
Average Average

Both Indexes above all Benchmarks

Malaysia
Total Global Financial Global High Malaysia Financial Malaysia
Favourable Services Performance National Services Banking
Score (%) Norm 2019 Norm 2019 Norm 2019 Norm 2019 Norm 2019

Communication Index 85 +19* +9* +7* +8* +6*

Sustainable Engagement Index 88 +5* +0* +2* +3* +3*

Note:
* +/- represents the improvement or decline of Bank’s Scores against benchmark.
 2019 Annual Report 41

Employee Engagement Initiatives We received an enviable final placement of their colleagues throughout the Bank.
Second Most Active Employer in the large Additionally, the Recreational and Sports Club
Upon completion of the annual VOE survey, corporate category. Six of our employees were also presented talks on Health and Sports
the Bank conducts “Skip” sessions between placed among the Top 10 Most Active Employee Safety.
management levels to obtain clarity and nationwide out of 100,000 participants.
feedback on gaps, identify opportunities for Rewards and Recognition Programmes
improvements, and positive initiatives to Throughout the year, employees can join in
repeat. At divisional level, we have allocated the various physical activities organised by We believe in recognising and appreciating the
funds for engagement activities designed to the Bank. These include vertical challenges, hard work and efforts of our employees to keep
strengthen bonds within the team. walk hunts, hikes, and Zumba sessions. them motivated.
It also extends to talks and programmes on
Our annual townhall and Leaders Conference healthy lifestyle topics such as good diet, During the year, we launched the “ManCo
are held to align the whole organisation with the “Getting Fit in the Office”, “Happiness at Work”, Appreciates You” page on the inAlliance Portal.
Bank’s strategic direction and key initiatives. and “Understanding and Living with Diabetes”, The portal is a conduit for Management to
These conferences also serve as platforms for all organised under the Fit@Alliance banner. showcase their appreciation for employees
employees to clarify the ambitions of the Bank who portray positive attitudes and exemplary
for the coming financial year. Recognising that wellness is not just limited to work ethics.
physical aspects, the Fit@Alliance committee
During the year, we held a competition for actively pursues mental and financial wellness Our Monthly Celebrations showcase businesses
our employees to refresh the staff ID card initiatives. Talks on Stress Management and the that achieved or exceeded their business goals
and lanyard with a new design. The final Financial Wellness series featured seminars on to maintain employee enthusiasm. Branches
design selection was made by the employees “Personal Budget“, “Cash Flow Management“, are not left behind in these endeavours.
themselves through an online voting system. “Managing Credit“, “Investing Done Right“, We present the Monthly Service Awards to
“Early Retirement Planning“, bank-wide branches that meet service standards.
The “Alliance at Heart” initiative, collaboratively quizzes, contests, and complimentary Financial
driven by the Group Marketing and Customer Planning sessions for employees have been During the year, we introduced the Branch
Experience Office and Group Human Resource well received for their creative take on Recognition Programme to motivate the Bank’s
(GHR), was introduced to create awareness and wellness. The use of infographics and quizzes branches by recognising and rewarding top
reinforce the Bank’s vision, strategies, brand allowed all staff to reap the benefits of the performing branches that delivered excellent
attributes, key behaviours, and financial goals. financial literacy programme, which recorded a customer experiences. Launched in August
These are interactively communicated through 40% participation rate. 2018, the programme is aligned with our
a series of educational cards, online quizzes, Transformation priority of ensuring excellent
and challenges. Recreational and Sports Club customer service, and provides an avenue
to learn from each other by sharing success
Allies of Alliance Portal The Bank’s Recreational and Sports Club stories.
continued to engage employees with activities
Introduced in FY2017, the “Allies of Alliance” such as the Treasure Hunt, Family Day and Fun Monthly awards are given to the top 10
portal and its Ideas Bank have resulted in the Run, the Inter-Bank Badminton Competition, performing branches that meet the minimum
activation of ideas originating from all levels Durian Fiesta, Movie Nights, and Futsal set service standards, quarterly awards to the
of employees. A total of 37 business-related matches. These activities provide a platform top performing branch, and a special award to
initiatives and 16 employee engagement for employees to engage and collaborate with the most improved branch.
related-initiatives were activated based on
ideas collated from the Ideas Bank and weekly
Huddle sessions. These include proposals on
simplification of processes.

Fit@Alliance

Since its inception in 2017, Fit@Alliance has

been promoting physical, mental and financial
wellness among employees. In FY2019, Fit@
Alliance organised a series of physical activities
targeted at enhancing and promoting active
lifestyles and camaraderie among employees.

During the year, the Bank also participated in the

Perkeso’s nationwide Activ@Work challenge, AFG Recreational and Sports Club Family Day
with more than 600 of our staff participating.
42 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Work Life Balance Initiatives

TRAINING AND
With evolving employee sentiments, the Bank understands the importance of work life balance in DEVELOPMENT
promoting our people’s personal growth and health.

Career Break Option

One of our sustainable long-term initiatives is the Career Break option. This option is offered to Contributed

RM4.2
exemplary performers occupying critical positions, who wish or need to take an extended break
from work for personal reasons and is exercised at the Bank’s discretion. Through this option, we
hope to retain talent in the long run. Employees on a career break have the assurance of job security
upon their return to the workforce.

Parental Leave
million
to Staff Training Fund to
upskill employees
The Bank provides both maternity and paternity leave to our staff to allow them to fulfill their family
responsibilities.

Paternal Leave Male Female

Entitled 39% 61% Invested

RM10
Utilisation Rate 3% 3%
Staff that return to work after parental leave 100% 98%

Promoting a Culture of Innovation

million
on employee training and
Employee-driven innovation is a critical enabler in driving through our brand attributes of Innovative,
development in FY2019
Fast, Simple, Responsive, and Aligned to Customers’ Needs.

In FY2019, we introduced Innovation Marvels (IM), a programme that champions the ideas
contributed by the various Huddle groups within the Bank. The IM team, comprising Management
Trainee graduates, identifies the ideas to be worked on and recommends strategic actions to

34 hours
improve processes.

Among the initiatives that were successfully implemented are the Alliance Remedial Collection or 4.25 days per employee
Sharing portal, an online resource centre to help our employees prepare for the Asian Institute spent on employee
of Chartered Bankers certification, and the Alliance ONE Account (AOA) referral campaign. Ideas development training
being explored for implementation in FY2020 include digitising approval processes to increase
efficiencies, and providing customers with faster and more responsive service.

Training and Development

We believe that talent development is a crucial component of the Bank’s success. It ensures we
have a sustainable pipeline of ready and industry-relevant talents at the Bank. We have introduced
414
face-to-face development
new initiatives in FY2019 with a wide range of talent development programmes. All our talent programmes
development initiatives are aligned with our strategic vision and Transformation initiatives.

19
e-learning programmes
 2019 Annual Report 43

Internship and Management Trainee Alliance Impactful Managers Programme Working with Strengths Programme
Programmes
This programme aims to inculcate positive The programme benefits from the innovative
The Bank strongly advocates early work workplace environment and build high concept of strengths-based approach.
exposure to students from a diverse range of performing teams. To date, more than 500 Workshops conducted provide participants with
fields. We launched our inaugural Decision employees have benefited from this programme fundamental concepts and tools to champion
Management Structured Internship Programme with 82 managers trained by our own internal a culture of change and drive performance at
(DMSIP) to provide students with insights Accelerated Strengths Coaches in FY2019. work. In FY2019, 292 employees participated
into data management and analytics in a in the workshops.
banking environment. Additionally, we support
OUR LEADERSHIP
and facilitate direct internships into various G.R.E.A.T. @ Alliance
DEVELOPMENT
departments, with a total of 24 intern students PROGRAMMES
benefiting from early work exposure in FY2019. As one of the Bank’s customer-based
programmes, G.R.E.A.T. @ Alliance is designed
Alliance Bank Leadership Excellence
(ABLE) Academy 77
leaders have been identified as
to support our strategy “To Be the Most
Important Relationship for the Financial Success
of Business Owners”. In FY2019, we organised
Mentors
The award-winning Alliance Bank Management 22 classes for 880 participants under the
Trainee Programme (MTP), now in its seventh programme.
year, has been successfully developing and
nurturing young graduates into holistic young Global Leaders Talkshop
leaders. We continuously improve our strategies
to develop and manage young talents to be 24
leaders have been certified as
To accelerate our employees’ leadership
well-rounded future leaders at the Bank. insights and learning, we invite global leaders
Strengths Coaches
to speak to our own homegrown talents. In
The MTP is the first step in the Alliance Bank FY2019, our employees accessed talks by
Leadership Excellence (ABLE) Academy. The leaders sharing their experiences on the
purpose of the ABLE Academy is to develop a following themes:
channel of potential leaders with breadth and
depth of knowledge. It is also a platform for 37
bank-wide leaders are part of our
•
•
•
“Leading in the Age of Disruption”
“Leading from the Edge”
“Resilient Leadership”
young aspirants to gain relevant knowledge,
training team • “Sustaining the Passion Within”
skills, and experience in the financial industry
• “The Pillars of Innovation”
so they can assume future leadership roles.

Accelerated Strengths Coaching Career Development Paths

We continue to innovate the MTP based on the
needs of young graduates and organic changes
We are continuously creating a base of Our Internal Job Opportunities platform
in the industry. Since its inception in 2012,
certified Accelerated Strengths Coaches who encourages employees to take a proactive
181 management trainees have benefited from
in turn are coaching other employees, thus role in their career development. This helps to
the programme. In FY2019, 25 management
creating a multiplier effect. They focus on mitigate workforce stagnation by empowering
trainees joined the ranks at ABLE Academy.
new and innovative approaches to enhance our employees to participate in their own career
team effectiveness and maximise employee development path. Individual Development
Alliance Leaders Programme
potential. In FY2019, more than 300 employees Plans are formulated and utilised as key
were coached by our pool of 24 certified components of our workforce performance
Alliance Leaders Programme is a flagship
coaches. management. This is complemented by
initiative aimed at building a strong foundation
experiential learning through internal and
of leadership knowledge, skills and experience
external learning programmes, coaching,
to cultivate successful leaders in the Bank.
mentoring, and networking.
During the year, our pioneering batch of 15
graduates completed their 10-month long
journey of self-development.
44 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Enhancing Staff Awareness on Banking Future Proofing Our Workforce Staff Education Events
Regulations
To ensure that our employees are kept updated The Bank regularly holds staff education events
We hold regular in-house training to ensure on the latest regulations governing the financial to provide additional exposure to our employees
our staff are up-to-date with current regulatory services industry, we provide them e-learning on areas relevant to their jobs. An example
guidelines and requirements. This comprises modules such as Anti-Money Laundering is the quarterly staff investment talk, where
in-house training on Law, Banking, Anti- (AML), Code of Conduct, Information Risk employees are informed of the advantages
Money Laundering (AML), and Combating the Management and Cyber Security, and Personal of share trading, and our online share trading
Financing of Terrorism (CFT). During the year, Data Protection Act (PDPA) 2010. platform, Alliance ONE Invest (AOI).
784 employees participated in these trainings.
To gauge awareness levels and effectiveness of To keep up with digital trends, we are
training, we conducted pre- and post-training developing programmes relating to Big Data
tests. Analytics, Data Science, Artificial Intelligence,
Cyber Security, Robotic Process Automation,
Alliance Islamic Banking Fundamentals Chatbot, the Digital Economy, and Digital
Training Marketing.

From August 2018 till March 2019, Alliance

Islamic Bank Berhad (AIS) held monthly
Alliance Islamic Banking Fundamentals (ALIF)
training for front line staff who are the first
point of contact for customers. The training
focused on the different types and nature of
Islamic contracts, financial system, transparent
disclosure of wealth products, and coverage of
Shariah Non-Compliant Event and risk areas.
In FY2019, 154 employees attended the ALIF
training.

Wealth Academy

In FY2019, we took steps to strengthen

our wealth management advisory team by CUSTOMERS
collaborating with business management
institutions to offer Wealth Management In FY2018, we set up a comprehensive internal communication system with a defined set of service
certification to our employees. rituals that would help us deliver excellent customer service.

Alliance SME Way Several of our training and development programmes focus on enhancing our relationship managers’
capabilities in delivering our brand promise such as the Wealth Academy, Alliance SME Way, and
Another new initiative introduced in FY2019 ALIF training. Our rewards and recognition programmes are meant to motivate our employees to
was Alliance SME Way, a structured sales continue to create great customer experience.
and advisory approach in delivering excellent
customer experience for our SME clients. In FY2018, we began tracking our Net Promoter Score (NPS) across nine touch points on a monthly
Launched in March 2019, the Alliance SME basis. We also initiated a Service Council where key stakeholders Bank-wide meet to share our NPS
Way covers customer contact strategy, sales results for the month. Collaboratively, we performed a deep dive into the results, identified areas
interaction model, and tools our relationship for improvement, and implemented the action items. We closely track and monitor these projects to
managers can use to advise SME clients on ensure that we remain on track.
business and finance matters.
 2019 Annual Report 45

One of the areas we have been improving on is responding to customer enquiries and complaints in a timely manner through our Voice of Customers
(VOC) initiatives. This focuses on improving the speed of resolution of enquiries and complaints at first contact point.

We enhanced service levels at branches by setting up the Branch Service Council to review and identify action plans on branch issues to close the service
gap. Digitisation initiatives such as automation are executed to improve customer experience by offering quicker service with a shorter turnaround time.

As a result of our focused approach, we recorded significant improvement in our NPS scores from FY2018 baseline.

FOURTH QUARTER FY2019 NET PROMOTER SCORE

43
39

34
30
26 27

21 20
17

12

7 8 17
4

Complaints Contact Centre Privilege Banking Privilege Banking Alliance Direct Branch Account SME Borrowing SME Non-Borrowing
Relationship Manager Relationship Manager Marketing Product Opening
Product Sales Relationship Call Sales

-19 -9

Baseline FY2018 FY2019 (Jan-Mar 2019)

Helping Customers Make Informed Financial Decisions

Alliance Retail Broking

In FY2019, Alliance Retail Broking (ARB), a collaboration between the conventional and investment banks, carried out several initiatives to
help simplify share trading for Malaysians. We:
• Launched an educational video series that uses fun and simplified explanations to tackle complex propositions
• Published articles in English and Mandarin on how one can build one’s wealth through share trading
• Went on air on BFM89.9 to help Malaysians demystify the barriers to starting an investment portfolio
• Participated in the InvestSmart Fest 2018 organised by Securities Commission Malaysia held from 12-14 October 2018
• Hosted Customer Investment Talks in partnership with Bursa Malaysia and Affin Hwang Asset Management in February and March
2019 at four different locations in the country

Since FY2018, we have been disseminating our Daily Research Summary via mobile, and sharing the Alliance Monthly Model Portfolio
with retailers. The information is shared in both English and Mandarin. Our efforts have received positive feedback from remisiers and
customers, especially with the Mandarin version.
46 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

COMMUNITY extends beyond the AEIOU Challenge. We held

four AEIOU Teachers’ Briefing sessions which AEIOU PROGRAMME
We have extended our role as a financial were attended by 193 teachers in the states of
institution to provide support for our
communities by leveraging on our abilities
and skills. Our Corporate Responsibility (CR)
Perak, Melaka, Sabah, and Selangor.

We introduced a new element to the challenge

13,065
students participated
activities are centred on promoting financial in FY2019, i.e. the AEIOU Save and Snap in the AEIOU roadshow nationwide
literacy, and enabling financial inclusion and Challenge. Our intent was to assess the impact
empowerment. Our efforts ensure that we of savings through tangible actions and create
are able to create meaningful social impact.
This is in line with our organisational ethos
of conducting our business to the highest
visible online peer-to-peer influence among
schoolchildren. The Save and Snap Challenge
was conducted as an online competition
193
teachers participated in AEIOU
standards of responsibility, trustworthiness, where parents and teachers posted creative Teachers’ Briefing sessions
transparency, and sustainability. photo submissions of the children exhibiting
saving habits on the social media platforms

15,000
Our CR activities have been conceptualised and of Facebook and Instagram. The challenge ran
implemented in accordance to Bursa Malaysia’s for two months, and received 50 submissions.
Corporate Social Responsibility Framework Ten winners were announced on the Bank’s
students took part in the AEIOU
for financial institutions. Our CR programmes Facebook and Instagram channels. Each
Drawing Challenge, an increase of
feature engagements with strategic partners winner received a RM100 cash prize.
to create positive outcomes in society through
financial education, corporate projects,
philanthropic works, and staff engagement.
To complement the AEIOU Programme, we
continued with our AEIOU Rural School Initiative
42.6%
from FY2018
for the second year. Through this programme,
the Bank helped to restore five schools in
FINANCIAL LITERACY PROGRAMMES Sabah that had suffered infrastructure damage About

1,000
as a result of natural disasters.
The Bank’s financial literacy programmes are
based on our belief in equipping communities The restoration included repairs to the schools’ schoolchildren benefited from the
with the right financial tools. roofs, walls and doors, as well as classrooms, AEIOU Rural School Initiative
canteens, and toilets. We also contributed
The AEIOU Programme teaching aids such as projectors to help with
learning activities towards creating a conducive Invested
The fourth cycle of the AEIOU Financial Comic education environment.
Strip Challenge saw us continuing to financially
educate school children through the fun and
interactive approach of a comic-drawing
The five schools under AEIOU Rural School
Initiative were SK Sugud, SK Tampasak, SK
RM286,600
on the AEIOU Roadshow and
competition with the theme “Smart Financial Koporingan, SK St Theresa, and SK Bantayan, Comic Strip Challenge, and

RM48,000
Habits”. Open to students in Primary Four, Five which are also the Bank’s adopted schools
and Six, the challenge encourages children under the BNM School Adoption Programme.
to practise saving, planning, and prudent on the AEIOU Rural School Initiative
spending habits from a young age.

Since its inception, we have reached out to more

than 7,500 primary schools nationwide, and to
more than 365,000 students. The success of
the programme has resulted in it being a two-
time award winner for Best Financial Literacy
Programme for Primary Schools by BNM.

For AEIOU Challenge 4, the Bank organised

a teacher-led workshop to assist teachers
to conduct their own AEIOU workshops at
their respective schools. This approach also
empowers teachers to be ambassadors of
financial education. It ensures that instilling
financial management knowledge in children With the top 40 finalists of the AEIOU Challenge 4
 2019 Annual Report 47

More than just a convenient, safe and secure

Inculcating Winning Financial Habits way to manage finances and perform online
remittance transactions, Alliance Cash2Home
On 1 November 2018, we held the Grand Finale and Closing Ceremony for the AEIOU
promotes financial inclusiveness especially
Challenge at HGH Convention Centre, Sentul, Kuala Lumpur. The top 40 contestants
the unbanked segment.
competed for the last time after being shortlisted from more than 15,000 entries. At the
end of that session, nine lucky contestants were selected to enter a bonus round, the
Buzzer Challenge, that offers a cash prize of RM1,000. Since the groundbreaking app was launched
in FY2018, it has received numerous regional
Khor Joo Ching, 12, from SJK (C) Yik Nam in Sabah was named champion of the Alliance accolades including “Best Digital Banking
Bank AEIOU Financial Comic Strip Challenge 4. She took home RM5,000 in cash, a trophy Initiative” at the Retail Banker International
and a participation certificate. Tan Yen Zhi, 12, from SJK (C) Sentul, and Foo Qiao Ying, Asia Trailblazer 2019, “Outstanding Client
12, from SJK (C) Chong Hwa in Setapak were named first and second runner-up in that On-Boarding & Account Opening” at the
order. Each won RM3,000 cash and RM1,000 cash respectively, as well as a trophy and Global Retail Banking Innovation Awards
certificate of participation. 2018, “Financial Inclusion Initiative of the
Year – Malaysia” at the Asian Banking and
SK Sg Binjai won the School with Highest Participation Award, which entitled them to
Finance Retail Banking Awards 2018, as
RM5,000 in school development fund. SK Talungan Telipok won the Smart Financial
well as “Best Digital Experience” and “Best
School Challenge, giving them a RM3,000 school development fund. The runners-up for
Omni-Channel Experience” at the Customer
the Smart Financial School Challenge, SK Pulau Nyior and SK Antara Gapi, won RM1,000
for their school development fund. Experience Asia Excellence Awards 2018.

Buku Wang Saku Programme Health and Wealth Programme BENEFITS OF ALLIANCE
CASH2HOME APP
We are a strong supporter of BNM’s In November 2018, AIS rolled out a Heath
• Helps business owners manage
Buku Wang Saku Programme that helps and Wealth programme for civil servants
operational costs, productivity
instil sound financial management in called Program Bimbingan Kewangan. The
and efficiency
schoolchildren. Through this initiative, programme offers physical and financial
• Mitigates cash handling risks
we helped schoolchildren at 329 adopted health check to public servants. Last year, • Accelerate the shift towards a
schools nationwide to effectively manage two workshops were held at the government cashless society
their pocket money by monitoring their agencies’ offices in Putrajaya. • Advocates transparency and
spending. It inculcates the habit of saving, accountability
and creates awareness on the importance of • Encourage legalisation of foreign
smart financial management and planning. ENABLING FINANCIAL INCLUSION AND workers
By teaching young children these skills, we EMPOWERMENT
are helping to put in place the building blocks
for a financially savvy future generation. Our Forward Position Research conducted COMMUNITY ENGAGEMENT PROGRAMMES
in FY2016 gave us insights into how we
could help business owners by offering their The Bank’s community engagement
Invested
stakeholders, i.e. employees, family, and programmes provide our employees with the

RM31,193
to produce 329,000
customers, access to useful and affordable
financial products and services. A key finding
opportunity to give back to society.

resulted in us carving out a foothold in the Breaking Fast with Asnaf

Buku Wang Saku
niche segment of digital financial inclusion
and empowerment. In conjunction with the holy month of
Ramadan in May 2018, we held a breaking
One such endeavour is our Alliance fast event at the residence of Pertubuhan

RM16,825
were spent to deliver the books
Cash2Home app for foreign workers. It offers
paperless account opening at the workplace
Baitul Ehsan Al-Khairi (PBEA) in Taman
Maluri, Kuala Lumpur. During our visit, we
utilising facial recognition biometrics donated items worth RM15,000 – RM5,000 in
to 329 schools nationwide
technology, and mobile remittance service zakat contributions, and duit raya (cash gifts)
for foreign workers from the lower income to 80 children at the home. Our employees
segment. also contributed additional household and
grocery items to help the home prepare for
Hari Raya celebration.
48 Alliance Bank Malaysia Berhad (88103-W)

SUSTAINABILITY STATEMENT (Cont’d)

Hari Raya Appreciation Dinner Charity Golf Tournaments

At last year’s Hari Raya event, we invited In FY2019, the Bank participated in two charity golf tournaments:
50 orphans and underprivileged children to • The Bank donated RM20,000 to MyKasih Foundation at the MyKasih Charity Golf
join us at our annual Hari Raya Appreciation Tournament, to help provide food, education and training programmes to the
Dinner at the Connexion@Nexus, Bangsar, underprivileged.
and Pacific Sutera Harbour, Kota Kinabalu. • We also contributed RM8,000 to the Estee Lauder Breast Cancer Awareness (BCA)
The children were treated to a specially Campaign Charity Golf in support of cancer awareness and research by Cancer Research
catered dinner and presented with duit raya Malaysia, The National Cancer Society, The College of Radiology Malaysia, and the Breast
of RM50 each while being entertained with Cancer Welfare Association.
stage performances.
Earth Day
AIS also presented zakat contributions
totalling RM92,000 to eligible recipients In conjunction with Earth Day, we partnered with the Forest Research Institute Malaysia (FRIM) to
and asnaf, including seven individuals and shed some light on sustainable management and best practices in optimising forest resources
three organisations from welfare centres, through research, education and technology. We were able to get hundreds of pledges to “Go
education centres, and non-governmental Green Everyday”. Due to the positive reception, FRIM has agreed to collaborate with us for
organisations. another two years.

Blood Donation

We joined forces with Huaren Resources Sdn

Bhd (Huaren Resources), Lulu Hypermarket,
and University Malaya Medical Centre, to set
up blood donation booths at 3Alliance and at
our headquarters at Menara Multi-Purpose.
Close to 260 people donated about 189 pints
of blood at our blood donation drive.

Keeping Your Kidney Healthy

We collaborated with Davita Malaysia Sdn

Bhd and Huaren Resources to provide
complimentary health screenings and With our partner for Earth Day, representatives from FRIM
consultation for the public, and shared
informative health tips emphasising the Beach Cleaning
importance of kidney care.
Working with the Malaysian Nature Society (Kuala Selangor Nature Park), we organised a one-
Movie Day with the Disabled day beach cleaning campaign at Pantai Remis in Jeram, Selangor. By the end of the day, our
Bank employees and their family members collected close to 300 kg of rubbish.
In conjunction with the International Day
of People with Disability, we organised a
movie outing for residents from the Selangor
Cheshire Home and our staff volunteers. The
residents enjoyed themselves at the theatre,
and had lunch with our volunteers after the
movie.

Christmas Carolling

On 14 December 2018, the Bank invited

residents of Yayasan Sunbeams Home to
help spread Christmas cheer together with
our staff. Our young guests sang Christmas Cleaning the beach with the Malaysian Nature Society
favourites such as “Joy to the World”,
“Jingle Bells” and “Feliz Navidad” during the
carolling session.
 2019 Annual Report 49

PARTNERSHIP TO CHANNEL ZAKAT

CONTRIBUTIONS

Each year, AIS contributes zakat (Islamic

tithes) in accordance with Islamic principles
and Shariah conventions. In FY2019, we
contributed close to RM500,000 in zakat.

AIS has a strategic partnership with YKN which

enables it to channel zakat contributions to
the economically disenfranchised. These
comprise single mothers with aspirations to
start their own home businesses, but lack the
working capital and equipment to do so. YKN
assists these women by distributing funds
for them to commence with their start-ups. Best Omni-Channel Experience (Gold) Best Digital Experience (Gold)
Customer Experience (CX) Asia Excellence Customer Experience (CX) Asia Excellence
Our partnership with YKN enables us to Awards 2018 Awards 2018
channel funds to those that need it the most,
thus contributing towards strengthening the
socio-economic fabric of the country.

CONCLUSION

The Bank’s sustainability initiatives are

centred on creating greater value for our
stakeholders and customers in line with our
vision of Building Alliances to Improve Lives.

We will maintain our efforts to monitor and

report on the progress of our sustainability
programmes, in line with our commitment
to provide transparent and accountable
disclosures to our stakeholders and Best Digital Banking Initiative (Winner) Outstanding Financial Inclusion Initiative
shareholders. Retail Banker International (RBI) Asia Trailblazer (Highly Acclaimed)
Awards 2019 Global Retail Banking Innovation Awards 2018
Our end goal is to support and enhance the
lives of our customers and communities
towards achieving socio-economic progress
in their lives.

Best App for Customer Experience (Highly Financial Inclusion Initiative of the Year -
Commended) Malaysia
Retail Banker International (RBI) Asia Trailblazer Asian Banking & Finance Retail Banking Awards
Awards 2019 2018
50 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS

Financial Calendar
for the financial year ended 31 March 2019

ACTIVITIES DATE

Announcement of Financial Results

- First Financial Quarter ended 30 June 2018 30 August 2018

- Second Financial Quarter ended 30 September 2018 29 November 2018

- Third Financial Quarter ended 31 December 2018 28 February 2019

- Fourth Financial Quarter ended 31 March 2019 29 May 2019

Dividend

- First Interim single tier dividend of 8.5 sen per share

• Payment Date 28 December 2018

- Second Interim single tier dividend of 8.2 sen per share

• Payment Date 27 June 2019

General Meeting

- Notice of 37th Annual General Meeting 25 June 2019

- 37th Annual General Meeting 25 July 2019

 2019 Annual Report 51

CALENDAR OF SIGNIFICANT EVENTS

for the financial year ended 31 March 2019

2018
Launch of BizSmart Challenge 2018 12 APR
Alliance Investment Bank Won Bronze in
14 APR the MIBA Badminton Tournament 2018

Alliance Bank launched its annual flagship BizSmart

Challenge 2018 in partnership with EcoWorld
Development Group Berhad at the Bukit Bintang City
Alliance Investment Bank Berhad (AIBB) won the Bronze
Centre, Kuala Lumpur. In its fifth year, the BizSmart
medal in the annual Malaysian Investment Banking
Challenge 2018 offers RM1 million cash and media
Association (MIBA) Badminton Tournament 2018. This
coverage prizes and up to RM5 million in collateral-
was a milestone achievement after securing 7th place
free financing to the Top 20 finalists. As the first reality
in 2017.
TV business programme in Malaysia by a financial
institution, the Challenge provides opportunities for
Malaysian businesses to accelerate their business 19 APR Earth Day Celebration
growth and achieve long-term success.

Charity Sale for Beautiful Gate

Foundation for The Disabled

Alliance Bank collaborated with Huaren Resources Sdn

Bhd and the Forest Research Institute Malaysia (FRIM) to
celebrate Earth Day as part of its corporate responsibility
initiative.

Alliance Bank organised a charity sale at its 25 APR Launch of allianceonline Mobile app
headquarters, in support of the Beautiful Gate Foundation
Alliance Bank launched allianceonline Mobile app to
for The Disabled. The foundation’s mission is to raise
simplify and enhance its customers’ overall banking
funds for people with disabilities in its efforts to improve
26 APR experience. The app offers customers access to online
their lives. Residents of the foundation showcased
banking services, including viewing of account balances,
and sold handicrafts made from recycled items. Other
transactions, and e-deposits placements, in a hassle-
contributions include medication and clothing.
free manner.
52 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS (Cont’d)

for the financial year ended 31 March 2019

2018
MIBA Men’s Veteran Futsal Tournament 12 MAY

15 MAY Kidney Care Awareness Programme

AIBB’s futsal team won the gold medal at the MIBA Men’s
Veteran Futsal Tournament 2018. This marked the first
gold medal won by AIBB since the Bank’s participation in
the tournament in 2015. The Bank’s Corporate Responsibility and Event
Management (CREM) team collaborated with Huaren
Program Sekampit Beras 22 MAY Resources Sdn Bhd and Davita to raise awareness on the
importance of kidney care to help people make healthier
lifestyle choices. A complimentary health screening on
glucose level, body mass index, health counselling and
blood pressure was held at Menara Multi-Purpose,
Capital Square.

Majlis Berbuka Puasa with Rumah

30 MAY Pertubuhan Baitul Ehsan AL-Khairi

AIS organised the Program Sekampit Beras in

collaboration with the Association of Islamic Banking
Institutions Malaysia (AIBIM) and Angkatan Belia Islam
Malaysia (ABIM). A contribution of RM10,000 was made
to asnaf recipients from Projek Perumahan Rumah
Termiskin.

Projek Pelangi –
Contribution of Baju Raya 9 JUNE
AIS organised a Majlis Berbuka Puasa with orphans
from Rumah Pertubuhan Baitul Ehsan AL-Khairi. AIS also
donated RM5,000 in zakat to the home.

AIS contributed to Projek Pelangi initiative by purchasing

baju raya for the residents of Pertubuhan Anak Yatim
dan Kebajikan Darul Izzah, Pusat Jagaan Pertubuhan
Kebajikan Islam Peribadi Mulia and Rumah Pengasih
Warga Prihatin.
 2019 Annual Report 53

2018
Zakat Contribution to Al Fikrah Welfare
Association 11 JUNE
Zakat Contribution to Rumah Asnaf
11 JUNE Al-Barakh

AIS contributed RM5,000 in zakat to the old folks home

Al Fikrah Welfare Association, as part of its annual zakat
distribution programme.
A zakat contribution of RM5,000 was made to the
orphanage Rumah Asnaf Al-Barakh, as part of AIS’
Hari Raya Customer Appreciation annual zakat distribution programme.

Dinner 2018 in Kuala Lumpur 28 JUNE

1 JUL Launch of AEIOU Challenge 4

Now in its fourth year, the AEIOU Challenge is an

30 SEP initiative by Alliance Bank to help improve the younger
generation’s financial literacy. The Challenge has been
recognised as the Best Financial Literacy Programme for
Primary Schools by Bank Negara Malaysia. The AEIOU
Challenge 4 featured new components such as the
Buzzer Challenge, Save and Snap Challenge, and Smart
Alliance Bank organised a Hari Raya Customer
School Challenge.
Appreciation Dinner for its customers and business
partners at Connexion@Nexus, Bangsar. AIS presented
zakat contributions to seven eligible asnaf recipients, an
education centre, a non-governmental organisation, and
a welfare centre. AEIOU Challenge 4:
1 JUL Save and Snap Challenge

The AEIOU Challenge 4: Save and Snap Challenge is a

30 SEP photo contest on the Bank’s social media platforms. The
AIBB Wins Best Structured Finance aim is to increase the younger generation’s awareness
Sukuk Award 10 JUL on the importance of financial literacy. The initiative
comprised students from the ages of nine to 12 years
AIBB received the Best Structured Finance Sukuk award old, with photographs depicting creative ways to save
at The Asset Triple A Islamic Finance Awards 2018 for its money.
role as a Lead Manager and Underwriter for SkyWorld
Capital Sdn Bhd’s inaugural sukuk issuance.
54 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS (Cont’d)

for the financial year ended 31 March 2019

2018
AEIOU Challenge 4 Roadshows JUL AIS Contributes to Yayasan
10 JUL Kebajikan Negara
AUG AIS contributed RM100,000 and donated a dialysis
machine worth RM42,000 to Yayasan Kebajikan
Negara (YKN). Part of the contribution is used to help
underprivileged Malaysians receive free dialysis
treatments at YKN dialysis centres.

As part of its AEIOU Challenge 4 initiative, the Bank visited Alliance Bank Wins Financial Inclusion
50 primary school nationwide to help improve school 12 JUL Initiative of the Year – Malaysia Award
children’s financial literacy. Students were educated
on good financial habits during the fun and interactive
sessions.

Hari Raya Customer Appreciation

Dinner 2018 in Sabah 13 JUL

Alliance Bank won the Financial Inclusion Initiative of the

Year – Malaysia award at the Asian Banking and Finance
Retail Banking Awards 2018. The ceremony was held at
the Shangri-La Hotel, Singapore. The award recognised
Alliance Cash2Home as an innovative first-in-the-market
digital solution that delivers an effortless, seamless, and
high quality banking experience to business customers
Alliance Bank hosted a celebratory Hari Raya dinner for and their foreign employees.
its customers and business partners in Sabah. Close to
50 orphans and people with disabilities were also invited.
A zakat contribution of RM11,125.00 was presented by Alliance Bank Golf Tournament for
AIS to Yayasan Kebajikan Negara Cawangan Sabah.
19 JUL Corporate and Commercial Customers

Alliance Bank Durian Fiesta 26 JUL

GROUP SME
BANKING

10 AUG
GROUP
CORPORATE,
COMMERCIAL
AND
TRANSACTIONS

The Bank organised a golf tournament for its corporate

and commercial customers in appreciation of their long
standing support. The tournament was held at the Kota
The Bank hosted its annual durian fiesta for over 800
Permai Golf and Country Club.
Corporate, Commercial and SME customers at TPC
Kuala Lumpur.
 2019 Annual Report 55

2018
AEIOU Challenge 4 Teacher’s Briefing 10 AUG
MELAKA

16 AUG
PERAK Blood Donation Drive
13 SEP
SABAH
KUALA LUMPUR

In collaboration with selected state education ministries,

the Bank organised a Teacher’s Briefing in conjunction 16 AUG
with the AEIOU Challenge 4 programme. A total of 193 3ALLIANCE,
SUBANG JAYA
teachers nationwide participated in this initiative. The
Alliance Bank held its annual blood donation drive
aim was to encourage more teachers to be advocates of
smart financial habits.
5 SEP in partnership with Huaren Resources Sdn Bhd, Lulu
MENARA MULTI-
PURPOSE, Hypermarket, and University Malaya Medical Centre at
CAPITAL SQUARE Menara Multi-Purpose. More than 180 people took part
in the blood donation drive.

Launch of Eco-Biz Dream Project 3 18 SEP

Alliance Bank Wins Gold for Best

Digital Experience and Best Omni-
26 SEP Channel Experience

Alliance Bank launched the Eco-Biz Dream Project 3,

an environmental-themed business pitch for university
students. The Programme provides a platform to help
nurture the next generation of social entrepreneurs.
The third installment of the programme revolves around
the revitalisation and protection of the Kerayong River
corridor in the Klang Valley. Alliance Bank’s Cash2Home solution won two Gold
awards for Best Digital Experience and Best Omni-
Channel Experience at the Customer Experience (CX)
Asia Excellence Awards 2018.
56 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS (Cont’d)

for the financial year ended 31 March 2019

2018
Alliance Bank Wins Outstanding Client
On-Boarding & Account Opening Award 27 SEP

2 OCT AEIOU Rural School Initiative

Alliance Bank’s Cash2Home solution won the award for

Outstanding Client On-Boarding and Account Opening,
and was Highly Acclaimed for Outstanding Financial
Under AEIOU Challenge 4, the Bank refurbished five
Inclusion Initiative at the Global Retail Banking Innovation
rural schools in Sabah which had suffered damages
Summit and Awards Ceremony 2018.
from multiple natural disasters over the years. The
infrastructure restoration included repairs of the walls
and doors of classrooms, roofs, toilets, and canteen
areas. The Bank also donated electrical items such as
Market Insight Seminar 2018 11 OCT projectors to aid in the students’ learning.

26 OCT BizSmart Challenge Alumni Bazaar 2018

The Bank organised a Market Insight Seminar for its

business customers and partners to share insights on
Malaysia and the global economic outlook. The seminar
included tips on how businesses can make sound
investments decisions and featured speakers from the
In celebration of Alliance Bank’s inaugural TV debut of
Socio-Economic Research Centre, and DBS Bank.
BizSmart Challenge 2018, the Bank organised a BizSmart
Challenge Alumni Bazaar at Menara Multi-Purpose. The
event provided an opportunity for former finalists of the
BizSmart Challenge to showcase their products and
services. Participating BizSmart Alumni included Christy
Ng Shoes, CatchThatBus, Amazin’ Graze, Happy Bunch,
NutriBrown Rice, The Tapping Tapir, Biji-biji Initiative, and
Little Fat Duck.
 2019 Annual Report 57

2018
Beach Cleaning Programme 27 OCT

Eco-Biz Dream Project 3 Design

29 OCT Thinking Workshop

A total of 80 Alliance Bank employees and their family

members came together to help clean Pantai Remis at
Jeram, Kuala Selangor. The initiative was organised in
collaboration with Kuala Selangor Nature Park managed
by the Malaysian Nature Society.
Under Eco-Biz Dream Project 3, 25 teams were
selected to attend a Design Thinking Workshop held
at the InterContinental Kuala Lumpur. The workshop
taught the students problem solving skills through
dynamic discussions, relevant readings, and team
exercises. It was also an opportunity for the students to
AEIOU Challenge 4 Awards and delve deeper into environmental problems concerning
Closing Ceremony 1 NOV the Kerayong River.

Luncheon Speaker Series Update on

13 NOV the Plantation Sector

The AEIOU Challenge 4 Awards and Closing Ceremony

was witnessed by YB Puan Teo Nie Ching, the Deputy
Minister of Education and attended by some 300
students and 50 teachers from selected participating
schools. The AEIOU Programme reached more than
7,000 schools and delivered financial lessons at more
than 300 schools nationwide. Submissions for the AEIOU
Challenge increased from more than 5,000 in the first AIBB hosted a luncheon series that provided an update
year, to over 15,000 in 2018. on the latest developments pertaining to the local
plantation sector for its corporate clients and business
partners. The event was attended by YB Teresa Kok,
Minister of Primary Industries, senior representatives
from the Malaysian Palm Oil Council, and close to 70
fund managers.
58 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS (Cont’d)

for the financial year ended 31 March 2019

2018
Eco-Biz Dream Project 3 Business
Model Canvas Boot Camp 17-18 NOV
National Budget Seminar for SME and
15 NOV Commercial Banking Customers
KUALA LUMPUR

21 NOV
JOHOR

23 NOV
PENANG

The top 10 teams of the Eco-Biz Dream Project 3

continued with the challenge in a two-day boot camp.
During the session, the students learned about business,
sustainability, and social entrepreneurship from the Alliance Bank hosted the annual National Budget Seminar
Asia School of Business in collaboration with MIT Sloan in Kuala Lumpur, Johor, and Penang for our SME and
School of Management. The boot camp also included a Commercial Banking customers. The seminar featured
field visit to the Kerayong River. topics on the Malaysian economic outlook, opportunities
for SMEs and corporates under the Budget 2019, tips for
Movie Screening for Alliance Bank business owners to access business financing, the latest
Trade Customers 18 NOV updates on income tax, and sales and services tax (SST).

Alliance Bank’s Trade customers were treated to a movie

screening of the blockbuster hit, Fantastic Beasts: The
Crimes of Grindelwald in Johor, Penang, and Sabah.
Over 300 customers and business partners attended the AIS Contributes zakat to Program
screening. Bantuan Pendidikan Perdana Lembaga
25 NOV Zakat Selangor
CTOS Sweatplus Inter-Financial
Institutions Badminton Championship 1-2 DEC

AIS contributed RM37,500 in the form of customised

school bags to 800 children from low income families,
in conjunction with the Program Bantuan Pendidikan
Alliance Bank emerged as the overall champion in the
Perdana Lembaga Zakat Selangor 2018. The initiative
CTOS Sweatplus Inter-Financial Institutions Badminton
helps reduce back-to-school expenses for low income
Championship 2018 held at Sports Arena Sentosa, Kuala
families.
Lumpur. The Championship saw high participation from 12
financial institutions. Each institution had a team competing
in five categories - Men’s Singles, Women’s Doubles, Mixed
Doubles, Men’s Doubles, and Men’s Veteran Doubles.
 2019 Annual Report 59

2018
Malaysia Investor Relations
Association (MIRA) Awards Ceremony
2018 5 DEC
Alliance Bank won the Best Company for Investor Movie Day with Residents of Selangor
Relations – Mid Cap, and Mr Tan Hong Ian, Head of
Investor Relations, Alliance Bank won the Best Investor
8 DEC Cheshire Home
Relations Professional – Mid Cap at the MIRA Awards
Ceremony 2018.

BizSmart Challenge 2018 Grand Finale 8 DEC

In conjunction with the International Day of People with

Disability 2018, Alliance Bank staff volunteered their
time for a movie and lunch date with residents of the
Selangor Cheshire Home.

Ms Mandy Leong, founder and owner of local beauty

and skincare brand Chriszen Malaysia Sdn Bhd, was Christmas Joy with the Children of
named the grand prize winner of the BizSmart Challenge
2018 during a live televised event held at Eco Majestic
14 DEC Yayasan Sunbeams Home
Semenyih, Selangor. Chriszen won RM250,000 cash
along with the Astro Media Award, which comes with
media coverage worth RM200,000. The first and second
runner-ups were Klezcar, a car rental service company,
and OhMostWanted, a cosmeceutical brand that combines
cosmetics and pharmaceutical properties. The brands
won RM200,000 and RM150,000 cash respectively.
Homegrown Farms Semenyih, a sustainable farming
service provider, won the Manulife Sustainability Award,
while Carput, an on-demand car breakdown assistance
app, took home the Visa Retail Award. Both brands won In the spirit of Christmas, Alliance Bank and Huaren
RM100,000 cash each. Resources Sdn Bhd hosted the children from Yayasan
Sunbeams Home to help spread the season’s cheer at
Menara Multi-Purpose, Capital Square. The Home also
had a bake sale with a selection of homemade festive
delights.
60 Alliance Bank Malaysia Berhad (88103-W)

CALENDAR OF SIGNIFICANT EVENTS (Cont’d)

for the financial year ended 31 March 2019

2019
Eco-Biz Dream Project 3 Awards and
Closing Ceremony 9 JAN

AIS Contributes zakat to Yayasan

Kebajikan Negara Palestine People’s
9 JAN Fund

The Green Team from University of Malaysia Sarawak

(UNIMAS) was named the winner of Eco-Biz Dream
Project 3 at its Awards and Closing Ceremony. The
team was among the top 10 finalists who presented
their business pitch on the revitalisation of Kerayong
River. The winning pitch revolved around the idea of
developing a simple solution, a Plug-and-Clean BioChar AIS presented a RM50,000 zakat contribution to Yayasan
filter. This solution reduces the amount of untreated Kebajikan Negara Palestine People’s Fund, in support of
effluents associated with high Chemical Oxygen Demand the foundation’s humanitarian initiatives.
and nutrients going into the river. The Green Team
was awarded with RM10,000 in cash. In addition, AIS
committed up to RM200,000 as seed funding to bring
the winning proposition to life.

AIBB Corporate Day 15 JAN

Pre-Chinese New Year Customer
Appreciation Dinner for Business
18 JAN Clients

AIBB and AllianceDBS Research hosted the 2019

Corporate Day Conference for the local fund management
community. More than 150 fund managers, analysts,
and corporate representatives attended the event
which showcased nine public listed companies. Datuk Over 800 of Alliance Bank’s Corporate, Commercial
Isham Ishak, the then-Secretary General, Ministry and SME customers were invited to attend the Alliance
of International Trade and Industry, was the keynote Bank’s Pre-Chinese New Year Customer Appreciation
speaker. Dinner. The event provided networking opportunities, and
a platform for the Bank to share its achievements with
customers and business partners.
 2019 Annual Report 61

2019
Alliance Bank Chinese New Year
Customer Appreciation Dinner 2019 18 FEB
23 FEB Alliance Customer Investment Talks

AIBB collaborated with Bursa Malaysia Berhad and Affin

14 MAR Hwang Asset Management Berhad to host a series of
customer investment talks in Kedah, Pahang, Johor,
and Kuala Lumpur. Over 400 customers and business
partners attended the talks.

Alliance Bank Wins Second Place at

The Bank’s annual Chinese New Year Customer 5 MAR Activ@Work Challenge 2018
Appreciation Dinner 2019 brought together more than
700 guests comprising customers, business partners,
media, and staff.

Alliance Bank Wins Best Digital

Banking Initiative 7 MAR

Alliance Bank won second place at the Activ@Work

Challenge 2018 Award Ceremony, while seven Bank
employees were placed in the Top 10 Most Active Employee
category. A total of 619 Bank employees participated in
the challenge, which was organised by PERKESO and
Bookdoc. The three-month challenge, which ran from
September to November 2018, helped participants keep
track of their fitness through a mobile app.
Alliance Bank’s Cash2Home won the Best Digital Banking
Initiative and was Highly Commended for Best App for
Customer Experience at the Retail Banker International Northern Region Customer
(RBI) Asia Trailblazer Awards 2019. Appreciation Dinner

Tea Talk on Voluntary Tax Disclosure 15 MAR

Alliance Bank, in collaboration with its partners,
SQL, Insure Savvy, and the Federation of Malaysian 18 MAR
Manufacturers (FMM), organised a Tea Talk on “Voluntary
Tax Disclosure”. The event attracted over 350 SME
participants, and featured speakers from Alliance Bank,
Inland Revenue Board (IRB), ANC Hub Consultants Pte
Ltd, and Insure Savvy.
A total of 210 Alliance Bank customers and business
partners from the Northern Region attended a Customer
Appreciation Dinner at Shangri-La’s Rasa Sayang Resort
and Spa, Penang. The Bank took the opportunity to thank
its customers for their continuous support.
62 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT

GUIDANCE ADHERED TO Code of Conduct

• Malaysian Code on Corporate Governance issued in 2017 Alliance Bank is guided by the Code of Conduct established by the
(the Code) Board which outlines the conduct required of the Board members and
• Bursa Malaysia Securities Berhad (Bursa Securities) Main the employees individually in order for them to discharge their duties
Market Listing Requirements (MMLR) in a professional, honest and ethical manner.
• Bursa Malaysia Corporate Governance Guide
• Bank Negara Malaysia’s (BNM) Policy Document on Corporate The Code of Conduct is available on the Bank’s corporate website at:
Governance (BNM CG Policy)
www.alliancebank.com.my
The following governance overview statement is to be read in conjunction
with the Corporate Governance Report which is accessible online at: The Directors also adhere to the Code of Ethics for Company
Directors established by the Companies Commission of Malaysia and
www.alliancebank.com.my the Group’s Conflict of Interest Policy for Directors.

Board Charter Leadership

The Board has clear divisions of responsibility and is collectively
The Board of Directors (Board) of Alliance Bank Malaysia Berhad responsible for the long-term success of the Bank.
(Alliance Bank or the Bank) has adopted a Board Charter that sets
out the mandate, responsibilities and procedures of the Board and More information can be found on pages 63 to 80.
the Board Committees, including matters reserved for the Board’s
decision. The Board Charter is reviewed by the Board at every two Effectiveness
years interval or as and when necessary in line with development We evaluate the balance of experience, skills, knowledge and
in corporate governance requirements and practices to ensure its independence elements of the Board to ensure we are effective.
continued relevance to the Board.
More information can be found on pages 81 to 86.
The Board Charter was reviewed and revised by the Board on 28
November 2018 and 19 March 2019 with, among others, the changes: Audit and Risk Management
We present a fair, balanced and easy to understand assessment
(a) Limiting the tenure of independent directors to a maximum of the Bank’s position and prospects. Our decisions are discussed
cumulative term of 9 years and removal of the option for an within the context of the risks involved.
independent director to continue serving on the Board as a
non-independent director upon completion of the 9 years term. More information can be found on pages 87 to 94.
(b) Introduced a new policy by limiting the tenure of non-
independent non-executive directors to a maximum cumulative Relations with Shareholders
term of 12 years. Strong relationships with our shareholders are crucial for the
successful execution of our strategy.
The Board Charter is available on the Bank’s corporate website at:
More information can be found on page 95.
www.alliancebank.com.my
 2019 Annual Report 63

CREATING THE RIGHT CULTURE THROUGH OUR GOVERNANCE FRAMEWORK

The Board of Alliance Bank considers good corporate governance to be the foundation of a well-managed institution. The Board is fully committed to integrity
and fair dealing in all its activities, and has endeavoured to adopt the best practice of corporate governance in all areas of its business towards enhancing
business prosperity and corporate accountability with the ultimate objective of safeguarding the interests of all stakeholders and enhancing shareholder
value.

The Bank’s approach to corporate governance practices is in conformity with BNM CG Policy and is guided by the principles and practices set out in the Code.

The Role of the Board

The Board has the overall responsibility for promoting the sustainable growth and financial soundness of the Bank and for ensuring reasonable standards
of fair dealing, without undue influence from any party. This includes a consideration of the long-term implications of the Board’s decisions on the Bank
and its customers, officers and the general public.

The key responsibilities of the Board are set out below:

(a) approve the risk appetite, business plans and other initiatives which would, singularly or cumulatively, have a material impact on the Bank’s risk
profile;
(b) oversee the selection, performance, remuneration and succession plans of the Chief Executive Officer (CEO), control function heads and other
members of senior management, such that the Board is satisfied with the collective competence of senior management to effectively lead the
operations of the Bank;
(c) oversee the implementation of the Bank’s governance framework and internal control framework, and periodically review whether these remain
appropriate in light of material changes to the size, nature and complexity of the Bank’s operations;
(d) promote, together with senior management, a sound corporate culture within the Bank which reinforces ethical, prudent and professional
behaviour;
(e) promote sustainability through appropriate environmental, social and governance considerations in the Bank’s business strategies;
(f) oversee and approve the recovery and resolution as well as business continuity plans for the Bank to restore its financial strength, and maintain
or preserve critical operations and critical services when it comes under stress; and
(g) promote timely and effective communication between the Bank and BNM on matters affecting or that may affect the safety and soundness of the
Bank.

Operation of the Board

We schedule Board meetings at least eight times a year. Matters which require decisions outside the scheduled meetings are dealt with through
additional ad hoc meetings.

At each scheduled meeting, the Board regularly receives progress reports from the Group CEO and Group Chief Financial Officer on the business and
financial performance of Alliance Bank. The Heads of Business units of the Bank regularly update the Board on the performance, strategic developments
and initiatives in their respective segment throughout the year. The Board also receives regular updates on internal control, risk management, legal,
compliance, internal audit, human resources, sustainability and governance matters.

There is an annual schedule of rolling agenda items to ensure that all matters are given due consideration and reviewed at the appropriate point in the
financial and regulatory cycle, although this is flexible to enable pressing matters, when they arise, to be dealt with in a timely manner.

The Chairman and Group CEO maintain frequent contact (in person or otherwise) with each other and the other Board members throughout the year
outside of the formal meetings.
64 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership

The Board

Responsible for the overall conduct of Alliance Bank’s business including our long-term success; setting our values, standards and strategic
objectives; reviewing our performance; and ensuring an effective communication with our shareholders/stakeholders.

Chairman

(a) Ensures that appropriate procedures are in place to govern the Board’s processes;
(b) Ensures that decisions are taken on a sound and well-informed basis, including by ensuring that all strategic and critical issues are considered
by the Board, and that Directors receive the relevant information on a timely basis; and
(c) Encourages healthy discussion and ensures that dissenting views can be freely expressed and discussed.

Senior Independent Director

(a) Acts as a sounding board to the Chairman;

(b) Serves as an intermediary for other Directors when necessary; and
(c) Acts as the point of contact for shareholders and other stakeholders.

Non-Executive Directors

(a) Contribute to developing our strategy;

(b) Scrutinise and constructively challenge the performance of management in the execution of our strategy; and
(c) Provide check and balance and ensure that high standards of corporate governance are applied.

Group Chief Executive Officer

(a) Develops the strategic direction of the Bank;

(b) Ensures that the Bank’s strategies and corporate policies are effectively implemented;
(c) Ensures that Board decisions are implemented and Board directions are responded to;
(d) Provides directions in the implementation of short and long term business plans;
(e) Provides strong leadership; i.e. effectively communicating a vision, management philosophy and business strategy to the employees;
(f) Keeps the Board fully informed of all important aspects of the Bank’s operations and ensures that sufficient and adequate information is provided
to Board members; and
(g) Ensures the day-to-day business affairs of the Bank are effectively managed.
 2019 Annual Report 65

Board Committees

Delegated to by the Board and responsible for overseeing implementation of strategies and policies; and maintaining effective governance
in the following areas: business decisions, audit and risk, remuneration, Board composition, succession planning and corporate governance.

The Board has four (4) Board Committees, which composed solely of Non-Executive Directors: Executive Committee (EXCO), Group Nomination &
Remuneration Committee (Group NRC), Group Audit Committee (Group AC) and Group Risk Management Committee (Group RMC). Among these Board
Committees, the Group NRC, Group AC and Group RMC operate on a Group basis covering the Bank and its two principal subsidiaries, namely Alliance
Islamic Bank Berhad (AIS) and Alliance Investment Bank Berhad (AIBB) (collectively, the Group).

Each Board Committee has agreed Terms of Reference, which are approved by the Board and reviewed at every two years interval or as and when
necessary. Any proposed changes to the Terms of Reference of the Board Committees are subject to the approval of the Board. The Terms of Reference
of the Board Committees are available on the Bank’s website at:

www.alliancebank.com.my

The Chairman of each Board Committee reports to the Board on salient matters discussed at the respective Board Committee meetings.

EXCO

The EXCO reviews/vetoes loan/financing applications with total group exposure which are within its approval limits set by the Board and approves
credit transactions/exposures with connected parties classified under BNM Guidelines on Credit Transactions and Exposures with Connected Parties
(BNM/GP 6). It also reviews and recommends strategies and business plans for the Board’s approval and oversees their implementation.

Group NRC

The Group NRC supports the Boards in carrying out their functions in the following matters concerning the Boards, Shariah Committee, Senior
Management and Company Secretary:

• Appointment and removals;

• Composition of the Boards;
• Performance evaluation and development; and
• Fit and proper assessments,

and actively oversees the design and operation of the Bank’s remuneration system. Group NRC also periodically reviews the remuneration of Directors
on the Board, and on whether remuneration remains appropriate to each Director’s contribution, taking into account the level of expertise, commitment
and responsibilities undertaken.

Group AC

Group AC assists the Boards in relation to the oversight of the Group’s financial and reporting processes. It monitors the integrity of the financial
statements and supervises both the internal and external audit processes, reporting back to the Board. It reviews the effectiveness of the policies,
procedures and systems in place related to, among others, operational risks, compliance, IT and Information Systems (including cyber security) and
works closely with the Group RMC in connection with assessing the effectiveness of the risk management and internal control framework.

Group RMC

Group RMC oversees the Senior Management’s activities in managing credit, market, liquidity, operational, compliance, legal, IT/Cyber and other risks
as well as to ensure that the risk strategy is sound and the risk management framework is in place and functioning effectively according to its purposes.
It also actively promotes a consistent culture of compliance, risk awareness and risk management within the Group.
66 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Board of Directors

TAN SRI DATO’ AHMAD BIN KUAH HUN LIANG

MOHD DON
Chairman of the Board Senior Independent Non-Executive Director of Alliance Bank
Independent Non-Executive Director of Alliance Bank Chairman of the Board of Alliance Investment Bank Berhad
Member of Group Nomination & Remuneration Committee Member of Group Audit Committee

71 | Malaysian | Male 57 | Malaysian | Male

Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Bank Malaysia Berhad: Alliance Bank Malaysia Berhad:
1 February 2017 15 December 2011

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Science in Economics and Business, summa cum • Bachelor of Science (Honours) in Applied Economics, University of
laude, Aberystwyth University, United Kingdom East London, United Kingdom
• Fellow of the Institute of Chartered Accountants in England and
Wales Mr Kuah Hun Liang has over 30 years of experience in the financial services
• Member of the Malaysian Institute of Certified Public Accountants industry. He began his career at Public Bank in 1983, and thereafter
joined Deutsche Bank AG (Deutsche Bank) in 1989 as Treasurer. He was
Tan Sri Dato’ Ahmad Bin Mohd Don is the Chairman of Alliance Bank promoted as Head of Global Markets when Deutsche Bank ventured into
Malaysia Berhad’s Board of Directors. He has extensive experience in investment banking. In 2000, he was appointed as an Executive Director
finance and banking. His work experience covers various capacities with of Deutsche Bank (M) Berhad. In 2002, he was promoted to Managing
Pernas Securities Sdn Bhd, Permodalan Nasional Berhad, and Malayan Director and Chief Executive Officer, and held both positions until 2006.
Banking Berhad. He served as Group Managing Director and Chief
Executive Officer of Malayan Banking Berhad from 1991 to 1994. Between Mr Kuah is the Chairman of Alliance Investment Bank Berhad. He also
May 1994 and August 1998, Tan Sri Dato’ Ahmad was the Governor of holds directorships in public companies listed on Bursa Malaysia namely,
Bank Negara Malaysia. Rexit Berhad and MPHB Capital Berhad. In addition, he serves as a
Director on the Board of Multi-Purpose Capital Holdings Berhad.
Tan Sri Dato’ Ahmad is also the Chairman on the Board of Sunway REIT
Management Sdn Bhd (manager of Sunway Real Estate Investment Trust
listed on Bursa Malaysia) and a Director on the Board of United Malacca
Berhad (listed on Bursa Malaysia).
 2019 Annual Report 67

OU SHIAN WAEI LEE AH BOON

Independent Non-Executive Director of Alliance Bank Non-Independent Non-Executive Director of Alliance Bank
Chairman of Group Nomination & Remuneration Committee Non-Independent Non-Executive Director of Alliance Investment
Member of Executive Committee Bank Berhad
Chairman of Executive Committee
Member of Group Nomination & Remuneration Committee
68 | Malaysian | Male 68 | Singaporean | Male
Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Bank Malaysia Berhad: Alliance Bank Malaysia Berhad:
8 December 2010 18 April 2012

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Science in Chemistry, University of Malaya • Bachelor of Accounting (Honours), National University of
Singapore
Mr Ou Shian Waei began his career with a local bank as a management
trainee in 1976 and remained till 1980. In 1981, he moved to IBM Malaysia Mr Lee Ah Boon joined Citibank in 1990 and held various Consumer
as a trainee System Engineer. At IBM, he held various technical and Banking roles in Singapore including that of Chief Financial Officer,
management positions. He retired as Managing Director of IBM Malaysia Senior Operations Officer, Head of Credit Card business and Business
in January 2010 after almost 30 years of service. Manager. In 2005, he started up Citibank’s Consumer Business in China
and returned to Singapore as Regional Operations Head of Citibank.
Mr Ou was the PIKOM (Association of Malaysia Computer Industry) He then moved to Barclays Bank in early 2009 as its International
Councillor from 1997 to 1998. In 2006, he was awarded the ‘Key Industry Technology Head for the Global Retail and Consumer Bank Business.
Leader Award’ by PIKOM (now known as The National ICT Association of
Malaysia) for his contributions to Malaysia’s IT industry. He was also the In September 2010, Mr Lee left Barclays Bank and joined Fullerton
Chairman of the National International Technology Council (NITC) Taskforce Financial Holdings (International) Pte Ltd, a subsidiary of Temasek
for IT literacy in 1997. Additionally, Mr Ou was Adjunct Professor for the Holdings (Private) Limited, as its Chief Operating Officer. He remained
Department of Economics and Business Administration at Universiti Putra for three years until his retirement in November 2013.
Malaysia from 1998 to 1999.
Mr Lee is currently an Advisor of Fullerton Financial Holdings
He serves as the Chairman of AIG Malaysia Insurance Berhad. He is also (International) Pte Ltd. He also serves as a Director on the Board of
a Director of FIDE Forum and Public Interest Director of Private Pension Alliance Investment Bank Berhad.
Administrator Malaysia.
68 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Board of Directors

DATUK WAN AZHAR BIN LEE BOON HUAT

WAN AHMAD
Independent Non-Executive Director of Alliance Bank Independent Non-Executive Director of Alliance Bank
Chairman of the Board of Alliance Islamic Bank Berhad Chairman of Group Risk Management Committee
Member of Group Nomination & Remuneration Committee Member of Executive Committee
Member of Group Audit Committee
Member of Executive Committee
60 | Malaysian | Male 61 | Singaporean | Male
Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Bank Malaysia Berhad: Alliance Bank Malaysia Berhad:
7 April 2015 7 April 2015

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor in Business Administration (Finance), University of • Bachelor of Business (Accounting), Western Australia Institute
Pacific, Stockton, California, USA of Technology, Australia
• Master in Business Administration (International Business),
National University San Diego, California, USA Mr Lee Boon Huat has extensive experience in the financial services
industry. He has served with the Monetary Authority of Singapore,
Datuk Wan Azhar Bin Wan Ahmad was the Chief Executive Officer of
Hong Kong and Shanghai Banking Corporation, Canadian Imperial
Credit Guarantee Corporation Malaysia Berhad (CGC) from 1997 until
his retirement in December 2014. He began his career in banking as Bank of Commerce and Chemical Bank. He held several posts at
a Loans Executive of Hong Leong Bank in 1985 and left the bank as Standard Chartered Bank including Head of Global Markets (South
Head of Branches Operations in 1993. He then joined CGC as Head East Asia), Head of Global Markets (Middle East), and Chief Operating
of Credit. In 1995, he was promoted to Assistant General Manager Officer (South East Asia) from 1998 to 2012.
and subsequently to Chief Executive Officer in 1997. In 2000, he was
appointed to the Board of Directors and assumed the role of Managing Mr Lee serves on the Boards of British and Malayan Trustees Limited,
Director. British and Malayan Holdings Limited (listed on the Singapore Stock
Exchange), Technological and Commercial Joint-stock Bank, Vietnam
One of the highlights of his career was the transformation of CGC (listed on the Vietnam Stock Exchange), and several other private
from a traditional credit guarantee provider into a market-driven and
corporations.
financially sustainable SME-support institution. He was instrumental
in the setting up of Credit Bureau Malaysia (CBM) where he was the
Chairman for six years from 2008 to 2014. On the international front,
he was also Chairman of the Association of Development Financial
Institutions for Asia Pacific region (ADFIAP) from 2012 to 2014.

Upon his retirement, he was appointed as Consultant to the World Bank

from 2015 to 2016, undertaking projects relating to SME financing in
the Middle East.

Datuk Wan Azhar is currently the Chairman of Alliance Islamic Bank

Berhad. He serves on the Board of Trustees of NAMA Foundation. He
is also the Chairman of the Small Debt Resolution Committee (SDRC)
at Bank Negara Malaysia.
 2019 Annual Report 69

HO HON CHEONG THAYAPARAN S. SANGARAPILLAI

Non-Independent Non-Executive Director of Alliance Bank Independent Non-Executive Director of Alliance Bank
Member of Group Audit Committee Chairman of Group Audit Committee
Member of Group Risk Management Committee Member of Group Risk Management Committee

64 | Malaysian | Male 64 | Malaysian | Male

Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Bank Malaysia Berhad: Alliance Bank Malaysia Berhad:
26 August 2015 10 May 2016

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Engineering (Honours), University of Malaya • Fellow of the Institute of Chartered Accountants in England
• Master of Business Administration in Finance and Accounting, and Wales
McGill University, Canada • Member of the Malaysian Institute of Certified Public
Accountants
Mr Ho Hon Cheong began his banking career with Citibank Malaysia • Member of the Malaysian Institute of Accountants
in 1981. Since then, he has held various senior positions with Citibank
in Asia Pacific and the Middle East including Country Risk Officer of Mr Thayaparan S. Sangarapillai has over 30 years of experience in
Citibank Malaysia, Pan Asia Corporate Head of Citibank Asia Pacific audit and business advisory services for a wide range of industries.
in Singapore, and Chief Executive Officer of Citibank Thailand. He His portfolio of clients included major public listed companies in
also served as General Manager and Group Head of Corporate and the power, telecommunications, automotive, property development,
Investment Banking with Saudi American Bank in Saudi Arabia. plantation and manufacturing sectors. Mr Thayaparan also led cross
border assignments. Other than statutory audits, Mr Thayaparan has
In 2004, Mr Ho was appointed President Director and Chief Executive led assignments on financial due diligences, mergers and acquisitions,
Officer of PT Bank International Indonesia TBK. Thereafter he joined initial public offerings, finance function effectiveness reviews and
Temasek Holdings (Private) Limited in 2009. He returned to Indonesia other advisory work.
in 2010 as the President Director and Chief Executive Officer of PT
Bank Danamon Indonesia TBK until his retirement in February 2015. Mr Thayaparan joined Price Waterhouse (now known as
PricewaterhouseCoopers PLT) in Kuala Lumpur in 1983. He was a
Mr Ho is a Director of AIA Singapore Pte Ltd and a Commissioner of Partner in the Assurance Services division of PricewaterhouseCoopers
PT Chandra Asri Petrochemical Tbk, which is listed on the Indonesia Malaysia from 1994 until his retirement as a Senior Partner in 2015.
Stock Exchange. He is also the Non-Executive Chairman of Frasers
Logistics and Industrial Trust, listed on the Singapore Stock Exchange. He serves as a Director on the Board of Sime Darby Berhad which is
listed on Bursa Malaysia. He also sits on the Boards of AIG Malaysia
Insurance Berhad, edotco Group Sdn Bhd and Robi Axiata Limited.
70 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Board of Directors

TAN CHIAN KHONG SUSAN YUEN SU MIN

Independent Non-Executive Director of Alliance Bank Independent Non-Executive Director of Alliance Bank
Member of Group Audit Committee Member of Group Nomination & Remuneration Committee
Member of Executive Committee

63 | Singaporean | Male 59 | Malaysian | Female

Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Bank Malaysia Berhad: Alliance Bank Malaysia Berhad:
26 September 2017 15 October 2018

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Accountancy, National University of Singapore • Bachelor of Computer Science (Honours), University of London,
• Master of Business Administration, University of South Australia United Kingdom
• Master of International Environmental Management, University
of Adelaide, Australia Ms Susan Yuen Su Min has over 30 years of working experience
• Member of the American Institute of Certified Public Accountants in the banking industry. She has served in a number of banking
• Fellow of the Institute of Singapore Chartered Accountants and establishments including Maybank and HSBC Malaysia. She was
of CPA Australia also previously attached to the National Bank of Abu Dhabi Malaysia
Berhad (NBAD) where she was the Regional CEO Asia and Country CEO
Mr Tan Chian Khong has 35 years of experience in the audit industry. Malaysia from 2014 to 2018. Prior to joining NBAD, she served as CEO
He was a partner at Ernst & Young LLP from July 1996 till his retirement of ANZ Banking Group in Hong Kong from 2009 to 2014.
in June 2016.
Ms Susan Yuen serves as an Independent Director on the Board of
Mr Tan currently holds directorships in a number of companies listed Chubb Insurance Malaysia Berhad.
on the Singapore Stock Exchange namely, CSE Global Limited, Hong
Leong Asia Ltd and The Straits Trading Company Ltd. He also sits on
the Board of Xinghua Port Holdings Ltd, listed on the Hong Kong Stock
Exchange.

Mr Tan is a Board member of the Casino Regulatory Authority of

Singapore, a statutory board in Singapore. He is a member of Rules
Change Panel of Energy Market Company Pte Ltd and volunteers as an
Honorary Executive Director of Trailblazer Foundation Ltd.
 2019 Annual Report 71

MAZIDAH BINTI ABDUL MALIK DATIN OOI SWEE LIAN

Independent Non-Executive Director of Independent Non-Executive Director of

Alliance Investment Bank Berhad Alliance Investment Bank Berhad
Member of Group Risk Management Committee

60 | Malaysian | Female 58 | Malaysian | Female

Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Investment Bank Berhad: Alliance Investment Bank Berhad:
18 January 2016 1 November 2018

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor in Business Administration, Ohio University, USA • Bachelor of Economics (Honours) in Business Administration,
• Master of Law Executive (Banking Law), International Islamic University of Malaya
University, Malaysia
• Certificate in Islamic Financial Planning, Islamic Banking and Datin Ooi Swee Lian has over 30 years of working experience in the
Finance Institute, Malaysia banking industry including seven years overseas. She began her
banking career in the Lending Division of Malayan Banking Berhad in
Puan Mazidah Binti Abdul Malik served for more than 30 years with 1983. In 1986, she went abroad and furthered her banking exposure
Bank Negara Malaysia, with stints at the Representative Office in with Llyods Bank, Hong Kong and Indover Asia Limited, Hong Kong.
New York and London, Labuan Offshore Financial Services Authority
and the International Centre for Education in Islamic Finance. She Datin Ooi joined RHB Bank Berhad in 1994 and has held various senior
has experience in money market and investment operations, as positions in commercial/corporate and transaction banking. She was
well as exposure on issues relating to macroeconomic policy, risk appointed as the Executive Vice President and Head of Group Business
management, communications and international relations. Banking and Transaction Banking in 2014, and held the position till
December 2017.
Puan Mazidah serves on the Boards of Prudential BSN Takaful Berhad,
Bursa Malaysia Securities Berhad and Bursa Malaysia Securities
Clearing Sdn Bhd.
72 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Board of Directors

TUAN HAJI MD ALI BIN MD SARIF TUAN HAJI IBRAHIM BIN HASSAN

Independent Non-Executive Director of Independent Non-Executive Director of

Alliance Islamic Bank Berhad Alliance Islamic Bank Berhad
Member of Shariah Committee Member of Group Risk Management Committee

65 | Malaysian | Male 63 | Malaysian | Male

Date of Appointment to the Board of Date of Appointment to the Board of
Alliance Islamic Bank Berhad: Alliance Islamic Bank Berhad:
23 March 2011 1 September 2016

Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Economics, University of Malaya • Bachelor of Economics (Hons), University of Malaya
• Master of Business Administration in Finance, Universiti
Kebangsaan Malaysia (UKM) Tuan Haji Ibrahim Bin Hassan has over 30 years of banking experience.
• Diploma in Islamic Studies, UKM He was the Managing Director/Chief Executive Officer of RHB Islamic
• Post-Graduate Diploma in Islamic Law, UKM Bank Berhad from 2 September 2013 to 1 August 2016.

Tuan Haji Md Ali Bin Md Sarif was with the Maybank Group from 1976, He began his illustrious career in the banking industry in the dealing
holding various senior positions until his retirement in 2008 as Head rooms of three Maybank International Offices in Hong Kong, New York,
of Planning, Maybank Islamic Berhad. He has extensive experience in and London for more than 10 years. Upon returning to Malaysia, he was
the areas of Islamic banking, corporate planning, asset and liability instrumental in strengthening the treasury operations of the Maybank
management, as well as banking operations. Group. He was subsequently appointed as the Chief Executive Officer
of Maybank Discount from 1996 to 1998. Thereafter, he became the
Tuan Haji Md Ali was a Distinguished Academic Fellow of the Institute head of the market risk division where he developed the market risk
of Islamic Banking and Finance (IIBF) at International Islamic University management policies and model for the Maybank Group.
Malaysia from 2008 to 2014.
Tuan Haji Ibrahim was promoted as Head of International Banking in
2001 to oversee the operations of Maybank’s international branches
and subsidiaries in 14 countries. In 2007, he was reassigned to lead
a team to de-merge the operations of Maybank’s Islamic window
operations into a separate full-fledged Islamic banking subsidiary
of Maybank Group. He was appointed as Chief Executive Officer of
Maybank Islamic when it began operations in January 2008. He was
the president director of Maybank Syariah Indonesia, previously known
as Maybank Indocorp, which commenced operations in October 2010.

Tuan Haji Ibrahim serves on the Board of Bank Pertanian Malaysia

Berhad.
 2019 Annual Report 73

ADDITIONAL INFORMATION OF DIRECTORS OF ALLIANCE BANK

(i) Directors’ Interest in the shares of the Bank as at

31 March 2019

Save as disclosed below, none of the other Directors have any

interest in the shares of the Bank as at 31 March 2019:

No. of Alliance Bank shares

Name Direct % Indirect %

Ho Hon Cheong - - 1,000^ *

DATO’ AHMAD HISHAM BIN
KAMARUDDIN Notes:
* Negligible
^
Indirect interest in the Bank’s shares by virtue of Section 59(11)
Independent Non-Executive Director of (c) of the Companies Act 2016
Alliance Islamic Bank Berhad
(ii) Family relationship

None of the Directors have any family relationship with other

62 | Malaysian | Male Directors and/or major shareholders of the Bank.
Date of Appointment to the Board of
Alliance Islamic Bank Berhad: (iii) Conflict of interests
15 February 2019
None of the Directors have any personal pecuniary interests which
are in conflict with the Bank or its subsidiaries.
Academic/Professional Qualifications:
• Bachelor of Laws (LLB), University of Malaya (iv) List of convictions for offences and public sanction or penalty

None of the Directors have been convicted of any offences within

Dato’ Ahmad Hisham Bin Kamaruddin was the founding and senior
the past 5 years (other than traffic offences) nor have they been
partner of Messrs Hisham & Associates. His career spans over 36
imposed any public sanction or penalty by the relevant regulatory
years in various areas of law including banking law, commercial
bodies during the FY2019.
agreements, corporate law and extensive experience in corporate
banking and finance, loan and securities documentations as well as
corporate matters. He focuses on complex joint-venture agreements
between Malaysian entities and foreign investors. His other areas of
expertise include cross-border estate planning, intellectual property
and aviation law.

Dato’ Ahmad Hisham previously served as Tribunal President for

the Consumer Court in Malaysia, Council Member of the Malaysia
Competition Commission and Council Member of the Malaysian
Heritage Council.

He is a duly registered Trademark and Industrial Design Agent with

the Ministry of Domestic Trade, Co-Operatives and Consumerism and
is a Notary Public.
74 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Senior Management

1 JOEL KORNREICH 2 KONG KIM YIHE 3 MANUEL BULENS

Group Chief Executive Officer Group Chief Operating Officer Head, Group Consumer Banking – Retail
Non-Independent Executive Director of Banking
Alliance Islamic Bank Berhad (AIS)
53 | Belgian | Male 55 | Malaysian | Male 41 | Belgian | Male
Joined: Joined: Joined:
1 January 2015 23 March 2016 1 December 2015
Appointment to Current Positions: Appointment to Current Position: Appointment to Current Position:
1 January 2015 (Group Chief Executive Officer) 23 March 2016 1 November 2018
10 October 2017 (Director of AIS)

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Masters of Science in Business • Master of Business Administration, • Degree in Commercial and Finance
Engineering, magna cum laude, Solvay National University of Singapore Science, Institute Catholique Des Hautes
Business School, Brussels, Belgium • Fellow, Life Management Institute, USA Etudes Commerciales (ICHEC), Belgium

Mr Kornreich has over 28 years of experience Mr Kong has more than 30 years of experience Mr Bulens was previously the Relief Officer,
in the financial services industry. Before joining in technology-related operations in the Group Consumer Banking. He had initially
Alliance Bank, he spent 20 years with Citigroup in financial services industry. He previously joined Alliance Bank as Group Chief
various roles around the world. His last position served with CIMB Bank and Phileo Allied Administrative Officer. Presently, he is leading
with Citigroup was as Country Business Manager Bank. He has also worked in non-financial the strategic execution of Retail Banking and
of Citibank Global Consumer Group, South services sectors with a global IT company and the strengthening of branch banking processes,
Korea. Previously, he had served as the Chief a multinational insurance company. Prior to controls, governance, and customer experience.
Executive Officer for Spain, Belgium and Greece, joining Alliance Bank, Mr Kong was the Group Mr Bulens has more than 17 years of experience
and managed Citigroup’s Consumer Banking Chief Technology Officer of The Edge Media in the financial services industry, including
businesses in Indonesia and Russia. Prior to Group. financial consulting and banking. He began
this, Mr Kornreich was Citigroup’s Marketing his career as an auditor at one of the big four
Director, and Head of Mortgages and Liabilities In his function as Group Chief Operating Officer, consulting firms before moving to a Regional
for Asia Pacific, as well as Retail Banking Head Mr Kong oversees areas related to banking Audit function with Citibank, Brussels. His
for Singapore. Earlier in his career, he was with operations and information technology. experience at Citibank covers audit, risk, internal
ABN AMRO Bank’s Consumer Banking business controls, compliance and general governance.
as Head of Sales and Distribution for Asia, and His international experience covers posts in
Consumer Banking business manager for Belgium, Russia, Spain and Korea, where he last
Indonesia and Hong Kong. served as Consumer Chief Administrative Officer.

In his role as Group Chief Executive Officer, As Head of Retail Banking, Mr Bulens oversees
Mr Kornreich’s key responsibilities are to Branch Distribution, Wealth Management, Retail
develop the strategic direction of the Banking Broking and Liabilities. His responsibilities
group, and ensure that the Bank’s strategies and include ensuring a high performance branch
corporate policies are effectively implemented. distribution network with sustainable wealth,
He also ensures that the Board’s directions are bancassurance, retail broking and deposits
implemented, and together with the Board, sales via excellent customer service. In leading
promote a sound corporate culture which the strategic execution of Retail Banking, he
reinforces ethical, prudent and professional is strengthening branch banking processes,
behaviour. controls, governance and customer experience.
 2019 Annual Report 75

4 ERNEST KWONG KAH WAH 5 JEFF THAM KOK KUEN 6 TAN ENG KIANG

Head, Group SME Banking Head, Group Corporate, Commercial and Head, Group Financial Markets
Transactions

45 | Malaysian | Male 50 | Malaysian | Male 55 | Malaysian | Male

Joined: Joined: Joined:
10 November 2006 6 July 2015 14 July 2014
Appointment to Current Position: Appointment to Current Position: Appointment to Current Position:
12 November 2016 6 July 2015 25 November 2014

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Business Administration • Bachelor’s Degree in Business • Associate Member, Chartered Institute
(Hons) majoring in Finance, University (Distinction), Curtin University of of Management Accountants, UK
Utara Malaysia Technology, Australia
Mr Tan initially joined Alliance Bank as Deputy
Mr Kwong joined Alliance Bank as Head of Mr Tham has over 25 years of experience in the Head, Financial Markets. He brings with him
Remedial Management before moving on to financial services industry. He was previously more than 25 years of experience in financial
several other roles within the business banking attached to HSBC Malaysia and UOB Malaysia. markets. He has worked in several large
segment. He has over 22 years of experience His previous experience covered various roles banking groups and regional banks in various
in the SME and Commercial segments at both encompassing commercial and corporate capacities including treasury operations, sales,
local and international financial institutions. banking, credit underwriting, trade services trading, funding, and liquidity management.
Prior to his current appointment, Mr Kwong and business management.
was the Head of Commercial Banking. In his role as Head of Group Financial
As Head of Group Corporate, Commercial Markets, Mr Tan oversees four core financial
He was instrumental in revamping the Bank’s and Transactions, Mr Tham is responsible market activities namely funding/liquidity
financial programmes, where he led a team for driving growth in the balance sheet and management and investment, trading, client-
to assess the viability and relevance of SME revenues of the Group Corporate, Commercial facing sales activities, and asset/liability
programmes at every business life stage. and Transactions division. He also leads the management for the Bank.
He has also worked in credit, recovery and Trade Finance and Digital BizSmart initiatives
sales roles. As Head of Group SME Banking, that will be introduced in the near future.
Mr Kwong oversees all SME Banking
operations.
76 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Senior Management

7 MAHESH S/O SHRI 8 RIZAL IL-EHZAN 9 FOZIAKHATOON BINTI

PRANLAL RUPAWALLA FADIL AZIM AMANULLA KHAN
Chief Executive Officer, Chief Executive Officer, Chief Business Development Officer
Alliance Investment Bank Berhad Alliance Islamic Bank Berhad
58 | Singaporean | Male 47 | Malaysian | Male 50 | Malaysian | Female
Joined: Joined: Joined:
21 April 2014 12 November 2012 24 September 2012
Appointment to Current Position: Appointment to Current Position: Appointment to Current Position:
21 April 2014 1 August 2017 1 August 2017

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Bachelor of Business Administration, • Bachelor of Science (Hons), University • Degree in Accounting and Finance from
National University of Singapore of Warwick, UK Humberside University in Hull, UK
• Master of Finance, Royal Melbourne • Chartered Banker, Asian Institute of
Institute of Technology, Australia Prior to his current role as Chief Executive Chartered Bankers (AICB)
• Chartered Banker, Asian Institute of Officer of Alliance Islamic Bank Berhad (AIS),
Chartered Bankers (AICB) En Rizal was the Deputy Chief Executive Puan Foziakhatoon initially joined Alliance
Officer and Senior Vice President, Strategy Bank as the Chief Executive Officer of its
Mr Rupawalla has more than 27 years of and Business Performance of AIS. He has subsidiary, Alliance Islamic Bank Berhad (AIS),
experience in the financial services industry. over 24 years of experience in business before being appointed to her current position.
He began his career with the Monetary advisory, banking and finance, including She sits on the Board of AllianceDBS Research
Authority of Singapore (MAS) and held the Islamic Banking. Before joining AIS, he served Sdn Bhd. She is also a Grand Council member
position of Assistant Director, Securities at Hong Leong Islamic Bank, EONCAP Islamic for the Chartered Institute of Islamic Finance
Industry Department when he left nine years Bank, The Boston Consulting Group and Bank Professionals (CIIF). She has over 24 years of
later. He subsequently spent the next 11 years Negara Malaysia. experience in the banking industry, covering
of his career with DBS Bank Ltd., Singapore, Corporate and Investment Banking, and
rising to the position of Regional Managing As Chief Executive Officer of AIS, he is Commercial and Islamic Banking. Prior to
Director, Mergers and Acquisitions Advisory. responsible to provide leadership to drive a joining Alliance Bank and AIS, she was the
Thereafter, he established a consultancy firm steady, sustainable and profitable growth in Chief Executive Officer and Executive Director
offering corporate finance, acquisition and Islamic Banking business for the Group, while of another local Islamic bank.
fund raising advisory to clients in South East exploring new business opportunities under
Asia. Prior to joining Alliance Investment Bank the Islamic Financial Services Act 2013 with As Chief Business Development Officer,
Berhad, he was the Chief Executive Officer of appropriate risk management framework she plays a crucial role in the Bank’s
HwangDBS Investment Bank for three years. emplaced. Transformation strategy. This entails
overseeing the development of new business
As Chief Executive Officer of Alliance relationships through strategic partnerships
Investment Bank Berhad, Mr Rupawalla is to enable the Bank to venture into an
responsible for establishing the investment e-commerce point of sale platform. As part of
bank’s business direction and priorities. This her responsibilities, she addresses the needs
includes driving the execution of business and of the Bank’s customers on a holistic basis, by
operational strategies, with effective control leveraging on digital technologies.
functions to achieve financial and corporate
objectives.
 2019 Annual Report 77

10 RAYMOND WONG 11 DR AARON SUM 12 PETER FONG SEOW LOONG

LAI LOONG WEI WERN
Group Chief Financial Officer Head, Group Strategy and Performance Group Chief Credit Officer
Management
58 | Malaysian | Male 41 | Malaysian | Male 52 | Malaysian | Male
Joined: Joined: Joined:
1 December 2015 6 December 2010 10 February 2014
Appointment to Current Position: Appointment to Current Position: Appointment to Current Position:
1 December 2015 1 April 2015 1 October 2014

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Fellow Member, Chartered Institute of • PhD in Engineering, University of • Bachelor’s Degree in Economics,
Management Accountants Nottingham, UK University of Leicester, UK
• Fellow Member, Chartered Global • Bachelor of Engineering, University of
Management Accountants Manchester, UK Mr Fong first joined Alliance Bank as Head,
• Certified Member, Financial Planning Group Corporate Credit. He has over 28
Association of Malaysia Dr Sum has more than 19 years of combined years of experience in the local and regional
management consulting, research and banking industry. He began his career with
Mr Wong has more than 30 years of industry experience. His key expertise is in HSBC Bank where he was involved in various
experience in the banking industry. His business strategy, operating model design, banking functions including corporate risk,
previous experience includes roles as Chief customer experience transformation and recovery, credit assessment, corporate policy
Financial Officer, Financial Controller, and process optimisation. and portfolio management. His stint at HSBC
other positions in Credit Portfolio Review and included two years at HSBC Hong Kong
Asset Liability Management at two leading In his current role as Head of Group Strategy as Senior Manager, Asia Pacific Risk. Prior
global and regional banks in Malaysia. Prior and Performance Management, Dr Sum is to joining Alliance Bank, Mr Fong was the
to joining Alliance Bank, he was the Chief responsible for strategic planning, business Head of Wholesale Credit for a local financial
Financial Officer of Standard Chartered Bank performance management, decision institution, where he was responsible for
Malaysia. management (business analytics) and its corporate, commercial and SME credit
market insights (research). He also oversees evaluation activities.
His primary responsibilities as Group Chief the execution of the Bank’s key strategic
Financial Officer are overseeing, managing initiatives. As Group Chief Credit Officer, Mr Fong
and optimising the Bank’s financial resources. oversees the areas of credit risk and approval.
This includes financial planning, forecasting He is also responsible for early warning,
and budgeting, management of financial remedial, collections and special assets for
liquidity and capital risks, record-keeping, the Bank.
as well as ensuring integrity in the Bank’s
financial and regulatory reporting.
78 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Senior Management

13 PANG CHOON HAN 14 GIUSEPPE TAIBI 15 CHEW SIEW SUAN

Group Chief Risk Officer Group Chief Marketing and Customer Head, Group Human Resource
Experience Officer
54 | Malaysian | Male 56 | Italian | Male 60 | Malaysian | Female
Joined: Joined: Joined:
1 November 2006 15 August 2016 3 October 2011
Appointment to Current Position: Appointment to Current Position: Appointment to Current Position:
27 October 2010 15 August 2016 3 October 2011

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Associate Member, Chartered Institute • Master of Science in Business • Bachelor of Economics, University of
of Management Accountants, UK Engineering, IAG, Louvain-La-Neuve, Malaya
• Chartered Banker, Asian Institute of Belgium
Chartered Bankers (AICB) Ms Chew has over 32 years of experience
• Chartered Banker, Chartered Banker Mr Taibi has over 28 years of international in the areas of Human Resource (HR)
Institute (UK) banking experience. He has worked in nine Management and Development. She began
countries within various sectors including her career in a manufacturing company with
Mr Pang first joined Alliance Bank as Head of marketing, customer experience, digital local and overseas outfits. She later joined
Group Market Risk. He has more than 28 years banking, decision management, business Hong Leong Bank Berhad as Head of Human
of experience in the banking industry. He and sales, as well as technology, compliance Resource where she managed the entire HR
began his career with Resorts World Berhad, and control. Prior to his appointment at functions for the banking and finance entities.
before joining Malayan Banking Berhad. Alliance Bank, Mr Taibi was the Customer Prior to joining Alliance Bank, she spent over
Mr Pang started off in internal audit, before Franchise Head at Citibank Thailand, where 10 years with PricewaterhouseCoopers (PwC)
switching to risk management. His previous he developed and implemented a customer- where she last held the position of Executive
responsibilities include reviewing controls focused strategy to align customer promise Director for Human Capital, covering Regional
across head office business and support with actual delivery. Human Capital functions for Malaysia, Vietnam
functions, overseas branches and banking and Cambodia.
subsidiaries, establishing risk frameworks, As Group Chief Marketing and Customer
policies and limits, supplementing supervisory Experience Officer, Mr Taibi oversees all As Head of Group Human Resource, Ms Chew
controls, and monitoring risk exposure. marketing and communications activities. partners with business leaders and division
These span areas such as branding, public heads to embed the Group’s key behaviours.
In his current role as Group Chief Risk Officer, relations, online media, and corporate She develops initiatives and action plans to
Mr Pang is responsible for overall Group risk responsibility and event management. He is build the Bank’s employees’ capabilities and
monitoring and management. This covers also in charge of customer experience and strengths. Additionally, she ensures a strong
the commercial bank, investment bank and contact centre activities. pipeline of talents for succession planning. In
Islamic bank. His areas of responsibility order to meet the Bank’s business needs, Ms
includes credit, operation, market and liquidity Chew oversees an effective resourcing and
risk functions. selection process, as well as the execution of
a robust performance management system.
 2019 Annual Report 79

16 LEONG SOW YOKE 17 JAMES TEH CHYE SEONG 18 LEE WEI YEN

Group Chief Internal Auditor Group Chief Compliance Officer Group Company Secretary

58 | Malaysian | Female 40 | Malaysian | Male 54 | Malaysian | Male

Joined: Joined: Joined:
8 December 2010 1 November 2018 1 April 2004
Appointment to Current Position: Appointment to Current Position: Appointment to Current Position:
8 December 2010 1 February 2019 1 December 2004

Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:

• Chartered Accountant (CA) • Bachelor of Jurisprudence (Hons), • Master of Business Administration in
• Fellow of the Association of Chartered University of Malaya Finance, University Putra Malaysia
Certified Accountants (FCCA) • Master of Advanced Business Practice,
• Certified Information Systems Auditor Mr Teh initially joined Alliance Bank as the University of South Australia
• Associate Member, Malaysian
(CISA) Head of Business Compliance and Control
Institute of Chartered Secretaries and
• Certified in Risk and Information for Group Consumer Banking, where he
Administrators
Systems Control (CRISC) managed the overall business compliance,
• Chartered Banker, Asian Institute of risk and control, business efficiency and sales With over 26 years of experience in the
Chartered Bankers (AICB) surveillance functions. His experience over corporate secretarial function, Mr Lee has a
• Chartered Banker, Chartered Banker the past 15 years include various compliance strong background in corporate actions of
Institute (UK) and supervisory roles at several financial public listed companies and a wide exposure
institutions and at a regulatory organisation. in the management and financial services
Ms Leong has more than 31 years of external He was also attached to a locally based industry.
and internal audit experience that includes foreign bank, where he was responsible for
both general and information systems audits. the development and implementation of the Mr Lee’s responsibilities as Group Company
She was an auditor with an audit firm and a overall compliance strategy and framework Secretary encompass providing counsel to
large conglomerate before joining the banking including policies, process, programmes, tools the Boards of Directors (Boards) and Board
sector. Prior to joining Alliance Bank, she was and controls. Committees (Committees) on governance
the Head of Internal Audit at UOB Malaysia matters and ensures that the Group is
Berhad. In his capacity as Group Chief Compliance fully compliant with the required corporate
Officer, Mr Teh leads the Group Compliance disclosure requirements, and that all decisions
As Group Chief Internal Auditor, Ms Leong function. He is responsible for the by the Boards adhere to applicable rules and
is responsible for the internal audit function identification, assessment, monitoring and regulations.
of the Group. She reports functionally to the reporting of compliance risk across the Group.
Group Audit Committee and administratively He facilitates the annual Board performance
to the Group Chief Executive Officer. In her assessment for Board effectiveness and
role, Ms Leong leads the Group Internal effective flow of information between the
Audit (GIA) to provide independent, objective Boards and Senior Management. Mr Lee
assurance and consulting services designed ensures that Board procedures are followed,
to add value and improve the operations of the to support the effective function of the Boards.
Group. GIA’s mission is to enhance and protect In his role, he organises and facilitates the
organisational value by providing risk-based induction of new Directors, and maintains
and objective assurance, advice and insight. a schedule for the continuous training and
development of Directors.
80 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Leadership - Senior Management

Notes:

None of our Senior Management Team has:

• Any family relationship with any Directors and/or major shareholders of the Bank
• Any personal pecuniary interests which are in conflict with the Bank or its subsidiaries
• Any conviction of any offences within the past five years (other than traffic offences) as at 31 March 2019
• Any public sanction or penalty imposed upon him/her by the relevant regulatory bodies during the FY2019

Save as disclosed below, none of the other Senior Management has any interest in the shares of the Bank as at 31 March 2019:

No. of Alliance Bank shares No. of Alliance Bank shares

held as at 1 April 2018 held as at 31 March 2019
Name Direct % Indirect % Direct % Indirect %

Aaron Sum Wei Wern 146,200 0.01 - - 146,200 0.01 - -

Chew Siew Suan 197,900 0.01 - - 197,900 0.01 - -
Ernest Kwong Kah Wah 122,300 0.01 - - 122,300 0.01 - -
Foziakhatoon Binti Amanulla Khan 92,400 0.01 - - 92,400 0.01 - -
Lee Wei Yen 219,800 0.01 - - 219,800 0.01 - -
Leong Sow Yoke 303,500 0.02 - - 303,500 0.02 - -
Mahesh S/O Shri Pranlal Rupawalla 56,400 * - - 56,400 * - -
Pang Choon Han 501,200 0.03 - - 501,200 0.03 - -
Peter Fong Seow Loong 69,500 * - - 69,500 * - -
Rizal IL-Ehzan Fadil Azim 47,500 * - - 47,500 * - -
Tan Eng Kiang 79,600 0.01 - - 79,600 0.01 - -

Note:
* Negligible
 2019 Annual Report 81

Effectiveness

Board Size, Composition, Tenure and Independence The Board, through the Group NRC, has taken steps to ensure that
women candidates are given priority consideration in the selection and
The Board has 10 members, comprising entirely of Non-Executive recruitment process for directors towards achieving the gender diversity
Directors, eight of whom are Independent Directors. target of 30% women participation. During FY2019, a woman director
was appointed to the Board on 15 October 2018. The Board will continue
The current Board comprises of individuals of high calibre with diverse its endeavour to meet the gender diversity target of 30% women
experience which collectively has the necessary skills, experience and participation.
qualifications to effectively manage the Bank and to discharge the
responsibilities of the Board. The diversity of business backgrounds in New Appointment and Re-Appointment of Director
the composition of the Board ensures good use of their different and
wide-ranging skills, regional as well as industry experience and other Any proposed appointment of new Directors or proposed re-appointment
attributes of the Directors. of Directors to the Board will be assessed by the Group NRC. The Group
NRC is guided by the Group Board Succession Plan and the Board
The Board considers a strong element of independence on the Board Gender Diversity Policy in identifying potential candidates for nomination
vital for good corporate governance. Independent Directors of the Bank as Directors. The Group Board Succession Plan entails the guiding
exercise independent judgement and participated in the deliberations principles for effective succession planning as well as the procedure
of the Board objectively with no individual or small group of individuals in ensuring a smooth transition in the Board’s succession process as
dominating the Board’s decision making process. The number of existing Directors leave the Board and new ones come on board. The
Independent Directors on the Board of the Bank has well exceeded Group NRC identifies potential candidates for nomination as Directors
the requirement laid down in BNM CG Policy to have a majority of from various sources such as referrals from existing Directors or officers
independent directors at all times and the requirements under MMLR and Directors Register maintained by FIDE Forum and other leadership
to ensure that at least two (2) directors or one-third of the Board are development and consulting organisations.
independent directors.
The Group Board Succession Plan was last reviewed and updated by the
The Board through the Group NRC assess Independent Directors’ Board in November 2018 to ensure alignment with the strategic direction
independence annually. In the annual assessment of the Independent of the Bank.
Directors of the Bank in respect of FY2019, the Board was satisfied
that each of the Independent Directors of the Bank continues to be Assessment Criteria and Process for Board Candidates
independent and free from any business or other relationship that could
interfere with the exercise of independent judgement or the ability to act The Group NRC takes into account the strategic directions of the Group
in the best interest of the Bank, and that each of them continues to fulfil when evaluating candidates to fill any Board vacancy. In assessing
the definition of independence as set out in Paragraph 11.7 of BNM CG candidates for new Board appointment, the Group NRC looks for diversity
Policy. of skills, knowledge, experience and gender of the candidates.

The Bank has adopted a 9-year policy for tenure of Independent Directors To ensure a candidate has the character, experience, integrity and
and a 12-year policy for tenure of Non-Independent Non-Executive competency to effectively discharge his/her role as a Director, the Group
Directors. NRC will assess the candidates on the following criteria:

As at the date of this Statement, none of the Bank’s Independent (a) not be disqualified under section 59(1) of the Financial Services
Directors have served for a cumulative period of more than 9 years. Act, 2013;
Mr Ou Shian Waei will retire as a Director of the Bank on 1 July 2019 (b) comply with the fit and proper requirements of the Bank;
upon expiry of his current term of office after serving the Group for 9 (c) not have any competing time commitments that impair his/her
years as an Independent Director. ability to discharge his/her duties effectively;
(d) not be an active politician;
Board Gender Diversity (e) not be a partner of a firm which has been appointed as the
external auditors of the Bank or any of the firm’s officers directly
The Board has adopted a Board Gender Diversity Policy in July 2018. involved in the engagement until at least two years after – (a) he/
The Board Gender Diversity Policy provides that women candidates will she ceases to be an officer or partner of that firm; or (b) the firm
be given priority consideration in the selection and recruitment process last served as an auditor of the Bank; and
of identifying suitable board candidates towards achieving the gender (f) preferably at a minimum holds a degree qualification and/or other
diversity target of 30% women participation on the Board. While it is equivalent qualification(s) and at least 5 years senior managerial
important to promote board gender diversity, the normal selection criteria position.
based on an effective blend of competencies, skills, extensive experience
and knowledge to strengthen the Board remain a priority. The Group NRC will, upon its assessment, submit its recommendation
to the Board for approval. The final decision on the appointment of a
candidate recommended by the Group NRC rests with the whole Board
before the application is submitted to BNM for approval.
82 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Effectiveness

Board and Committee Meetings may request to be furnished with additional information for clarification.
Relevant Senior Management Officers are invited to attend Board/Board
The Board meets on a scheduled basis at least eight times a year to review Committee meetings to provide the Board/Board Committees with
progress reports on the Bank’s business and financial performance, detailed explanations and clarifications on proposals tabled to enable the
approve budget, strategies, business plans and significant policies as Board/Board Committees to make informed decisions.
well as to consider business and other proposals which require the
Board’s approval. All Directors are informed of these scheduled Board The Group has implemented paperless meetings where board materials
meetings before the start of the financial year. Ad hoc Board meetings are uploaded to a secured board portal for the Directors to download to
may be called to deliberate and assess issues that require the Board’s their tablets or laptops. This initiative has made the process of creating,
immediate consideration/decision. distributing and reviewing confidential board materials more efficient
and secure. It speeds up the process of board pack dissemination and
Directors are required to attend at least 75% of all the Board/Board removes the need for hard copy papers. The initiative also enhances the
Committee meetings during each financial year. The attendance of Group’s corporate responsibility in line with environmental initiatives by
Directors at a Board/Board Committee meeting, by way other than reducing its paper consumption.
physical presence, remains the exception rather than the norm and
is subject to appropriate safeguards to preserve the confidentiality of In total, the Board met formally 15 times during FY2019. 10 meetings
deliberation. were scheduled meetings while 5 meetings were ad hoc meetings to
consider exigency matters. In addition, the Board had 2 offsite meetings
The Board’s approval for urgent and straight forward matters may be on Strategy and Budget respectively during FY2019.
obtained through written resolutions approved via circulation.
All Directors have demonstrated that they are able to allocate sufficient
All Directors are supplied with information on a timely manner. The agenda time to the Bank in discharging their duties and responsibilities, and
for each Board/Board Committee meeting, together with detailed reports their commitment is affirmed by their attendance at the Board and Board
and proposal papers to be tabled, are circulated to the Directors for their Committees meetings held during FY2019, as reflected below:
prior reading well in advance of the date of the meeting. The Directors
Attendance
Board Committee
Alliance Group Group Group
Directors Designation/Independence Bank Board EXCO AC RMC NRC

Tan Sri Dato’ Ahmad Bin Chairman of the Board 15/15 - - - 14/14
Mohd Don Independent Non-Executive Director
Kuah Hun Liang(1) Senior Independent Non-Executive Director 15/15 - 20/21 21/21 -
Ou Shian Waei Independent Non-Executive Director 15/15 13/13 - - 14/14
Lee Ah Boon Non-Independent Non-Executive Director 13/15 13/13 - - 14/14
Datuk Wan Azhar Bin Independent Non-Executive Director 15/15 13/13 21/21 - 14/14
Wan Ahmad
Lee Boon Huat(2),(3) Independent Non-Executive Director 13/15 12/13 - 20/23 6/6
Ho Hon Cheong Non-Independent Non-Executive Director 15/15 - 21/21 23/23 -
Thayaparan S. Sangarapillai(4) Independent Non-Executive Director 15/15 - 21/21 2/2 -
Tan Chian Khong Independent Non-Executive Director 15/15 - 20/21 - -
Susan Yuen Su Min(5) Independent Non-Executive Director 5/5 - - - -
Kung Beng Hong(6) Non-Independent Non-Executive Director 12/12 9/10 - - 11/11
Tuan Haji Ibrahim Bin Hassan Independent Non-Executive Director of Alliance - - - 22/23 -
Islamic Bank Berhad
Mazidah Binti Abdul Malik Independent Non-Executive Director of Alliance - - - 23/23 -
Investment Bank Berhad

Notes:
(1)
Chairman/Member of Group RMC until 31 December 2018. Appointed as Senior Independent Non-Executive Director with effect from 1 April 2019
(2)
Re-designated as Chairman of Group RMC with effect from 1 January 2019
(3)
Member of Group NRC until 31 July 2018
(4)
Appointed as a member of Group RMC with effect from 1 January 2019
(5)
Appointed to the Board on 15 October 2018
(6)
Retired from the Board with effect from 1 January 2019
 2019 Annual Report 83

WHAT THE BOARD DID THIS YEAR

Board activities are structured to develop the Group’s strategy and to enable the Board to provide the necessary oversight and support executive
management on the delivery of the Group’s strategy within a transparent governance framework.

KEY ACTIVITIES OF THE BOARD DURING FY2019

Strategy People

- Reviewed and approved the strategic directions and - Approved appointment/re-appointment to the Board
business plans proposed by Management - Received regular updates on recruitment and resignation
- Reviewed and approved the Annual Budget of Key Management Staff
- Reviewed and approved the specific financial and non- - Reviewed and assessed the fitness and propriety of Key
financial objectives proposed by Management Responsible Persons
- Reviewed and approved the Capital Management Plan - Reviewed and approved the human capital policies and
strategies of the Group
- Reviewed and approved the Group Annual Compensation
and the Compensation Review for Group CEO
- Reviewed remuneration for Non-Executive Directors

Performance Governance

- Reviewed business and financial performance against - Reviewed Monthly Group Compliance Dashboard and
targets and objectives Monthly Integrated Risk Dashboard
- Reviewed and approved the quarterly financial results and - Reviewed and/or approved the Risk Appetite Statement,
Annual Audited Financial Statements of Alliance Bank the Stress Test Results and the Contingency Funding Plan
- Reviewed the Internal Capital Adequacy and Assessment Drill Results
Process (ICAAP) Reporting and Basel II Pillar 3 Report - Reviewed and approved BNM Composite Risk Rating
- Reviewed and approved the Group Dividend Proposals Action Plans and the reply to BNM
- Reviewed and approved Group Corporate Scorecard and - Received the quarterly legal updates
Group CEO Scorecard Assessment - Reviewed and approved regulatory reporting
- Reviewed and deliberated the results of the annual Board - Reviewed and approved Board governance related
Effectiveness Assessment for the Board as a whole, Board proposals including Board Gender Diversity Policy, Board
Committees and the contribution of each Individual Director Development Plan, Group Board Succession Plan, revisions
to Board Charter and Board Committees’ Terms of
Reference, etc
- Reviewed and recommended the proposed amendments to
the Constitution of the Bank for shareholders’ consideration
- Reviewed and approved the Group Internal Audit Charter
- Reviewed Internal Audit Reports
- Reviewed IT Independent Assessment Report
84 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Effectiveness

Key activities of Board Committees during FY2019 7. Conducted Exit Interview with Senior Management who tendered
their resignation.
EXCO 8. Assessed and recommended to the Board the performance of the
Group CEO.
During FY2019, the EXCO had carried out the following key activities: 9. Recommended to the Board the compensation proposals, including
Corporate Bonus Pool, Annual Salary Review for employees and
1. Reviewed/vetoed the new/incremental loans/financing with total Compensation for Group CEO and CEOs of subsidiaries.
group exposure which is within EXCO’s approval limits set by the 10. Approved the proposal on Compensation for the members of
Board. Group Management Committee and Other Material Risk Takers,
2. Approved credit transactions/exposures with connected parties including Deferral Award.
classified under BNM/GP6 Guidelines. 11. Recommended to the Board the Group Corporate Scorecard and
3. Reviewed early warning accounts and restructuring & rescheduling Group CEO Scorecard.
(performing & impaired) accounts. 12. Assessed and recommended to the Board the performance score
4. Reviewed recovery/restructuring plans as per limits in the of the Group Corporate Scorecard.
Approval Authorities of Group Special Assets set by the Board. 13. Reviewed internal policies and procedures in relation to fit and
5. Reviewed and recommended strategies and business plans for proper assessment and Group Board Succession Plan.
the Board’s approval and oversees their implementation. 14. Reviewed the Bank’s organisation structure and human capital
6. Reviewed the loan loss provisioning under MFRS 9. policies and strategies of the Group including Rewards Framework,
7. Approved non-credit expenditures as per limits in the Approval Training and Education Sponsorship Scheme, Disciplinary
Authorities set by the Board. Management Policy and Sales Penalty Framework.
8. Reviewed the quarterly updates of Group Information System and
Voice of Customers. Group AC
9. Reviewed and approved revisions to terms of reference of Group
Management Credit Committee. The Group AC’s activities during FY2019 are summarised in the Group
10. Reviewed and recommended the revisions to terms of reference AC Report.
of EXCO for the Board’s approval.
More information can be found on pages 89 to 90.
Group NRC
Group RMC
The Group NRC had carried out the following key activities during FY2019:
During FY2019, the Group RMC had considered and deliberated on,
1. Reviewed the Board and Board Committees Composition of the among others, the following:
Bank and its principal subsidiaries, including board and board
committee size, criteria and skill sets required of Directors, 1. Compliance Culture
development plan for Directors and gender diversity for the Bank. 2. Capital Management Plan
2. Recommended the appointment and re-appointment of Directors, 3. Embedded Risk Function
Senior Independent Director, Chief Executive Officer and Shariah 4. Group RMC Future Direction
Committee members to the entity Boards of the Bank and its 5. Credit Risk Strategy for the Group
principal subsidiaries. 6. Top 5 Risks for the Group
3. Reviewed and deliberated the results of the annual Board 7. Group Compliance Way Forward
Effectiveness Assessment for the Board as a whole, Board 8. IT Governance and Management
Committees and the contribution of each Individual Director. 9. Risk and compliance related frameworks and policies, including
4. Carried out annual Fit and Proper Assessment of Key Responsible BNM Review of Composite Risk Rating, review of Credit Risk
Persons and annual review of Directors’ fitness and propriety, Management Framework, EndPoint Security Policy, etc.
including the independence of Independent Directors. 10. Regular reports such as Compliance Dashboard, Integrated Risk
5. Engaged an independent consultant to review the remuneration Management Dashboard, Regulatory Stress Test Result and ICAAP
of Non-Executive Directors and recommended a revised Report for submission to BNM.
remuneration to the Board. 11. Compensation, and Annual Fit and Proper Assessment of Group
6. Approved the appointment of Senior Management including Chief Risk Officer and Group Chief Compliance Officer.
extension of employment of Senior Management under fixed term
contract.
 2019 Annual Report 85

BOARD EFFECTIVENESS REVIEW

The Board recognises that it continually needs to assess and improve its performance. This is achieved through the Board’s annual performance
evaluation, induction of new Board members and ongoing Board development activities.

Board Effectiveness Assessment

The Board has implemented an annual Board Effectiveness Assessment process, carried out by the Group NRC, to assess the effectiveness of the Board
as a whole, the Committees of the Board and the contribution of each individual Director.

Step 1: Completion of Comprehensive Questionnaire

Each Director evaluates the performance of the Board as a whole by way of a Self-Assessment
I.
Questionnaire by Individual Board Members.
Assessment of the
Board by Board Members
The assessments are made against the pre-established criteria as follows:

A. Board Composition/Structure
B. Board Process
C. Board Governance
D. Major Responsibilities of the Board

II.
For individual Directors’ assessments, Self-Assessment Forms by Individual Directors are
Individual
completed individually by every Director.
Director Self-Assessment

III.
The performance of each Board Member is also assessed by their fellow Board members based
Peer Assessment of Individual
on similar criteria of the Individual Director Self-Assessment.
Directors

IV. Each Member of the Board Committees completes the Self-Assessment Form in respect of the
Assessment of Board Committees in which he/she is a member. The effectiveness of the Board Committees is
the Board Committees assessed against the following pre-established criteria:

A. Committee Governance
B. Accountability and Responsibilities

Step 2: Reporting and Discussion with the Group NRC and the Board

The results of the annual Board Effectiveness Assessment for the Board as a whole, Board Committees and the contribution of each Individual Director
are compiled for deliberation by the Group NRC, respective Board Committees and the Board for improvement, where necessary.

For FY2019, the Board was satisfied with the results of the annual Board Effectiveness Assessment and would take the necessary steps to address areas
for improvement suggested by the Directors.

The Board also periodically engages external consultants to assist in and lend objectivity to the annual board assessment. For FY2018, an external
consultant, the Institute of Corporate Directors Malaysia (ICDM) was engaged to undertake the Board Effectiveness Assessment and Individual Director
Evaluation for the Bank.
86 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Effectiveness

Fit and Proper Assessment digitisation and Blockchain which are relevant to the financial services
industry to enable them to keep abreast with the latest developments
The Board, through the Group NRC, assessed the fitness and propriety of in the industry. All Directors are also regularly being updated on new
the Directors in accordance with the Group’s Policy on Fit and Proper as requirements affecting their responsibility and are constantly reminded
part of the annual Board Effectiveness Assessment exercise. All Directors of their obligations.
are required to complete a Fit & Proper Declaration annually. The Fit &
Proper Declarations by the Directors are verified against independent The Directors have attended various training programmes during
sources. FY2019. The list of training programmes attended by the Directors is
disclosed under Section B of the Corporate Governance Report, which is
For FY2019, the Board was satisfied that each of the Directors had met available on our website:
the required standard of fitness and propriety.
www.alliancebank.com.my

BOARD TRAINING AND DEVELOPMENT

REMUNERATION
Continuous training is vital for the Directors to gain insight and keep
abreast with the development in the industry to further enhance their Board of Directors
skills and knowledge in discharging their roles and responsibilities
effectively. While the Directors are expected to have personal The Bank’s Policy on Directors’ remuneration is disclosed under Practice
development skills to improve themselves, they are encouraged to attend 6.1 of Section A of the Corporate Governance Report, which is available
a minimum of three days of training programmes relating to the relevant on our website:
areas within a financial year taking into consideration emerging trends
in the financial services industry. In addition, each Board Committee www.alliancebank.com.my
member is encouraged to attend a minimum of two days of training
programmes relevant to the respective areas of the Board Committees The details of remuneration of each Director of the Bank
in each financial year to keep abreast with the latest developments in received/receivable from the Bank and the Group in respect of
the industry. FY2019 are disclosed on pages 213 to 216 of the 2019 Annual
Report.
The Bank has in place an In-house Directors’ Orientation Programme
for newly appointed Directors to familiarise themselves with the For FY2019, the Board has engaged an independent consultant to carry
Bank’s operations in addition to the regulatory mandatory training out a review on the remuneration of the Non-Executive Directors to
programmes such as Bursa Mandatory Accreditation Programme and determine if the Bank’s remuneration for the Non-Executive Directors
Financial Institutions Directors’ Education (FIDE) Core Programme. continues to be in line with the industry taking into consideration the
Upon appointment, a new Director will attend an in-house orientation complexities of the Bank’s business and operations. The proposed
programme within three months of the appointment where he/she will remuneration of the Non-Executive Directors will be tabled to the
be briefed on the operations and business strategies by the Senior shareholders of the Bank for approval at the forthcoming Annual General
Management to familiarise him/her with the Bank and the Group. Meeting to be held on 25 July 2019.
Directors also received guidance from the Company Secretary on the
Bank’s governance framework and associated policies, as well as their Senior Management
duties as Directors of the Bank.
The Bank’s Group Compensation Policy and employee performance
The Directors are provided with the opportunity to attend relevant management are disclosed under Section B of the Corporate Governance
training programmes on an ongoing basis in areas relating to Islamic Report, which is available on our website:
banking, corporate governance and compliance, board leaderships,
risk management, anti-money laundering, strategic issues and latest www.alliancebank.com.my
development and innovation in the marketplace such as FinTech,
 2019 Annual Report 87

Audit and Risk Management

DIRECTORS’ RESPONSIBILITIES FOR THE PREPARATION OF THE ANNUAL AUDITED FINANCIAL STATEMENTS

Statements explaining the responsibilities of the Directors for the preparation of the Annual Audited Financial Statements for inclusion in the
Annual Report can be found on page 106.

RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK

The Board is ultimately responsible for the Bank’s risk management and internal control framework. The Board, which is assisted by the Group RMC and
Group AC, confirms that it monitors the Bank’s risk management and internal control systems and carries out a review of their effectiveness, at least
annually. The monitoring and review covers all material controls, including financial, operational and compliance controls.

Since the Bank is the Group’s largest business and operates in the complex financial services sector, its risk management framework and internal control
processes are key to that of the Group.

The Board, through the Group RMC, has carried out a robust assessment of the principal risks facing the Bank, including those that would threaten its
business model, future performance, solvency and liquidity.

Further details of the Bank’s Risk Management Framework and Internal Control System are explained in the Statement on Risk Management and
Internal Control and Risk Management Report on pages 96 to 103.
88 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Audit and Risk Management

GROUP AUDIT COMMITTEE REPORT

COMPOSITION AND TERMS OF REFERENCE
CHAIRMAN
Thayaparan S. Sangarapillai The Group AC which comprises four Independent Non-Executive Directors and a Non-Independent
Independent Non-Executive Director Non-Executive Director, is in compliance with Paragraph 15.09(1)(a) and (b) of the MMLR of Bursa
Securities which states that the audit committee must be composed of no fewer than 3 members;
MEMBERS and that all the audit committee members must be non-executive directors, with a majority of them
Kuah Hun Liang being independent directors.
Independent Non-Executive Director
The Terms of Reference (TOR) of the Group AC which deals with its authority and duties is made
Datuk Wan Azhar Bin Wan Ahmad available on the Bank’s corporate website at:
Independent Non-Executive Director
www.alliancebank.com.my
Ho Hon Cheong
Non-Independent Non-Executive In the annual assessment of the effectiveness of Board Committees for FY2019, the Board was
Director satisfied that the Group AC and its members have discharged their function, duties and responsibilities
in accordance with the Group AC’s TOR to provide independent oversight of the Bank’s internal and
Tan Chian Khong external audit functions, internal controls and ensuring checks and balances within the Bank.
Independent Non-Executive Director
During the FY2019, a total of 21 Group AC meetings were held. 11 were regular meetings scheduled
before the start of the financial year while 10 meetings were ad hoc meetings convened to consider
exigency matters.

The details of attendance of the Group AC members are as follows:

Name of Committee Members Attendance Percentage

Thayaparan S. Sangarapillai (Chairman) 21/21 100%

Kuah Hun Liang 20/21 95%
Datuk Wan Azhar Bin Wan Ahmad 21/21 100%
Ho Hon Cheong 21/21 100%
Tan Chian Khong 20/21 95%

The Group AC meetings were also attended by Group Chief Internal Auditor together with the Audit
Department Heads while the attendance of other Management staff is by invitation depending on the
matters deliberated by the Group AC.
 2019 Annual Report 89

SUMMARY OF GROUP AC’S WORKS • Reviewed the non-audit services rendered by the external
auditors and their proposed fees taking into consideration
The Group AC is principally responsible to support the Board in ensuring the fees threshold established under the Group’s policy
that there is a reliable and transparent financial reporting process within to ensure that the external auditors’ independence and
the Bank and its principal subsidiaries. During FY2019, the Group AC in objectivity are not compromised.
discharging its functions, duties and responsibilities had carried out the
following works: The details of the statutory audit, audit related and
non-audit fees paid/payable to the external auditors,
1. Financial Reporting PricewaterhouseCoopers PLT for FY2019 and its affiliates
are set out below:
• Reviewed and discussed the unaudited quarterly
consolidated financial results and the annual audited RM’000
consolidated financial statements of the Bank and its
Description Bank Group
subsidiaries (the Group) with the Management before
recommending the same for approval by the Board. In Statutory audit and audit
reviewing the financial reporting of the Group, the Group AC related services 1,436 2,087
discussed and made enquiries on, among others:
Non-audit related services 1,666 2,432
(i) changes in or implementation of major accounting
policy changes; The total non-audit fees incurred as a percentage of the
(ii) significant matters highlighted including financial total statutory audit and other audit related services fees for
reporting issues, significant judgements made by the Group in respect of FY2019 was 16.5%.
Management, significant and unusual events or
transactions, and how these matters are addressed; • Assessed and satisfied itself with the performance,
and effectiveness and independence of the external auditors
(iii) compliance with accounting standards and other based on the criteria set out in BNM’s Policy Document on
legal requirements. External Auditors and recommended to the Board for the re-
appointment of the external auditors for the next financial
2. External Audit year. Among the assessment criteria taken into account by
the Group AC were:
• Reviewed the audit plan of the external auditors, which
encompassed the detailed terms of the external auditors’ (i) Qualification criteria;
responsibilities and affirmation of their independence as (ii) Level of knowledge, capabilities, experience and
external auditors, audit strategy, the engagement team, risk quality of previous work;
assessment, areas of audit emphasis for the financial year (iii) Level of engagement with the Board and Audit
and additional disclosures in the auditors’ report in line with Committee;
the new and amended international standards on auditing, (iv) Ability to provide constructive observations,
including disclosure on Key Audit Matters. implications and recommendations in areas which
require improvements;
• Reviewed with the external auditors, the results of their audit (v) Appropriateness of audit approach and the
together with their recommendations and Management’s effectiveness of audit planning;
responses as detailed in the following reports: (vi) Ability to perform the audit work within the agreed
duration given;
(i) Audit Report in respect of the Group Statutory Audit (vii) Independence, Objectivity and Professional
for Financial Year Ended 31 March 2018; Scepticism; and
(ii) Limited Review Report of the Group for the Half-Year (viii) Ability to demonstrate unbiased stance when
Ended 30 September 2018; and interpreting the standards/policies adopted by the
(iii) Audit Committee Report for FY2019. licensed institutions.

• Met twice with the external auditors on 23 October 2018

and 24 April 2019 without the presence of Management
for open discussions between the Group AC and external
auditors on any issues of concern of the external auditors
arising from their audits.
90 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Audit and Risk Management

3. Internal Audit GROUP INTERNAL AUDIT FUNCTION

• Reviewed with Group Internal Audit the internal audit plan The Group Internal Audit’s (GIA) primary role is to assist the Group AC to
to ensure adequacy of scope, coverage and resources discharge its duties and responsibilities by independently reviewing and
required to perform audits for the identified auditable areas. reporting on the adequacy and effectiveness of the systems of internal
• Met with Group Chief Internal Auditor on 13 April 2018 controls and the overall control environment.
without the presence of Management for open discussion
between the Group AC and Group Chief Internal Auditor on The GIA provides reasonable assurance that the system of internal
any issues of concern arising from internal audits. controls continue to operate satisfactorily and effectively. The audits
• Reviewed and assessed the half-yearly and full year cover the review of the adequacy of risk management, operational
performance of Group Chief Internal Auditor. controls, compliance with established procedures, guidelines and
• Performed fit and proper assessment of the Group Chief statutory requirements, quality of assets, application systems and
Internal Auditor to ensure that she satisfies the fitness management efficiency, among others.
and propriety criteria set out in the Group Policy on Fit and
Proper for Key Responsible Persons on a continuous basis. GIA is headed by Ms Leong Sow Yoke, the Group Chief Internal Auditor
• Reviewed and endorsed the appointment of external (GCIA). She has more than 30 years of external and internal audit
consultant under co-sourcing arrangement to conduct one experience that includes general and information systems audit. Ms
audit assignment which is specialised and technical in Leong is a Fellow of the Association of Chartered Certified Accountants
nature. (FCCA), a Chartered Accountant with the Malaysian Institute of
Accountants, a Certified Information Systems Auditor (CISA) and Certified
4. Related Party Transactions in Risk and Information Systems Control (CRISC). In 2015, Ms Leong was
conferred the title “Chartered Banker” by the Asian Institute of Chartered
• Reviewed related party transactions entered into by the Banker and the Chartered Banker Institute (UK).
Bank and its subsidiaries, covering the nature and amount
of the transactions so as to ensure that related party The GIA function is guided by the Internal Audit Charter, which sets out its
transactions are undertaken on an arm’s length basis, on purpose, authority, scope, independence and responsibilities.
normal commercial terms and on terms that are not more
favourable to the related parties than those generally To maintain objectivity and independence, the GCIA is responsible to
available to the non-related parties. the Group AC and Board. The appointment, remuneration, performance
• Reviewed audit reports on recurrent related party appraisal, transfer and dismissal of the GCIA are to be decided by the
transactions (RRPTs) on a quarterly basis. The reports Group AC. GIA personnel do not have any authority or responsibility
covered the aggregate consideration of RRPTs tracked for the activities they audit. They are required to report to the GCIA
against the limit of thresholds set to ensure proper reporting any situation in which a conflict of interest or bias is present or may
and disclosures in accordance with the requirements of reasonably be inferred. Assignments are allocated so that potential and
the Bank’s internal policy and the Main Market Listing actual conflicts and bias are avoided.
Requirements of Bursa Securities.
GIA’s processes and activities are governed by policies established by
5. Other Works the Group AC and regulatory guidelines as well as the International
Standards for the Professional Practices Framework (Standards) issued
• Provided oversight over the preparation and implementation by the Institute of Internal Auditors (IIA) Malaysia.
of the Malaysian Financial Reporting Standard 9 (MFRS
9), which is effective for the Group and the Bank for the In line with best practices, GIA adopts a risk-based approach that deploys
financial year beginning on 1 April 2018, including the audit resources to focus on significant risk areas which prioritises the
review of the gap analysis and the potential impact to the audits to areas that have been assessed as having potentially higher
Group. risks.
• Reviewed the Audit Committee Report and the Statement
on Risk Management and Internal Control for the Board’s GIA also plays a consultative role in the development of major systems or
approval to be included in the Annual Report. projects to ensure that the necessary control features are incorporated.
 2019 Annual Report 91

GIA works collaboratively with Group Risk Management and evaluates the risk governance framework and the risk management processes that are
applied to ensure an acceptable level of risk exposure which is consistent with the risk management policy of the Group. GIA also works with the external
auditors to resolve any control issues raised by them to ensure that significant issues are duly acted upon by Management.

GIA continues with its initiatives to optimise the use of technology and increase the usage of data analytics tools to achieve audit effectiveness and
efficiency. The upskilling of internal auditors through continuous learning and development remains a key focus. This is achieved through structured and
formalised training programmes on themed subject matters as well as on the job exposure via intra-department resource pooling programmes, aimed
at expanding the breadth of knowledge and experiences of internal auditors as they build depth.

GIA continues to host the Guest Auditor Programme where selected line managers and candidates are invited to join as guest auditors for audit
assignments. During these short attachments to GIA, guest auditors gain useful insights into the internal audit process and a deeper appreciation of the
risks and controls while GIA will benefit from their functional or business unit knowledge. This pooling of talents and experiences allows the sharing of
best practices across the Group.

As at 31 March 2019, GIA has 35 audit personnel. During FY2019, the GIA function incurred costs amounting to RM9.4 million.

The activities undertaken by GIA in FY2019 include:

1. Established the annual audit plan for FY2019, which included key focus areas and manpower requirements, using a risk-based approach and
taking into consideration the Group’s business strategic plans, regulatory requirements and Management’s inputs.
2. Revised the audit plan during the half-year review of the plan to take into account changes in business environment, audit priorities and ad hoc
requests from regulators.
3. Conducted audits as per the approved audit plan, as well as ad hoc reviews as requested by regulators or Management.
4. Attended meetings of the various management and working committees as a permanent invitee in a consultative capacity to provide independent
feedback on internal control and governance aspects; such as Group Operational Risk Management Committee, Executive Risk Management
Committee, Group Information Technology Steering Committee, MFRS 9 Project Steering Committee, Product Review Group, Sales Surveillance
Committee and Product Operational Readiness Team.
5. Monitored and validated the completion of management action plans to address audit findings, and reported to the Group AC the status of overdue
management actions plans.
6. Involved as observers in major functional testing of Business Continuity Plan and Disaster Recovery Plan to provide an independent evaluation of
the testing preparation and exercise performance.
92 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Shariah Committee

SHARIAH COMMITTEE OF ALLIANCE ISLAMIC BANK BERHAD

COMPOSITION AND TERMS OF REFERENCE

CHAIRMAN
Associate Professor The Board of Alliance Islamic Bank Berhad (AIS) has established a Shariah Committee which
Dr Badruddin Bin Hj Ibrahim comprises five members who have the necessary qualifications, knowledge, expertise and
experience in Islamic banking industry. Four of the Shariah Committee members have the necessary
MEMBERS qualification in Shariah law whilst one member has the qualification in Finance and experience in
Tuan Haji Md Ali Bin Md Sarif banking industry.

Ustaz Zaharudin Bin Muhammad The primary roles and responsibilities of the Shariah Committee are as follows:

Dr Azrul Azlan Bin Iskandar Mirza • Advising the Board and Management on Shariah related matters;
• Reviewing and endorsing Shariah related policies and guidelines;
Ustaz Ahmad Fauwaz Bin Ali @ • Endorsing new products and services including contract, agreement or other legal
Fadzil documentation used for Islamic banking transactions;
• Endorsing and validating product guidelines, marketing advertisements, sales illustrations
and brochures related to AIS’s products, services and activities;
• Reviewing the work carried out by Shariah Review and Shariah Audit as the AIS’s second line
and third line of defense providing assurance on the state of the Bank’s Shariah governance;
• Endorsing AIS’s zakat computation and distribution;
• Assisting and advising related parties such as AIS’s legal counsel, auditor or consultant on
Shariah matters upon request;
• Advising AIS in consultation with the Shariah Advisory Council of BNM (SAC) on any Shariah
matters which have not been resolved or endorsed by the SAC;
• Monitoring AIS’s compliance with all SAC’s decisions; and
• Reviewing the potential Shariah Non-Compliance events determined by the Qualified Shariah
Officer whether or not they are actual Shariah related events.

During the FY2019, 9 meetings were held. The attendance of members of the Shariah Committee
is as follows:

Shariah Committee Members Attendance Percentage

Associate Professor Dr Badruddin Bin Hj Ibrahim (Chairman) 9/9 100%

Tuan Haji Md Ali Bin Md Sarif 9/9 100%
Ustaz Zaharudin Bin Muhammad 9/9 100%
Dr Azrul Azlan Bin Iskandar Mirza 9/9 100%
Ustaz Ahmad Fauwaz Bin Ali @ Fadzil 9/9 100%
 2019 Annual Report 93

ASSOCIATE PROFESSOR DR BADRUDDIN BIN HJ IBRAHIM

Chairman of Shariah Committee

Associate Professor Dr Badruddin was appointed as a Shariah Committee member of AIS on 15 June 2009. He currently serves as a lecturer at
Ahmad Ibrahim Kulliyah of Law, International Islamic University of Malaysia (IIUM). While he specialises in the Islamic Law of Trust, and Islamic
Law of Property, he is also experienced in Islamic Jurisprudence and Islamic Family Law, having taught such subjects in IIUM for over a decade.

As an academia, he actively pursues his thirst for knowledge by conducting many research activities under IIUM, his most recent research project
being “Transaction Involving Unlawful Wealth Under Islamic Law”. Much of his work has been presented publicly in academic institutions and
conferences in Malaysia, the UK, Indonesia and Russia. In recent years, he has channelled his expertise and passion into organising a myriad of
Islamic Law-related conferences, conventions, and seminars.

He possesses a PhD in Islamic Law of Trust, Islamic Law of Property from IIUM, Malaysia. His Masters and Degree in Shariah and Law were
obtained from the International Islamic University of Islamabad, Pakistan.

TUAN HAJI MD ALI BIN MD SARIF

Member of Shariah Committee

Tuan Haji Md Ali was appointed as a Shariah Committee member of AIS on 1 April 2011. He was a Distinguished Academic Fellow of the
Institute of Islamic Banking and Finance (IIBF) at International Islamic University Malaysia from 2008 to 2014. Prior to joining IIBF in 2008, he
was with Maybank Group from 1976, holding various senior positions until his retirement as Head of Planning, Maybank Islamic Berhad. He
has extensive experience in the areas of Islamic Banking, Corporate Planning, Asset & Liability Management as well as Banking Operations.

He holds a Bachelor’s Degree in Economics from University Malaya and a Masters of Business Administration (MBA) in Finance from University
Kebangsaan Malaysia.

Tuan Haji Md Ali is also a member of the AIS Board and serves as a bridge between the Board and the Shariah Committee. The presence of
a Director with sound Shariah knowledge would foster greater understanding and appreciation among the Board members on the decisions
made by the Shariah Committee.

USTAZ ZAHARUDIN BIN MUHAMMAD

Member of Shariah Committee

Ustaz Zaharudin was appointed as a Shariah Committee member of AIS on 1 April 2009. He is currently the sole proprietor for ASZA-HT Trading
Sdn Bhd.

He obtained his Masters in Islamic Economy and Jurisprudence from the University of Cairo, Egypt (1st class, graduated in top 10). He has
also obtained a Bachelor in Islamic Jurisprudence from the Al-Azhar University Cairo with 1st class among foreign students.

Furthermore, he has written several books and articles related to his specialised field of Islamic Jurisprudence. He has since published five
more field-related books.

His previous working experience was as a researcher at the International Shariah Research Academy and Chief Religious Officer of Kumpulan
Perangsang Sdn Bhd. He was also a Shariah Committee member of Prudential BSN Takaful Berhad and HSBC Amanah Takaful (Malaysia)
Berhad.
94 Alliance Bank Malaysia Berhad (88103-W)

CORPORATE GOVERNANCE OVERVIEW STATEMENT (Cont’d)

Shariah Committee

DR AZRUL AZLAN BIN ISKANDAR MIRZA

Member of Shariah Committee

Dr Azrul Azlan was appointed as a member of Shariah Committee of AIS on 1 April 2015. He studied at the Al-Azhar University (Egypt) where
he obtained a Bachelor in Shariah. He holds a Masters in Management from the International Islamic University of Malaysia and PhD in Islamic
Finance from the International Centre for Islamic Finance.

He is currently attached to the Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia as Head of Islamic Banking & Finance
Program. His fields of specialisation are Shariah, Islamic finance and investment analysis. He is also a Shariah Committee member of HSBC
Amanah Takaful (Malaysia) Berhad, Shariah Adviser of Alliance Investment Bank Islamic Stockbroking Services and a committee member of State
Fatwa Council, Negeri Sembilan.

Previously he was a Shariah Committee member for KAF Investment Bank Berhad and OSK Investment Berhad.

USTAZ AHMAD FAUWAZ BIN ALI @ FADZIL

Member of Shariah Committee

Ustaz Fauwaz was appointed as a Shariah Committee member of AIS on 1 April 2018. He is currently a Shariah Consultant of Telaga Biru Sdn Bhd.

He holds Bachelor of Shariah from Al-Azhar University, Egypt and Master of Shariah from University of Malaya. He also trained in fatwa methodology from
Dar al-Ifta al-Misriyyah, Egypt.

He was attached with Telaga Biru Sdn Bhd as a Chief Editor of a religious magazine and author of contemporary fiqh books. One of his books entitled
Fiqh Wanita (Islamic Jurisprudence for ladies) has won the award for the best fiqh book by Yayasan Pembangunan Buku Negara. Given his forte is fatwa
methodology, he has been giving training to Shariah officers at Islamic financial institutions as well as state religious authorities. He also gives talks in
local radio and television stations.

Ustaz Fauwaz was attached with Kolej University Insaniah, Kedah before his involvement in publication.
 2019 Annual Report 95

Relations with Shareholders

INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION channel of communication with shareholders. All correspondence
to the Senior Independent Non-Executive Director can be sent via
The Bank acknowledges the importance of regular communication email to sid@alliancefg.com or by mail to the registered office of the
with shareholders and investors. The Bank endeavours to maintain Bank at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan
constant and effective communication with shareholders through Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.
timely and comprehensive announcements. The Board regards the
Annual General Meeting (AGM) as an opportunity to communicate Corporate Disclosure
directly with shareholders and encourages attendance and
participation. The notice of AGM is despatched to shareholders, The Corporate Disclosure Policies and Procedures (CDPP) provides
together with explanatory notes or circulars on items of special timely, consistent and fair disclosure of corporate information to
business, at least 28 days prior to the meeting date. At the enable informed decision making by investors.
forthcoming 37th AGM to be held on 25 July 2019, other than the
proposed amendments to the Constitution of the Bank, no other The objectives of the CDPP are:
substantive resolutions or resolutions on related party transactions
will be put forth for shareholders’ approval. • raising awareness of Directors, Management and employees
on disclosure requirements and practices;
In line with the MMLR of Bursa Securities, voting at general meetings • providing guidance in disseminating corporate information to,
of the Bank will be conducted by poll with an independent scrutineer and in dealing with investors, analysts, media representatives
appointed to validate the votes cast at the general meetings. and the public; and
• ensuring compliance with the disclosure obligations under the
The Investor Relations team engages the financial community, MMLR of Bursa Securities and other applicable laws.
stakeholders and other key constituencies of the Bank to provide
consistent, accurate, transparent and timely information. Briefings for The Group Company Secretary being the Corporate Disclosure
analysts are conducted every quarter in conjunction with the release Manager (CDM), serves as the primary contact person for all material
of the quarterly financial results to facilitate consistent dialogue corporate-related matters referenced in the CDPP. He oversees
between the Bank’s Key Senior Management and the investment and co-ordinates the disclosure of material information to Bursa
community. The Bank also participates in one-on-one and group Securities. The CDM also ensures compliance with the CDPP and
meetings conferences and roadshows to share the latest updates undertakes reviews of any violations, including assessment and
and pertinent information on the Bank’s progress with the investment implementation of appropriate consequences and remedial action.
community.
The Chairman of the Bank and the Group CEO are the primary authorised
These platforms enable the investment community to express their spokespersons responsible for communicating Group information to
views on the Bank’s performance and in turn, the Bank had the the investing public. These primary authorised spokespersons may,
opportunity to manage investors’ expectations and strengthen their from time to time, designate other officers (designated officers) of
understanding of the Bank. the Bank to speak on behalf of the Group or to respond to specific
inquiries, where doing so facilitate effective communication with
Shareholders, potential investors and members of the public can the investing public. The authorised spokespersons and designated
access the Bank’s corporate website at www.alliancebank.com.my officers are regularly reminded of their responsibility to exercise due
for information on the Bank. There is a dedicated section for corporate diligence in making sure that the information to be disseminated to
governance on the Bank’s corporate website where information such the investing public is accurate, clear, timely and complete, and that
as the Board Charter, Code of Conduct, Annual Reports, Minutes of due care is observed when responding to analysts, the media and the
General Meetings, Constitution and Terms of Reference of the Board investing public.
Committees are made available to the public. A corporate calendar
on material events such as entitlement dates, ex-dividend dates
and payment dates for dividend payment; all announcements made KEY FOCUS AREAS AND FUTURE PRIORITIES
by the Bank to Bursa Securities including quarterly results and
dividend information; and presentation slides for analyst briefings The Board will continue to improve the Bank’s corporate governance
are also available on the Bank’s corporate website under the Investor practices and procedures and enhance the corporate disclosures
Relations section for the benefit of the investing public. practices towards promoting transparency, business prosperity and
corporate accountability with the ultimate objective of realising long
The investing public can contact the Head, Investor Relations term shareholder value while taking into account the interest of other
& Corporate Treasury, Mr Tan Hong Ian at 03-2604 3370 or stakeholders.
investor_relations@alliancefg.com, for any investor relations matters.
Shareholders may also convey any of their concern and enquiries to This Corporate Governance Overview Statement was approved by the
the Senior Independent Non-Executive Director, Mr Kuah Hun Liang Board of Directors on 30 May 2019.
who serves as the designated contact for any shareholders’ concerns
and enquiries that may be raised, as an alternative to the formal
96 Alliance Bank Malaysia Berhad (88103-W)

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

RESPONSIBILITY SYSTEM OF INTERNAL CONTROLS

The Board acknowledges its overall responsibility for the Group’s system To ensure that a sound system of controls is in place, the Board has
of risk management and internal controls, and for reviewing its adequacy established primary processes in reviewing the adequacy and integrity of
and integrity. The system is designed to manage the Group’s risks within the system of internal controls. The primary processes include:
an acceptable risk profile, rather than to totally avoid or eliminate the risks
that are inherent to the Group’s activities. It can therefore only provide a • Regular and comprehensive management reports are made available
reasonable but not absolute assurance of effectiveness against material to the Board on a monthly basis, covering financial performance
misstatement of financial/management information; or against financial and key business indicators, which allow for effective monitoring of
losses and fraud. The preparation of this statement has been guided by significant variances between actual performance against budgets
the “Statement on Risk Management and Internal Controls: Guidelines for and plans;
Directors of Listed Issuers” issued by Industry led Task Force. • Clearly defined delegation of responsibilities to committees of the
Board and to Management including organisation structures and
The Board regularly receives and reviews reports on internal control; and appropriate authority levels;
is of the view that the system of internal controls that has been instituted • An operational risk management framework, business continuity
throughout the Group is sound and adequate to safeguard the shareholders’ management framework, code of conduct, human resource policies
investments and the Group’s assets. and performance reward system to support business objectives, risk
management and the system of internal control;
The Group has instituted an on-going process for identifying, evaluating • Defined policies and procedures to control applications and the
and managing the significant risks faced by the Group. This process environment of computer information systems;
includes updating the system when there are changes to the business • Regular updates of internal policies and procedures, to adapt to
environment or regulatory guidelines. The process has been in place during changing risk profiles and address operational deficiencies;
the year under review and up to the date of approval of this statement; • Regular reviews of the Group’s activities to assess the adequacy and
and is regularly reviewed by the Board. The role of Management is to effectiveness of the risk management and internal control system;
implement the Board’s policies, procedures and guidelines on risks and • Documentation and periodic assessment of controls and processes
controls, to identify and evaluate the risks faced, and to design, operate by all business and support units for managing key risks; and
and monitor a suitable system of internal controls to manage these risks. • Regular senior management meetings to review, identify, discuss and
resolve strategic, operational, financial and key management issues.
The Board has extended the responsibilities of the Group Audit Committee
(“GAC”) to include the role of oversight on internal controls on behalf of
the Board, including identifying risk areas and communicating critical ASSESSMENT OF RISK MANAGEMENT AND INTERNAL CONTROL
risk issues to the Board. The GAC is supported by an independent Group SYSTEM
Internal Audit function which reports directly to it. The internal auditors
have performed their duties with impartiality, competency and due The Board, through the GRMC and GAC has assessed the adequacy and
professional care. effectiveness of the risk management and internal control system. Based
on the results of these reviews as well as the assurance it has received
from the Group Chief Executive Officer and Group Chief Financial Officer,
RISK MANAGEMENT FRAMEWORK the Board is of the view that the Group’s risk management and internal
control system is operating adequately and effectively, in all material
The Board, through its Group Risk Management Committee (“GRMC”) aspects.
provides oversight on risk management strategies, methodologies, policies
and guidelines, risk tolerance and other risk related matters of the Group.
Approval of risk policies by the Board is obtained where necessitated by REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
regulatory requirements. In addition, the GRMC also oversees the functions
of management committees such as the Executive Risk Management As required by Paragraph 15.23 of the Bursa Malaysia Securities
Committee, Group Assets and Liabilities Management Committee and Berhad Main Market Listing Requirements, the external auditors have
Group Operational Risk Management Committee, which assume the reviewed this Statement on Risk Management and Internal Control. Their
responsibility of monitoring specific areas of risks pertaining to the Group’s limited assurance review was performed in accordance with Audit and
business activities and implement various risk management policies and Assurance Practice Guide ("AAPG") 3 issued by the Malaysian Institute
procedures. For further information on the Group’s risk management of Accountants. AAPG 3 does not require the external auditors to form an
framework, please refer to the Risk Management report on pages 97 to opinion on the adequacy and effectiveness of the risk management and
103 of this Annual Report. internal control systems of the Group.

Major risks arising from the Group’s day-to-day activities in the financial
services industry comprise credit risk, liquidity risk, market risk and
operational risk. For more information on the risks and relevant guidelines
and policies, please refer to Note 45 under the Financial Statement.
 2019 Annual Report 97

RISK MANAGEMENT

The Board and Management of Alliance Bank are committed towards ensuring that the Bank’s corporate objectives are supported
by a sound risk strategy with an effective risk management framework that is appropriate to the nature, scale and complexity of
the Bank’s activities.

BOARD RESPONSIBILITY

The Board is responsible for:

a. Reviewing and approving the Bank’s overall risk strategy, including the risk appetite and overseeing its implementation to support the sustainability
of the Bank.
b. Ensuring that the Bank establishes comprehensive risk management frameworks, policies, processes and infrastructure to manage risks arising
from the Bank’s business activities.

With these objectives, the Board has established specialized Committees to oversee and review major functional areas and ensure critical issues
and relevant matters are appropriately addressed in a timely and strategic manner. While the Board has assigned these duties to these specialized
Committees, the Board in the overall remains responsible and accountable for the policies and decisions recommended and approved by the Committees.

ROLES AND RESPONSIBILITIES OF THE GROUP RISK MANAGEMENT COMMITTEE (GRMC)

The scope of the GRMC focuses on risk-related and compliance-related frameworks, strategies, policies and methodologies. In line with the above scope,
the GRMC is responsible for overseeing the risk management and compliance related subjects, as follows:

a. Reviewing risk management strategies, policies and risk tolerance and ensure these are in alignment and compliance of regulations and
requirements from Bank Negara Malaysia, and all other relevant authorities.
b. Reviewing and assessing the adequacy of risk management framework, policies and controls, including Information Technology (IT) risk management
matters, with regard to identifying, measuring, evaluating, monitoring, controlling and reporting on the extent to which these are operating effectively,
prudently and in compliance with regulatory guidelines.
c. Ensuring that appropriate infrastructure, resources and systems are in place for risk management and compliance functions; and ensuring that
the staff responsible for implementing risk management and compliance systems perform those duties independently of the Bank’s risk-taking
activities.
d. Reviewing periodic reports on risk exposures, risk portfolio composition and risk management activities to ensure that these risk reports facilitate
understanding; and determination of appropriate risk responses.
e. Ensuring that the effectiveness of the Bank’s overall management of compliance risk is evaluated at least annually, and that adequate time and
priority is provided in the agenda to deliberate compliance issues, to ensure that such issues are resolved effectively and expeditiously.
f. Supporting the Board in meeting regulatory expectations on risk management, as set out under BNM’s policy document on Risk Governance and on
Compliance.
g. Assisting in the implementation of a sound remuneration framework that promotes a culture of prudent risk-taking while deterring inappropriate or
excessive risk-taking within the Bank.

MANAGEMENT RESPONSIBILITY

Key responsibilities of the management are as follows:

a. Formulating and implementing risk framework, risk strategy, risk appetite and risk management policies.
b. Ensuring that business operation is aligned with the Bank’s strategies and risk strategy.
c. Ensuring that all relevant material risks and emerging risks are adequately identified, assessed and subsequently reported to the Board.
d. Ensuring that the Executive Risk Management Committee (ERMC) oversees and advises the Management on the risk-related matters, to support the
sustainability of the Bank.
98 Alliance Bank Malaysia Berhad (88103-W)

RISK MANAGEMENT (Cont’d)

RISK MANAGEMENT FRAMEWORK

An efficient risk management framework is

a perquisite to establishing stakeholders’ Risk
confidence in the Bank. The Bank’s Risk Governance and
Organisation
Management Framework is embedded in
our respective business activities in order to Risk Strategy
integrate risk-taking and decision-making and Risk
with risk management. It provides a structured Risk Appetite
RISK
Management
approach for the Bank to form a consolidated MANAGEMENT
Techniques
and aggregated view of all risks identified at FRAMEWORK
entity, business segment and product levels;
and to manage these risks in a holistic manner
alongside business objectives and compliance Risk and Risk
requirements. The Bank’s Risk Management Compliance Management
Framework is comprised of the following Culture Process
elements:

Risk Governance and Organisation

The Bank adopts the model of Three Lines of Defence in managing risks collectively based on their respective role as reflected below:

1st Line of Defence Risk-Taking

Business units are the primary owners of the risk, responsible for managing risks within the Bank’s business activities, aided
by Business Support functions.

2nd Line of Defence Risk Control

The risk control functions are represented by three independent Risk Control Units, i.e. Group Risk Management, Group
Compliance and the Shariah Review Team.

Group Risk Management is responsible for formulating, implementing and reviewing Risk Management frameworks, as well as
recommending risk policies, risk appetite parameters, risk methodologies and risk control measures.

Group Compliance is responsible for ensuring the Bank’s compliance to applicable laws and regulations; and to minimize the
risk of regulatory non-compliance.

Shariah Review Team is responsible for ensuring Bank’s compliance to Shariah laws and rulings, and to minimize the risk of
Shariah non-compliance.

3rd Line of Defence Risk Assurance

Group Internal Audit is responsible for conducting independent assessment and providing assurance on the adequacy and
effectiveness of the Bank’s internal controls related to processes, risks and governance functions.
 2019 Annual Report 99

Governance Structure

Everyone plays a crucial risk management role in the Bank. The chart below illustrates the governance structure and committees responsible for effective
governance and supervision over risk-related functions.

BOARDS

ABMB AISB AIBB

Board Board Board

BOARD-LEVEL COMMITTEES

Executive Shariah Group Risk Group Audit

Committee Committee Management Committee Committee

MANAGEMENT-LEVEL CIMMITTEES

Group Management Executive Risk Management Committee

Committee

Credit Portfolio Review Management Group IT

Group Management Committees Steering Committee
Credit Committee

Group Operational Risk Group Asset & Liability

Legal & Compliance
Management Committee Management Committee
Committee

The Bank places high priority on the risk management across our three banking entities. The Board is assisted by the GRMC, to provide oversight on
compliance and risk management policies, limits and parameters; as well as to ensure adequate infrastructure are in place for effective compliance and
risk management.

The Board-level GRMC is assisted by the Management-level Executive Risk Management Committee (ERMC). The ERMC represents the central conduit
for several other Management-level risk committees, as depicted above.

Risk Strategy

The Bank establishes appropriate risk governance, processes and controls in order to pursue its strategic business objectives with confidence, to protect
its Balance Sheet and stakeholders’ interest; and to deliver sustainable profitability. While it may not be possible or feasible to eliminate all inherent risks
within the Bank, a set of risk mitigation techniques has been established to reduce the impact of these risks.

The Bank seeks to accomplish its risk strategy by:

• ensuring that all identified material risks are adequately managed;

• establishing risk appetite parameters to manage Bank’s risk-taking activities;
• identifying and allocating clear roles and responsibilities for the control of risks within the Bank;
• avoiding unjustified risk concentrations;
• inculcating a prudent risk and compliance culture;
• ensuring risk-based remuneration is applied to material risk-takers.
100 Alliance Bank Malaysia Berhad (88103-W)

RISK MANAGEMENT (Cont’d)

Risk Appetite

Risk Appetite describes the high-level risk parameters and thresholds the Bank is willing to assume in pursuit of its strategic business objectives. These
high level thresholds are then cascaded, where appropriate, into more granular limits and targets across the various portfolios and business units.

The Bank strives for balanced, sustainable growth by performing business activities in accordance with approved strategic plans, policies and limits;
balancing between risks and rewards; and protecting the interest of our various stakeholders. These are supported by ensuring strong risk management
practices, active liquidity management and a healthy capital position.

Risk Management Process

The Bank’s risk management process embeds the Bank’s cultures and practices. It starts with risk identification, followed by risk assessment, risk
mitigation and control, risk monitoring, risk reporting, escalation and disclosure, as illustrated below:

3
1 2
MITIGATE &
IDENTIFY ASSESS
CONTROL

• Identify the various risks inherent • Adopt quantitative and qualitative • Examine various measures to
to each product or activity. approaches to measure and mitigate and monitor these risks.
• Identify adverse trends of risk assess these risks, in terms of • Implement an appropriate set
parameters. quantum, impact severity and of risk mitigating and control
occurrence probability. measures.

6 5 4
DISCLOSE REPORT MONITOR

• Provide regular risk disclosure to • Present periodic risk reports to • Continuously monitor the identified
investors and regulators through Senior Management and the Board. risks and their control in place.
Pillar 3 disclosure report and • Highlight new/emerging risk areas • Monitor the potential impact to
regulatory reports. and the controls in place. business strategies and propose
corrective measures, where
necessary.

Risk Culture & Staff Development project-based assignments; to equip our staff with the right knowledge
and skills to carry out their duties properly and professionally. Such
Risk management is not merely confined to inanimate policies, procedures, training is not merely confined to technical skills training; the Bank
limits and risk models. Effective risk management also requires a strong devotes much effort towards embedding risk culture and instilling our set
risk culture. Risk culture comprises the set of values and behaviours of values in our staff, with emphasis on leadership, conduct/ethics and
within the Bank that shapes our day-to-day activities and interactions. stakeholder-centricity.

Our Board members, senior management and staff are all ambassadors Talent management and succession planning are also integral for
of the Bank’s risk culture. Hence, leadership, supervision, guidance, identifying and developing our next generation of supervisors and leaders.
counselling and communication, represent key elements in shaping Additional leadership and skills competency training and development
and cultivating a desirable risk culture. For example, the Bank convenes programmes have been designed; and applied to staff with identified
regular staff huddles, which serves as a reminder on the Bank’s vision, potential.
strategy, key behaviours and brand attributes. For added training effect,
both good and bad examples are highlighted in our case studies. The Bank employs a carrot-and-stick approach with regard to good vs.
bad behaviour. For the former, we provide various benefits, rewards and
Added to this, the Bank applies a variety of approaches, ranging from incentives. Whereas the latter is subject to the Bank’s disciplinary and
classroom sessions, external courses, on-the-job training and ad hoc consequence management process.
 2019 Annual Report 101

Compliance Culture

The compliance culture of the Bank is driven with a strong tone from the top to ingrain the expected values and principles of conduct that shape the
behaviour and attitude of employees at all level of business and activities across the Bank. Compliance culture goes beyond complying with laws, we
expect all staff to conduct their commitments with integrity and business ethics.

The Bank has instilled a compliance culture where the Board, Senior Management and every employee of the Bank are committed to adhere to relevant
regulatory standards. This commitment is clearly demonstrated through the establishment of strong compliance policies and guidelines to ensure that
compliance risks are effectively managed.

The Bank noted a satisfactorily level of increase in compliance awareness among the staff. Among the key initiatives implemented to promote compliance
awareness are:

• Encouraging staff to report any situation that exposes the Bank to compliance risk
• Raising compliance awareness through team huddles, ethics week, online quiz, establishment of the Compliance Guide and Code of Conduct
• Ensuring robust compliance monitoring
• Introduction of self-raise concept for risk, control and compliance issues that are tracked at management committee
• Enhancement of staffs’ performance scorecard (i.e. KPI) with emphasis on governance and risk control
• Compliance-related e-learning modules such as AML/CFT, Code of Conduct and PDPA

The Bank strives to ensure compliance to regulatory requirements and business ethics to maintain high standard of professionalism in business conducts
at all times.

Risk Management Techniques

The Risk Management Framework defines the Bank’s key risk activities according to risk categories. To manage risk identified, Framework and Policies
are in place and various risk management techniques and tools are used. The table below provides examples of some of these techniques/tools:

Risk Category Risk Definition Risk Management Techniques/Tools

Credit Risk The risk of loss due to failure by customers/ • Credit risk management framework, strategy, policies &
counterparties to fulfil their financial or procedures
contractual obligations, when due. • Risk Acceptance Criteria
• Financing/product programs
• Product/portfolio risk limits, triggers and parameters
• Credit concentration limits
• Credit ratings/scorecards
• Credit authorization
• Risk dashboards
• Early Warning triggers and Watch Lists
• Risk-based pricing
• Stress tests
• Thematic/portfolio reviews
• Independent credit reviews
Market Risk The risk of loss arising from volatile changes in • Market risk management framework and policies
market variables such as interest rates, profit • Risk measurement/valuation tools
rates, foreign exchange rates, equity prices and • Product/portfolio risk limits
commodity prices. • Risk Sensitivity limits and Value-at-Risk limits
• Stress testing & simulations
• Risk dashboards
Liquidity Risk • The risk of loss resulting from the Bank’s • Liquidity risk management framework and policies
inability to meet its financial obligations, • Liquidity risk limits and triggers
when due. • Liquidity stress testing & simulations
• Risk of incurring losses when attempting to • Contingency funding plan
liquidate assets, due to market disruptions • Deposit concentration monitoring & reporting
and/or illiquid market situations.
102 Alliance Bank Malaysia Berhad (88103-W)

RISK MANAGEMENT (Cont’d)

Risk Category Risk Definition Risk Management Techniques/Tools

Operational Risk The risk of loss resulting from failures of • Operational risk management framework and policies
processes, people and systems; or from • IT risk management framework and policies
external events which are neither • Risk and Control Self-Assessment
market-related nor credit-related. • Control Self-Assessment
• Key Risk Indicators
• Loss Event Data collection
• Scenario Analysis
• Business Continuity Plan/Drills
• Risk dashboards
Regulatory The risk of loss or imposition of penalties, • Compliance framework, Legal manual and AML/CFT policy
Non-Compliance Risk fines, or other liabilities arising from breaches • Group-wide education and programme on compliance and risk
of applicable laws, regulations, or contractual awareness
obligations.
Shariah The risk of loss arising from failure to comply • Shariah governance framework
Non-Compliance Risk with Shariah rules and principles. • Shariah non-compliance monitoring and reporting
• Independent Shariah compliance reviews
Strategic Risk The risk of loss arising from adopting the wrong • Strategic risk management framework
business strategy, failure to properly execute • Annual strategy and budget setting exercise
business strategies, or failure to effectively • Capital management framework and initiatives
respond to changes in the industry/economy. • Stress tests/Reverse stress tests
• Strategic project initiatives
• Business reviews and production meetings
Reputational Risk The risk of loss arising from negative perception • Reputational Risk Management Framework
by customers, counterparties, shareholders and • Code of Conduct guidelines
other relevant key stakeholders. • Corporate risk rating exercise
• Managing investor relations
• Corporate Social Responsibility programmes
Model Risk The risk of loss arising from inappropriate • Independent Model Validation Framework
reliance on risk models. • Back-testing and independent model validation exercises

EMERGING RISK

The Bank identifies the emerging risks in order to assess risk trends that may have significant impact on the Bank’s business strategies and earnings.

Regulatory non-Compliance Risk

Banks operate under a highly regulated environment, with stringent regulatory and supervisory requirements, particularly in the areas of effective
governance, risk management, liquidity management as well as technology risk. Failure to meet regulatory compliance would attract punitive action,
including monetary fines. The Bank reviews policies, procedures and risk practices periodically to ensure effective compliance with the evolving regulatory
landscape. Furthermore, the Bank monitors industry and regulatory developments in order to identify potential consequential impact to the Bank.

Conduct Risk

In recent years, a greater emphasis has been placed on ensuring that customers are treated fairly. Banks are expected to embed a culture of customer-
centricity; to reduce the risk of wrong-doing arising from conduct risk. Examples of conduct risk, includes the following:

• Mis-selling unsuitable products to customers, potentially leading to bad customer experience.

• Pursuit of rapid growth/staff remuneration at the expense of customers’ needs and fiduciary duties.
• Insider trading, information leakage and market abuse.

In our context, the Bank continues to emphasize on ethical business and compliance culture. We review our business conduct, activities and governing
policies to ensure compliance with the “spirit of the law”, beyond mere adherence to regulatory requirements.
 2019 Annual Report 103

Economic Headwinds

Economic headwinds largely attributable to geopolitical and economic developments, may negatively impact the Bank’s earnings. In our effort to
safeguard our shareholders and depositors, the Bank continuously reviews the health of our various financing portfolios; and provide updates to Senior
Management and the Board. In addition, the Bank also reviews and aligns its business strategies to address other challenges faced.

Technology Risk

The emergence of fast-paced digital technologies has paved the way for many organisations to achieve tangible benefits in a short time span. Technology
leveraging on the ubiquitous mobile devices, social media, robotic process automation, and cloud computing has made it possible for the Bank to
introduce fast, simple-to-use and innovative products and services. This inevitably carries other risks associated with the use of such technology.

Cyber-attacks, system disruptions, data breaches and intensified regulatory requirements challenge certain conventions in the way we do business. It
requires a higher level of commitment, greater effort and added investment to offer value-added products and services, while safeguarding the interests
of our customers and stakeholders.

The Bank has put in place a formalized Technology Risk Management Framework that drives our security policies, to ensure that risks arising from the
use of technology are properly identified, assessed, managed and reported. Appropriate controls are in place to ensure confidentiality, integrity, and
availability of information. The Bank also raises staff awareness on technology risks through its continuous education programmes, encompassing
Information Risk and Cyber Security, conducted classroom style and via our e-learning modules. Additionally, reminders on IT-security and Cyber security
safe practices are disseminated periodically to both customers and employees via various communication channels.

Environmental and Social Risk

In pursuit of delivering business goals, banks are now put in the spotlight on the way businesses are run in tandem with the pursuit of financial goals, with
greater attention focused on the impact to the environment and society at large. The underlying themes/principles shall focus on sustainable business
practices, conservation of scarce resources and generating benefits to society and future generations.

The Bank is developing a robust framework to incorporate the principles of environmental and social responsibility plus good governance across our
various activities.
104 Alliance Bank Malaysia Berhad (88103-W)

ADDITIONAL COMPLIANCE INFORMATION

POLICY AND PROCEDURES ON RELATED PARTY TRANSACTIONS

The Bank has established an internal policy and procedures on Related Party Transactions (RPTs) and recurrent RPTs to ensure all RPTs are undertaken
on an arm’s length basis and on normal commercial terms not more favourable to the related parties than those generally available to the non-related
parties.

Generally, a comparison of the terms offered by the related party with at least three non-related parties providing similar services/products will be made,
taking into consideration stipulated criteria such as pricing/cost, quality of service/product, level of efficiency, etc. to establish whether the terms offered
by the related party are fair and reasonable and in the commercial interests of the Bank and comparable with those offered by the non-related parties.

The Group Audit Committee reviews all RPTs and Recurrent RPTs where the amounts of consideration in aggregate for a 12-month period equal to or
exceed the minimum threshold set by the Board before recommending to the Board for approval, if thought fit.

CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES POLICY

Bank Negara Malaysia Guidelines on Credit Transactions and Exposures with Connected Parties (“BNM Guidelines”) outlines standards and guidelines
for banking institutions to extend credit in the ordinary course of business to connected parties which are of good credit standing, while ensuring an
appropriate level of prudence based on sound credit risk management practices.

The Bank has established an internal policy on credit transactions and exposures with connected parties to ensure the connected parties do not
inappropriately benefit from such transactions to the detriment of the Bank, and in compliance with BNM Guidelines.

MATERIAL CONTRACTS INVOLVING DIRECTORS OR MAJOR SHAREHOLDERS

There were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Bank and/or its subsidiaries
involving the interests of the Directors, Group Chief Executive Officer and major shareholders, either still subsisting at the end of the financial year or, if
not then subsisting, entered into since the end of the previous financial year.
 FINANCIAL
STATEMENTS
CONTENTS

106 Statement of Board of Directors’ Responsibilities

107 Directors’ Report
115 Statement by Directors
115 Statutory Declaration
116 Independent Auditors’ Report
121 Statements of Financial Position
122 Statements of Income
123 Statements of Comprehensive Income
124 Statements of Changes in Equity
127 Statements of Cash Flows
132 Notes to the Financial Statements

More on this subject:

https://www.alliancebank.com.my/
106 Alliance Bank Malaysia Berhad (88103-W)

STATEMENT OF BOARD OF DIRECTORS’ RESPONSIBILITIES

For preparation of the Annual Audited Financial Statements

The Companies Act, 2016 requires Directors to prepare financial statements for each financial year, which give a true and fair view of the financial
position as at the end of the financial year and the financial performance for the financial year of the Group and the Bank.

In preparing the financial statements, the Directors are responsible for the adoption of suitable accounting policies that comply with the provisions
of the Companies Act, 2016, the Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Directors are
also responsible to ensure their consistent use in the financial statements, supported where necessary by reasonable and prudent judgments.

The Directors hereby confirm that suitable accounting policies have been consistently applied in the preparation of the financial statements.
The Directors also confirm that the Group and the Bank maintains adequate accounting records and an effective system of internal control to
safeguard the assets of the Group and the Bank and prevent and detect fraud or any other irregularities.
 2019 Annual Report 107

DIRECTORS’ REPORT

DIRECTORS’ REPORT

The Directors present their report together with the audited financial statements of the Group and of the Bank for the financial year ended 31 March 2019.

PRINCIPAL ACTIVITIES

The Bank is principally engaged in all aspects of banking business and the provision of related financial services.

The principal activities of the subsidiaries are Islamic banking, investment banking including stockbroking services, nominees services, investment
advisory services and related financial services.

There have been no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS

GROUP BANK
RM’000 RM’000

Profit before taxation 708,023 614,012

Taxation (170,426) (128,060)
Net profit for the financial year 537,597 485,952

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

DIVIDENDS

The amount of dividends declared and paid by the Group and the Bank since 31 March 2018 were as follows:

RM’000

(i) A single tier second interim dividend of 6.8 sen per share, on 1,548,105,929 ordinary shares in respect of the financial year
ended 31 March 2018, was paid on 28 June 2018. 105,271

(ii) A single tier first interim dividend of 8.5 sen per share, on 1,548,105,929 ordinary shares in respect of the financial year ending
31 March 2019, was paid on 28 December 2018. 131,589

236,860

Subsequent to the financial year end, on 29 May 2019, the Directors declared a single tier second interim dividend of 8.2 sen per share, on 1,548,105,929
ordinary shares amounting to approximately RM126,945,000 in respect of current financial year. The accompanying financial statements do not reflect
this dividend. The dividend will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending 31 March
2020. The Directors do not propose any final dividend in respect of the financial year ended 31 March 2019.
108 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORS’ REPORT (Cont’d)

BUSINESS REVIEW FOR FINANCIAL YEAR ENDED (“FYE”) 31 MARCH 2019

Improved Profitability:
For the FYE 31 March 2019 (“FYE2019”), the Group recorded strong financial performance as a result of the successful execution of its Transformation
initiatives to scale up its core businesses in the SME and consumer segments. Net profit after taxation increased by RM44.4 million or 9.0% to RM537.6
million. Return on equity (“ROE”) improved to 9.9% from 9.5% in the previous year.

Net income grew by RM50.1 million or 3.2% to an all-time record high of RM1.62 billion. This was driven by net interest income growth of 8.9% year on
year (“YOY”) from the expansion of total loans and the improved loan mix from better risk adjusted return loans. Net interest margin (“NIM”) improved
by 10bps YOY to 2.50%.

Better Loans Growth:

Gross loans and advances grew 6.0% YOY to RM42.7 billion outpacing the industry loan growth of 4.9% YOY. The Group’s loan origination efforts
continued to focus on better risk adjusted return loans from SME, commercial, consumer unsecured lending and Alliance ONE Account (“AOA”) segments.
SME and commercial loans expanded 12.9% YOY, while consumer unsecured loans grew 21.4% YOY. AOA loan balances tripled to RM3.2 billion from
RM1.0 billion the previous year. The loan mix continued to improve with better risk adjusted return loans making up 43% of the portfolio as compared
to 36% in the previous year.

Other Operating Income:

The Group recorded other operating income of RM265.0 million amid the challenging external environment. Wealth management fee income for FYE2019
was lower by RM15.2 million due to lower structured investment fee income and lower brokerage/share trading fee income. Lower credit card fee income
by RM8.3 million was mainly due to lower regulatory interchange fees and higher redemption from the improved rewards programme proposition. The
Group continues to expand its initiatives to increase the fee income business through its new exclusive general insurance partnership with Zurich
Insurance, enhancing relationship managers’ capabilities through the Wealth Academy and expanding cross-selling efforts for wealth management
products.

Operating Expenses:
Operating expenses improved by RM19.1 million or 2.4% YOY. Excluding restructuring costs, operating expenses grew 3.1% YOY mainly due to
transformation sales force investment and IT infrastructure costs. The investment of RM32.4 million in transformation sales force has generated revenue
of RM58.7 million in FYE2019. Cost to income ratio (“CIR”) was at 47.8%.

Better Asset Quality:

FYE2019 net credit cost was at 31.5 bps excluding a one-off write back from credit rating scale alignment for corporates in 3QFYE18 and a one-off
debt-sale in 1QFYE2019, normalised FYE2019 net credit cost increased marginally by 0.8bps YOY to 33.2 bps from 32.4 bps in FYE2018. The marginal
increase in credit cost was mainly due to the growth of the personal financing portfolio offset by write backs from repayment of several major business
accounts.

The gross impaired loans ratio improved 31bps to 1.12% from 1.43% in FYE2018. The ongoing regularisation of the residential properties portfolio
through proactive collection efforts and the repayments in the non-residential properties portfolio from several major business accounts, have contributed
to the lower GIL in FYE2019. Loan loss coverage (including Regulatory Reserve) improved to 142.9% from 96.7% in FYE2018.

Healthy Funding and Liquidity Position:

Our funding position continues to be healthy despite the intense competition for deposits. Customer based funding grew 5.3% YOY to RM45.9 billion from
RM43.6 billion a year ago, mainly driven by consumer deposits. The Group was able to maintain high Current Account/Savings Account (“CASA”) ratio
of 35.5% mainly due to the expansion of Alliance SavePlus and contribution from the Alliance@Work channel. Fixed deposits growth of RM1.5 billion
YOY was utilised to fund the growth in better risk adjusted return loans portfolio such as AOA and personal financing. The Group continues to focus on
growing company payroll deposits and employee CASA under Alliance@Work. Our liquidity coverage ratio and loan to fund ratio remained healthy at
154.3% and 86.6% respectively.
 2019 Annual Report 109

BUSINESS REVIEW FOR FINANCIAL YEAR ENDED (“FYE”) 31 MARCH 2019 (CONT’D)

Proactive Capital Management:

As part of our continuous proactive capital management to support the future business expansion in all our entities, Alliance Bank Malaysia Berhad
completed an Additional Tier-1 Capital Securities issuance of RM100 million in March 2019. This strengthened our Tier-1 Capital ratio to 14.1%. With
Common Equity Tier-1 (“CET 1”) ratio at 13.4% and total capital ratio at 18.5%, we continue to maintain our capital levels among the strongest in the
sector. Our Islamic Banking entity, Alliance Islamic Bank Berhad (“AIS”) also successfully completed its maiden Additional Tier-1 Sukuk Wakalah of
RM100 million issuance out of the newly-established RM500 million Additional Tier-1 Sukuk Wakalah programme. This strengthened AIS’ Tier-1 Capital
ratio to 12.6%.

Sustainability:
The Group continues to prioritise Economic, Environmental and Social (“EES”) sustainability matters as important components of long-term business
sustainability. We continue to maintain our inclusion in the FTSE4Good Bursa Malaysia Index with improvement in our Environment, Social, Governance
(“ESG”) rating. Our ranking in Minority Shareholders Watch Group (“MSWG”) Corporate Governance & Performance improved to 28th position in November
2017, as compared to 58th position a year ago.

Helping SMEs:
As part of our sustainability efforts, we continue to help businesses especially SMEs, thanks to our SME Banking expansion initiatives. These initiatives
include our collaboration with Credit Guarantee Corporation Malaysia Berhad (“CGC”) to offer a Portfolio Guarantee scheme of RM50 million in November
2018 to assist viable SMEs that may lack the necessary collateral to secure credit facilities. In February 2019, we extended the scheme with an additional
portfolio limit of RM100 million. In addition, the SME Unsecured Express Loan is extended to businesses to finance their general working capital with a
financing limit of up to RM500,000. These initiatives contributed to our SME loans expansion.

The Group’s flagship programme for young businesses, the BizSmart Challenge 2018, has awarded RM1 million in cash and media prizes to its winners.
We have also extended up to RM5 million in unsecured loans to the BizSmart Top 20 finalists to help expand their business. Since the programme’s
inception in 2013, we have received more than 1,300 submissions from SMEs nationwide, signifying its popularity and relevance to the SME business
community. More than 110 young SMEs have been discovered and groomed to achieve greater heights in their businesses, both in Malaysia as well as
abroad.

Alliance@Work addresses business owners’ business needs with its paperless employee onboarding, as well as the mobile banking needs of their
employees and business partners with Cash2Home and mobile banking. Alliance@Work has acquired more than 25,000 local employee CASA accounts
and 1,392 company payroll accounts in FYE2019.

Performance by business segment

The Group’s businesses segments comprise Consumer Banking, Business Banking, Financial Markets and Stockbroking and Corporate Advisory Services.
Please refer to Note 53 on Segment Information for the composition of each business segment.

Profit before tax within the Consumer Banking segment stood at RM80.5 million, with net income increasing by RM8.4 million or 1.5%, mainly due to
higher net interest income from the success of the AOA segment. Operating expenses grew by RM36.5 million or 11.0% compared to the previous year.
Allowance for expected credit losses for loans, advances and financing increased by RM33.7 million. Segment asset increased by RM0.7 billion or 3.3%.

The Business Banking segment’s profit before tax recorded growth of 14.6% or RM52.3 million to RM409.4 million in FYE2019. Net income improved
by RM42.6 million or 6.3% mainly due to higher net interest income from the successful SME banking expansion and other operating income. Operating
expenses improved by RM14.2 million or 4.6% compared to the previous year. Allowance for expected credit losses for loans, advances and financing
increased by RM4.7 million. Segment asset registered a growth of RM2.0 billion or 11.1%.

Profit before tax in the Financial Markets segment increased by 2.1% or RM4.7 million to RM232.7 million. Net income was higher by RM6.5 million or
2.3%. Operating expenses grew by RM2.8 million or 5.2%. Segment asset was at RM15.3 billion, a reduction of 2.4% compared to the previous year.

The Stockbroking and Corporate Advisory Services segment recorded higher loss before tax by RM32.5 million compared to FYE2018 due to lower
brokerage income and goodwill impairment arising from lower projected cash flows from the reassessment of expected future business performance in
the light of current trading and economic conditions.
110 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORS’ REPORT (Cont’d)

ECONOMIC OUTLOOK AND PROSPECTS FOR FYE 31 MARCH 2020

For FY2020, Bank Negara Malaysia (“BNM”) has projected steady Malaysian Gross Domestic Product (GDP) growth at between 4.3% and 4.8% YOY,
compared to 4.7% in 2018. Malaysia’s domestic activity will be negatively affected by the persisting slowdown in global growth, and declining global
trade activity.

Private sector spending will remain the key driver of growth, underpinned by steady private consumption. This will likely be supported by steady labour
market conditions, while private investment is expected to be backed by ongoing and new capital spending in the manufacturing and services sectors,
as well as the repayment of corporate tax refunds.

BNM expects inflation to trend lower between 0.7% and 1.7% in FY2020, due to the impact of tax cost pass-through from a muted Sales and Services
Tax (SST) impact, as well as lower global oil prices that will help reduce domestic fuel prices. On 7 May 2019, BNM announced a cut in Overnight Policy
Rate by 25bps to 3.00%.

On the external sector, gross exports growth is forecasted at 3.4%, compared to a 6.8% in FY2018. This is due to weaker demand from trade partners
and the impact of ongoing trade tensions.

Overall, external risks from global headwinds such as a potential no-deal on trade war negotiations between the US and China; delay in Brexit; and
a potential slowdown of the Chinese economy could be stress points that may dampen external demand for Malaysia’s electrical and electronics
manufacturing, and oil and gas sectors.

BUSINESS OUTLOOK FOR NEXT FINANCIAL YEAR

For the financial year ending 31 March 2020 (“FYE2020”), the Group will continue to focus on accelerating momentum in our core businesses of AOA
and SME despite the uncertain outlook.

Leveraging on our strong collaborative culture across the Group, we will focus on cross-selling higher value propositions using a targeted and segmented
approach which responds to our customers’ financial needs. In particular, Alliance@Work will continue to contribute to new consumer CASA and work
closely with Group SME, Group Corporate and Commercial, and Branches for acquisition of new company payroll accounts.

Continuing on our digitisation journey, we will modernise and streamline the processes and workflows to bring simple, fast and responsive solutions to
our customers. In Consumer Banking, we will be digitising personal loans application to enable faster loan disbursement. We will continue to accelerate
client acquisition through our innovative proposition such as Alliance ONE Account, Alliance SavePlus, Alliance Cash2Home as well as digital marketing,
multiple referral channels and Alliance@Work.

In SME Banking, we will be piloting a digital onboarding for Alliance BizSmart accounts which will enable same day account opening as well as
introducing the Mobile BizSmart app to enable SMEs to make faster decisions on time sensitive payments. Our goal is to provide a comprehensive
financial advisory and funding support to help SMEs and the community grows to their full potential.

We will also focus on broadening our franchise through strategic ecosystem partnerships. In addition, we will continue to amplify the brand through
various media channel, and increase the weight of digital channels to support our sales and marketing activities throughout the Bank.

Our focus will remain on business owners as our key area of growth, and extending our financial products and services to their stakeholder base of
families, employees, business partners, and retail clients. Underscoring all our efforts is our brand promise to deliver Fast, Simple, Responsive, and
Innovative products and services that are Aligned to Customers’ Needs.

We remain confident that our continued focus on our strategic transformation initiatives will generate positive financial returns in the year ahead, and
expect profitability to improve further.
 2019 Annual Report 111

RATING BY EXTERNAL RATING AGENCY

The Bank is rated by Rating Agency Malaysia Berhad (“RAM”). Based on RAM’s rating in January 2019, the Bank’s short-term and long-term ratings are
reaffirmed at P1 and A1 respectively. RAM has classified these rating categories as follows:

P1 – Financial institutions in this category have superior capacities for timely payments of obligations.

A1 – Financial institutions rated in this category are adjudged to offer adequate safety for timely payments of financial obligations. This level of rating
indicates financial institutions with adequate credit profiles, but possess one or more problem areas, giving rise to the possibility of future
riskiness. Financial institutions rated in this category have generally performed at industry average and are considered to be more vulnerable to
changes in economic conditions than those rated in the higher categories.

DIRECTORS

The Directors of the Bank in office during the financial year and during the period from the end of the financial year to the date of this report are:

Tan Sri Dato’ Ahmad Bin Mohd Don (Chairman)

Ou Shian Waei
Lee Ah Boon
Kuah Hun Liang
Datuk Wan Azhar Bin Wan Ahmad
Lee Boon Huat
Ho Hon Cheong
Thayaparan S Sangarapillai
Tan Chian Khong
Susan Yuen Su Min (appointed on 15 October 2018)
Kung Beng Hong (retired with effect from 1 January 2019)

DIRECTORS’ REMUNERATION

Details of Directors’ Remuneration are set out in Note 44 to the financial statements.

DIRECTORS’ BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangements to which the Bank is a party, whereby the
Directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or any other body corporate.

Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive any benefit (other than benefits shown
under Directors’ Remuneration in Note 44 to the financial statements) by reason of a contract made by the Bank or its subsidiary 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.
112 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORS’ REPORT (Cont’d)

DIRECTORS’ INTERESTS

According to the Register of Directors’ shareholdings required to be kept under Section 59 of the Companies Act, 2016, none of the Directors in office
at the end of the financial year had any interest in shares of the Bank or its subsidiaries or its related corporations during the financial year, except as
stated below:

Number of Ordinary Shares

As at As at
1.4.2018 Acquired Sold 31.3.2019

Ho Hon Cheong - 1,000* - 1,000

Note:

* Indirect interest in the Bank shares held by virtue of Section 59(11)(c) of the Companies Act 2016.

ISSUE OF SHARES AND DEBENTURES

The Bank has completed the second issuance of Additional Tier 1 Capital Securities (“ATICS”) pursuant to its existing ATICS Programme of up to
RM1.0 billion in nominal value as below:

Issuance Date Nominal Amount Tenure Call Date Distribution Rate

8 March 2019 RM100.0 million Perpetual Non-callable Five (5) years 8 March 2024 and thereafter on every 5.95% per annum
distribution payment date

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Bank were prepared, the Directors took reasonable steps to ascertain that proper action had been
taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had
been written off and adequate allowances have been made for doubtful debts.

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

CURRENT ASSETS

Before the financial statements of the Group and of the Bank were prepared, the Directors took reasonable steps to ascertain that any current assets
which were unlikely to realise their value as shown in the accounting records in the ordinary course of business, had been written down to an amount
which they might be expected so to realise.

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

VALUATION METHOD

At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of
valuation of assets or liabilities of the Group and of the Bank misleading or inappropriate.
 2019 Annual Report 113

CONTINGENT AND OTHER LIABILITIES

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

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

(ii) any contingent liability in respect of the Group or of the Bank which has arisen since the end of the financial year other than in the ordinary course
of banking business.

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

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

In the opinion of the Directors:

(i) the results of the operations of the Group and of the Bank during the financial year were not substantially affected by any item, transaction or event
of a material and unusual nature; and

(ii) 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 which is likely to affect substantially the results of the operations of the Group and of the Bank for the financial year in which
this report is made.

SUBSIDIARIES

Details of subsidiaries are set out in Note 16 to the financial statements.

AUDITORS’ REMUNERATION

Details of auditors’ remuneration are set out in Note 35 to the financial statements.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events during the financial year are disclosed in Note 54 to the financial statements.

SUBSEQUENT EVENTS

There were no material events subsequent to the end of the financial reporting period that require disclosure or adjustment to the financial statements.
114 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORS’ REPORT (Cont’d)

AUDITORS

The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF1146), have expressed their willingness to accept reappoinment as auditors.

This report was approved by the Board of Directors on 31 May 2019. Signed on behalf of the Board of Directors.

Tan Sri Dato’ Ahmad Bin Mohd Don Kuah Hun Liang

Kuala Lumpur, Malaysia

 2019 Annual Report 115

STATEMENT BY DIRECTORS
Pursuant To Section 251(2) of the Companies Act, 2016

We, Tan Sri Dato’ Ahmad Bin Mohd Don and Kuah Hun Liang, being two of the Directors of Alliance Bank Malaysia Berhad, do hereby state that, in the
opinion of the Directors, the accompanying financial statements set out on pages 121 to 284 are drawn up so as to give a true and fair view of the
financial position of the Group and of the Bank as at 31 March 2019 and financial performance of the Group and of the Bank for the financial year ended
31 March 2019 in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of
the Companies Act, 2016 in Malaysia.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 31 May 2019.

Tan Sri Dato' Ahmad Bin Mohd Don Kuah Hun Liang

Kuala Lumpur, Malaysia

STATUTORY DECLARATION
Pursuant To Section 251(1) of the Companies Act, 2016

I, Wong Lai Loong, being the officer primarily responsible for the financial management of Alliance Bank Malaysia Berhad, do solemnly and sincerely
declare that the accompanying financial statements set out on pages 121 to 284 are in my opinion correct, and I make this solemn declaration
conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the

abovenamed Wong Lai Loong
at Kuala Lumpur in the Federal Territory on
31 May 2019 Wong Lai Loong
MIA Membership No. (CA 29328)

Before me,

M. Sivanason
Commissioner for Oaths

Kuala Lumpur, Malaysia

31 May 2019
116 Alliance Bank Malaysia Berhad (88103-W)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

OF ALLIANCE BANK MALAYSIA BERHAD
(Incorporated in Malaysia)
(Company No: 88103-W)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion
 
In our opinion, the financial statements of Alliance Bank Malaysia Berhad (“the Bank”) and its subsidiaries (“the Group”) give a true and fair view of the
financial position of the Group and of the Bank as at 31 March 2019, and of their financial performance and their cash flows for the year then ended in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016
in Malaysia.
 
What we have audited
 
We have audited the financial statements of the Group and of the Bank, which comprise the statements of financial position as at 31 March 2019 of the
Group and of the Bank, and the statements of income, statements of comprehensive income, statements of changes in equity and statements of cash
flows of the Group and of the Bank for the year then ended, and notes to the financial statements, including a summary of significant accounting policies,
as set out on pages 121 to 284.
 
Basis for opinion
 
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities
under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.
 
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
 
Independence and other ethical responsibilities
 
We are independent of the Group and of the Bank in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian
Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA
Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach

 
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of the Group and
the Bank. In particular, we considered where the Directors made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk
of material misstatement due to fraud.
 
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into
account the structure of the Group and of the Bank, the accounting processes and controls, and the industry in which the Group and the Bank operate.
 2019 Annual Report 117

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group
and of the Bank for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Bank
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters How our audit addressed the key audit matters

Allowance for impairment on loans, advances and financing

Refer to accounting policy 2(k)(i) and 2(a)(ii), Note 13 and 36 of the We obtained an understanding and tested management’s controls over
Financial Statements of the Group and the Bank. identification of loans, advances and financing that have experienced
significant increase in credit risk or objective evidence of impairment in
The Group adopted MFRS 9 “Financial Instruments” with a date of accordance with the Group’s policy and procedures, and the calculation
transition of 1 April 2018. MFRS 9 introduces an expected credit loss of ECL provisions.
(“ECL”) impairment model, which requires the use of complex models
and significant assumptions about future economic conditions and credit We tested a sample of loans, advances and financing and assessed
behaviour. This is a new and complex accounting standard which has the reasonableness of management’s judgement that there was no
required considerable judgement and interpretation in its implementation. significant increase in credit risk or objective evidence of impairment
for these loans.
In particular, the significant judgements in applying the accounting
requirements for measuring ECL include the following: Where objective evidence of impairment was identified by the Group
and impairment loss was individually calculated, we examined both
• Building the appropriate models used to calculate ECL. The models the quantum and timing of future cash flows used by the Group in the
are inherently complex and judgement is applied in determining the impairment loss calculation, challenged the assumptions and compared
appropriate construct of the model; estimated to external evidence where available. Calculations of the
discounted cash flows were also re-performed.
• Identification of loans, advances and financing that have experienced
a significant increase in credit risk; and To determine the appropriateness of models implemented by the Group,
we have:
• Assumptions used in the ECL models such as expected future cash
flows, forward-looking macroeconomic factors and data sets to be • Assessed the methodologies inherent within the ECL models applied
used as inputs to the models. against the requirements of MFRS 9;

• Tested the design and operating effectiveness of the controls relating

to:
- Governance over ECL methodology, model development and model
validation;
- Data used to determine the allowances for credit losses; and
- Calculation, review and approval of the ECL calculation.

• Assessed and tested the significant modelling assumptions;

• Assessed and considered reasonableness of forward-looking forecasts

assumptions; and

• Checked the accuracy of data and calculation of the ECL amount, on a

sample basis.

Based on the procedures performed, we did not find any material

exceptions to the Group’s assessment on impairment of loans, advances
and financing.
118 Alliance Bank Malaysia Berhad (88103-W)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

OF ALLIANCE BANK MALAYSIA BERHAD (Cont’d)
(Incorporated in Malaysia)
(Company No: 88103-W)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Key audit matters (cont’d)

Key audit matters How our audit addressed the key audit matters

Impairment testing of goodwill

Refer to accounting policy 2(k)(ii)(a), and 2(a)(i), and Note 20 of the We tested management’s impairment assessment of goodwill as follows:
Financial Statements of the Group and the Bank.
• Compared the cash flows projection of each CGU to approved budgets
Management performed annual impairment review on the goodwill and business plans for each CGU.
balance.
• Compared historical cash flows projections to actual results of each
CGU to assess the reasonableness of forecasting.
The recoverable amount of each cash generating units (“CGU”) of which
goodwill has been allocated was determined based on the value-in-use
• Assessed the reasonableness of the annual growth rates used in the
method. The value-in-use was determined using cash flow projections
cash flow projections of each CGU.
based on the financial budget and business plans approved by the Board
of Directors. • Assessed the reasonableness of the applied discount rates by
comparing to external and industry information. The applied discount
In particular, we focused on the following key assumptions that requires rates reflect the specific risks relating to each CGU where the risk
significant judgement, for each CGU: associated to each CGU is determined based on the CGU’s business
and operating model.
• The annual growth rates in the cash flow projections;
• Evaluated reasonableness of terminal growth rates used by comparing
• The terminal growth rate; and to Malaysia’s forecasted GDP rate.

• Independently performed sensitivity analysis to assess the potential

• The discount rate.
impact of a reasonable possible change of the key assumptions on the
recoverable amount of each CGUs.

• Reviewed the adequacy of the Group’s and the Bank’s disclosures

within the financial statements about these assumptions to which the
outcome of the impairment test is most sensitive.

Based on the evidence obtained, we found that the assumptions used by

management in the value-in-use calculation were within a reasonable
range.

Information other than the financial statements and auditors’ report thereon
 
The Directors of the Bank are responsible for the other information. The other information comprises:

(i) Financial Highlights

(ii) Statement by Chairman of Alliance Bank Group
(iii) Management Discussion and Analysis
(iv) Statement on Corporate Governance
(v) Sustainability Statement
(vi) Audit Committee Report
(vii) Statement on Risk Management and Internal Control
(viii) Risk Management
(ix) Directors’ Report
(x) Basel II Pillar 3 Report Disclosure
 2019 Annual Report 119

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Information other than the financial statements and auditors’ report thereon (cont’d)

but does not include the financial statements of the Group and of the Bank and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Bank does not cover the other information and we do not express any form of assurance
conclusion thereon.
 
In connection with our audit of the financial statements of the Group and of the Bank, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements of the Group and of the Bank or our knowledge obtained
in the audit or otherwise appears to be materially misstated.
 
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
 
Responsibilities of the Directors for the financial statements
 
The Directors of the Bank are responsible for the preparation of the financial statements of the Group and of the Bank that give a true and fair view in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016
in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial
statements of the Group and of the Bank that are free from material misstatement, whether due to fraud or error.
 
In preparing the financial statements of the Group and of the Bank, the Directors are responsible for assessing the Group’s and the Bank’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Bank or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

 
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Bank as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Bank, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit 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 Group’s and the Bank’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the
Directors.
120 Alliance Bank Malaysia Berhad (88103-W)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

OF ALLIANCE BANK MALAYSIA BERHAD (Cont’d)
(Incorporated in Malaysia)
(Company No: 88103-W)
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Auditors’ responsibilities for the audit of the financial statements (cont’d)

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Bank’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the financial statements of the Group and of the Bank or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the
Bank to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Bank, including the disclosures, and
whether the financial statements of the Group and of the Bank represent the underlying transactions and events in a manner that achieves fair
presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an
opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify during our audit.
 
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
 
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements
of the Group and of the Bank for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.

OTHER MATTERS
 
This report is made solely to the members of the Bank, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia and for no
other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS PLT SOO HOO KHOON YEAN

(No. LLP0014401-LCA & AF1146) (No. 2682/10/2019 (J))
Chartered Accountants Chartered Accountant

Kuala Lumpur
31 May 2019
 2019 Annual Report 121

STATEMENTS OF FINANCIAL POSITION

as at 31 March 2019

GROUP BANK
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 3 1,804,734 2,768,758 1,571,995 1,715,961
Deposits and placements with banks and other financial
institutions 4 500 77,283 - 77,283
Amounts due from clients and brokers 5 77,008 101,305 - -
Financial assets at fair value through profit or loss 6 230,440 - 169,656 -
Financial investments at fair value through other comprehensive
income 7 9,478,462 - 6,852,866 -
Financial investments at amortised cost 8 235,720 - 311,930 -
Financial assets held-for-trading 9 - 63,750 - 48,771
Financial investments available-for-sale 10 - 8,505,189 - 6,406,448
Financial investments held-to-maturity 11 - 293,612 - 344,703
Derivative financial assets 12 55,442 84,455 55,442 84,455
Loans, advances and financing 13 42,320,301 39,989,515 32,622,976 31,546,564
Other assets 14 199,138 141,949 320,794 176,948
Tax recoverable 20,282 2,004 5,501 -
Statutory deposits 15 1,521,592 1,408,316 1,142,108 1,092,566
Investments in subsidiaries 16 - - 989,102 989,102
Investment in joint venture 17 802 693 - -
Property, plant and equipment 18 70,497 69,373 69,178 67,834
Deferred tax assets 19 72,972 22,664 50,116 9,223
Intangible assets 20 432,961 409,402 323,804 292,981
TOTAL ASSETS 56,520,851 53,938,268 44,485,468 42,852,839

LIABILITIES AND EQUITY

Deposits from customers 21 45,017,632 42,740,460 34,982,862 33,508,370
Deposits and placements of banks and other financial institutions 22 858,708 873,871 344,835 439,238
Financial liabilities designated at fair value through profit or loss 23 778,423 682,238 778,423 682,238
Amounts due to clients and brokers 24 51,164 75,103 - -
Derivative financial liabilities 12 57,545 154,686 57,545 154,686
Recourse obligations on loans and financing sold to Cagamas 25 800,669 1,102,363 300,076 601,696
Other liabilities 26 1,740,797 1,435,523 1,572,308 1,319,698
Provision for taxation - 22,661 - 23,190
Provision for zakat 686 252 - -
Deferred tax liabilities 19 2,163 11,907 - -
Subordinated obligations 27 1,480,222 1,379,614 1,479,580 1,379,024
TOTAL LIABILITIES 50,788,009 48,478,678 39,515,629 38,108,140

Share capital 28 1,548,106 1,548,106 1,548,106 1,548,106

Reserves 29 4,184,736 3,911,484 3,421,733 3,196,593
TOTAL EQUITY 5,732,842 5,459,590 4,969,839 4,744,699
TOTAL LIABILITIES AND EQUITY 56,520,851 53,938,268 44,485,468 42,852,839

COMMITMENTS AND CONTINGENCIES 48 24,181,704 22,641,134 21,570,720 20,272,725

Net assets per share attributable to equity holders of the Bank (RM) 3.70 3.53

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

122 Alliance Bank Malaysia Berhad (88103-W)

STATEMENTS OF INCOME
for the financial year ended 31 March 2019

GROUP BANK
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000

Interest income 31 2,010,662 1,897,878 1,982,830 1,875,037

Interest expense 32 (1,012,579) (972,727) (984,350) (941,905)
Net interest income 998,083 925,151 998,480 933,132
Net income from Islamic banking business 33 359,057 318,245 - -
1,357,140 1,243,396 998,480 933,132
Fee and commission income 276,746 303,464 238,120 259,228
Fee and commission expense (86,488) (96,677) (76,945) (84,373)
Investment income 45,077 94,117 120,271 126,433
Other income 29,626 27,723 29,878 27,222
Other operating income 34 264,961 328,627 311,324 328,510
Net income 1,622,101 1,572,023 1,309,804 1,261,642
Other operating expenses 35 (774,947) (794,021) (601,771) (635,229)
Operating profit before allowances 847,154 778,002 708,033 626,413
Allowance for expected credit losses/impairment losses on loans,
advances and financing and other financial assets 36 (130,849) (93,386) (94,618) (43,107)
Write-back of expected credit losses on financial investments 37 201 - 449 -
(Allowance for)/write-back of impairment losses on non-financial
assets 38 (8,592) (62) 148 (62)
Operating profit after allowances 707,914 684,554 614,012 583,244
Share of results of joint venture 17 109 43 - -
Profit before taxation 708,023 684,597 614,012 583,244
Taxation 39 (170,426) (191,369) (128,060) (156,334)
Net profit for the financial year 537,597 493,228 485,952 426,910

Net profit for the financial year attributable to:

Equity holders of the Bank 537,597 493,228 485,952 426,910

Earnings per share attributable to 40

Equity holders of the Bank
- Basic (sen) 34.7 31.9
- Diluted (sen) 34.7 31.9

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

 2019 Annual Report 123

STATEMENTS OF COMPREHENSIVE INCOME

for the financial year ended 31 March 2019

GROUP BANK
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000

Net profit for the financial year 537,597 493,228 485,952 426,910
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Revaluation reserve on financial investments at fair value
through other comprehensive income
- Net gain from change in fair values 84,754 - 38,489 -
- Realised gain transferred to statement of income on
disposal (2,684) - (2,119) -
- Transfer to deferred tax (19,697) - (8,729) -
- Changes in expected credit losses (783) - (624) -
61,590 - 27,017 -

Revaluation reserve on financial investments available-for-sale:

- Net gain from change in fair values - 25,539 - 16,134
- Realised gain transferred to statement of income on
disposal - (4,857) - (2,987)
- Transfer to deferred tax - (4,963) - (3,156)
- 15,719 - 9,991
Other comprehensive income, net of tax 61,590 15,719 27,017 9,991
Total comprehensive income for the financial year 599,187 508,947 512,969 436,901

Total comprehensive income for the financial year attributable to:

Equity holders of the Bank 599,187 508,947 512,969 436,901

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

124 Alliance Bank Malaysia Berhad (88103-W)

STATEMENTS OF CHANGES IN EQUITY

for the financial year ended 31 March 2019

Attributable to Equity holders of the Bank

Ordinary Regulatory Capital FVOCI Revaluation Retained Total
shares reserves reserves reserves reserves profits equity
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated 1,548,106 186,064 100,150 - 114,987 3,510,283 5,459,590
Effects of adoption of
MFRS 9 - (17,330) - 16,923 (114,987) 41,819 (73,575)
Effects of adoption of
MFRS 15 - - - - - (15,500) (15,500)
As restated 1,548,106 168,734 100,150 16,923 - 3,536,602 5,370,515
Net profit for the financial year - - - - - 537,597 537,597
Other comprehensive income - - - 61,590 - - 61,590
Total comprehensive income - - - 61,590 - 537,597 599,187
Transfer to regulatory reserves - 9,663 - - - (9,663) -
Dividends paid to shareholders
[Note 41] - - - - - (236,860) (236,860)
At 31 March 2019 1,548,106 178,397 100,150 78,513 - 3,827,676 5,732,842

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

 Attributable to Equity holders of the Bank
Employees’
Equity share
contribution scheme
Ordinary Share Statutory Regulatory Capital Revaluation from former (“ESS”) Shares held Retained Total
shares premium reserve reserves reserves reserves parent reserve for ESS profits equity
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2017
As previously stated 796,517 401,517 1,223,525 157,900 10,018 99,268 6,062 - - 2,306,158 5,000,965
Effects of group reorganisation 751,589 (401,517) - - 79,992 - (6,062) 6,444 (73,837) (243,376) 113,233
As restated 1,548,106 - 1,223,525 157,900 90,010 99,268 - 6,444 (73,837) 2,062,782 5,114,198
Net profit for the financial year - - - - - - - - - 493,228 493,228
Other comprehensive income - - - - - 15,719 - - - - 15,719
Total comprehensive income - - - - - 15,719 - - - 493,228 508,947
Share-based payment under ESS - - - - - - - 204 - - 204
ESS on shares lapsed:
- employees of subsidiaries - - - - - - - (157) - 157 -
- bank employees - - - - - - - (1,037) - 1,037 -
ESS shares grant vested to:
- employees of subsidiaries - - - - - - - (488) 488 - -
- employees of joint ventures - - - - - - - (111) 111 - -
- bank employees - - - - - - - (3,099) 3,099 - -
ESS shares option exercised by:
- employees of subsidiaries - - - - - - - (22) 22 - -
- bank employees - - - - - - - (96) 96 - -
Proceeds from share options exercised - - - - - - - - 4,032 - 4,032
Transfer of ESS recharged
difference on shares vested - - - - - - - (1,638) - 1,638 -
Disposal of ESS share - - - - - - - - 65,989 - 65,989
Gain from disposal of ESS share - - - - - - - - - 11,247 11,247
Transfer (from)/to reserves - - (1,223,525) 28,164 10,140 - - - - 1,185,221 -
Dividends paid to shareholders [Note 41] - - - - - - - - - (247,697) (247,697)
Dividends added back for shares held in ESS
trust - - - - - - - - - 2,670 2,670
At 31 March 2018 1,548,106 - - 186,064 100,150 114,987 - - - 3,510,283 5,459,590
2019 Annual Report
125

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

 126

STATEMENTS OF CHANGES IN EQUITY (Cont’d)

for the financial year ended 31 March 2019

Distributable
Non-distributable reserves
reserves
Equity
contribution
from former
Ordinary Share Statutory Regulatory Capital FVOCI Revaluation holding Retained Total
shares premium reserve reserves reserve reserves reserves company profits equity
BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2018
Alliance Bank Malaysia Berhad (88103-W)

As previously reported 1,548,106 - - 160,029 95,515 - 74,907 - 2,866,142 4,744,699

Effects of adoption of MFRS 9 - - - 327 - 9,814 (74,907) - 29,297 (35,469)
Effects of adoption of MFRS 15 - - - - - - - - (15,500) (15,500)
As restated 1,548,106 - - 160,356 95,515 9,814 - - 2,879,939 4,693,730
Net profit for the financial year - - - - - - - - 485,952 485,952
Other comprehensive income - - - - - 27,017 - - - 27,017
Total comprehensive income - - - - - 27,017 - - 485,952 512,969
Transfer to regulatory reserves - - - 442 - - - - (442) -
Dividends paid [Note 41] - - - - - - - - (236,860) (236,860)
At 31 March 2019 1,548,106 - - 160,798 95,515 36,831 - - 3,128,589 4,969,839

At 1 April 2017 796,517 401,517 835,401 144,349 - - 64,916 5,523 2,115,505 4,363,728
Net profit for the financial year - - - - - - - - 426,910 426,910
Other comprehensive income - - - - - - 9,991 - - 9,991
Total comprehensive income - - - - - - 9,991 - 426,910 436,901
Issuance of shares to former holding company 100,000 - - - - - - - - 100,000
Bonus issue 651,589 (401,517) - - - - - - (250,072) -
Acquisition of subsidiary under group reorganisation - - - - 95,515 - - - - 95,515
Share-based payment under ESS - - - - - - - 188 - 188
Payment for ESS recharged from former holding company - - - - - - - (3,195) - (3,195)
Transfer of ESS recharged difference on shares vested - - - - - - - (1,479) 1,479 -
ESS on share options lapsed - - - - - - - (1,037) 1,037 -
Transfer (to)/from retained profits - - (835,401) 15,680 - - - - 819,721 -
Dividends paid [Note 41] - - - - - - - - (248,438) (248,438)
At 31 March 2018 1,548,106 - - 160,029 95,515 - 74,907 - 2,866,142 4,744,699

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

 2019 Annual Report 127

STATEMENTS OF CASH FLOWS

for the financial year ended 31 March 2019

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 708,023 684,597 614,012 583,244

Adjustments for:
Accretion of discount less amortisation of premium of financial investments (84,578) (77,535) (83,707) (75,417)
Allowance for expected credit losses/impairment losses on loans, advances
and financing 147,238 105,575 97,909 54,703
(Write-back of)/allowance for expected credit losses on commitment and
contingencies (11,377) - 1,304 -
Write-back of expected credit losses on financial investments (201) - (449) -
(Write-back of)/allowance for expected credit losses/impairment losses on
amounts due from clients and brokers (1) 5 - -
Allowance for expected credit losses/impairment losses on other
receivables and cash and short term funds 2,856 4,047 2,514 3,169
Amortisation of computer software 30,206 24,161 29,117 23,346
Depreciation of property, plant and equipment 23,333 20,731 22,674 19,986
Dividends from financial assets at fair value through profit or loss (1,299) - (749) -
Dividends from financial investments available-for-sale - (1,861) - (1,311)
Dividends from subsidiaries - - (80,154) (33,913)
Interest expense on recourse obligation on loans and financing sold to
Cagamas 25,182 24,142 25,182 24,142
Interest expense on other borrowings - 167 - 167
Interest expense on subordinated obligations 78,732 72,617 78,915 72,735
Interest income from financial investments at fair value through other
comprehensive income (260,639) - (249,720) -
Interest income from financial investments at amortised cost (14,174) - (18,176) -
Interest income from financial investments available-for-sale - (267,241) - (260,478)
Interest income from financial investments held-to-maturity - (17,593) - (17,242)
Allowance for/(write-back of) impairment losses on non-financial assets 8,592 62 (148) 62
(Gain)/loss on disposal of property, plant and equipment (8) 105 (8) (1)
Loss on disposal of computer software - - - 675
Property, plant and equipment written-off 42 291 43 277
Computer software written-off 1,822 372 1,724 284
Net gain from sale of financial assets at fair value through profit or loss (3,378) - (3,377) -
Net gain from sale of financial investments at fair value through other
comprehensive income (2,684) - (2,119) -
Cash flow from operating activities carried forward 647,687 572,642 434,787 394,428
128 Alliance Bank Malaysia Berhad (88103-W)

STATEMENTS OF CASH FLOWS (Cont’d)

for the financial year ended 31 March 2019

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D)

Cash flow from operating activities brought forward 647,687 572,642 434,787 394,428
Net gain from sale of financial assets held-for-trading - (761) - (761)
Net gain from sale of financial investments available-for-sale - (21,863) - (21,331)
Unrealised gain arising from financial assets at fair value through
profit or loss (12,092) - (8,248) -
Unrealised (gain)/loss arising from derivative instruments (18,276) 113,094 (18,276) 113,094
Unrealised loss/(gain) arising from financial liabilities designated at fair
value through profit or loss 12,809 (25,555) 12,809 (25,555)
Unrealised gain arising from financial assets held-for-trading - (5,813) - (5,298)
Share options/grants under Employees’ Share Scheme - 189 - 191
Share of results of joint venture (109) (43) - -
Zakat 590 150 - -
Cash flow from operating activities before working capital changes 630,609 632,040 421,072 454,768
Changes in working capital:
Deposits from customers 2,277,172 (1,705,260) 1,474,492 (2,604,131)
Deposits and placements of banks and other financial institutions (15,163) 10,967 (94,403) (210,491)
Other liabilities 258,213 55,187 208,529 86,271
Deposits and placements with banks and other financial institutions 76,783 (77,283) 77,283 (77,283)
Financial liabilities designated at fair value through profit or loss 83,376 305,059 83,376 305,059
Financial assets held-for-trading - 272,407 - 211,887
Financial assets at fair value through profit or loss 16,668 - 10,827 -
Loans, advances and financing (2,801,062) (1,103,401) (1,400,892) (229,360)
Other assets (60,506) 662 (146,823) (38,666)
Amounts due from clients and brokers 358 17,749 - -
Statutory deposits (113,276) 29,128 (49,542) 36,800
Cash generated from/(used in) operating activities 353,172 (1,562,745) 583,919 (2,065,146)
Taxation paid (219,123) (196,351) (167,520) (159,931)
Zakat paid (156) (104) - -
Net cash generated from/(used in) operating activities 133,893 (1,759,200) 416,399 (2,225,077)
 2019 Annual Report 129

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM INVESTING ACTIVITIES

Dividend from financial assets at fair value through profit or loss 1,299 - 749 -
Dividends from financial investments available-for-sale - 1,861 - 1,311
Dividends from subsidiaries - - 80,154 33,913
Capital injection into subsidiaries - - - (537)
Interest received from financial assets at fair value through profit or loss 1,547 - 1,547 -
Interest received from financial investments at fair value through other
comprehensive income 239,129 - 241,980 -
Interest received from financial investments at amortised costs 13,071 - 17,362 -
Interest received from financial investments assets held-for-trading - 5,677 - 5,102
Interest received from financial investments available-for-sale - 260,342 - 257,081
Interest received from financial investments held-to-maturity - 20,760 - 18,934
Net interest expense for derivative instruments (49,852) (38,501) (49,852) (38,501)
Purchase of property, plant and equipment (24,560) (16,670) (24,122) (16,291)
Purchase of computer software (64,327) (56,574) (61,664) (55,300)
Proceeds from redemption/disposal of financial investment at amortised
cost (net of purchase) 368,791 - 302,126 -
Proceeds from redemption/disposal financial investments at fair value
through other comprehensive income (net of purchase) (1,041,224) - (526,693) -
Proceeds from redemption/disposal of financial investments held-to-
maturity (net of purchase) - 699,136 - 389,106
Proceeds from redemption/disposal of financial investments
available-for-sale (net of purchase) - 1,782,543 - 1,728,991
Proceeds from disposal of property, plant and equipment 69 56 69 16
Net cash (used in)/generated from investing activities (556,057) 2,658,630 (18,344) 2,323,825

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to shareholders of the company (236,860) (245,027) (236,860) (248,438)

Interest paid on recourse obligation on loans and financing sold to Cagamas (26,872) (24,490) (26,791) (25,152)
Interest on other borrowings - (237) - (237)
Interest paid on subordinated obligations (78,124) (68,654) (78,359) (68,654)
Cash flow from financing activities carried forward (341,856) (338,408) (342,010) (342,481)
130 Alliance Bank Malaysia Berhad (88103-W)

STATEMENTS OF CASH FLOWS (Cont’d)

for the financial year ended 31 March 2019

GROUP BANK
2019 2018 2019 2018
RM'000 RM'000 RM'000 RM'000

CASH FLOWS FROM FINANCING ACTIVITIES (CONT’D)

Cash flow from financing activities brought forward (341,856) (338,408) (342,010) (342,481)
(Repayment of)/proceeds from recourse obligations on loans and financing
sold to Cagamas (300,004) 599,998 (300,011) 99,993
Settlement on other borrowings - (5,000) - (5,000)
Proceeds from issuance of subordinated notes 100,000 150,000 100,000 150,000
Proceeds from ESS exercised by employees/joint venture - 4,150 - -
Proceeds from disposal of share held in trust - 77,236 - -
Payment for ESS recharged from former parent - - - (3,195)
Subscription of shares from former holding company - - - 100,000
Transaction costs paid on issuance of subordinated notes - (427) - (721)
Net cash (used in)/generated from financing activities (541,860) 487,549 (542,021) (1,404)
NET CHANGE IN CASH AND CASH EQUIVALENTS (964,024) 1,386,979 (143,966) 97,344
CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR 2,768,758 1,381,779 1,715,961 1,618,617
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR 1,804,734 2,768,758 1,571,995 1,715,961

Cash and cash equivalents comprise the following:

Cash and short-term funds 1,804,734 2,768,758 1,571,995 1,715,961
 2019 Annual Report 131

A reconciliation of liabilities from financing activities to the statement of financial position and statement of cash flows as follows:

Recourse
obligations on
loans and
financing
sold to Subordinated Other
Cagamas obligations borrowings
GROUP RM’000 RM’000 RM’000

As at 1 April 2017 502,713 1,226,078 5,070

Cash flow
- Issuance/redemption 599,998 150,000 (5,000)
- Interest payment (24,490) (68,654) (237)
- Transaction costs - (427) -
Non cash changes
- Interest accrued 24,142 72,617 167
As at 31 March/1 April 2018 1,102,363 1,379,614 -
Cash flow
- (Redemption)/issuance (300,004) 100,000 -
- Interest payment (26,872) (78,124) -
Non cash changes
- Interest accrued 25,182 78,732 -
As at 31 March 2019 800,669 1,480,222 -

Recourse
obligations on
loans and
financing
sold to Subordinated Other
Cagamas obligations borrowings
BANK RM’000 RM’000 RM’000

As at 1 April 2018 502,713 1,225,664 5,070

Cash flow
- Issuance/redemption 99,993 150,000 (5,000)
- Interest payment (25,152) (68,654) (237)
- Transaction costs - (721) -
Non cash changes
- Interest accrued 24,142 72,735 167
As at 31 March/1 April 2018 601,696 1,379,024 -
Cash flow
- (Redemption)/issuance (300,011) 100,000 -
- Interest payment (26,791) (78,359) -
Non cash changes
- Interest accrued 25,182 78,915 -
As at 31 March 2019 300,076 1,479,580 -
132 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS

for the financial year ended 31 March 2019

1. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The Bank is principally engaged in all aspects of banking business and the provision of related financial services.

The principal activities of the subsidiaries are Islamic banking, investment banking including stockbroking services, nominees services, investment
advisory services and related financial services.

The Bank is a public limited liability company, incorporated and domiciled in Malaysia. The registered office is located at 3rd Floor,
Menara Multi-Purpose, Capital Square, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 31 May 2019.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

Malaysian Financial Reporting Standards (“MFRS”) Framework

The financial statements of the Group and the Bank have been prepared in accordance with the Malaysian Financial Reporting Standards
(“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia.

The financial statements of the Group and the Bank have been prepared under the historical cost convention, as modified by the financial
investments at fair value through other comprehensive income and financial assets/liabilities (including derivative instruments) at fair value
through profit or loss.

The financial statements incorporate all activities relating to the Islamic banking business which have been undertaken by the Group.
Islamic banking business refers generally to the acceptance of deposits and granting of financing under the Shariah principles.

The financial statements are presented in Ringgit Malaysia (“RM”) and all numbers are rounded to the nearest thousand (RM’000), unless
otherwise stated.

The preparation of the financial statements in conformity with MFRS requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise
their judgment in the process of applying the Group’s and the Bank’s accounting policies. Although these estimates and judgment are based
on the Directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are described in the following notes:

(i) Annual testing for impairment of goodwill (Note 20) – the measurement of the recoverable amount of cash-generating units are
determined based on the value-in-use method, which requires the use of estimates for cash flow projections approved by the Board
of Directors covering a 4-year period, estimated growth rates for cash flows beyond the fourth year are extrapolated in perpetuity
and discount rates are applied to the cash flow projections.
 2019 Annual Report 133

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of Preparation (cont’d)

Malaysian Financial Reporting Standards (“MFRS”) Framework (cont’d)

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are described in the following notes: (cont’d)

(ii) The measurement of allowance for expected credit losses for financial assets measured at amortised cost and at fair value through
comprehensive income is an area that requires the use of significant assumptions about future economic conditions and credit
behaviour.
 
The allowance for expected credit losses are recognised using forward-looking information including macroeconomic factors. By using
forward-looking information will increase the level of judgement as to how changes in these macroeconomic factors will affect allowance
for credit losses. The methodology and assumptions including any forecasts of future economic conditions are reviewed regularly.

Some of the areas of significant judgements involved in the measurement of ECL are detailed as follows:

• Significant increase in credit risk

• Development of ECL models and assumption for the measurement of ECL
• Determining the number and relative weightings of forward-looking scenarios
• Establishing groups of similar financial assets for the purpose of measuring the ECL on collective basis

The sensitivity effect on the macroeconomic factor is further disclosed in Note 45.

Standards, amendments to published standards and interpretations that are effective

The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Group
and the Bank for the financial year beginning on 1 April 2018 are as follows:

• MFRS 9 “Financial Instruments”

• MFRS 15 “Revenue from Contracts with Customers”
• IC Interpretation 22 “Foreign Currency Transactions and Advance Consideration”
• Annual Improvements to MFRSs 2014-2016 Cycles
- Amendments to MFRS 1 “First-time Adoption of Malaysian Financial Reporting Standards”
- Amendments to MFRS 128 “Investments in Associates and Joint Ventures”

The adoption of the above standards, amendments to published standards and interpretation to existing standards did not have any
significant impact on the financial statements of the Group and the Bank other than the adoption of MFRS 9 and MFRS 15, which resulted
in changes in accounting policies.

The Group and the Bank have applied MFRS 9 retrospectively with the date of initial application of 1 April 2018. In accordance with the
transitional provisions provided in MFRS 9, comparative information for 31 March 2018 was not restated and continued to be reported
under the previous accounting policies governed under MFRS 139. The cumulative effects of initially applying MFRS 9 were recognised as
an adjustment to the opening balance of retained profits as at 1 April 2019.

The Group and the Bank have applied MFRS 15 with the date of initial application of 1 April 2018 by using the modified
retrospective transition method. Under the modified retrospective transition method, the Group and the Bank apply the new standards
retrospectively only to contracts that are not completed contracts at the date of initial application. Accordingly, the 31 March 2018
comparative information was not restated and the cumulative effects of initial application of MFRS 15 were recognised as an adjustment
to the opening balance of retained profits as at 1 April 2018. The comparative information continued to be reported under the previous
accounting policies governed under MFRS 118 and MFRS 111.

The detailed impact of change in accounting policies are set out in Note 56.
134 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of Preparation (cont’d)

Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
the Bank but not yet effective

The Group and the Bank will apply the new standards, amendments to standards and interpretations in the following period:

Financial year beginning on/after 1 April 2019

(a) MFRS 16 “Leases” supersedes MFRS 117 “Leases” and the related interpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.
 
MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases (off
balance sheet). MFRS 16 requires a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future
lease payments for most leases.
 
The right-of-use asset is depreciated in accordance with the principle in MFRS 116 “Property, Plant and Equipment” and the lease
liability is accreted over time with interest expense recognised in the income statement.
 
For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating
leases or finance leases and account for them differently.

The Group and the Bank have set up a project team which has reviewed all of the leasing arrangements over the last year in light
of the new lease accounting rules in MFRS 16. The standard will affect primarily the accounting for the Group’s and the Bank’s
operating leases.
 
The Group and the Bank will apply the standard from its mandatory adoption date of 1 April 2019. The Group and the Bank intend
to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use
assets will be measured on transition as if the new rules had always been applied.
 
The Group and the Bank are now progressing to finalise the right-of-use assets and the lease liability and will complete this prior to
releasing the interim results for the financial period ending 30 June 2019.

(b) Amendments to MFRS 9 “Prepayment features with negative compensation” allow companies to measure some prepayable
financial assets with negative compensation at amortised cost. Negative compensation arises where the contractual terms permit
the borrower to prepay the instrument before its contractual maturity, but the prepayment amount could be less than the unpaid
amounts of principal and interest. To qualify for amortised cost measurement, the negative compensation must be reasonable
compensation for early termination of the contract, and the asset must be held within a ‘held to collect’ business model.

The amendments will be applied retrospectively.

 2019 Annual Report 135

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of Preparation (cont’d)

Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
the Bank but not yet effective (cont’d)

The Group and the Bank will apply the new standards, amendments to standards and interpretations in the following period: (cont’d)

Financial year beginning on/after 1 April 2019 (cont’d)

(c) Amendments to MFRS 128 “Long-term Interest in Associates and Joint Ventures” clarify that an entity should apply MFRS 9
“Financial Instruments” (including the impairment requirements) to long-term interests in an associate or joint venture, which are
in substance form part of the entity’s net investment, for which settlement is neither planned nor likely to occur in the foreseeable
future.

In addition, such long-term interest are subject to loss allocation and impairment requirements in MFRS 128.

The amendments shall be applied retrospectively.

(d) Annual Improvements to MFRSs 2015 - 2017 Cycles:

• Amendments to MFRS 3 “Business Combinations” clarify that when a party obtains control of a business that is a joint
operation, the acquirer should account the transaction as a business combination achieved in stages. Accordingly it should
remeasure its previously held interest in the joint operation (rights to the assets and obligations for the liabilities) at fair value
on the acquisition date.

• Amendments to MFRS 11 “Joint Arrangements” clarify that when a party obtains joint control of a business that is a joint
operation, the party should not remeasure its previously held interest in the joint operation.

• Amendments to MFRS 112 “Income Taxes” clarify that where income tax consequences of dividends on financial instruments
classified as equity is recognised (either in profit or loss, other comprehensive income or equity) depends on where the past
transactions that generated distributable profits were recognised. Accordingly, the tax consequences are recognised in profit
or loss when an entity determines payments on such instruments are distribution of profits (that is, dividends). Tax on dividend
should not be recognised in equity merely on the basis that it is related to a distribution to owners.

• Amendments to MFRS 123 “Borrowing Costs” clarify that if a specific borrowing remains outstanding after the related
qualifying asset is ready for its intended use or sale, it becomes part of general borrowings.

(e) IC Interpretation 23 “Uncertainty over Income Tax Treatments” (effective 1 January 2019) provides guidance on how to recognise
and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.
 
If an entity concludes that it is not probable that the tax treatment will be accepted by the tax authority, the effect of the tax
uncertainty should be included in the period when such determination is made. An entity shall measure the effect of uncertainty
using the method which best predicts the resolution of the uncertainty.
 
IC Interpretation 23 will be applied retrospectively.

The above standards, amendments to published standards and interpretations to existing standards are not anticipated to have any
significant impact on the financial statements of the Group and the Bank in the year of initial application.
136 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of Preparation (cont’d)

Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and
the Bank but not yet effective (cont’d)

The Group and the Bank will apply the new standards, amendments to standards and interpretations in the following period: (cont’d)

Financial year beginning on/after 1 April 2020

Amendments to MFRS 3 “Definition of a Business”

Amendments to MFRS 3 “Definition of a Business” revise the definition of a business. To be considered a business, an acquisition would
have to include an input and a substantive process that together significantly contribute to the ability to create outputs.
 
The amendments provide guidance to determine whether an input and a substantive process are present, including situation where an
acquisition does not have outputs. To be a business without outputs, there will now need to be an organised workforce. It is also no longer
necessary to assess whether market participants are capable of replacing missing elements or integrating the acquired activities and
assets.
 
In addition, the revised definition of the term ‘outputs’ is narrower, focusses on goods or services provided to customers, generating
investment returns and other income but excludes returns in the form of cost savings.
 
The amendments introduce an optional simplified assessment known as ‘concentration test’ that, if met, eliminates the need for further
assessment. Under this concentration test, if substantially all of the fair value of gross assets acquired is concentrated in a single identifiable
asset (or a group of similar assets), the assets acquired would not represent a business.
 
The amendments shall be applied prospectively.

(b) Economic Entities in the Group

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.

The consolidated financial statements comprise the financial statements of the Bank and its subsidiaries as at the end of the
reporting period. The financial statements of the subsidiaries are prepared for the same reporting date as the Bank.

Subsidiaries are consolidated using the acquisition method of accounting. The consideration transferred includes the fair value of
any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the
subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are with limited
exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the
acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognised amounts of acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.
 2019 Annual Report 137

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Economic Entities in the Group (cont’d)

(i) Subsidiaries (cont’d)

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date
fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised
as goodwill (Note 2(d)(i)). If the total of consideration transferred, non-controlling interest recognised and previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is
recognised directly in the statement of income.

If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree
is remeasured to fair value at the acquisition date, any gains or losses arising from such re-measurement are recognised in
statement of income.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 9
in statement of income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is
accounted for within equity.

In a group reorganisation, the assets and liabilities of the acquired entity are included in the consolidated financial statements of the
Group at their existing carrying amounts without fair value uplift. The difference between the consideration given and the aggregate
carrying amounts of the assets and liabilities (as of the date of the transaction) is recognised in equity. No goodwill is recognised.
The acquired entity’s assets and liabilities are incorporated in the consolidated financial statements of the Group as if the entity had
always been, prior to the group reorganisation.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the transfer assets. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(ii) Changes in Ownership Interests in Subsidiaries Without Change of Control

Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners
of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-
controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to
non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Group.

(iii) Disposal of Subsidiaries

When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is remeasured to its fair value
with the change in carrying amount recognised in statement of income. This fair value becomes the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are
reclassified to profit or loss.

Gains or losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries sold.
138 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Economic Entities in the Group (cont’d)

(iv) Associates

Associates are all entities over which the Group has significant influence, but not control or joint control, generally accompanying a
shareholding of between 20% and 50% of voting rights. Significant influence is the power to participate in financial and operating
policy decisions of associates but not power to exercise control over those policies.

Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment in
an associate is initially recognised at cost, and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or
losses of the associate in profit or loss, and the Group’s share of movements in other comprehensive income of the associate in other
comprehensive income. Dividends received or receivable from an associate are recognised as a reduction in the carrying amount
of the investment. When the Group’s share of losses in an associate equals or exceeds its interests in the associate, including any
long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. The Group’s investment
in associates includes goodwill identified on acquisition.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is
impaired. An impairment loss is recognised for the amount by which the carrying amount of the associate exceeds its recoverable
amount.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the
Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised gains on transactions
between the Group and its associates are eliminated to the extent of the Group’s interest in the associates, unrealised losses are
also eliminated unless the transaction provides evidence on impairment of the asset transferred. Where necessary, in applying the
equity method, adjustments are made to the financial statements of associates to ensure consistency of accounting policies with
those of the Group.

When the Group ceases to equity account its associate because of a loss of significant influence, any retained interest in the
entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the
initial carrying amount for the purposes of subsequently accounting for the retained interest as a financial asset. In addition, any
amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are
reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts
previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

Dilution gains and losses arising in investments in associates are recognised in the statements of income.

(v) Joint Arrangements

A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more
parties, where decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties
sharing control. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and
obligations of the parties to the arrangement. A joint venture is a joint arrangement whereby the joint venturers have rights to the
net assets of the arrangement. A joint operation is a joint arrangement whereby the joint operators have rights to the assets and
obligations for the liabilities, relating to the arrangement.
 2019 Annual Report 139

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(b) Economic Entities in the Group (cont’d)

(v) Joint Arrangements (cont’d)

Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated
statement of financial position. Under the equity method, the investment in a joint venture is initially recognised at cost, and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses of the joint venture in profit or loss, and the Group’s
share of movements in other comprehensive income of the joint venture in other comprehensive income. Dividends received or
receivable from a joint venture are recognised as a reduction in the carrying amount of the investment. When the Group’s share of
losses in a joint venture equals or exceeds its interests in the joint venture, including any long-term interests that, in substance, form
part of the Group’s net investment in the joint venture, the Group does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the joint venture.
 
The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture
is impaired. An impairment loss is recognised for the amount by which the carrying amount of the joint venture exceeds its
recoverable amount.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in
the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies
adopted by the Group.

When the Group ceases to equity account its joint venture because of a loss of joint control, any retained interest in the entity is
remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition,
any amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had
directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.

(c) Investments in Subsidiaries, Joint Ventures and Associates in separate financial statements

In the Bank’s separate financial statements, investments in subsidiaries, joint ventures and associates are carried at cost less accumulated
impairment losses. The policy for the recognition and measurement of impairment is in accordance with Note 2(k)(ii)(b). On disposal of
investments in subsidiaries, joint ventures and associates, the difference between disposal proceeds and the carrying amounts of the
investments are recognised in the statement of income.

(d) Intangible Assets

(i) Goodwill

Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred,
the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the
fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration
transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair
value of the net identifiable assets of the acquiree, the resulting gain is recognised in profit or loss.
140 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Intangible Assets (cont’d)

(i) Goodwill (cont’d)

Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate
that it might be impaired, and carried at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill
acquired in a business combination is allocated to each of the cash generating units (“CGUs”), or groups of CGUs, that is expected
to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at operating
segments level. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the
fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(ii) Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring the specific software
to use. The costs are amortised over their useful lives of five years and are stated at cost less accumulated amortisation and
accumulated impairment, if any. Computer software is assessed for impairment whenever there is an indication that it may be
impaired. The amortisation period and amortisation method are reviewed at least at the end of each reporting period.

The policy for the recognition and measurement of impairment is in accordance with Note 2(k)(ii)(b).

Costs associated with maintaining computer software programmes are recognised as expenses as incurred. Costs that are directly
associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets. These costs include software development
employee costs and appropriate portion of relevant overheads.

(e) Property, Plant and Equipment and Depreciation

Property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment initially recognised
includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to
be capable of operating in the manner intended by management.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are recognised as expenses in the statement of income
during the financial year in which they are incurred.

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

Subsequent to initial recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation
and accumulated impairment, if any. The policy for the recognition and measurement of impairment is in accordance with Note 2(k)(ii)(b).

Freehold land has an unlimited useful life and therefore is not depreciated. Other property, plant and equipment are depreciated on the
straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, summarised as follows:

Buildings 2%
Office equipment, furniture and fixtures 10% - 20%
Motor vehicles 20%
Renovations 20%
Computer equipment 20% - 33.3%
 2019 Annual Report 141

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(e) Property, Plant and Equipment and Depreciation (cont’d)

Depreciation on assets under construction commences when the assets are ready for their intended use.

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and
period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits
embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or
disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in the statement of income.

(f) Financial Assets

Accounting policies applicable with effective from 1 April 2018

(i) Classification

With effective from 1 April 2018, the Group and the Bank classify the financial assets in the following measurement categories:

• Fair value through other comprehensive income (“FVOCI”);

• Fair value through profit or loss (“FVTPL”); and
• Amortised cost.

For financial assets measured at fair value, gains and losses will either be recorded in statement of income or statement of other
comprehensive income. For investment in debt instruments, this will depend on the business model in which the investment is
held. For investment in equity instruments, it is determined by the irrevocable election at the time of initial recognition to account
for the equity investment at FVTPL by the Group and the Bank.

(i) Financial assets at FVOCI comprise of:

Debt securities where the contractual cash flows are solely principal and interest and the objective of the Group’s and the
Bank’s business model is achieved both by collecting contractual cash flows and selling financial assets.

(ii) The Group and the Bank classify the following financial assets at FVTPL:

• Debt investments that do not qualify for measurement at either amortised cost or fair value through comprehensive
income, and

• Equity investments for which the entity has not elected to recognise at fair value through other comprehensive
income.

(iii) The Group and the Bank classify their financial assets at amortised cost only if both of the following criteria are met:

• The asset is held within a business model with the objective of collecting the contractual cash flows; and

• The contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal outstanding.

The policy of the recognition of impairment is in accordance with Note 2(k)(i).

(ii) Recognition and initial measurement

Regular way purchases and sales of financial assets are recognised on settlement date, the date on which the Group and the
Bank settle to purchase or sell the asset.

At initial recognition, the Group and the Bank measures a financial asset at its fair value plus, in the case of a financial asset not
at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial
assets carried at FVTPL are expensed in profit or loss.
142 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Financial Assets (cont’d)

Accounting policies applicable with effective from 1 April 2018 (cont’d)

(ii) Recognition and initial measurement (cont’d)

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
payment of principal and interest (“SPPI”).

(iii) Subsequent measurement

Debt instruments

There are three measurement categories into which the Group and the Bank classify its debt instruments:

(i) Amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent SPPI are measured at amortised
cost. Interest/profit income from these financial assets is included in gross interest/profit income using the effective interest/
profit method. Any gain or loss arising on derecognition is recognised directly in statement of income and presented in other
operating income. Impairment losses are presented as separate line item in the statement of income.

(ii) FVOCI

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent SPPI, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest/profit income and foreign exchange gains and losses which are recognised
in statement of income.

When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to statement of income and recognised in other operating income. Interest/profit income from these financial assets
is included in gross interest income using the effective interest. Foreign exchange gains and losses are presented in other
operating income and impairment expenses are presented as separate line item in the statement of income and statement
of comprehensive income.

(iii) FVTPL

Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVTPL. The Group and the Bank may also
irrevocably designate financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets
and liabilities being measured on different bases. Fair value changes is recognised in statement of income and presented net
within other operating income in the period which it arises.

Equity instruments

The Group and the Bank subsequently measures all equity investments at fair value. Where the Group’s and the Bank’s management
has elected to present fair value gains and losses on equity investments through profit and loss. Changes in the fair value of financial
assets at FVTPL are recognised in other operating income in the statement of income. Dividends from such investments continue to
be recognised in profit or loss as other operating income when the Group’s and the Bank’s right to receive payments is established.
 2019 Annual Report 143

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Financial Assets (cont’d)

Accounting policies applicable with effective from 1 April 2018 (cont’d)

(iv) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred
and the Group and the Bank have transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group and the Bank are not
derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The
corresponding cash received from the financial institutions is recorded as amount due to Cagamas Berhad.

When financial investments at FVOCI are sold, the accumulated fair value adjustments recognised in other comprehensive income
are reclassified to statement of income.

Accounting policies applicable prior to 1 April 2018

(v) Classification

The Group and the Bank classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, available-for-sale and held-to-maturity. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification at initial recognition and, in the case of assets classified as held-to-maturity,
re-evaluates this designation at the end of each reporting period. The policy of the recognition and measurement of impairment is
in accordance with Note 2(k).

Financial assets at fair value through profit or loss

The Group and the Bank classifies financial assets at fair value through profit or loss if they are acquired principally for the purpose
of selling in the short term, i.e. are held-for-trading.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. The Group and the Bank’s loans and receivables comprise cash and short-term funds, deposits and placements with bank
and other financial institutions, loans, advances and financing and other assets, in the statement of financial position. 

Financial investments available-for-sale

Financial investments available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories.

Financial investments held-to-maturity

Financial investments held-to-maturity are non-derivative quoted financial assets with fixed or determinable payments and fixed
maturities that the Group and the Bank’s management has the positive intention and ability to hold to maturity. If the Group and the
Bank were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and
reclassified as financial investments available for sale.
144 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Financial Assets (cont’d)

Accounting policies applicable prior to 1 April 2018 (cont’d)

(vi) Reclassification

The Group and the Bank may choose to reclassify a non-derivative trading financial asset out of the held for trading category if the
financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are
permitted to be reclassified out of the held for trading category only in rare circumstances arising from a single event that is unusual
and highly unlikely to recur in the near term. In addition, the Group and the Bank may choose to reclassify financial assets that would
meet the definition of loans and receivables out of the held for trading or available-for-sale categories if the Group and the Bank has
the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as
applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.

Effective interest/profit rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined
at the reclassification date.

(vii) Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the settlement date.

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the
financial asset for all financial assets not carried at fair value through profit or loss. Financial assets at fair value through profit or
loss are initially recognised at fair value, and transaction costs are expensed in statement of income.

(viii) Subsequent measurement – gains and losses

Financial investments available-for-sale and financial assets at fair value through profit or loss are subsequently carried at fair value.
Loans and receivables and financial investments held-to-maturity are subsequently carried at amortised cost using the effective
interest method.

Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest
and dividend income are recognised in profit or loss in the period in which the changes arise.

Changes in the fair value of financial investments available-for-sale are recognised in other comprehensive income, except for
impairment losses Note 2(k) and foreign exchange gains and losses Note 2(u).

(ix) De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred
and the Group and the Bank have transferred substantially all risks and rewards of ownership.

Receivables that are factored out to banks and other financial institutions with recourse to the Group and the Bank are not
derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The
corresponding cash received from the financial institutions is recorded as amount due to Cagamas Berhad.

When financial investments available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive
income are reclassified to statement of income.
 2019 Annual Report 145

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(g) Derivative Financial Instrument and Hedge Accounting

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their
fair value at the end of each reporting period.

The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged.

Derivatives that do not qualify for hedge accounting are classified as held for trading and accounted for at fair value through profit or loss.
Changes in the fair value are recognised immediately in profit or loss.

Derivatives that qualify for hedge accounting are designated as either:

(a) Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);
(b) Hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge);
or
(c) Hedges of a net investment in a foreign operation (net investment hedge).

The Group and the Bank documents at the inception of the hedge relationship, the economic relationship between hedging instruments and
hedged items including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of
hedged items. The Group and the Bank documents its risk management objective and strategy for undertaking its hedge transactions.

(i) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together
with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The Group applies fair value hedge accounting for hedging fixed interest risk on securities. The gain or loss relating to the effective
portion of interest rate swaps hedging fixed rate securities is recognised in profit or loss. The gain or loss relating to the ineffective
portion is recognised in profit or loss within the other operating income. Changes in the fair value of the hedge fixed rate securities
attributable to interest rate risk are recognised in equity.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which
the effective interest method is used to amortised to profit or loss over the period to maturity.

(ii) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised
in other comprehensive income and accumulated in reserves within equity. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.

When the forecast transaction that is hedged results in the recognition of a non-financial asset (for example property, plant and
equipment), the gains or losses previously deferred in equity are reclassified from equity and included in the initial measurement of
the cost of the asset. The deferred amounts are ultimately recognised in depreciation of property, plant and equipment.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in statement of changes in equity and is recognised in the periods
when the hedged item affects profit or loss. When hedged future cash flows or forecast transaction is no longer expected to occur,
the cumulative gain or loss and deferred cost of hedging that was reported in equity is immediately reclassified to profit or loss.
146 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(g) Derivative Financial Instrument and Hedge Accounting (cont’d)

(iii) Net investment hedge

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.

Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive
income and accumulated in reserves within equity. The gain or loss relating to the ineffective portion is recognised immediately in
profit or loss.

Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is disposed or partially disposed.

(h) Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course
of business and in the event of default, insolvency or bankruptcy. 

(i) Amounts Due from Clients and Brokers

Amounts due from clients and brokers are recognised at amortised cost less impairment allowances. Impairment allowances are made
based on simplified approach for balances overdue from clients and brokers, after taking into consideration collateral held by the Group
and deposits of and amounts due to dealer representative in accordance with the Rules of Bursa Securities. Bad debts are written off when
all recovery actions have been fully exhausted.

(j) Other Assets

Other receivables, deposits, trade receivables, balances due from subsidiaries and related party included in other assets are carried at
amortised cost using the effective yield method, less impairment allowance. Bad debts are written-off when identified. An estimate is made
for doubtful debts based on a review of all outstanding amounts as at the end of the reporting period.

(k) Impairment of Assets

(i) Impairment of financial assets

Accounting policies applicable with effective from 1 April 2018

The Group and the Bank assess on a forward looking basis the expected credit loss (“ECL”) associated with its financial assets
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase
in credit risk.

The Group and the Bank have four types of financial assets that are subjected to the ECL model includes financial assets classified
at amortised cost, debt instruments measured at FVOCI, loans commitments, financial guarantee contracts and other commitments.
 2019 Annual Report 147

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Impairment of Assets (cont’d)

(i) Impairment of financial assets (cont’d)

Accounting policies applicable with effective from 1 April 2018 (cont’d)

(a) General 3-stage approach

At each reporting date, the Group and the Bank measures ECL through loss allowance at an amount equal to 12 month ECL if
credit risk on a financial instrument or a group of financial instruments has not increased significantly since initial recognition.
For all other financial instruments, a loss allowance at an amount equal to lifetime ECL is required.

Impairment will be measured on each reporting date according to a three-stage expected credit loss impairment model:

Stage 1 – from initial recognition of a financial assets to the date on which the credit risk of the asset has increased
significantly relative to its initial recognition, a loss allowance is recognised equal to the credit losses expected to result from
defaults occurring over the next 12 months (12-month ECL). 
 
Stage 2 – following a significant increase in credit risk relative to the initial recognition of the financial assets, a loss
allowance is recognised equal to the credit losses expected over the remaining life of the asset (Lifetime ECL).

Stage 3 – when a financial asset is considered to be credit-impaired, a loss allowance equal to full lifetime expected credit
losses is to be recognised (Lifetime ECL). This includes exposures which have triggered obligatory impairment criterion or
judgmentally impaired.

Measurement of ECL is set out in Note 45.

(b) Simplified approach for other receivables

The Group applies the MFRS 9 simplified approach to measure ECL which uses probability default ratio (“PD”) and loss given
default (“LGD”) for the due amount.

The PD methodology is derived based on net flow rate model as a simplified approach in view of it’s low credit risk and
non-maturity profile on due amount. LGD deem to be in full at any point in time as accounts are short term repayment and
forward looking element will not be considered.

(c) Write-off

The Group and the Bank write-off financial assets, in whole or in part, when it has exhausted all practical recovery efforts
and has concluded that there is no reasonable expectation of recovery. The assessment of no reasonable expectation of
recovery is based on unavailability of borrower’s sources of income or assets to generate sufficient future cash flows to repay
the amount. The Group and the Bank may write-off financial assets that are still subject to enforcement activity. Subsequent
recoveries of amounts previously written-off will result in impairment gains.
148 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Impairment of Assets (cont’d)

(i) Impairment of financial assets (cont’d)

Accounting policies applicable prior to 1 April 2018

(d) Assets carried at amortised cost

The Group and the Bank assess at each reporting date whether there is objective evidence that a financial asset or a group of
financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result
of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has
an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the Group and the Bank uses to determine that there is objective evidence of an impairment include:

(1) significant financial difficulty of the obligor;

(2) a breach of contract, such as a default or delinquency in interest or principal payments;
(3) it becomes probable that the borrower will enter bankruptcy or winding up petition is served on the borrower, significant
shareholder or significant guarantor;
(4) adverse Center Credit Reference Information System (“CCRIS”) findings or unfavorable industry developments for that
borrower; and
(5) observable data indicating that there is a measurable decrease in the estimated future cash flows including adverse
changes in the repayment behavior of the borrower or downgrade of the borrower’s credit ratings.

The Group and the Bank first assesses individually whether objective evidence of impairment exists for all financial assets
deemed to be individually significant, and individually or collectively for financial assets that are not individually significant.
If it is determined that no objective evidence of impairment exists for an individually assessed financial asset whether
significant or not, the loan is then collectively assessed for impairment.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original
effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment is the
current effective interest rate determined under the contract.

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

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

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of
the previously recognised impairment loss is recognised in profit or loss.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the
necessary procedures have been completed and the amount of the loss has been determined.
 2019 Annual Report 149

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Impairment of Assets (cont’d)

(i) Impairment of financial assets (cont’d)

Accounting policies applicable prior to 1 April 2018 (cont’d)

(e) Assets classified as financial investments available-for-sale

The Group and the Bank assesses at the end of the reporting period whether there is objective evidence that a financial
asset or a group of financial assets is impaired. For debt securities, the Group and the Bank uses criteria and measurement
of impairment loss applicable for ‘assets carried at amortised cost’ above. If, in a subsequent period, the fair value of a debt
instrument classified as financial investments available-for-sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the profit
or loss.

In the case of equity securities classified as financial investments available-for-sale, in addition to the criteria for ‘assets
carried at amortised cost’ above, a significant or prolonged decline in the fair value of the security below its cost is also
considered as an indicator that the assets are impaired. If any such evidence exists for financial investments available-for-
sale, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in profit or loss.
The amount of cumulative loss reclassified to profit or loss is the difference between the acquisition cost and the current fair
value, less any impairment loss on that financial asset previously recognised in profit or loss. Impairment losses recognised
in profit or loss on equity instruments classified as financial investments available-for-sale are not reversed through profit or
loss in subsequent periods.

(ii) Impairment of non-financial assets

(a) Goodwill/Intangible assets

Goodwill and intangible assets that have an indefinite useful life are tested annually for impairment, or more frequently if
events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing,
goodwill from business combinations or intangible assets are allocated to cash-generating units (“CGU”) which are expected
to benefit from the synergies of the business combination or the intangible asset.

The recoverable amount is determined for each CGU based on its value in use. 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 is recognised in the statements of comprehensive
income when the carrying amount of the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of
the CGU. The total impairment is allocated, first, to reduce the carrying amount of goodwill or intangible assets allocated to
the CGU and then to the other assets of the CGU on a pro-rata basis.

An impairment on goodwill is not reversed in subsequent periods. An impairment for other intangible assets is reversed if,
and only if, there has been a change in the estimates used to determine the intangible asset’s recoverable amount since
the last impairment was recognised and such reversal is through the statement of income to the extent that the intangible
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortisation, if no
impairment had been recognised.
150 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Impairment of Assets (cont’d)

(ii) Impairment of non-financial assets (cont’d)

(b) Other non-financial assets

Other non-financial assets such as property, plant and equipment, computer software, foreclosed properties and investments
in subsidiaries and associates are reviewed for objective indications of impairment at the end of each reporting period or
whenever there is any indication that these assets may be impaired. Where such indications exist, impairment is determined
as the excess of the asset’s carrying value over its recoverable amount (greater of value in use or fair value less costs to sell)
and is recognised in the statement of income. An impairment for an asset is reversed if, and only if, there has been a change
in the estimates used to determine the asset’s recoverable amount since the last impairment was recognised.

The carrying amount is increased to its revised recoverable amount, provided that the amount does not exceed the carrying
amount that would have been determined (net of amortisation or depreciation) had no impairment been recognised for the
asset in prior years. A reversal of impairment for an asset is recognised in the statement of income.

(l) Financial Liabilities

Financial liabilities are initially recognised at the fair value of consideration received less directly attributable transaction costs. Subsequent
to initial recognition, financial liabilities are measured at amortised cost.

Certain financial liabilities are designated at initial recognition at fair value through profit or loss when one of the designation criteria is met:

(i) Designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

(ii) Its performance is evaluated on a fair value basis, in accordance with a documented with management or investment strategy.

A financial liability which does not meet any of these criteria may still be designated as measured at FVTPL when it contains one or more
embedded derivatives that sufficiently modify the cash flows of the liability and are not clearly closely related.

Interest payables are now classified into the respective class of financial liabilities.

(m) Repurchase Agreements

Financial instruments purchased under resale agreements are instruments which the Group and the Bank have purchased with a
commitment to resell at future dates. The commitment to resell the instruments are reflected as an asset in the statement of financial
position.

Conversely, obligations on financial instruments sold under repurchase agreements are instruments which the Group and the Bank have
sold from their portfolio, with a commitment to repurchase at future dates. Such financing transactions and the obligations to repurchase
the instruments are reflected as a liability in the statement of financial position.

(n) Bills and Acceptances Payable

Bills and acceptances payable represent the Group and Bank’s own bills and acceptances rediscounted and outstanding in the market.
Refer to 2(l).
 2019 Annual Report 151

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(o) Subordinated Obligations and Other Borrowings

The interest-bearing instruments are classified as liabilities in the statement of financial position as there is a contractual obligation by the
Group and the Bank to make cash payments of either principal or interest or both to holders of the debt securities and the Group and the
Bank are contractually obliged to settle the financial instrument in cash or another financial instrument.

Subsequent to initial recognition, debt securities issued are recognised at amortised cost, with any difference between proceeds net of
transaction costs and the redemption value being recognised in the statement of income over the period of the borrowings on an effective
interest/profit method.

(p) Provisions

Provisions are recognised when the Group and the Bank have a present legal or constructive obligation as a result of past events. It is
probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made.

Where the Group and the Bank expect a provision to be reimbursed by another party (for example, under an insurance contract), the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for
future operating losses.

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

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due
to passage of time is recognised as finance cost expense.

(q) Leases

A lease is recognised as a finance lease if it transfers substantially to the Group and the Bank all the risks and rewards incidental to
ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(i) Finance Leases

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the
present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment.
The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the
minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine;
otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such
assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which
represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the
statement of income over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance
of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in
Note 2(e). The policy for the recognition and measurement of impairment is in accordance with Note 2(k)(ii)(b).
152 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(q) Leases (cont’d)

(ii) Operating Leases

Operating lease payments are recognised in the statement of income on a straight-line basis over the term of the relevant lease.
The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expenses over the lease term on a
straight-line basis.

The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification.
Leasehold land that normally has an indefinite economic life and where title is not expected to pass to the lessee by the end of the
lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted for as
prepaid lease payments at the end of the reporting period. In the case of a lease of land and buildings, the prepaid lease payments
or the upfront payments made are allocated, whenever necessary, between the land and buildings elements in proportion to the
relative fair values for leasehold interest in the land element and buildings element of the lease at the inception of the lease. The
prepaid lease payments are amortised over the lease term in accordance with the pattern of benefits provided.

(r) Share Capital

(i) Classification

Ordinary shares with discretionary dividends are classified as equity.

(ii) Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted against equity.

(iii) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owner of the Group and the Bank, excluding any costs of servicing equity other than ordinary shares.
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all
dilutive potential ordinary shares.
 2019 Annual Report 153

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(s) Revenue Recognition

(i) Recognition of interest and financing income

Interest income and financing income are recognised using effective interest/profit rates, which is the rate that exactly discounts
estimated future cash payments or receipts through the expected life of the loans/financing or, where appropriate, a shorter period
to the net carrying amount of the loan/financing. When calculating the effective interest/profit rate, the Group and the Bank estimates
cash flows considering all contractual terms of the loans/financing but does not consider future credit losses. The calculation
includes significant fees paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.

Interest income and financing income are recognised in the statement of income and statement of comprehensive income for all
interest/profit-bearing assets on an accrual basis. Interest income and financing income include the amortisation of premium or
accretion of discount. Income from the Islamic banking business is recognised on an accrual basis in accordance with the Shariah
principles.

For impaired loans/financing where the value has been reduced as a result of impairment loss, interest/financing income continues
to be accrued using the rate of interest/profit used to discount the future cash flows for the purposes of measuring the impairment.

(ii) Recognition of fees and other income

Loan arrangement fees and commissions, management and participation fees and underwriting commissions are recognised as
income when all conditions precedents are fulfilled.

Commitment, guarantee and portfolio management fees which are material are recognised as income based on time apportionment
basis.

Corporate advisory fees are recognised as income base on fulfilment of the performance obligation.

Dividends are recognised when the right to receive payment is established. This applies even if they are paid out of pre-acquisition
profits. From 1 April 2018, dividend that clearly represents a recovery of part of the cost of an investment is recognised in other
comprehensive income if it relates to an investment in equity investment measured at FVOCI.

Income from bancassurance agreements are based on time apportionment method throughout the exclusive service agreement
period.

Brokerage charged to clients is recognised on the day when the contracts are executed.

(t) Recognition of Interest and Financing Expenses

Interest expense and attributable profit (on activities relating to Islamic banking business) on deposits and borrowings of the Group and of
the Bank are recognised on an accrual basis.

(u) Foreign Currencies

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia,
which is the Bank’s functional and presentation currency.
154 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(u) Foreign Currencies (cont’d)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.

Changes in the fair value of monetary securities denominated in foreign currency classified as debt instruments classified as
FVOCI (2018: financial investments available-for-sale) are analysed between translation differences resulting from changes in the
amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes
in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive
income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair
value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as FVOCI (2018: financial
investments available-for-sale), are included in other comprehensive income.

(v) Current and Deferred Income Tax

Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income
taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the end of the
reporting date. In the event of uncertain tax position, the tax is measured using the single best estimate of the most likely outcome.

Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in
equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax is provided in full, using the liability method, on temporary differences at the end of the reporting date between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax
credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax
losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative
goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based
on tax rates that have been enacted or substantively enacted at the end of the reporting period. Deferred tax is recognised as income or an
expense in the statement of comprehensive income for the period, except when it arises from a transaction which is recognised directly in
other comprehensive income or directly in equity, in which case the deferred tax is also charged or credited to other comprehensive income
or to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting
goodwill.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when deferred income tax assets and liabilities relate to taxes levied by the same tax authority on either the taxable entity
or different taxable entities where there is an intention to settle the balances on a net basis.
 2019 Annual Report 155

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(w) Foreclosed Properties

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

(x) Cash and Cash Equivalents

Cash and cash equivalents as stated in the statements of cash flows comprise cash and bank balances and short-term deposits maturity
within one month that are readily convertible into cash with insignificant risk of changes in value.

(y) Employee Benefits

(i) Short-term employee benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated
services are rendered by employees of the Group and the Bank. Short-term accumulating compensated absences such as paid
annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated
absences, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group and the Bank pay fixed contributions into
separate entities or funds and will have no legal or constructive obligations to pay further contributions if any of the funds do not
hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such
contributions are recognised as an expense in the statement of comprehensive income as incurred. As required by law, companies
in Malaysia make contributions to the Employees Provident Fund (“EPF”).

(iii) Equity compensation benefits

The former holding company operates a number of equity-settled share-based compensation plan under which the Bank receives
services from employees as consideration for equity instruments (options/grants) of the Bank. The award is treated as equity settled
in the Bank’s financial statements. The fair value of the employee services received in exchange for the grant of the options/grants
is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options/grants
granted:

• including any market performance conditions (for example, an entity’s share price);
• excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth
targets and remaining an employee of the entity over a specified time period); and
• including the impact of any non-vesting conditions (for example, the requirement for employees to save or holding of shares
for a specific period of time).

Non-market vesting conditions and service conditions are included in assumptions about the number of options that are expected
to vest.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to
be satisfied. At the end of the reporting period, the Group revises its estimates of the number of options that are expected to vest
based on the non-market vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to ESS reserves in equity.
156 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(y) Employee Benefits (cont’d)

(iii) Equity compensation benefits (cont’d)

In circumstances where employees provide services in advance of the grant date, the grant date fair value is estimated for the
purposes of recognising the expense during the period between service commencement period and grant date.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised. When options are not exercised and lapsed, the ESS reserves is transferred to retained
profits.

(z) Contingent Assets and Contingent Liabilities

The Group and the Bank do not recognise contingent assets and liabilities other than those from business combination, but disclose its
existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be
confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or the Bank or a
present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured
reliably. However, contingent liabilities do not include financial guarantee contracts.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence
of one or more uncertain future events beyond the control of the Group and the Bank. The Group and the Bank do not recognise contingent
assets but disclose its existence where inflows of economic benefits are probable, but not virtually certain.

(aa) Financial Guarantee Contract

Financial guarantee contracts are contracts that require the Group and the Bank to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
 
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued.
 
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual
payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would
be payable to a third party for assuming the obligations.

Financial guarantee contracts are subsequently measured at the higher of the amount determined in accordance with the expected credit
loss model under MFRS 9 “Financial instruments” and the amount initially recognised less cumulative amount of income recognised in
accordance with the principles of MFRS 15 “Revenue from Contracts with Customers”, where appropriate.

Prior to 1 April 2018, the liability is initially measured at fair value and subsequently at the higher of the amount determined in accordance
with MFRS 137 “Provisions, Contingent Liabilities and Contingent Assets” and the amount initially recognised less cumulative amortisation,
where appropriate.

(ab) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments. The
Management Committee of the Group is identified as the chief operating decision-maker.
 2019 Annual Report 157

3. CASH AND SHORT-TERM FUNDS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Cash and balances with banks and other financial institutions 661,540 611,394 591,842 524,088
Money at call and deposit placements maturing within one month 1,143,232 2,157,364 980,191 1,191,873
1,804,772 2,768,758 1,572,033 1,715,961
Less: Allowance for expected credit losses (38) - (38) -
1,804,734 2,768,758 1,571,995 1,715,961

Included in the cash and short-term funds of the Group are accounts held-in-trust for remisiers amounting to RM6,122,000 (2018: RM5,866,000).

Movements in allowance for expected credit losses are as follows:

Lifetime ECL
Not-credit
12-Month ECL Impaired
(Stage 1) (Stage 2) Total
GROUP/BANK RM’000 RM’000 RM’000

At 1 April 2018
As previously stated - - -
Effects of adoption of MFRS 9 42 459 501
As restated 42 459 501
New financial assets originated or purchased 111 423 534
Financial assets derecognised other than write-off (103) (896) (999)
Changes due to change in credit risk (13) - (13)
Other adjustments 1 14 15
Total write-back from income statement (4) (459) (463)
At 31 March 2019 38 - 38

4. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Licensed banks 500 77,283 - 77,283

158 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

5. AMOUNTS DUE FROM CLIENTS AND BROKERS

GROUP
2019 2018
RM’000 RM’000

Due from clients 77,182 101,475

Due from brokers 665 670
77,847 102,145
Less: Allowance for expected credit losses/impairment losses (839) (840)
77,008 101,305

These represent amounts receivable by Alliance Investment Bank Berhad (“AIBB”) from non-margin clients and outstanding contracts entered into
on behalf of clients where settlement via the Bursa Malaysia Securities Clearing Sdn. Bhd. has yet to be made.

AIBB’s normal trade credit terms for non-margin clients is three (3) market days in accordance with the Bursa Malaysia Securities Berhad’s
(“Bursa”) Fixed Delivery and Settlement System (“FDSS”) trading rules.

The movements in allowance for expected credit losses/impairment losses are as follows:

GROUP
2019 2018
RM’000 RM’000

At beginning of financial year

As previously stated 840 835
Effects of adoption of MFRS 9 - -
As restated 840 835
(Write-back of)/allowance made during the financial year (net) (1) 5
At end of financial year 839 840

As at 31 March 2019, the Group’s and the Bank’s gross exposure of amounts due from clients and brokers that are credit impaired is of
RM875,000 (2018: RM851,000).

6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (“FVTPL”)

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At fair value
Money market instrument:
Malaysian Government investment issues 41,002 - 41,002 -
41,002 - 41,002 -
Unquoted securities:
Shares 187,517 - 126,733 -
Corporate bonds and sukuk 1,921 - 1,921 -
189,438 - 128,654 -
Total financial assets at FVTPL 230,440 - 169,656 -
 2019 Annual Report 159

7. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”)

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At fair value – debt instruments

Money market instruments:
Malaysian Government securities 2,137,524 - 1,914,515 -
Malaysian Government investment certificates 3,064,770 - 1,710,316 -
Negotiable instruments of deposits - - 732,211 -
Commercial papers 87,001 - 48,318 -
5,289,295 - 4,405,360 -
Quoted securities:
Shares 8 - 8 -
8 - 8 -
Unquoted securities:
Corporate bonds and sukuk 4,189,159 - 2,447,498 -
4,189,159 - 2,447,498 -
Total financial investments at FVOCI 9,478,462 - 6,852,866 -

Movements in allowance for expected credit losses are as follows:

Lifetime ECL
Not-credit Lifetime ECL
12-Month ECL Impaired Credit Impaired
(Stage 1) (Stage 2) (Stage 3) Total
GROUP RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 241 1,106 9,409 10,756
As restated 241 1,106 9,409 10,756
New financial investments originated or purchased 20 - - 20
Changes due to change in credit risk (80) (662) - (742)
Financial investments derecognised other than write-off (61) - - (61)
Total write-back from income statement (121) (662) - (783)
At 31 March 2019 120 444 9,409 9,973
160 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

7. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”) (CONT’D)

Movements in allowance for expected credit losses are as follows: (cont’d)

Lifetime ECL
Not-credit Lifetime ECL
12-Month ECL Impaired Credit Impaired
(Stage 1) (Stage 2) (Stage 3) Total
BANK RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 134 872 - 1,006
As restated 134 872 - 1,006
New financial investments originated or purchased 8 - - 8
Changes due to change in credit risk (45) (545) - (590)
Financial investments derecognised other than write-off (42) - - (42)
Total write-back from income statement (79) (545) - (624)
At 31 March 2019 55 327 - 382

As at 31 March 2019, the Group’s and the Bank’s gross exposure of financial investments at FVOCI that are credit impaired is at RM9,409,000
and RM Nil respectively. There is no movement during the financial year.

8. FINANCIAL INVESTMENTS AT AMORTISED COST

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At amortised cost
Money market instruments:
Malaysian Government securities 121,789 - 101,446 -
Commercial papers 38,686 - 34,880 -
160,475 - 136,326 -
Unquoted securities:
Corporate bonds and sukuk 90,020 - 177,498 -
Allowance for expected credit losses (14,775) - (1,894) -
75,245 - 175,604 -
Total financial investments at amortised cost 235,720 - 311,930 -
 2019 Annual Report 161

8. FINANCIAL INVESTMENTS AT AMORTISED COST (CONT’D)

Movements in allowance for expected credit losses are as follows:

Lifetime ECL
Not-credit Lifetime ECL
12-Month ECL Impaired Credit Impaired
(Stage 1) (Stage 2) (Stage 3) Total
RM’000 RM’000 RM’000 RM’000

GROUP
At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 - - 14,193 14,193
As restated - - 14,193 14,193
New financial investments originated or purchased 42 540 - 582
Total charge to income statement 42 540 - 582
At 31 March 2019 42 540 14,193 14,775

BANK
At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 425 - 1,294 1,719
As restated 425 - 1,294 1,719
New financial investments originated or purchased 42 270 - 312
Changes due to change in credit risk (137) - - (137)
Total (write-back from)/charge to income statement (95) 270 - 175
At 31 March 2019 330 270 1,294 1,894

As at 31 March 2019, the Group’s and the Bank’s gross exposure of financial investments at amortised cost that are credit impaired is at
RM18,565,000 and RM1,294,000 respectively. There is no movement during the financial year.

9. FINANCIAL ASSETS HELD-FOR-TRADING

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At fair value
Money market instruments:
Commercial papers - 40,905 - 25,926

Unquoted securities:
Corporate bonds and sukuk - 22,845 - 22,845
- 63,750 - 48,771
162 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

10. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At fair value
Money market instruments:
Malaysian Government securities - 1,698,601 - 1,586,503
Malaysian Government investment issues - 2,063,704 - 1,196,560
Negotiable instruments of deposits - 398,898 - 1,058,671
Commercial papers - 14,978 - 14,978
Khazanah bonds - 113,549 - 113,549
- 4,289,730 - 3,970,261
Quoted securities in Malaysia:
Shares - 21 - 21
Allowance for impairment losses - (11) - (11)
- 10 - 10
Unquoted securities:
Shares - 178,846 - 121,634
Corporate bonds and sukuk - 4,046,012 - 2,314,543
Allowance for impairment losses - (9,409) - -
- 4,036,603 - 2,314,543
- 8,505,189 - 6,406,448

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

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At beginning of financial year 9,420 233,362 11 135,692

Effects of adoption of MFRS 9 (9,420) - (11) -
As restated - 233,362 - 135,692
Written-off during the financial year - (223,942) - (135,681)
At end of financial year - 9,420 - 11
 2019 Annual Report 163

11. FINANCIAL INVESTMENTS HELD-TO-MATURITY

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At amortised cost
Money market instruments:
Malaysian Government securities - 141,686 - 121,271
Khazanah bonds - 147,181 - 93,036
- 288,867 - 214,307
Unquoted securities:
Corporate bonds and sukuk - 18,938 - 131,690
Allowance for impairment losses - (14,193) - (1,294)
- 4,745 - 130,396
- 293,612 - 344,703

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

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At beginning of financial year 14,193 14,193 1,294 1,294

Effects of adoption of MFRS 9 (14,193) - (1,294) -
As restated/At end of financial year - 14,193 - 1,294
164 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

12. DERIVATIVE FINANCIAL ASSETS/(LIABILITIES)

Derivative financial instruments are financial instruments whose values change in response to changes in prices or rates (such as foreign
exchange rates, interest rates and equity prices) of the underlying instruments. These instruments allow the Group and the Bank and the banking
customers to transfer, modify or reduce their foreign exchange and interest rate risk via hedge relationships. The Group and the Bank also
transact in these instruments for proprietary trading purposes. The risks associated with the use of derivative financial instruments, as well as
management’s policy for controlling these risks are set out in Note 45.

The table below shows the Group’s and the Bank’s derivative financial instruments as at the end of the financial year. The contractual or underlying
notional amounts of these derivative financial instruments and their corresponding gross positive (derivative financial asset) and gross negative
(derivative financial liability) fair values as at the end of financial year are analysed below.

2019 2018
Contract/ Fair Value Contract/ Fair Value
Notional Notional
Amount Assets Liabilities Amount Assets Liabilities
GROUP/BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trading Derivatives
Foreign exchange contracts:
- Currency forwards 1,446,443 9,238 (14,131) 1,540,435 8,365 (96,062)
- Currency swaps 2,960,820 10,003 (10,326) 3,240,897 47,110 (13,774)
- Currency spots 190,594 246 (200) 167,965 245 (185)
- Currency options 133,034 420 (106) 198,450 1,449 (1,616)
Interest rate related
contracts:
- Interest rate swaps 6,318,009 34,489 (13,258) 5,342,800 26,882 (26,667)
Equity related contracts:
- Options 109,768 1,046 (19,524) 106,485 404 (16,382)
Total derivative assets/
(liabilities) 11,158,668 55,442 (57,545) 10,597,032 84,455 (154,686)
 2019 Annual Report 165

13. LOANS, ADVANCES AND FINANCING

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Overdrafts 4,254,342 3,410,188 2,811,642 2,544,606

Term loans/financing
- Housing loans/financing 14,169,222 14,013,987 11,220,949 11,568,619
- Syndicated term loans/financing 542,646 328,508 400,597 183,539
- Hire purchase receivables 997,023 1,160,135 700,548 728,742
- Other term loans/financing 15,144,370 13,838,846 11,726,939 10,807,750
Bills receivables 416,944 345,530 404,862 340,283
Trust receipts 238,682 215,712 199,118 187,088
Claims on customers under acceptance credits 3,262,886 3,041,120 2,492,765 2,282,838
Staff loans (Loans to Directors: RM Nil) 23,217 26,123 6,233 7,744
Credit/charge card receivables 628,329 604,110 628,329 604,110
Revolving credits 1,842,108 2,069,989 1,333,991 1,510,347
Share margin financing 1,210,678 1,253,125 957,244 1,004,670
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336
Add: Sales commissions and handling fees 92,517 54,591 102,848 61,630
Less: Allowance for expected credit losses/impairment losses on
loans, advances and financing
- Expected credit losses (502,663) - (363,089) -
- Individual assessment allowance - (75,733) - (64,967)
- Collective assessment allowance - (296,716) - (220,435)
Total net loans, advances and financing 42,320,301 39,989,515 32,622,976 31,546,564

The Bank has entered into an arrangement on Commodity Murabahah Term Financing (“CMTF”) with Alliance Islamic Bank Berhad (“AIS”), the
Bank’s wholly owned subsidiary. The contract is based on Wakalah principle where the Bank will provide the funds, while the assets are managed
by AIS (as the Wakeel or agent). The risk and rewards of the underlying assets are recognised and borne by the Bank. Hence, the underlying
assets and allowances for expected credit losses/impairment losses are recognised and accounted for by the Bank. The total loans, advances and
financing for CMTF was at RM179,795,000 as at 31 March 2019.

(i) By maturity structure:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Within one year 11,948,217 11,169,395 8,882,437 8,623,585

One year to three years 2,028,957 1,320,249 1,596,836 951,258
Three years to five years 2,507,701 2,475,345 1,734,480 1,882,787
Over five years 26,245,572 25,342,384 20,669,464 20,312,706
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336
166 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(ii) By type of customer:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Domestic non-bank financial institutions 454,420 451,720 397,339 374,409

Domestic business enterprises
- Small and medium enterprises 11,134,591 10,232,690 8,715,301 8,040,287
- Others 8,378,248 8,005,100 6,462,979 6,065,223
Government and statutory bodies 62,011 3,667 62,011 3,667
Individuals 21,940,809 20,690,312 16,586,050 16,455,658
Other domestic entities 18,154 164,843 2,087 162,138
Foreign entities 742,214 759,041 657,450 668,954
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336

(iii) By interest/profit rate sensitivity:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Fixed rate
- Housing loans/financing 30,924 18,387 3,819 12,488
- Hire purchase receivables 975,868 1,131,382 679,421 699,989
- Other fixed rate loans/financing 6,680,657 5,451,667 4,632,043 4,023,034
Variable rate
- Base lending rate plus 26,180,959 25,722,537 20,862,144 21,273,098
- Base rate plus 4,659,660 3,268,524 3,485,583 2,533,620
- Cost plus 4,202,379 4,714,876 3,220,207 3,228,107
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336
 2019 Annual Report 167

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(iv) By economic purposes:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Purchase of securities 1,204,373 1,245,600 950,940 997,145

Purchase of transport vehicles 777,449 933,698 496,279 525,290
Purchase of landed property 22,319,389 22,079,479 18,002,032 18,335,356
of which: - Residential 15,172,297 15,051,340 12,160,606 12,566,335
- Non-residential 7,147,092 7,028,139 5,841,426 5,769,021
Purchase of fixed assets excluding land and buildings 322,933 302,307 283,977 256,498
Personal use 4,624,412 3,309,928 2,575,790 1,938,753
Credit card 628,329 604,110 628,329 604,110
Construction 598,923 451,297 542,695 433,393
Mergers and acquisitions - 117,705 - 117,705
Working capital 9,673,428 8,832,929 7,455,372 6,774,400
Others 2,581,211 2,430,320 1,947,803 1,787,686
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336

(v) By geographical distribution:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Northern region 3,099,338 2,835,527 2,231,147 2,139,991

Central region 30,518,935 28,946,946 23,759,896 23,158,486
Southern region 5,273,067 4,951,821 3,989,423 3,820,900
Sabah region 2,867,868 2,606,218 2,174,295 1,992,524
Sarawak region 971,239 966,861 728,456 658,435
Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336
168 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(vi) Movements in credit impaired loans, advances and financing (“impaired loans”) in Stage 3:

GROUP BANK
2019 2019
RM’000 RM’000

At 1 April 2018
As previously stated under MFRS 139 577,519 470,646
Effects of adoption of MFRS 9 (16,386) (15,008)
As restated 561,133 455,638
Impaired during the financial year 722,929 533,179
Recovered during the financial year (100,684) (75,340)
Reclassified as unimpaired during the financial year (484,529) (379,515)
Financial assets derecognised other than write-off during the financial year (85,352) (75,194)
Amount written-off (136,895) (89,644)
At 31 March 2019 476,602 369,124
Gross impaired loans as % of gross loans, advances and financing 1.1% 1.1%

(vii) Movements in impaired loans, advances and financing under MFRS 139:

GROUP BANK
2018 2018
RM’000 RM’000

At 1 April 2017 393,349 339,580

Impaired during the financial year 848,111 635,366
Reclassified as unimpaired during the financial year (352,268) (271,181)
Recovered during the financial year (198,592) (165,034)
Amount written-off (113,081) (68,085)
At 31 March 2018 577,519 470,646
Gross impaired loans as % of gross loans, advances and financing 1.4% 1.5%
 2019 Annual Report 169

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(viii) Credit impaired loans analysed by economic purposes:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Purchase of securities - 50 - 50
Purchase of transport vehicles 17,088 13,671 14,777 10,131
Purchase of landed property 234,412 347,159 184,647 281,386
of which: - Residential 153,789 188,970 129,916 155,226
- Non-residential 80,623 158,189 54,731 126,160
Purchase of fixed assets excluding land and buildings 21,220 5,635 20,579 4,754
Personal use 81,293 56,852 47,995 35,527
Credit card 9,045 9,074 9,045 9,074
Construction 8,429 11,771 8,429 11,771
Working capital 79,382 98,433 60,685 89,864
Others 25,733 34,874 22,967 28,089
Gross impaired loans 476,602 577,519 369,124 470,646

(ix) Credit impaired loans by geographical distribution:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Northern region 49,667 42,540 39,874 34,658

Central region 326,982 417,859 246,940 336,653
Southern region 63,370 78,417 49,183 65,560
Sabah region 25,316 28,145 22,554 24,263
Sarawak region 11,267 10,558 10,573 9,512
Gross impaired loans 476,602 577,519 369,124 470,646
170 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(x) Movements in the allowance for expected credit losses on loans, advances and financing are as follows:

Lifetime ECL
Not-credit Lifetime ECL
12-Month ECL Impaired Credit Impaired
(Stage 1) (Stage 2) (Stage 3) Total
2019 RM’000 RM’000 RM’000 RM’000

GROUP
At 1 April 2018
As previously stated under MFRS 139 372,449
Effects of adoption of MFRS 9 90,879
As restated 66,941 203,691 192,696 463,328
Transfer to Stage 1 24,268 (132,004) (7,270) (115,006)
Transfer to Stage 2 (40,020) 232,846 (103,159) 89,667
Transfer to Stage 3 (181) (114,361) 254,377 139,835
New financial assets originated or purchased 70,774 154,861 15,818 241,453
Changes due to change in credit risk (9,934) 20,361 (7,814) 2,613
Financial assets derecognised other than write-off (39,199) (152,890) (19,415) (211,504)
Other adjustment 30 150 - 180
5,738 8,963 132,537 147,238
Unwinding of discount - - (6,941) (6,941)
Total charge to income statement 5,738 8,963 125,596 140,297
Write-off - (135) (100,827) (100,962)
At 31 March 2019 72,679 212,519 217,465 502,663

BANK
At 1 April 2018
As previously stated under MFRS 139 285,402
Effects of adoption of MFRS 9 52,797
As restated 43,894 137,652 156,653 338,199
Transfer to Stage 1 15,264 (90,649) (5,930) (81,315)
Transfer to Stage 2 (24,760) 154,042 (71,881) 57,401
Transfer to Stage 3 (148) (65,538) 178,889 113,203
New financial assets originated or purchased 46,449 120,924 7,800 175,173
Changes due to change in credit risk (5,213) 5,001 (4,699) (4,911)
Financial assets derecognised other than write-off (26,381) (118,951) (16,490) (161,822)
Other adjustment 30 150 - 180
5,241 4,979 87,689 97,909
Unwinding of discount - - (5,408) (5,408)
Total charge to income statement 5,241 4,979 82,281 92,501
Write-off - (9) (67,602) (67,611)
At 31 March 2019 49,135 142,622 171,332 363,089
 2019 Annual Report 171

13. LOANS, ADVANCES AND FINANCING (CONT’D)

(x) Movements in the allowance for impairment losses on loans, advances and financing are as follows: (cont’d)

Stage 1 expected credit losses (“ECL”) for the Group and the Bank increased by RM5.7 million and RM5.2 million during the
financial year mainly due to:

• Newly originated loans, advances and financing for the Group’s and the Bank’s amounting to RM23.2 billion and RM15.2 billion;
• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 2 and 3 to Stage 1 by RM4.3 billion and RM3.4 billion;

Offset by

• Settlement of the Group’s and the Bank’s gross carrying amount of RM17.5 billion and RM11.9 billion; and
• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 1 to Stage 2 by RM5.3 billion and RM4.1 billion.

Stage 2 ECL for the Group and the Bank increased by RM9.0 million and RM4.9 million mainly due to:

• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 1 and 3 to Stage 2 by RM5.6 billion and RM4.3 billion;
• Newly originated loans, advances and financing for the Group’s and the Bank’s amounting to RM4.8 billion and RM3.2 billion;

Offset by

• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 2 to Stage 1 and 3 by RM5.0 billion and RM3.8 billion; and
• Settlement of the Group’s and the Bank’s gross carrying amount of RM4.5 billion and RM3.2 billion.

Stage 3 ECL for the Group and the Bank increased by RM132.5 million and RM87.7 million mainly due to:

• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 1 and 2 to Stage 3 by RM0.7 billion and RM0.5 billion;

Offset by

• Transfer of the Group’s and the Bank’s gross carrying amount from Stage 3 to Stage 2 by RM0.4 billion and RM0.3 billion.

The gross carrying amount of the Group and the Bank were written-off by RM137.3 million and RM89.6 million had resulted in the reduction
of Stage 3 and 2.
172 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

13. LOANS, ADVANCES AND FINANCING (CONT’D)

GROUP BANK
2018 2018
RM’000 RM’000

Individual assessment allowance

At 1 April 2017 66,627 64,147
Net allowance made during the financial year (net) 31,876 24,085
Amount written-off (25,229) (24,617)
Transfers from collective assessment allowance 2,459 1,352
At 31 March 2018 75,733 64,967

Collective assessment allowance

At 1 April 2017 313,328 234,637
Net allowance made during the financial year (net) 73,699 30,618
Amount written-off (87,852) (43,468)
Transfers to individual assessment allowance (2,459) (1,352)
At 31 March 2018 296,716 220,435

14. OTHER ASSETS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Other receivables 86,513 68,394 72,185 54,502

Collateral pledged for derivative transactions 23,292 37,136 23,056 36,902
Settlement account 94,606 42,924 94,606 42,924
Deposits 8,775 8,690 8,122 8,020
Prepayment 20,038 16,430 18,573 14,992
Amounts due from subsidiaries [Note (a)] - - 133,557 46,794
Amount due from joint venture [Note (a)] 299 392 299 392
233,523 173,966 350,398 204,526

Allowance for expected credit losses/impairment losses on other

receivables [Note (b)] (34,385) (32,017) (29,604) (27,578)
199,138 141,949 320,794 176,948

Note:

(a) Amounts due from subsidiaries and joint venture

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Non-interest bearing 299 392 133,856 47,186

The amounts due from subsidiaries and joint venture are unsecured, interest-free and repayable upon demand.
 2019 Annual Report 173

14. OTHER ASSETS (CONT’D)

Note: (cont’d)

(b) Movements for allowance for expected credit losses/impairment losses on other receivables are as follows:

Lifetime ECL
RM’000

GROUP
At 1 April 2018
As previously stated 32,017
Effects of adoption of MFRS 9 -
As restated 32,017
New financial assets originated or purchased 1,174
Financial assets derecognised other than write-off (1,382)
Changes due to change in credit risk 3,527
Total charge to income statement 3,319
Write-off (951)
At 31 March 2019 34,385

BANK
At 1 April 2018
As previously stated 27,578
Effects of adoption of MFRS 9 -
As restated 27,578
Changes due to change in credit risk 2,977
Total charge to income statement 2,977
Write-off (951)
At 31 March 2019 29,604

GROUP BANK
2018 2018
RM’000 RM’000

At 1 April 2017 29,535 24,409

Allowance made during the financial year net of write-back 4,047 3,169
Amount written-off (1,565) -
At 31 March 2018 32,017 27,578
174 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

15. STATUTORY DEPOSITS

(a) Non-interest bearing statutory deposits for the Group and the Bank of RM1,521,492,000 and RM1,142,108,000 (2018: RM1,408,216,000
and RM1,092,566,000) respectively are maintained with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of
Malaysia Act, 2009, the amounts of which are determined as a set percentage of total eligible liabilities.

(b) Interest bearing statutory deposits of RM100,000 (2018: RM100,000) relating to a subsidiary, Alliance Trustee Berhad which is maintained
with Accountant-General in compliance with Section 3(f) of the Trust Companies Act, 1949.

16. INVESTMENTS IN SUBSIDIARIES

BANK
2019 2018
RM’000 RM’000

Unquoted shares, at cost

At beginning of financial year 989,102 892,820
Acquisition via group reorganisation - 95,745
Subscription of ordinary shares in subsidiaries - 537
At end of financial year 989,102 989,102

The Bank’s subsidiaries, all of which incorporated in Malaysia, are:

Name Principal activities Effective equity interest

2019 2018
% %

Alliance Investment Bank Berhad Investment banking business including Islamic 100 100
banking, provision of stockbroking services and
related financial services

Alliance Islamic Bank Berhad Islamic banking, finance business and the provision 100 100
of related financial services

Alliance Direct Marketing Sdn. Bhd. Dealing in sales and distribution of consumer and 100 100
commercial banking products

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

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

Alliance Trustee Berhad [Note (a)] Trustee services 100 100

Alliance Financial Group Berhad Dormant 100 100

(under members’ voluntary winding up)
 2019 Annual Report 175

16. INVESTMENTS IN SUBSIDIARIES (CONT’D)

The Bank’s subsidiaries, all of which incorporated in Malaysia, are: (cont’d)

Name Principal activities Effective equity interest

2019 2018
% %

Subsidiaries of Alliance Investment Bank

Berhad

ARSB Alliance Sdn. Bhd. Dormant 100 100

(under members’ voluntary winding up)

KLCS Sdn. Bhd. Dormant 100 100

(under members’ voluntary winding up)

AIBB Nominees (Tempatan) Sdn. Bhd. Liquidated - 100

(dissolved on 16.4.2018)

Subsidiaries of Alliance Financial Group

Berhad

Hijauan Setiu Sdn. Bhd. Dormant 100 100

(under members’ voluntary winding up)

Setiu Intergrated Resort Sdn. Bhd. Dormant 100 100

(under members’ voluntary winding up)

Kota Indrapura Development Corporation Berhad Dormant 100 100

(under members’ voluntary winding up)

Note:

(a) Alliance Trustee Berhad is jointly held by the following subsidiaries:

Name Effective equity interest

2019 2018
% %

Alliance Investment Bank Berhad 20 20

Alliance Direct Marketing Sdn. Bhd. 20 20

AllianceGroup Nominees (Asing) Sdn. Bhd. 20 20

AllianceGroup Nominees (Tempatan) Sdn. Bhd. 20 20

176 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

17. INVESTMENT IN JOINT VENTURE

GROUP
2019 2018
RM’000 RM’000

Unquoted shares
At beginning of financial year 693 650
Share of results 109 43
802 693
Employees’ Share Scheme [Note (a)]
At beginning of financial year
Effects of group reorganisation - 113
As restated - 113
Employees’ Shares Scheme vested during the financial year - (113)
- -
Net Carrying Amount 802 693

Represented by:
Share of net tangible assets 802 693

Note:

(a) This amount is in respect of the services rendered by the employees of the Bank’s joint venture, pursuant to the Employees’ Share Scheme.

Details of the joint venture, which is incorporated in Malaysia, are as follows:

Name Principal activities Effective equity interest

2019 2018
% %

AllianceDBS Research Sdn. Bhd. Research and stock analysis 51 51

Investment in AllianceDBS Research Sdn. Bhd. (“ADBS”) is accounted for as an investment in joint venture in accordance with MFRS 128
“Investment in Associates and Joint Ventures” because both of the Group and the other joint venturer have joint control over the decision making
of the entity and rights to net assets of the entity.
 2019 Annual Report 177

17. INVESTMENT IN JOINT VENTURE (CONT’D)

The summarised financial information of the joint venture are as follows:

GROUP
2019 2018
RM’000 RM’000

Assets and Liabilities

Current assets
Cash and short term funds 2,377 2,223
Other current assets 546 565
Total current assets 2,923 2,788
Non-current assets 509 409
Total assets 3,432 3,197

Current liabilities
Other liabilities (non-trade) 1,860 1,838
Total liabilities 1,860 1,838
Net assets 1,572 1,359

The summarised statement of comprehensive income is as follow:

Revenue 6,585 6,570

Profit before tax for the financial year 284 281
Profit after tax for the financial year 213 84

The above profit includes the following:

Depreciation and amortisation (31) (18)
Taxation (71) (197)

Reconciliation of summarised financial information:

Net assets
At beginning of financial year 1,359 1,275
Profit for the financial year 213 84
At end of financial year 1,572 1,359

Carrying value at 51% share of the equity interest of a joint venture 802 693
 178

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

18. PROPERTY, PLANT AND EQUIPMENT

Leasehold land
Office
Freehold 50 years Less than equipment Computer Motor
land or more 50 years Buildings Renovations and furniture equipment vehicles Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2019
Cost
Alliance Bank Malaysia Berhad (88103-W)

At 1 April 2018 1,953 11,673 1,850 30,332 124,220 56,296 62,070 870 289,264
Additions - - - - 1,951 5,876 16,733 - 24,560
Disposals - - - - - (1,352) (57) - (1,409)
Written-off - - - - (387) (4,065) (1,311) - (5,763)
At 31 March 2019 1,953 11,673 1,850 30,332 125,784 56,755 77,435 870 306,652

Accumulated Depreciation
At 1 April 2018 - 3,077 1,024 12,332 113,209 38,922 51,195 70 219,829
Charge for the financial year - 118 19 587 6,099 6,876 9,496 138 23,333
Disposals - - - - - (1,348) - - (1,348)
Written-off - - - - (383) (4,042) (1,296) - (5,721)
At 31 March 2019 - 3,195 1,043 12,919 118,925 40,408 59,395 208 236,093

Accumulated Impairment Losses

At 1 April 2018/31 March 2019 - 37 - 25 - - - - 62

Net Carrying Amount 1,953 8,441 807 17,388 6,859 16,347 18,040 662 70,497
18. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Leasehold land
Office
Freehold 50 years Less than equipment Computer Motor
land or more 50 years Buildings Renovations and furniture equipment vehicles Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2018
Cost
At 1 April 2017
As previously stated 1,953 11,673 1,850 30,332 122,407 57,010 66,955 887 293,067
Effect of group reorganisation - - - - 631 416 165 501 1,713
As restated 1,953 11,673 1,850 30,332 123,038 57,426 67,120 1,388 294,780
Additions - - - - 2,032 8,475 6,139 24 16,670
Disposals - - - - - (47) (17) (527) (591)
Written-off - - - - (850) (9,558) (11,172) (15) (21,595)
At 31 March 2018 1,953 11,673 1,850 30,332 124,220 56,296 62,070 870 289,264

Accumulated Depreciation
At 1April 2017 - 2,959 1,005 11,745 105,986 41,538 56,071 (26) 219,278
Effect of group reorganisation - - - - 620 411 168 355 1,554
As restated - 2,959 1,005 11,745 106,606 41,949 56,239 329 220,832
Charge for the financial year - 118 19 587 7,385 6,362 6,123 137 20,731
Disposals - - - - - (40) (9) (381) (430)
Written-off - - - - (782) (9,349) (11,158) (15) (21,304)
At 31 March 2018 - 3,077 1,024 12,332 113,209 38,922 51,195 70 219,829

Accumulated Impairment Losses

At 1 April 2017 - - - - - - - - -
Impaired during the financial year
[Note 38] - 37 - 25 - - - - 62
At 31 March 2018 - 37 - 25 - - - - 62

Net Carrying Amount 1,953 8,559 826 17,975 11,011 17,374 10,875 800 69,373
2019 Annual Report
179
 180

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

18. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Leasehold land
Office
Freehold 50 years Less than equipment Computer Motor
land or more 50 years Buildings Renovations and furniture equipment vehicles Total
BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2019
Cost
Alliance Bank Malaysia Berhad (88103-W)

At 1 April 2018 1,953 11,673 1,850 29,373 120,683 57,080 57,095 944 280,651
Additions - - - - 1,592 5,851 16,679 - 24,122
Disposals - - - - - (1,352) (57) - (1,409)
Written-off - - - - (387) (4,066) (1,311) - (5,764)
At 31 March 2019 1,953 11,673 1,850 29,373 121,888 57,513 72,406 944 297,600

Accumulated Depreciation
At 1 April 2018 - 3,077 1,024 11,372 110,406 40,483 46,288 105 212,755
Charge for the financial year - 118 19 587 5,694 6,710 9,408 138 22,674
Disposals - - - - - (1,348) - - (1,348)
Written-off - - - - (383) (4,042) (1,296) - (5,721)
At 31 March 2019 - 3,195 1,043 11,959 115,717 41,803 54,400 243 228,360

Accumulated Impairment Losses

At 1 April 2018/31 March 2019 - 37 - 25 - - - - 62

Net Carrying Amount 1,953 8,441 807 17,389 6,171 15,710 18,006 701 69,178
18. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Leasehold land
Office
Freehold 50 years Less than equipment Computer Motor
land or more 50 years Buildings Renovations and furniture equipment vehicles Total
BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2018
Cost
At 1 April 2017 1,953 11,673 1,850 29,373 119,667 57,864 60,028 962 283,370
Additions - - - - 1,770 8,456 6,041 24 16,291
Disposals - - - - - (47) (17) (27) (91)
Written-off - - - - (754) (9,193) (8,957) (15) (18,919)
At 31 March 2018 1,953 11,673 1,850 29,373 120,683 57,080 57,095 944 280,651

Accumulated Depreciation
At 1 April 2017 - 2,959 1,005 10,785 104,181 43,313 49,234 10 211,487
Charge for the financial year - 118 19 587 6,920 6,196 6,009 137 19,986
Disposals - - - - - (40) (9) (27) (76)
Written-off - - - - (695) (8,986) (8,946) (15) (18,642)
At 31 March 2018 - 3,077 1,024 11,372 110,406 40,483 46,288 105 212,755

Accumulated Impairment Losses

At 1 April 2017 - - - - - - - - -
Impaired during the financial year
[Note 38] - 37 - 25 - - - - 62
At 31 March 2018 - 37 - 25 - - - - 62

Net Carrying Amount 1,953 8,559 826 17,976 10,277 16,597 10,807 839 67,834

Note:

Included in property, plant and equipment of the Group and the Bank are computer equipment under finance lease with a carrying amount of RM688,000 (2018: RM3,329,000).

Details of the finance lease arrangment is disclosed in Note 26.

2019 Annual Report
181
182 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

19. DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and
when the deferred taxes relate to the same tax authority. The net deferred tax assets and liabilities shown in the statement of financial position
after appropriate offsetting are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Deferred tax assets 72,972 22,664 50,116 9,223

Deferred tax liabilities (2,163) (11,907) - -
70,809 10,757 50,116 9,223

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At beginning of financial year

As previously stated 10,757 4,073 9,223 4,088
Effects of group reorganisation - 705 - -
Effects of adoption of MFRS 9 34,364 - 20,873 -
As restated 45,121 4,778 30,096 4,088
Recognised in statement of income 45,385 10,942 28,749 8,291
Recognised in equity (19,697) (4,963) (8,729) (3,156)
At end of financial year 70,809 10,757 50,116 9,223
 2019 Annual Report 183

19. DEFERRED TAX (CONT’D)

The components and movements of deferred tax assets and liabilities during the financial year are as follows:

Financial
investments at
Financial fair value
Allowance for investments through other Property,
expected Other available- comprehensive plant and
credit losses liabilities for-sale income equipment Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deferred tax assets/(liabilities)

At 1 April 2017
As previously stated - 42,389 (31,348) - (6,968) 4,073
Effects of group reorganisation - 699 - - 6 705
As restated - 43,088 (31,348) - (6,962) 4,778
Recognised in statement of income - 6,557 - - 4,385 10,942
Recognised in equity - - (4,963) - - (4,963)
At 31 March 2018/1 April 2018 - 49,645 (36,311) - (2,577) 10,757
Effects of adoption of MFRS 9 - - 36,311 (1,947) - 34,364
As restated - 49,645 - (1,947) (2,577) 45,121
Recognised in statement of income 46,878 (651) - - (842) 45,385
Recognised in equity - - - (19,697) - (19,697)
At 31 March 2019 46,878 48,994 - (21,644) (3,419) 70,809

Financial
investments at
Financial fair value
Allowance for investments through other Property,
expected Other available- comprehensive plant and
credit losses liabilities for-sale income equipment Total
BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deferred tax assets/(liabilities)

At 1 April 2017 - 31,240 (20,499) - (6,653) 4,088
Recognised in statement of income - 3,996 - - 4,295 8,291
Recognised in equity - - (3,156) - - (3,156)
At 31 March 2018/1 April 2018 - 35,236 (23,655) - (2,358) 9,223
Effects of adoption of MFRS 9 - - 23,655 (2,782) - 20,873
As restated - 35,236 - (2,782) (2,358) 30,096
Recognised in statement of income 32,163 (2,813) - - (601) 28,749
Recognised in equity - - - (8,729) - (8,729)
At 31 March 2019 32,163 32,423 - (11,511) (2,959) 50,116
184 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

20. INTANGIBLE ASSETS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Goodwill

Cost:
At beginning of financial year/end of financial year 301,997 301,997 186,272 186,272

Impairment:
At beginning of financial year 3,292 3,292 45 45
Impaired during the financial year 8,740 - - -
At end of financial year 12,032 3,292 45 45

Net carrying amount 289,965 298,705 186,227 186,227

Computer software

Cost:
At beginning of financial year 244,736 203,836 236,710 198,008
Additions 64,327 56,574 61,664 55,300
Disposal - - - (1,077)
Written-off (1,850) (15,674) (1,752) (15,521)
At end of financial year 307,213 244,736 296,622 236,710

Accumulated amortisation:
At beginning of financial year 134,039 125,180 129,956 122,249
Charge for the financial year 30,206 24,161 29,117 23,346
Disposal - - - (402)
Written-off (28) (15,302) (28) (15,237)
At end of financial year 164,217 134,039 159,045 129,956

Net carrying amount 142,996 110,697 137,577 106,754

Total carrying amount 432,961 409,402 323,804 292,981

Note:

Computer software of the Group and of the Bank includes work in progress of RM35,819,000 and RM35,549,000 (2018: RM43,146,000 and
RM42,774,000) respectively which is not amortised until ready for use.
 2019 Annual Report 185

20. INTANGIBLE ASSETS (CONT’D)

(a) Impairment Test on Goodwill

Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred. Goodwill
has been allocated to the Group’s cash-generating units (“CGU”) that are expected to benefit from the synergies of the acquisitions,
identified according to the business segments as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Consumer banking 101,565 101,565 67,513 67,513

Business banking 100,822 100,822 81,448 81,448
Financial markets 83,261 83,261 36,960 36,960
Corporate finance and capital market 630 630 40 40
Stockbroking business 3,687 12,427 266 266
289,965 298,705 186,227 186,227

For annual impairment testing purposes, the recoverable amount of the CGUs, which are reportable business segments, are determined
based on their value-in-use. The value-in-use calculations uses pre-tax cash flow projections based on financial budget and business
plans approved by the Board of Directors. The key assumptions for the computation of value-in-use include the discount rates, cash flow
projection and growth rates applied are as follows:

(i) Discount rate

The discount rate used are pre-tax and reflect specific risks relating to the CGUs. The discount rate used in determining the
recoverable amount are as follows:

GROUP
2019 2018
% %

Consumer banking 7.92 10.56

Business banking 7.93 10.86
Financial markets 6.47 6.18
Corporate finance and capital market 7.92 9.92
Stockbroking business 7.87 9.80

(ii) Cash flow projections and growth rate

Cash flow projections are based on four-year financial budget and business plans approved by the Board of Directors. The cash flow
projections are derived based on a number of key factors including past performance and management’s expectation of market
developments.

Cash flows beyond the fourth year are extrapolated in perpetuity using terminal growth rate at 4.6% (2018: 5.2%), representing the
forecasted GDP growth rate of the country for the CGUs.
186 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

20. INTANGIBLE ASSETS (CONT’D)

(a) Impairment Test on Goodwill (cont’d)

(iii) Impairment

During the financial year, an impairment loss of RM8,740,000 has been recognised in respect of the stockbroking business. The
impairment loss is driven by lower projected cash flows resulting from the reassessment of expected future business performance
in the light of current trading and economic condition.

(b) Sensitivity to Changes in Assumptions

Management is of a view that any reasonable change key assumptions would not cause the carrying amount of the goodwill to exceed the
recoverable amount of the CGUs except for Stockbroking business.

21. DEPOSITS FROM CUSTOMERS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Demand deposits 14,207,328 14,161,040 11,510,890 11,752,631

Savings deposits 1,753,526 1,792,710 1,432,970 1,468,774
Fixed/investment deposits 25,676,643 24,142,700 19,430,211 18,393,938
Money market deposits 2,917,200 2,277,386 2,206,407 1,716,143
Negotiable instruments of deposits 462,935 366,624 402,384 176,884
45,017,632 42,740,460 34,982,862 33,508,370

(i) The maturity structure of fixed deposits, money market deposits and negotiable instruments of deposits are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Due within six months 19,128,642 17,234,419 14,877,446 13,695,607

Six months to one year 8,833,425 8,371,649 6,994,821 5,709,738
One year to three years 730,686 1,018,884 157,981 869,862
Three years to five years 364,025 161,758 8,754 11,758
29,056,778 26,786,710 22,039,002 20,286,965
 2019 Annual Report 187

21. DEPOSITS FROM CUSTOMERS (CONT’D)

(ii) The deposits are sourced from the following types of customers:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Domestic financial institutions 306,199 358,990 390,046 190,812

Domestic non-bank financial institutions 2,516,834 2,676,350 1,769,027 1,854,863
Government and statutory bodies 5,450,441 4,312,577 2,975,054 2,106,387
Business enterprises 16,909,336 16,354,335 12,894,883 12,945,816
Individuals 18,637,918 17,941,780 15,917,675 15,432,649
Foreign entities 630,733 596,011 559,770 534,617
Others 566,171 500,417 476,407 443,226
45,017,632 42,740,460 34,982,862 33,508,370

22. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Licensed banks 252,558 203,995 12,467 63,619

Licensed investment banks 30,051 22,004 - -
Bank Negara Malaysia 576,099 619,467 332,368 375,619
Others - 28,405 - -
858,708 873,871 344,835 439,238

23. FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS

Structured investments designated at fair value for the Group and the Bank include investments with embedded equity linked options, interest
rate index linked options and foreign currency options.

The Group and the Bank designated certain structured investments at fair value through profit or loss. The structured investments are recorded
at fair value.

The fair value changes of the structured investments that are attributable to the changes in own credit risk are not significant.

GROUP/BANK
2019 2018
RM’000 RM’000

Structured investments 815,079 731,703

Fair value changes arising from designation at fair value through profit or loss (36,656) (49,465)
778,423 682,238
188 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

24. AMOUNTS DUE TO CLIENTS AND BROKERS

GROUP
2019 2018
RM’000 RM’000

Due to clients 51,164 75,103

51,164 75,103

These mainly relate to amounts payable to non-margin clients and outstanding contracts entered into on behalf of clients where settlement via
the Bursa Malaysia Securities Clearing Sdn. Bhd. has yet to be made.

The Group’s normal trade credit terms for non-margin clients is three (3) market days according to the Bursa’s FDSS trading rules.

Following the issuance of FRSIC Consensus 18, the Group no longer recognises trust monies balances in the statement of financial position, as
the Group does not have any control over the trust monies to obtain the future economic benefits embodied in the trust monies. The trust monies
maintained by the Group amounting to RM56,655,000 (2018: RM71,652,000) have been excluded accordingly.

25. RECOURSE OBLIGATIONS ON LOANS AND FINANCING SOLD TO CAGAMAS

This relates to proceeds received from housing loans/financing and hire purchase loans/financing sold directly to Cagamas Berhad with recourse
to the Group and the Bank. Under the agreement, the Group and the Bank undertakes to administer the loans/financing on behalf of Cagamas
Berhad and to buy back any loans/financing which are regarded as defective based on pre-determined and agreed upon prudential criteria set by
Cagamas Berhad.

26. OTHER LIABILITIES

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Other payables 488,686 292,226 406,233 243,477

Collateral pledged for derivative transactions 8,456 32,751 8,456 32,751
Bills payable 175,095 157,335 166,622 143,126
Settlement account 80,059 53,882 80,059 53,882
Clearing account 224,575 199,469 174,407 160,002
Sundry deposits 40,962 54,924 35,705 47,306
Provision and accruals 129,763 131,282 117,929 131,534
Remisiers accounts 6,122 5,866 - -
Allowance for expected credit losses/impairment losses on
commitment and contingencies 32,604 148 28,582 148
Finance lease liabilities [Note (a)] 688 3,329 688 3,329
Structured investments 553,627 504,143 553,627 504,143
Amount due to joint venture [Note (b)] 160 168 - -
1,740,797 1,435,523 1,572,308 1,319,698
 2019 Annual Report 189

26. OTHER LIABILITIES (CONT’D)

Note:

(a) Finance lease liabilities of the Group and the Bank are as follows:

Present value
Future Future of finance
minimum lease finance lease
payments charges liabilities
GROUP/BANK RM’000 RM’000 RM’000

At 31 March 2019
Within one year 695 (7) 688
695 (7) 688

At 31 March 2018
Within one year 2,780 (139) 2,641
One year to five years 695 (7) 688
3,475 (146) 3,329

The Group and the Bank lease computer equipment under finance lease. At the end of the lease term, the Group and the Bank have the
option to acquire the assets at a nominal price deemed to be a bargain purchase option. There are no restrictive covenants imposed by the
lease agreement and no arrangements have been entered into for contingent rental payments.

(b) The amounts due to joint venture are unsecured, interest-free, and repayable upon demand.

Movements for allowance for expected credit losses on commitments and contingencies are as follows:

Lifetime ECL
12-Month Not-credit Lifetime ECL
ECL Impaired Credit Impaired
2019 (Stage 1) (Stage 2) (Stage 3) Total
GROUP RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 8,562 21,295 14,143 44,000
As restated 8,562 21,295 14,143 44,000
Transfer to Stage 1 1,023 (10,403) - (9,380)
Transfer to Stage 2 (1,396) 11,958 (401) 10,161
Transfer to Stage 3 - (1,058) 7,298 6,240
New financial assets originated or purchased 5,696 5,704 73 11,473
Changes due to change in credit risk (3,330) (2,786) 161 (5,955)
Financial assets derecognised other than write-off (3,728) (8,063) (12,148) (23,939)
Other adjustments 6 17 - 23
(1,729) (4,631) (5,017) (11,377)
Unwinding of discount - - (19) (19)
Total write-back from income statement (1,729) (4,631) (5,036) (11,396)
At 31 March 2019 6,833 16,664 9,107 32,604
190 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

26. OTHER LIABILITIES (CONT’D)

(b) The amounts due to joint venture are unsecured, interest-free, and repayable upon demand. (cont’d)

Movements for allowance for expected credit losses on commitments and contingencies are as follows: (cont’d)

Lifetime ECL
12-Month Not-credit Lifetime ECL
ECL Impaired Credit Impaired
2019 (Stage 1) (Stage 2) (Stage 3) Total
BANK RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated - - - -
Effects of adoption of MFRS 9 7,520 15,587 4,183 27,290
As restated 7,520 15,587 4,183 27,290
Transfer to Stage 1 867 (8,597) - (7,730)
Transfer to Stage 2 (1,257) 10,651 (395) 8,999
Transfer to Stage 3 - (1,046) 7,069 6,023
New financial assets originated or purchased 5,120 4,157 73 9,350
Changes due to change in credit risk (3,011) (987) 538 (3,460)
Financial assets derecognised other than write-off (3,148) (6,291) (2,454) (11,893)
Other adjustments 6 9 - 15
(1,423) (2,104) 4,831 1,304
Unwinding of discount - - (12) (12)
Total (write-back from)/charge to income statement (1,423) (2,104) 4,819 1,292
At 31 March 2019 6,097 13,483 9,002 28,582

As at 31 March 2019, the Group’s and the Bank’s gross exposure of commitment and contingencies that are credit impaired was at
RM16,460,000 and RM14,481,000 respectively.

27. SUBORDINATED OBLIGATIONS

GROUP BANK
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000

Subordinated Medium Term Notes (“Sub-MTNs”)

RM900 million Sub-MTNs (a) 921,510 921,793 921,300 921,295
RM300 million Sub-MTNs (b) 304,830 304,829 304,745 304,714
RM150 million Additional Tier I Capital Securities (c) 153,491 152,992 153,144 153,015
RM100 million Additional Tier I Capital Securities (d) 100,391 - 100,391 -
1,480,222 1,379,614 1,479,580 1,379,024
 2019 Annual Report 191

27. SUBORDINATED OBLIGATIONS (CONT’D)

(a) RM900 million Sub-MTNs

On 27 October 2015, the Bank issued RM900 million Sub-MTNs under the RM2.0 billion Sub-MTN Programme.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At cost 900,000 900,000 900,000 900,000

Accumulated unaccreted discount (324) (325) (534) (823)
Interest accrued 21,834 22,118 21,834 22,118
921,510 921,793 921,300 921,295

The Subordinated Notes have been assigned a long term rating of A2 by RAM Rating Services Berhad with tenure of 10 years, callable five
(5)-years after issue date.

The coupon rate for the Sub-MTNs is fixed at 5.75% per annum, payable semi-annually throughout the entire tenure.

The main features of the Sub-MTNs are as follows:

(i) Issue date : 27 October 2015

(ii) Tenure of the facility/issue : 10 years from the issue date and callable five (5) years after issue date

(iii) Maturity date : 27 October 2025

(iv) Interest rate/coupon : 5.75% per annum, payable semi-annually in arrears

(v) Call date : 27 October 2020 and thereafter on every coupon payment date

(vi) The Sub-MTNs constitutes direct and unsecured obligations of the issuer, subordinated in right and priority of payment, to the extent
and in the manner provided in the Sub-MTNs, ranking pari passu among themselves.

(vii) In the event of winding up or liquidation of the issuer, be subordinated in right of payment to all deposit liabilities and other liabilities
of the issuer, except in each case to those liabilities which by their terms rank equally in right of payment or which are subordinated
to the Sub-MTNs.

(b) RM300 million Sub-MTNs

On 18 December 2015, the Bank issued RM300 million Sub-MTNs under the RM2.0 billion Sub-MTN Programme.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At cost 300,000 300,000 300,000 300,000

Accumulated unaccreted discount - - (85) (115)
Interest accrued 4,830 4,829 4,830 4,829
304,830 304,829 304,745 304,714
192 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

27. SUBORDINATED OBLIGATIONS (CONT’D)

(b) RM300 million Sub-MTNs (cont’d)

The Sub-MTNs have been assigned a long term rating of A2 by RAM Rating Services Berhad with tenure of 10 years, callable five (5)-years
after issue date.

The coupon rate for the Sub-MTNs is fixed at 5.65% per annum, payable semi-annually throughout the entire tenure.

The main features of the Sub-MTNs are as follows:

(i) Issue date : 18 December 2015

(ii) Tenure of the facility/issue : 10 years from the issue date and callable five (5) years after issue date

(iii) Maturity date : 18 December 2025

(iv) Interest rate/coupon : 5.65% per annum, payable semi-annually in arrears

(v) Call date : 18 December 2020 and thereafter on every coupon payment date

(vi) The Sub-MTNs constitutes direct and unsecured obligations of the issuer, subordinated in right and priority of payment, to the extent
and in the manner provided in the Sub-MTNs, ranking pari passu among themselves.

(vii) In the event of winding up or liquidation of the issuer, be subordinated in right of payment to all deposit liabilities and other liabilities
of the issuer, except in each case to those liabilities which by their terms rank equally in right of payment or which are subordinated
to the Sub-MTNs.

(c) RM150 million Additional Tier 1 Capital Securities

On 8 November 2017, the Bank issued RM150 million Additional Tier 1 Capital Securities under the RM1.0 billion Additional Tier 1 Capital
Securities Programme.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At cost 150,000 150,000 150,000 150,000

Accumulated unaccreted discount (208) (707) (555) (684)
Interest accrued 3,699 3,699 3,699 3,699
153,491 152,992 153,144 153,015

Capital Securities have been assigned a long term rating of BBB1 by RAM Rating Services Berhad.

The coupon rate for the capital securities is fixed at 6.25% per annum, payable semi-annually throughout the entire tenure.
 2019 Annual Report 193

27. SUBORDINATED OBLIGATIONS (CONT’D)

(c) RM150 million Additional Tier 1 Capital Securities (cont’d)

The main features of the capital securities are as follows:

(i) Issue date : 8 November 2017

(ii) Tenure of the facility/issue : Perpetual Non-callable five (5) years

(iii) Interest rate/coupon : 6.25% per annum, payable semi-annually in arrears

(iv) Call date : 8 November 2022 and thereafter on every coupon payment date

(v) The Capital Securities constitutes direct and unsecured obligations of the issuer and are subordinated in right and priority of
payment, to the extent and in the manner provided in the Capital Securities and the Transaction Documents, ranking pari passu
among themselves.

(vi) Upon the occurrence of any winding up proceeding, the amount payable on the Capital Securities will be subordinated in right of
payment to all deposit liabilities and other liabilities of the issuer, except in each case to those liabilities which by their terms rank
equally with or junior to the Capital Securities.

(d) RM100 million Additional Tier 1 Capital Securities

On 8 March 2019, the Bank issued RM100 million Additional Tier 1 Capital Securities under the RM1.0 billion Additional Tier 1 Capital
Securities Programme.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At cost 100,000 - 100,000 -

Interest accrued 391 - 391 -
100,391 - 100,391 -

Capital Securities have been assigned a long term rating of BBB1 by RAM Rating Services Berhad.

The coupon rate for the capital securities is fixed at 5.95% per annum, payable semi-annually throughout the entire tenure.

The main features of the capital securities are as follows:

(i) Issue date : 8 March 2019

(ii) Tenure of the facility/issue : Perpetual Non-callable five (5) years

(iii) Interest rate/coupon : 5.95% per annum, payable semi-annually

(iv) Call date : 8 March 2024 and thereafter on every distribution payment date

(v) The Capital Securities constitutes direct and unsecured obligations of the issuer and are subordinated in right and priority of
payment, to the extent and in the manner provided in the Capital Securities and the Transaction Documents, ranking pari passu
among themselves.

(vi) Upon the occurrence of any winding up proceeding, the amount payable on the Capital Securities will be subordinated in right of
payment to all deposit liabilities and other liabilities of the issuer, except in each case to those liabilities which by their terms rank
equally with or junior to the Capital Securities.
194 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

28. SHARE CAPITAL

2019 2018
Number of Number of
ordinary ordinary
shares shares
’000 RM’000 ’000 RM’000

GROUP

Ordinary shares issued and fully paid:

At beginning of the financial year 1,548,106 1,548,106 796,517 796,517
Effects of group reorganisation - - 751,589 751,589
At end of financial year 1,548,106 1,548,106 1,548,106 1,548,106

BANK

Ordinary shares issued and fully paid:

At beginning of the financial year 1,548,106 1,548,106 796,517 796,517
Issuance of shares to former holding company - - 100,000 100,000
Bonus issue - - 651,589 651,589
At end of financial year 1,548,106 1,548,106 1,548,106 1,548,106

29. RESERVES

GROUP BANK
2019 2018 2019 2018
Note RM’000 RM’000 RM’000 RM’000

Non-distributable:
Statutory reserve (a) - - - -
Share premium (b) - - - -
Regulatory reserves (c) 178,397 186,064 160,798 160,029
Capital reserves (d) 100,150 100,150 95,515 95,515
FVOCI reserves (e) 78,513 - 36,831 -
Revaluation reserves (f) - 114,987 - 74,907
Equity contribution from former parent (g) - - - -
Employees’ Share Scheme (“ESS”) reserves (g) - - - -
357,060 401,201 293,144 330,451
Distributable:
Retained profits 3,827,676 3,510,283 3,128,589 2,866,142
4,184,736 3,911,484 3,421,733 3,196,593
 2019 Annual Report 195

29. RESERVES (CONT’D)

Notes:

(a) The requirement to maintain a statutory reserve fund is no longer required pursuant to BNM’s Capital Fund Policy with effect from
3 May 2017.

(b) Share premium is used to record premium arising from new shares issued by the Bank. Prior to 31 January 2017, the application of the
share premium account was governed by Section 60 and 61 of the Companies Act 1965. In accordance with the transitional provisions set
out in Section 618 (2) of the Companies Act, 2016, on 31 January 2017 any amount standing to the credit of the Group’s and the Bank’s
share premium account have been aggregated as part of the Group’s and the Bank’s share capital (refer to Note 28). Notwithstanding this
provision, the Group and the Bank may within 24 months from the commencement of the Companies Act, 2016, use the amount standing
to the credit of its share premium account for purposes as set out in Section 618 (3) of the Companies Act, 2016.

(c) Regulatory reserves represent the Group’s and the Bank’s compliance with BNM Revised Policy Documents in Financial Reporting and
Financial Reporting for Islamic Banking Institutions effective 1 April 2018 whereby the Bank and its banking subsidiaries must maintain in
aggregate, loss allowance for non-credit-impaired exposures and regulatory reserves of no less than 1% of total credit exposures, net of
loss allowance for credit-impaired exposures.

Prior to 1 April 2018, the Group is required to maintain in aggregate collective impairment allowances of no less than 1.2% of the total
outstanding loans, advances and financing, net of individual impairment allowances, in accordance with the BNM guideline dated 6 April
2015 on “Classification and Impairment Provisions for Loans/Financing”.

(d) Capital reserves are in respect of retained profits capitalised for a bonus issue by a subsidiary.

(e) FVOCI reserves are the cumulative gains and losses arising on the revaluation of debt instruments measured at FVOCI, net off cumulative
gains and losses transferred to profit or loss upon disposal and the cumulative allowance for expected credit losses on these investments.

(f) The revaluation reserves are in respect of unrealised fair value gains and losses on financial investments available-for-sale, net off
cumulative gains and losses transferred to profit or loss upon disposal and impairment.

(g) The ESS reserves and equity contribution from former parent relate to the equity-settled share options/share grants to former Executive
Directors and employees. This reserve is made up of the estimated fair value of the share options/share grants based on the cumulative
services received from former Executive Directors and employees over the vesting period. The scheme ended on 2 December 2017.

30. ALLIANCE FINANCIAL GROUP BERHAD EMPLOYEES’ SHARE SCHEME

The Alliance Financial Group Berhad Employees’ Share Scheme (“AFG Bhd ESS”) is governed by the By-Laws approved by the shareholders at an
Extraordinary General Meeting held on 28 August 2007. The AFG Bhd ESS which comprises the Share Option Plan, the Share Grant Plan and the
Share Save Plan took effect on 3 December 2007 and is in force for a period of 10 years.

The salient features of the AFG Bhd ESS are as follows:

(i) The AFG Bhd ESS is implemented and administered by the Employees’ Share Participating Scheme Committee (“ESPS Committee”) in
accordance with the By-Laws.

(ii) The total number of shares which may be available under the AFG Bhd ESS shall not exceed in aggregate 10% of the total issued and
paid-up share capital of AFG Bhd at any one time during the existence of the AFG Bhd ESS and out of which not more than 50% of the
shares available under the AFG Bhd ESS shall be allocated, in aggregate, to Directors and senior management. In addition, not more
than 10% of the shares available under the AFG Bhd ESS shall be allocated to any individual Director or employee who, either singly or
collectively through his/her associates, holds 20% or more in the issued and paid-up capital of AFG Bhd.
196 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

30. ALLIANCE FINANCIAL GROUP BERHAD EMPLOYEES’ SHARE SCHEME (CONT’D)

(iii) The subscription price for each share under the Share Option Plan, Share Grant Plan and Share Save Plan may be at a discount (as
determined by the ESPS Committee or such other pricing mechanism as may from time to time be permitted by Bursa Malaysia Securities
Berhad or such other relevant regulatory authorities), provided that the discount shall not be more than 10% from the 5-day weighted
average market price of the Bank’s shares transacted on Bursa Malaysia Securities Berhad immediately preceding the date on which an
offer is made or at par value of the shares, whichever is higher.

(iv) The ESPS Committee may at its discretion offer to any Director or employee of a corporation in the Group to participate in the AFG Bhd ESS
if the Director or employee:

(a) has attained the age of 18 years;

(b) in the case of a Director, is on the board of directors of a corporation in the Group;
(c) in the case of an employee, is employed by a corporation in the Group; and
(d) is not a participant of any other employee share option scheme implemented by any other corporation within the Group which is in
force for the time being.

Provided that the non-executive directors of the Group who are not employed by a corporation in the Group shall not be eligible to
participate in the Share Save Plan.

(v) Under the Share Option Plan and Share Grant Plan, the ESPS Committee may stipulate the performance targets, performance period, value
and/or other conditions deemed appropriate.

(vi) Under the Share Save Plan, the ESPS Committee may at its discretion offer Share Save Option(s) to any employees of the Group to subscribe
for the Bank’s shares and the employee shall authorise deductions to be made from his/her salary.

(vii) AFG Bhd may decide to satisfy the exercise of options/awards of shares under the AFG Bhd ESS through the issue of new Bank’s shares,
transfer of existing shares or a combination of both new and existing shares.

(viii) AFG Bhd may appoint or authorise the trustee of the AFG Bhd ESS to acquire its shares from the open market to give effect to the AFG Bhd
ESS.

The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share grants:

2019 2018
Share Grants Share Grants
Number of Share Grants Number of Share Grants
At At
beginning beginning
of At end of of At end of
financial Lapsed/ financial financial Lapsed/ financial
year Vested forfeited year year Vested forfeited year
GROUP ’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000

2015 Share Scheme (1st grant) - - - - 356 (325) (31) -

2015 Share Scheme (2nd grant) - - - - 12 (12) - -
2016 Share Scheme - - - - 773 (725) (48) -
- - - - 1,141 (1,062) (79) -

WAEP - - - - - - - -
 2019 Annual Report 197

30. ALLIANCE FINANCIAL GROUP BERHAD EMPLOYEES’ SHARE SCHEME (CONT’D)

2019 2018
Share Grants Share Grants
Number of Share Grants Number of Share Grants
At At
beginning At beginning At
of end of of end of
financial Lapsed/ financial financial Lapsed/ financial
year Vested forfeited year year Vested forfeited year
BANK ’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000

2015 Share Scheme (1st grant) - - - - 298 (279) (19) -

2015 Share Scheme (2nd grant) - - - - 12 (12) - -
2016 Share Scheme - - - - 640 (598) (42) -
- - - - 950 (889) (61) -

WAEP - - - - - - - -

(a) Details of share grants at the end of financial year:

Vesting Schedule Vesting Dates

2015 Share Grants (1st grant) - First 33.3% of the share grants 23.06.2015
- Second 33.3% of the share grants 23.06.2016
- Third 33.4% of the share grants 23.06.2017

2015 Share Grants (2nd grant) - First 33.3% of the share grants 26.01.2016
- Second 33.3% of the share grants 26.01.2017
- Third 33.4% of the share grants 26.11.2017

2016 Share Grants - First 33% of the share grants 22.06.2016

- Second 67% of the share grants 22.06.2017
198 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

30. ALLIANCE FINANCIAL GROUP BERHAD EMPLOYEES’ SHARE SCHEME (CONT’D)

(b) Fair value of share grants offered/awarded:

The fair value of share grants under the Share Grant Plan was estimated by an external valuer using a binomial model, taking into account
the terms and conditions upon which the share options/share grants were offered/awarded. The rates are based on observable prices. The
fair value of share options and share grants measured at offer/award date and the assumptions are as follows:

Share Grants
2015 2015 2016
(1st grant) (2nd grant)

Fair value of the shares as at grant date,

- 23 June 2014 (RM) 4.3400 - -
- 26 January 2015 (RM) - 4.3500 -
- 22 June 2015 (RM) - - 4.0600
Weighted average share price (RM) 4.7400 4.7430 4.3700
Expected volatility (%) 0.2418 0.1884 0.1736
Risk free rate (%) 3.17 to 4.43 3.36 to 4.39 2.99 to 4.29
Expected dividend yield (%) 4.36 4.31 4.31

The expected life of the share options is based on the exercisable period of the option and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of the share option/share grant were incorporated into the measurement of fair value.

The risk-free rate is employed using a range of risk-free rates for Malaysian Government Securities (“MGS”) tenure from 1-year to 20-year
MGS.

31. INTEREST INCOME

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Loans, advances and financing 1,637,738 1,522,604 1,608,250 1,504,903

Money at call and deposit placements with financial institutions 12,782 12,546 22,226 16,640
Financial investments at fair value through other comprehensive
income 260,639 - 249,720 -
Financial investments at amortised cost 14,174 - 18,176 -
Financial investments available-for-sale - 267,241 - 260,478
Financial investments held-to-maturity - 17,593 - 17,242
Others 751 359 751 357
1,926,084 1,820,343 1,899,123 1,799,620
Accretion of discount less amortisation of premium 84,578 77,535 83,707 75,417
2,010,662 1,897,878 1,982,830 1,875,037

Included in interest income on loans, advances and financing for the current financial year is interest/profit accrued on impaired loans/financing
of the Group and the Bank of RM5,465,000 (2018: RM3,722,000 and RM3,487,000 respectively).
 2019 Annual Report 199

32. INTEREST EXPENSE

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Deposits and placements of banks and other financial institutions 17,056 25,294 9,787 13,833
Deposits from customers 887,040 846,632 865,897 827,153
Recourse obligations on loans and financing sold to Cagamas 25,182 24,142 25,182 24,142
Other borrowings - 167 - 167
Subordinated obligations 78,732 72,617 78,915 72,735
Others 4,569 3,875 4,569 3,875
1,012,579 972,727 984,350 941,905

33. NET INCOME FROM ISLAMIC BANKING BUSINESS

GROUP
2019 2018
RM’000 RM’000

Income derived from investment of depositors’ funds and others 593,548 488,710
Income derived from investment of Islamic Banking funds 60,588 54,332
Income attributable to the depositors and financial institutions (295,079) (224,797)
359,057 318,245

Note:

Net income from Islamic banking business comprises income generated from Alliance Islamic Bank Berhad (“AIS”), and Islamic banking business
of Alliance Investment Bank Berhad (“AIBB”). Both AIS and AIBB are wholly-owned subsidiaries of the Bank.
200 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

34. OTHER OPERATING INCOME

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

(a) Fee and commission income:

Commissions 80,064 89,165 80,064 89,165

Service charges and fees 29,322 31,076 28,851 30,242
Corporate advisory fees 3,214 3,221 - -
Underwriting commissions 520 472 - -
Brokerage fees 30,178 36,811 - -
Guarantee fees 15,131 15,807 14,696 15,807
Processing fees 10,962 11,368 7,407 8,508
Commitment fees 17,404 16,413 17,358 16,376
Cards related income 83,950 96,130 83,950 96,130
Other fee income 6,001 3,001 5,794 3,000
276,746 303,464 238,120 259,228

(b) Fee and commission expense:

Commissions expense (1,398) (1,624) (1,398) (1,624)

Brokerage fees expense (9,552) (12,311) (9) (7)
Guarantee fees expense (225) (461) (225) (461)
Cards related expense (75,313) (82,281) (75,313) (82,281)
(86,488) (96,677) (76,945) (84,373)

(c) Investment income:

Realised gain arising from sale/redemption of:

- Financial assets at fair value through profit or loss 3,378 - 3,377 -
- Financial investments at fair value through other
comprehensive income 2,684 - 2,119 -
- Financial assets held-for-trading - 761 - 761
- Financial investments available-for-sale - 21,863 - 21,331
- Derivative instruments 20,157 151,358 20,157 151,358
Marked-to-market revaluation gain/(loss):
- Financial assets at fair value through profit or loss 12,092 - 8,248 -
- Financial assets held-for-trading - 5,813 - 5,298
- Derivative instruments 18,276 (113,094) 18,276 (113,094)
- Financial liabilities designated at fair value through
profit or loss (12,809) 25,555 (12,809) 25,555
Gross dividend income from:
- Financial assets at fair value through profit or loss 1,299 - 749 -
- Financial investments available-for-sale - 1,861 - 1,311
- Subsidiaries - - 80,154 33,913
45,077 94,117 120,271 126,433

(d) Other income:

Foreign exchange gain 2,101 1,163 1,689 804

Rental income - - 711 680
Gain/(loss) on disposal of property, plant and equipment 8 (105) 8 1
Others 27,517 26,665 27,470 25,737
29,626 27,723 29,878 27,222
Total other operating income 264,961 328,627 311,324 328,510
 2019 Annual Report 201

35. OTHER OPERATING EXPENSES

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Personnel costs
- Salaries, allowances and bonuses 380,786 354,861 292,799 272,572
- Contribution to EPF 60,223 55,857 46,439 43,188
- Share options/grants under ESS - 189 - 191
- Termination benefits - 42,365 - 42,225
- Others 48,625 51,028 38,904 42,470
489,634 504,300 378,142 400,646

Establishment costs
- Depreciation of property, plant and equipment 23,333 20,731 22,674 19,986
- Amortisation of computer software 30,206 24,161 29,117 23,346
- Rental of premises 29,573 29,648 23,233 23,104
- Water and electricity 7,818 7,991 5,664 5,905
- Repairs and maintenance 9,747 9,980 7,384 7,947
- Information technology expenses 58,628 50,010 47,552 40,538
- Others 15,855 13,982 6,333 5,480
175,160 156,503 141,957 126,306

Marketing expenses
- Promotion and advertisement 12,518 14,193 10,796 13,437
- Branding and publicity 13,233 13,160 9,167 11,633
- Others 8,270 7,096 5,140 4,340
34,021 34,449 25,103 29,410

Administration and general expenses

- Communication expenses 11,601 10,708 8,609 8,197
- Printing and stationery 2,676 2,829 2,070 2,277
- Insurance 11,182 11,345 10,033 10,384
- Professional fees 23,485 27,853 18,392 20,838
- Others 27,188 46,034 17,465 37,171
76,132 98,769 56,569 78,867

Total other operating expenses 774,947 794,021 601,771 635,229

202 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

35. OTHER OPERATING EXPENSES (CONT’D)

Included in the other operating expenses are the following:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Auditors’ remuneration
- statutory audit fees 1,351 1,239 978 850
- audit related fees 726 1,349 458 1,067
- tax compliance fees 100 113 53 53
- tax related services 60 116 52 -
- non-audit related services 185 510 125 440
Hire of equipment 2,447 2,994 2,447 2,994
Property, plant and equipment written-off 42 291 43 277
Computer software written-off 1,822 372 1,724 284

36. ALLOWANCE FOR EXPECTED CREDIT LOSSES/IMPAIRMENT LOSSES ON LOANS, ADVANCES AND FINANCING AND OTHER FINANCIAL
ASSETS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Allowance for expected credit losses/impairment losses on loans,

advances and financing
(a) Expected credit losses
- Made during the financial year (net) 147,238 - 97,909 -
(b) Individual assessment allowance
- Made during the financial year (net) - 31,876 - 24,085
(c) Collective assessment allowance
- Made during the financial year (net) - 73,699 - 30,618
(d) Bad debts on loans and financing
- Recovered (44,304) (37,099) (29,192) (25,698)
- Written-off 36,437 20,858 22,083 10,933
(e) Commitment and contingencies (11,377) - 1,304 -
127,994 89,334 92,104 39,938
(Write-back of)/allowance for expected credit losses/impairment
losses on:
- Amounts due from clients and brokers (1) 5 - -
- Other receivables 3,319 4,047 2,977 3,169
- Cash and short-term funds (463) - (463) -
130,849 93,386 94,618 43,107
 2019 Annual Report 203

37. (WRITE-BACK OF)/ALLOWANCE FOR EXPECTED CREDIT LOSSES ON FINANCIAL INVESTMENTS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

(Write-back of)/allowance for expected credit losses on:

- Financial investments at FVOCI (783) - (624) -
- Financial investment at amortised cost 582 - 175 -
(201) - (449) -

38. ALLOWANCE FOR/(WRITE-BACK OF) IMPAIRMENT LOSSES ON NON-FINANCIAL ASSETS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Commitment and contingencies (148) - (148) -

Intangible assets – Goodwill 8,740 - - -
Property, plant and equipment - 62 - 62
8,592 62 (148) 62

39. TAXATION

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Income tax:
Provision for current financial year 222,893 191,044 163,354 153,605
(Over)/under provision in prior years (7,082) 11,267 (6,545) 11,020
215,811 202,311 156,809 164,625

Deferred tax [Note 19] (45,385) (10,942) (28,749) (8,291)

170,426 191,369 128,060 156,334

Income tax is calculated at the Malaysian statutory tax rate of 24% (2018: 24%) on the estimated assessable profit for the financial year.
204 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

39. TAXATION (CONT’D)

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

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Profit before taxation 708,023 684,597 614,012 583,244

Taxation at Malaysian statutory tax rate of 24% (2018: 24%) 169,926 164,303 147,363 139,979
Income not subject to tax (3,028) (398) (21,407) (8,455)
Expenses not deductible for tax purposes 9,519 12,204 6,971 10,190
(Over)/under provision of tax expense in prior years (5,991) 15,260 (4,867) 14,620
Tax expense for the financial year 170,426 191,369 128,060 156,334

40. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing profit for the year attributable to Equity holders of the Bank by the weighted average
number of ordinary shares in issue during the financial year.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Profit for the year attributable to Equity holders of the Bank 537,597 493,228 485,952 426,910

GROUP BANK
2019 2018 2019 2018
’000 ’000 ’000 ’000

Weighted average numbers of ordinary shares in issue 1,548,106 1,548,106 1,548,106 1,506,439

GROUP BANK
2019 2018 2019 2018
sen sen sen sen

Basic earnings per share 34.7 31.9 31.4 28.3

(b) Diluted

For the purpose of calculating diluted earning per share, the profit for the year attributable to Equity holders of the Bank and the weighted
average number of ordinary shares in issue during the financial year have been adjusted for the dilutive effects of all potential ordinary
shares, (non-cumulative).

There were no dilutive potential ordinary shares outstanding as at 31 March 2019 and 31 March 2018 respectively. As a result, the dilutive
earnings per share equal to basic earnings per share for financial year ended 31 March 2019 and 31 March 2018.
 2019 Annual Report 205

41. DIVIDENDS

Dividends on Ordinary Shares:

Dividend recognised during the financial year

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Former Holding Company

Second interim dividend

7.5 sen per share, on 1,548,105,929 ordinary shares, declared in

financial year ended 31 March 2017, was paid on 22 June 2017 by
the former holding company of the Bank to shareholders - 116,108 - -

Bank

First interim dividend

8.5 sen per share, on 1,548,105,929 ordinary shares, declared in

financial year ending 31 March 2019, was paid on 28 December
2018 to the shareholders 131,589 - 131,589 -

8.5 sen per share, on 1,548,105,929 ordinary shares, declared in

financial year ended 31 March 2018, was paid on 28 December
2017 to the shareholders - 131,589 - 131,589

Second interim dividend

6.8 sen per share, on 1,548,105,929 ordinary shares, declared in

the financial year ended 31 March 2018, was paid on 28 June 2018
to the shareholders 105,271 - 105,271 -

14.67 sen per share, on 796,517,043 ordinary shares, declared in

financial year ended 31 March 2017, was paid on 20 June 2017 to
the former holding company, and was eliminated at the Group - - - 116,849
236,860 247,697 236,860 248,438
206 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

41. DIVIDENDS (CONT’D)

Dividends paid on the shares held in Trust pursuant to the Group’s ESS which are classified as shares held for ESS are not accounted for in the
total equity where RM1,121,000 for the first interim dividend and RM1,549,000 for second interim dividend being dividends paid for those shares
were added back to the appropriation of retained profits in respect of the dividends as at 31 March 2018.

The dividend paid by the Bank to the former holding company, Alliance Financial Group Berhad (“AFG”) prior to group reorganisation exercise, is
eliminated at the Group level. Upon the completion of group reorganisation exercise on 26 September 2017, the Bank is now the holding company
of AFG. Dividends paid by the Bank after the group reorganisation will be reflected both in the Group and the Bank.

Subsequent to the financial year end, on 29 May 2019, the Directors declared a second interim dividend of 8.2 sen per share, on 1,548,105,929
ordinary shares amounting to approximately RM126,945,000 in respect of current financial year. The accompanying financial statements do not
reflect these dividend. The dividend will be accounted for in shareholders’ equity as an appropriation of retained profits in the financial year ending
31 March 2020.

The Directors do not propose any final dividend in respect of the financial year ended 31 March 2019.

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are the Group’s and the Bank’s other
significant related party transactions and balances:

The related parties of, and their relationship with the Group and the Bank are as follows:

Relationship Related parties

- Key management personnel Key management personnel refer to those persons having authority and
responsibility for planning, directing and controlling the activities of the
Group and the Bank, directly or indirectly, including Executive Directors
and Non-Executive Directors of the Group and the Bank (including close
members of their families). Other members of key management personnel of
the Group and the Bank are the Business Support Heads who report directly
to Group Chief Executive Officer or to the Board Committees (including close
members of their families).

- Substantial shareholders Substantial shareholders refer to those entities or persons having significant
voting power in the Group and/or the Bank, directly or indirectly, resides with
certain Directors of the Group and/or the Bank.

- Subsidiaries Subsidiaries of the Bank as disclosed in Note 16.

- Joint venture Joint venture of the Bank as disclosed in Note 17.

 2019 Annual Report 207

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D)

Significant related party transactions and balances as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

(a) Transactions

Interest income
- subsidiaries - - 46,607 38,800
- key management personnel 37 26 20 26

Dividend income
- subsidiaries - - 80,154 33,913

Management fees
- subsidiaries - - 154 336

Rental income
- subsidiaries - - 717 680
- joint venture - 1 - 1

Other operating expenses recharged

- subsidiaries - - 113,451 102,052
- joint venture 221 203 221 203

Interest expenses
- subsidiaries - - (42) (47)
- joint venture (39) (32) - -
- key management personnel (550) (314) (502) (281)
- substantial shareholders (2) - (2) -

Rental expenses
- subsidiaries - - - (89)
- joint venture (1) - (1) -

Other operating expenses

- subsidiaries - - (205) (2,676)
- joint venture/other related company [Note (a)] (3,011) (3,052) (1,198) (936)
- substantial shareholders [Note (b)] (84) (785) (84) (785)

Commission paid
- subsidiaries - - (18,247) (6,267)

Dividend paid
- former holding company - - - (117,971)
208 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D)

Significant related party transactions and balances as follows: (cont’d)

Note:

As at 31 March 2019:

(a) The Group and the Bank have paid RM2,895,000 and RM1,149,000 respectively (2018: RM3,213,000 and RM974,000) to the joint venture/
other related company for the research services provided, where the joint venture/other related company was jointly held by Alliance
Investment Bank Berhad and DBS Vickers Securities Pte. Ltd., a company incorporated in Singapore.

(b) The Group and the Bank have paid RM260,000 (2018: RM784,000) for staff secondment to an indirect shareholder, Fullerton Financial
Holdings (International) Pte. Ltd., a company incorporated in Singapore.

(c) Other than transactions with joint venture company and Fullerton Financial Holdings (International) Pte. Ltd., all intercompany transactions
are conducted in Malaysia.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

(b) Balances

Deposits from customers

- subsidiaries - - (34,831) (24,844)
- joint venture (2,377) (2,223) (375) (721)
- key management personnel (20,269) (15,376) (19,005) (13,925)
- substantial shareholders (645) - (645) -

Financial investments at fair value through other

comprehensive income
- subsidiaries - - 745,432 754,750

Financial investments at amortised cost

- subsidiaries - - 130,666 130,059

Loans, advances and financing

- key management personnel 5,131 4,875 3,063 3,210

Money at call and deposit placements with financial

institutions
- subsidiaries - - 119,852 300,054

Other assets
- subsidiaries - - 133,557 46,794
- joint venture 299 392 299 392

Other liabilities
- joint venture (160) (168) - -
 2019 Annual Report 209

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D)

(c) Compensation of key management personnel

Remuneration of Chief Executive Officers (“CEO”), Non-executive Directors and other members of key management excluding past CEO
and Directors for the financial year is as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CEO and other Key Management:

- Salary and other remuneration 30,742 30,145 27,909 27,714
- Contribution to EPF 4,177 4,080 3,791 3,772
- Benefits-in-kind 309 309 266 266
35,228 34,534 31,966 31,752

Non-executive Directors:
- Fees payables 2,698 2,820 1,897 1,530
- Allowances 973 790 714 496
- Benefits-in-kind 31 34 31 34
3,702 3,644 2,642 2,060

Included in the total key management personnel are:

CEO and Directors’remuneration, excluding past CEO

and Directors [Note 44] 14,305 13,272 9,983 8,907

Key management personnel of the Group and the Bank have been offered/awarded the following number of share grants under the AFG
Bhd ESS:

Share Grants
2019 2018
GROUP ’000 ’000

At beginning of financial year

As restated - 415
Vested - (415)
At the end of financial year - -

Share Grants
2019 2018
BANK ’000 ’000

At beginning of financial year - 300

Key management personnel appointed during the financial year - 43
Vested - (343)
At the end of financial year - -

The above share grants were offered/awarded on the same terms and conditions as those offered to other employees of the Group and the
Bank.
210 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D)

(c) Compensation of key management personnel (cont’d)

GROUP

Total value of remuneration and numbers of officers with variable remuneration for the financial year are as follow:

2019 2018
Unrestricted Deferred Unrestricted Deferred
GROUP Number RM’000 Number RM’000 Number RM’000 Number RM’000

Fixed remuneration
Cash 25,709 - 25,512 -
25,709 - 25,512 -

Variable remuneration
Cash 19 8,663 19 4,558 19 9,589 19 3,077
8,663 4,558 9,589 3,077
34,372 4,558 35,101 3,077

2019 2018
Unrestricted Deferred Unrestricted Deferred
BANK Number RM’000 Number RM’000 Number RM’000 Number RM’000

Fixed remuneration
Cash 22,463 - 22,025 -
22,463 - 22,025 -

Variable remuneration
Cash 17 7,938 17 4,207 17 8,929 17 2,858
7,938 4,207 8,929 2,858
30,401 4,207 30,954 2,858
 2019 Annual Report 211

43. CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES

BANK
2019 2018
RM’000 RM’000

Outstanding credit exposures with connected parties 43,641 44,698

of which:
Total credit exposure which is impaired or in default 8 -

Total credit exposures 46,311,419 44,389,189

Percentage of outstanding credit exposures to connected parties

- as a proportion of total credit exposures 0.09% 0.10%

- which is impaired or in default 0.00% 0.00%

The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with paragraph 9.1 of Bank Negara
Malaysia’s 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 includes the extension of credit facilities and/or off-balance sheet
credit exposures such as guarantees, trade-related facilities and loan commitments. It also includes holdings of equities and private debt securities
issued by the connected parties.
212 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

44. CEOs AND DIRECTORS’ REMUNERATION

Remuneration in aggregate for CEO/Directors charged to the statement of income for the year is as follows:

GROUP BANK
2019 2018 2019 2018
RM'000 RM’000 RM’000 RM’000

Chief Executive Officers:

- Salary and other remuneration 6,072 5,295 3,964 3,525
- Bonuses 3,175 3,131 2,449 2,471
- Contribution to EPF 1,201 1,080 815 771
- Benefits-in-kind 155 122 113 80
10,603 9,628 7,341 6,847
Non-executive Directors:
- Fees payables 2,698 2,820 1,897 1,530
- Allowances 973 790 714 496
- Benefits-in-kind 31 34 31 34
3,702 3,644 2,642 2,060
14,305 13,272 9,983 8,907

Past Chief Executive Officer/Directors:

- Salary and other remuneration, including meeting allowance 103 336 63 -
- Fees 357 146 143 -
- Contribution to EPF - 49 - -
- Benefits-in-kind 20 51 10 -
480 582 216 -
14,785 13,854 10,199 8,907

Total Directors’ remuneration excluding benefits-in-kind 14,579 13,647 10,045 8,793

Notes:

(a) Other than Directors fees and allowances, there were no amount paid or payable for services rendered by any Directors of the Group and
the Bank during the financial year.

(b) The Directors of the Group and the Bank are covered under the Directors’ & Officers’ Liability Insurance in respect of liabilities arising from
acts committed in their capacity as Directors of the Group and the Bank, provided that such Director has not acted negligently, fraudulently
or dishonestly, or is in breach of his or her duty of trust. The total apportioned amount of insurance effected for Directors under the Group
and the Bank was at RM130,000 and RM118,000 (2018: RM134,000 and RM121,000) respectively.
 2019 Annual Report 213

44. CEOs AND DIRECTORS’ REMUNERATION (CONT’D)

The total remuneration (including benefits-in-kind) of the CEO and Directors of the Group and the Bank are as follows:

Share
Salary options/
and other Contribution Fees grants Benefits-
GROUP remuneration Bonuses to EPF payables Allowances under ESS in-kind Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Chief Executive Officers:

Joel Kornreich 3,964 2,449 815 - - - 113 7,341
Mahesh s/o Shri Pranlal Rupawalla 1,464 390 251 - - - 42 2,147
Rizal IL-Ehzan Bin Fadil Azim 644 336 135 - - - - 1,115
6,072 3,175 1,201 - - - 155 10,603

Non-executive Directors:
Tan Sri Dato’ Ahmad Bin Mohd Don - - - 285 53 - 31 369
Ou Shian Waei - - - 205 70 - - 275
Kuah Hun Liang - - - 312 118 - - 430
Lee Ah Boon - - - 217 68 - - 285
Datuk Wan Azhar Bin Wan Ahmad - - - 405 124 - - 529
Lee Boon Huat - - - 205 91 - - 296
Ho Hon Cheong - - - 190 95 - - 285
Thayaparan S Sangarapillai - - - 179 68 - - 247
Tan Chian Khong - - - 155 64 - - 219
Susan Yuen Su Min - - - 55 9 - - 64
Datin Amy Ooi Swee Lian - - - 37 15 - - 52
Mazidah Binti Abdul Malik - - - 137 71 - - 208
Dato’ Yeoh Beow Tit - - - 90 30 - - 120
Hj Md Ali Bin Md Sarif - - - 90 28 - - 118
Dato’ Ahmad Hisham Bin Kamaruddin - - - 11 2 - - 13
Ibrahim Bin Hassan - - - 125 67 - - 192
- - - 2,698 973 - 31 3,702

Past Non-executive Directors:

Dato’ Majid Bin Mohamad - - - 67 18 - 10 95
Kung Beng Hong - - - 290 85 - 10 385
- - - 357 103 - 20 480
Total CEOs and Directors’ remuneration 6,072 3,175 1,201 3,055 1,076 - 206 14,785
214 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

44. CEOs AND DIRECTORS’ REMUNERATION (CONT’D)

The total remuneration (including benefits-in-kind) of the CEOs and Directors of the Group and the Bank are as follows: (cont’d)

Salary
and other Contribution Fees Benefits-
GROUP remuneration Bonuses to EPF payables Allowances in-kind Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Chief Executive Officers:

Joel Kornreich 3,525 2,471 771 - - 80 6,847
Mahesh s/o Shri Pranlal Rupawalla 1,385 436 246 - - 42 2,109
Rizal IL-Ehzan Bin Fadil Azim 385 224 63 - - - 672
5,295 3,131 1,080 - - 122 9,628

Non-executive Directors:
Tan Sri Dato’ Ahmad Bin Mohd Don - - - 211 32 34 277
Kung Beng Hong - - - 404 89 - 493
Ou Shian Waei - - - 242 68 - 310
Kuah Hun Liang - - - 273 91 - 364
Lee Ah Boon - - - 234 55 - 289
Datuk Wan Azhar Bin Wan Ahmad - - - 319 88 - 407
Lee Boon Huat - - - 167 58 - 225
Ho Hon Cheong - - - 142 62 - 204
Thayaparan S Sangarapillai - - - 132 50 - 182
Tan Chian Khong - - - 191 33 - 224
Dato’ Majid Bin Mohammad - - - 164 56 - 220
Mazidah Binti Abdul Malik - - - 107 36 - 143
Dato’ Yeoh Beow Tit - - - 76 19 - 95
Hj Md Ali Bin Md Sarif - - - 76 23 - 99
Ibrahim Bin Hassan - - - 82 30 - 112
- - - 2,820 790 34 3,644

Past Chief Executive Officer:

Foziakhatoon Binti Amanulla Khan 310 - 49 - - - 359
310 - 49 - - - 359

Past Non-executive Directors:

Shaharuddin Bin Zainuddin - - - 37 15 - 52
Datuk Oh Chong Peng - - - 109 11 51 171
- - - 146 26 51 223

Total CEOs and Directors’ remuneration 5,605 3,131 1,129 2,966 816 207 13,854
 2019 Annual Report 215

44. CEOs AND DIRECTORS’ REMUNERATION (CONT’D)

The total remuneration (including benefits-in-kind) of the CEOs and Directors of the Group and the Bank are as follows: (cont’d)

Salary
and other Contribution Fees Benefits-
BANK remuneration Bonuses to EPF payables Allowances in-kind Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Chief Executive Officer:

Joel Kornreich 3,964 2,449 815 - - 113 7,341
3,964 2,449 815 - - 113 7,341

Non-executive Directors:
Tan Sri Dato’ Ahmad Bin Mohd Don - - - 285 53 31 369
Ou Shian Waei - - - 205 70 - 275
Kuah Hun Liang - - - 193 91 - 284
Lee Ah Boon - - - 205 68 - 273
Datuk Wan Azhar Bin Wan Ahmad - - - 225 105 - 330
Lee Boon Huat - - - 205 91 - 296
Ho Hon Cheong - - - 190 95 - 285
Thayaparan S Sangarapillai - - - 179 68 - 247
Tan Chian Khong - - - 155 64 - 219
Susan Yuen Su Min - - - 55 9 - 64
- - - 1,897 714 31 2,642

Past Non-executive Director:

Kung Beng Hong - - - 143 63 10 216
Total CEOs and Directors’ remuneration 3,964 2,449 815 2,040 777 154 10,199
216 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

44. CEOs AND DIRECTORS’ REMUNERATION (CONT’D)

The total remuneration (including benefits-in-kind) of the Directors of the Group and the Bank are as follows: (cont’d)

Salary
and other Contribution Fees Benefits-
BANK remuneration Bonuses to EPF payables Allowances in-kind Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Chief Executive Officer:

Joel Kornreich 3,525 2,471 771 - - 80 6,847
3,525 2,471 771 - - 80 6,847

Non-executive Directors:
Tan Sri Dato’ Ahmad Bin Mohd Don - - - 211 32 34 277
Kung Beng Hong - - - 142 48 - 190
Ou Shian Waei - - - 157 55 - 212
Kuah Hun Liang - - - 157 66 - 223
Lee Ah Boon - - - 157 45 - 202
Datuk Wan Azhar Bin Wan Ahmad - - - 167 69 - 236
Lee Boon Huat - - - 167 58 - 225
Ho Hon Cheong - - - 142 62 - 204
Thayaparan S Sangarapillai - - - 132 50 - 182
Tan Chian Khong - - - 98 11 - 109
- - - 1,530 496 34 2,060

Total CEO and Directors’ remuneration 3,525 2,471 771 1,530 496 114 8,907
 2019 Annual Report 217

45. FINANCIAL RISK MANAGEMENT POLICIES

The Group engages in business activities which entail risk taking and types of risk involved include credit, market and liquidity, operational and
technology, regulatory and compliance (including Shariah compliance), and strategic risks.

Risk management in the Group is governed by Risk Management Framework which covers governance, appetite, strategy, policies and processes
to manage risks. The objective of risk management is to ensure that the Group conducts business in a responsible manner and to achieve
sustainable growth for the Group’s balance sheet and capital.

The Group manages risk within clearly defined guidelines that are approved by the Directors. In addition, the Board of Directors of the Group
provides independent oversight to ensure that risk management policies are complied with, through a framework of established controls and
reporting processes.
 
The guidelines and policies adopted by the Group to manage the main risks that arise in the conduct of its business activities are as follows:

(a) Credit Risk

Credit risk is the risk of financial loss resulting from the failure of the Group’s borrowers or counterparties to fulfil their contractual
obligations to repay their loans or settle commitments.

This arises from loans/financing, advances, investment in securities, amongst others. The amount of credit exposure is represented by
the carrying amount of loans/financing, advances and investment securities in the statements of financial position. The lending/financing
activities in the Group are guided by the Group’s Credit Risk Management Framework, in line with regulatory guidelines and best practices.
 
Also, credit risk arises from financial transactions with counterparties (including interbank market activities, derivative instruments used for
hedging and debt instruments), of which the amount of credit exposure in respect of these instruments is equal to the carrying amount of
these assets in the statements of financial position. This exposure is monitored on an on-going basis against predetermined counterparty
limits.
 
The credit exposure arising from off-balance sheet activities, i.e. commitments and contingencies is set out in Note 48 to the financial
statements.

(i) Maximum exposure to credit risk

The following table presents the Group’s and the Bank’s maximum exposure to credit risk of on balance sheet and off-balance sheet
financial instruments, before taking into account any collateral held or other credit enhancements and after allowance for expected
credit losses/impairment losses, where appropriate.
 
For on-balance sheet financial assets, the maximum exposure to credit risk equals their carrying amount. For financial guarantees
and similar contracts granted, the maximum exposure to credit risk is the maximum amount that would have to be paid if the
guarantees were to be called upon. For credit related commitments and contingencies that are irrevocable over the life of the
respective facilities, the maximum exposure to credit risk is the full amount of the credit facilities granted to customers.
218 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(i) Maximum exposure to credit risk (cont’d)

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Credit risk exposure: on-balance sheet

Cash and short-term funds (exclude cash in hand) 1,549,624 2,503,354 1,316,885 1,450,557
Deposits and placements with banks and other
financial institutions 500 77,283 - 77,283
Amounts due from clients and brokers 77,008 101,305 - -
Financial assets at fair value through profit or loss
(exclude equity securities) 42,923 - 42,923 -
Financial investments at fair value through other
comprehensive income (exclude equity securities) 9,478,454 - 6,852,858 -
Financial investments at amortised cost 235,720 - 311,930 -
Financial assets held-for-trading - 63,750 - 48,771
Financial investments available-for-sale
(exclude equity securities) - 8,326,333 - 6,284,804
Financial investments held-to-maturity - 293,612 - 344,703
Derivative financial assets 55,442 84,455 55,442 84,455
Loans, advances and financing
(exclude sales commissions and handling fees) 42,227,784 39,934,924 32,520,128 31,484,934
Statutory deposits 1,521,592 1,408,316 1,142,108 1,092,566
Other assets (exclude prepayment) 179,100 125,519 302,221 161,956
55,368,147 52,918,851 42,544,495 41,030,029

Credit risk exposure: off-balance sheet

Financial guarantees 721,500 730,771 518,066 556,701
Credit related commitments and contingencies 12,301,536 11,313,331 9,893,986 9,118,992
13,023,036 12,044,102 10,412,052 9,675,693
Total maximum exposure 68,391,183 64,962,953 52,956,547 50,705,722
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(ii) Credit risk concentrations

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that cause their ability to meet contractual
obligations to be similarly affected by changes in economic and other conditions. The analysis of credit risk concentration presented below relates only to financial assets subject to credit
risk and are based on the industry in which the counterparty is engaged.

Financial,
Insurance, Transport, Agriculture,
Government Business Storage and Manufacturing,
and Central Services and Communication Wholesale &
GROUP Bank Real Estate Services Retail Trade Construction Household Others Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 1,040,926 508,698 - - - - - 1,549,624
Deposits and placements with banks and other
financial institutions - 500 - - - - - 500
Amounts due from clients and brokers - 665 - - - - 76,343 77,008
Financial assets at fair value through profit or loss
(exclude equity securities) 41,002 1,909 7 4 1 - - 42,923
Financial investments at fair value through other
comprehensive income (exclude equity securities) 5,293,442 2,520,795 1,149,358 245,233 269,626 - - 9,478,454
Financial investments at amortised cost 121,789 43,404 - 50,015 - - 20,512 235,720
Derivative financial assets - 35,438 - - - - 20,004 55,442
Loans, advances and financing
(exclude sales commissions and handling fees) - 4,435,835 688,241 12,844,254 1,391,351 22,425,539 442,564 42,227,784
Statutory deposits 1,521,592 - - - - - - 1,521,592
Other assets (exclude prepayment) - 299 - - - - 178,801 179,100
8,018,751 7,547,543 1,837,606 13,139,506 1,660,978 22,425,539 738,224 55,368,147

Financial guarantees - 79,794 33,041 542,131 52,123 4,586 9,825 721,500

Credit related commitments and contingencies 141,985 1,540,262 125,463 5,141,861 1,611,172 3,356,111 384,682 12,301,536
141,985 1,620,056 158,504 5,683,992 1,663,295 3,360,697 394,507 13,023,036
Total credit risk 8,160,736 9,167,599 1,996,110 18,823,498 3,324,273 25,786,236 1,132,731 68,391,183
2019 Annual Report
219
 220

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(ii) Credit risk concentrations (cont’d)

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that cause their ability to meet contractual
obligations to be similarly affected by changes in economic and other conditions. The analysis of credit risk concentration presented below relates only to financial assets subject to credit
risk and are based on the industry in which the counterparty is engaged. (cont’d)

Financial,
Alliance Bank Malaysia Berhad (88103-W)

Insurance, Transport, Agriculture,

Government Business Storage and Manufacturing,
and Central Services and Communication Wholesale &
GROUP Bank Real Estate Services Retail Trade Construction Household Others Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 1,877,818 625,536 - - - - - 2,503,354
Deposits and placements with banks and other
financial institutions - 77,283 - - - - - 77,283
Amounts due from clients and brokers - 670 - - - - 100,635 101,305
Financial assets held-for-trading - 53,527 10,223 - - - - 63,750
Financial investments available-for-sale
(exclude equity securities) 3,853,262 2,806,383 1,161,400 208,142 297,146 - - 8,326,333
Financial investments held-to-maturity 141,686 151,926 - - - - - 293,612
Derivative financial assets - 56,969 - - - - 27,486 84,455
Loans, advances and financing
(exclude sales commissions and handling fees) - 4,930,498 497,730 11,318,771 1,361,096 21,313,630 513,199 39,934,924
Statutory deposits 1,408,316 - - - - - - 1,408,316
Other assets (exclude prepayment) - 392 - - - - 125,127 125,519
7,281,082 8,703,184 1,669,353 11,526,913 1,658,242 21,313,630 766,447 52,918,851

Financial guarantees - 36,669 31,573 576,904 57,355 7,680 20,590 730,771

Credit related commitments and contingencies - 1,453,597 128,259 4,495,893 1,515,553 2,900,735 819,294 11,313,331
- 1,490,266 159,832 5,072,797 1,572,908 2,908,415 839,884 12,044,102
Total credit risk 7,281,082 10,193,450 1,829,185 16,599,710 3,231,150 24,222,045 1,606,331 64,962,953
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(ii) Credit risk concentrations (cont’d)

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that cause their ability to meet contractual
obligations to be similarly affected by changes in economic and other conditions. The analysis of credit risk concentration presented below relates only to financial assets subject to credit
risk and are based on the industry in which the counterparty is engaged. (cont’d)

Financial,
Insurance, Transport, Agriculture,
Government Business Storage and Manufacturing,
and Central Services and Communication Wholesale &
BANK Bank Real Estate Services Retail Trade Construction Household Others Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 692,477 624,408 - - - - - 1,316,885
Financial assets at fair value through profit or loss
(exclude equity securities) 41,002 1,909 7 4 1 - - 42,923
Financial investments at fair value through other
comprehensive income (exclude equity securities) 3,705,868 2,098,405 743,892 173,009 131,684 - - 6,852,858
Financial investments at amortised cost 101,446 164,961 - 25,011 - - 20,512 311,930
Derivative financial assets - 35,438 - - - - 20,004 55,442
Loans, advances and financing
(exclude sales commissions and handling fees) - 3,467,388 511,905 9,975,830 1,189,899 17,079,817 295,289 32,520,128
Statutory deposits 1,142,108 - - - - - - 1,142,108
Other assets (exclude prepayment) - 133,856 - - - - 168,365 302,221
5,682,901 6,526,365 1,255,804 10,173,854 1,321,584 17,079,817 504,170 42,544,495

Financial guarantees - 77,195 27,895 383,755 15,081 4,544 9,596 518,066

Credit related commitments and contingencies 141,985 1,285,169 120,734 4,014,944 1,448,995 2,536,013 346,146 9,893,986
141,985 1,362,364 148,629 4,398,699 1,464,076 2,540,557 355,742 10,412,052
Total credit risk 5,824,886 7,888,729 1,404,433 14,572,553 2,785,660 19,620,374 859,912 52,956,547
2019 Annual Report
221
 222

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(ii) Credit risk concentrations (cont’d)

A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that cause their ability to meet contractual
obligations to be similarly affected by changes in economic and other conditions. The analysis of credit risk concentration presented below relates only to financial assets subject to credit
risk and are based on the industry in which the counterparty is engaged. (cont’d)

Financial,
Alliance Bank Malaysia Berhad (88103-W)

Insurance, Transport, Agriculture,

Government Business Storage and Manufacturing,
and Central Services and Communication Wholesale &
BANK Bank Real Estate Services Retail Trade Construction Household Others Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 587,207 863,350 - - - - - 1,450,557
Deposits and placements with banks and other
financial institutions - 77,283 - - - - - 77,283
Financial assets held-for-trading - 38,549 10,222 - - - - 48,771
Financial investments available-for-sale
(exclude equity securities) 2,863,925 2,453,110 679,796 182,188 105,785 - - 6,284,804
Financial investments held-to-maturity 121,271 223,432 - - - - - 344,703
Derivative financial assets - 56,969 - - - - 27,486 84,455
Loans, advances and financing
(exclude sales commissions and handling fees) - 3,917,597 349,960 8,710,547 1,065,567 17,038,464 402,799 31,484,934
Statutory deposits 1,092,566 - - - - - - 1,092,566
Other assets (exclude prepayment) - 47,186 - - - - 114,770 161,956
4,664,969 7,677,476 1,039,978 8,892,735 1,171,352 17,038,464 545,055 41,030,029

Financial guarantees - 31,839 26,419 432,615 37,837 7,638 20,353 556,701

Credit related commitments and contingencies - 1,292,655 122,364 3,509,320 1,382,911 2,302,406 509,336 9,118,992
- 1,324,494 148,783 3,941,935 1,420,748 2,310,044 529,689 9,675,693
Total credit risk 4,664,969 9,001,970 1,188,761 12,834,670 2,592,100 19,348,508 1,074,744 50,705,722
 2019 Annual Report 223

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(iii) Collaterals

The main types of collateral obtained by the Group and the Bank are as follows:

- Where property is provided as collateral, legal charge over the title;

- For hire purchase, ownership rights over the vehicles or equipment financed; and
- For other loans/financing, charges over business assets such as premises, financial/trade receivables, or deposits.

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Gross loans, advances and financing 42,730,447 40,307,373 32,883,217 31,770,336

Less: Allowance for expected credit losses/
impairment losses (502,663) (372,449) (363,089) (285,402)
Net loans, advances and financing 42,227,784 39,934,924 32,520,128 31,484,934

Percentage of collateral held for loans, advances and

financing 70.9% 72.0% 71.8% 73.9%

(iv) Credit risk measurement

The Group and the Bank adopt the following judgements and assumptions on measurement of expected credit loss (“ECL”):

(a) Definition of significant increase in credit risk

The Group and the Bank consider the probability of default upon initial recognition of financial asset and whether there has
been a significant increase in credit risk on an ongoing basis. To assess whether there is a significant increase in credit risk,
the Group and the Bank compare the risk of a default occurring on the financial asset as at the reporting date with the risk of
default as at the date of initial recognition. It considers available reasonable and supportable forward-looking information.

The following events are taken into consideration during the assessment:

• Contractual payment is in arrears for 30 days or more;

• Significant downgrade of credit rating or internal rating;
• Modified exposure placed under Agensi Kaunseling dan Pengurusan Kredit (“AKPK”) status;
• Exposure being monitored under watchlist; or
• Restructured and rescheduled exposure with increase in credit risk.

(b) Definition of credit impaired financial assets

An exposure is classified as credit impaired when one or more events that have a detrimental impact to the estimated future
cash flows of that financial assets have occurred. Evidence that a financial asset is credit impaired includes observable data
about the following events: 

Quantitative criteria:

A financial asset is classified as credit impaired, when the counterparty fails to make contractual payment within 90 days or
3 months from when they fall due.
224 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(iv) Credit risk measurement (cont’d)

(b) Definition of credit impaired financial assets (cont’d)

Evidence that a financial asset is credit impaired includes observable data about the following events:

Qualitative criteria:

• Significant financial difficulty of the issuer or the borrower;

• Breach of contract, such as a default of past due event;
• Concessions have been made by the lender relating to the borrower’s financial difficulty;
• Indications that borrower will enter into bankruptcy/winding up or other financial restructuring;
• Disappearance of an active market for that financial asset; or
• Purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

(c) Measurement of ECL

ECL is measured by three components, i.e. exposure at default, probability of default and loss given default.

Exposure at default (“EAD”)

EAD for non-retail portfolio is calculated based upon the contractual amortisation amount up to the point prior to the default
event. Repayments are then assumed to cease, with only interest accrued on the outstanding balance from this point.
Since the non-retail portfolio contains a variety of products with different interest accrual methods, amortisation types and
repayment methods, the approaches employed to calculate EAD varies accordingly.

EAD for retail portfolio is calculated based upon either:

(i) Simple equation based calculation approach – where the outstanding balance follows a predictable trend across the
amount and tenure.
(ii) Utilisation curve model. These curves provide a view of percent drawn down at the point of default, expressed as a
percentage of the customer credit limit at observation.
(iii) Mechanical equation based approach – which was utilised to forecast monthly default balances as per an amortisation
profile and adjusted for different paths to default using an adjustment factor.

Probability at default (“PD”)

A PD is assigned to each risk measure and represents a percentage of the likelihood of default.

For non-retail portfolio, the PD is measured from the internal or external rating of the borrower or issuer to determine the level
of default risk.

For retail portfolio, a signature curve approach forecasted the lifetime PD and PD at any given time within the lifetime horizon.
This is based upon historic default data using a chain ladder methodology to construct a lifetime default emergence curve.

Loss given default (“LGD”)

This is on a time series of probability weighted loss rate relative to the monthly exposure at default where the probabilities
and loss rates are estimated by key risk driver segments such as exposure migration status (e.g. loss given cure & loss given
charge off), collateral type, defaulted exposure relative to original exposure amount and months in default.
 2019 Annual Report 225

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(iv) Credit risk measurement (cont’d)

(d) Forward-looking information

Three economic scenarios using different probability weightage are applied to the ECL:

• Base Case – based upon current economic outlook or forecast.

• Positive Case – based upon a projected optimistic or positive economic outlook or forecast.
• Negative Case – based upon a projected pessimistic or negative economic outlook or forecast.

Projection of economic scenario and the probability of each scenario happening in future shall be carried out and shall contain
all macroeconomic variables (“MEV”) which are applied in the ECL models as they are found to have significant correlation
to increase of credit risk via the modelling exercise.

For forward looking estimates, analysis was carried out to determine how the estimates were affected by macroeconomic
trends. Factors such as unemployment rate or GDP growth rate were analysed to identify the level of correlation with the
observed trends. Given the statistically strong correlation, the estimates were adjusted to reflect macroeconomic trends.

(e) Grouping of exposure for ECL measured on collective basis

For expected credit loss provisions modelled on a collective basis, a grouping of exposures is performed on the basis of
shared risk characteristics, such that risk exposures within a group are homogeneous.

The appropriateness of groupings is monitored and reviewed on a periodic basis.

(f) Modification of loans

The Group and the Bank sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers.
When this happens, the Group and the Bank assess whether or not the new terms are substantially different to the original
terms.

When the modification is not substantial and so does not result in derecognition of the original loans, the Group and the Bank
recalculate the gross carrying amount based on the revised cash flow of the financial asset and recognises a modification
gain or loss in the statement of income. The new gross carrying amount is recalculated by discounting the modified cash flow
at the original effective interest/profit rate. The Group and the Bank monitor the subsequent performance of modified assets.
The risk of default of such loans after modification is assessed and compared with the risk under the original terms at initial
recognition. The Group and the Bank may determine that the credit risk has significantly improved after restructuring, so that
the assets are moved from Stage 3 or Stage 2 (Lifetime ECL) to Stage 1 (12-month ECL). This is only the case for assets which
have performed in accordance with the new terms for six consecutive months or more.

If the terms are substantially different from the original terms, the Group and the Bank derecognised the original financial
asset and recognised a new asset and recalculates a new effective interest/profit rate for asset. The date of renegotiation is
consequently considered to be the date of initial recognition for impairment calculation purposes, including the purpose of
determining whether a significant increase in credit risk has occurred. However, the Group and the Bank also assess whether
the new financial asset recognised is deemed to be credit-impaired at initial recognition, especially in circumstances where
the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying
amount are recognised in statement of income as gain or loss on derecognition.
226 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality

Upon the adoption of MFRS 9, the Group and the Bank assess the credit quality for amounts due from clients and brokers and loans,
advances and financing by the below categories:

Credit Quality Credit Grading Definition

Retail (1)
Non-retail (2)

Low Low risk score 1 - 12 Borrowers with good capacity to meet

(AAA to BB) financial commitments.

Medium Medium risk score 13 - 16 Borrower which is in a fairly acceptable

(BB- to B-) capacity to meet financial commitments.

High High risk score 17 - 19 Borrower which is in an uncertain

(CC+ to CC-) capacity to meet financial commitments
but have not been impaired.

Unrated Unrated Unrated Borrower which is unrated.

Credit impaired Credit impaired Credit impaired Defaulted, or judgmentally impaired

due to lack of capacity to fulfil financial
commitments.

Notes:

(1)
Retail refers to Consumer Banking
(2)
Non-retail refers to Business Banking

Other financial assets are categorised in the following manner:

Credit Quality Credit Grading Definition

Investment graded AAA to BBB- Issuer with low risk of defaulting principal or interest payment.

Non-investment graded Lower than BBB- Issuer with medium or high risk of defaulting principal or interest
payment.

Sovereign/Government backed – Issued or guaranteed by Malaysian government.

Unrated Unrated Issuer where rating is unavailable.

Credit impaired Credit impaired Defaulted.

 2019 Annual Report 227

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

The following table shows an analysis of the credit quality by stages and the allowance for expected credit losses of the financial
assets:

GROUP Stage 1 Stage 2 Stage 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand)

Investment graded 508,730 - - 508,730
Non-investment graded 6 - - 6
Sovereign/Government backed 1,040,926 - - 1,040,926
Gross carrying amount 1,549,662 - - 1,549,662
Expected credit losses (38) - - (38)
Net carrying amount 1,549,624 - - 1,549,624

Deposits and placements with banks and other

financial institutions
Investment graded 500 - - 500
Gross carrying amount 500 - - 500
Expected credit losses - - - -
Net carrying amount 500 - - 500

Financial investments at fair value through other

comprehensive income (exclude equity securities)
Investment graded 2,708,219 62,478 - 2,770,697
Sovereign/Government backed 6,698,348 - - 6,698,348
Credit impaired - - 9,409 9,409
Gross carrying amount 9,406,567 62,478 9,409 9,478,454

Expected credit losses [Note a] (120) (444) (9,409) (9,973)

Financial investments at amortised cost

Sovereign/Government backed 121,790 - - 121,790
Unrated 59,586 50,554 - 110,140
Credit impaired - - 18,565 18,565
Gross carrying amount 181,376 50,554 18,565 250,495
Expected credit losses (42) (540) (14,193) (14,775)
Net carrying amount 181,334 50,014 4,372 235,720
228 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

The following table shows an analysis of the credit quality by stages and the allowance for expected credit losses of the financial
assets: (cont’d)

GROUP Stage 1 Stage 2 Stage 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Loans, advances and financing

Low 26,899,181 650,501 - 27,549,682
Medium 7,396,792 2,855,264 - 10,252,056
High 1,836,349 1,681,048 - 3,517,397
Unrated 510,925 423,785 - 934,710
Credit impaired - - 476,602 476,602
Gross carrying amount 36,643,247 5,610,598 476,602 42,730,447
Expected credit losses (72,679) (212,519) (217,465) (502,663)
Net carrying amount 36,570,568 5,398,079 259,137 42,227,784

Statutory deposit
Sovereign/Government backed 1,521,492 - - 1,521,492
Unrated 100 - - 100
Gross carrying amount 1,521,592 - - 1,521,592
Expected credit losses - - - -
Net carrying amount 1,521,592 - - 1,521,592

Credit related commitments and contingencies

Low 9,031,633 268,268 - 9,299,901
Medium 1,583,967 923,861 - 2,507,828
High 356,419 83,720 - 440,139
Unrated 757,265 1,443 - 758,708
Credit impaired - - 16,460 16,460
Gross carrying amount 11,729,284 1,277,292 16,460 13,023,036

Expected credit losses (6,833) (16,664) (9,107) (32,604)

Note a: The ECL is recognised in other comprehensive income reserves instead of in the statement of financial position as the
carrying amount of debt instruments at FVOCI is equivalent to fair value.
 2019 Annual Report 229

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Simplified approach

Current to
less than 16 days to More than
16 days 30 days 30 days
GROUP past due past due past due Total
2019 RM’000 RM’000 RM’000 RM’000

Amounts due from clients and brokers

Gross carrying amount 76,941 31 875 77,847
Expected credit losses - - (839) (839)
Net carrying amount 76,941 31 36 77,008

More than
90 days
Current past due Total
RM’000 RM’000 RM’000

Other assets (exclude prepayment)

Gross carrying amount 179,100 34,385 213,485
Expected credit losses - (34,385) (34,385)
Net carrying amount 179,100 - 179,100
230 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

BANK Stage 1 Stage 2 Stage 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand)

Investment graded 624,441 - - 624,441
Non-investment graded 6 - - 6
Sovereign/Government backed 692,476 - - 692,476
Gross carrying amount 1,316,923 - - 1,316,923
Expected credit losses (38) - - (38)
Net carrying amount 1,316,885 - - 1,316,885

Financial investments at fair value through other

comprehensive income (exclude equity securities)
Investment graded 2,428,480 47,617 - 2,476,097
Sovereign/Government backed 4,376,761 - - 4,376,761
Gross carrying amount 6,805,241 47,617 - 6,852,858

Expected credit losses [Note a] (55) (327) - (382)

Financial investments at amortised cost

Investment graded 130,058 - - 130,058
Sovereign/Government backed 101,446 - - 101,446
Unrated 55,745 25,281 - 81,026
Credit impaired - - 1,294 1,294
Gross carrying amount 287,249 25,281 1,294 313,824
Expected credit losses (330) (270) (1,294) (1,894)
Net carrying amount 286,919 25,011 - 311,930

Note a: The ECL is recognised in other comprehensive income reserves instead of in the statement of financial position as the
carrying amount of debt instruments at FVOCI is equivalent to fair value.
 2019 Annual Report 231

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

BANK Stage 1 Stage 2 Stage 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Loans, advances and financing

Low 21,420,465 500,842 - 21,921,307
Medium 5,336,079 2,242,286 - 7,578,365
High 1,184,084 1,308,235 - 2,492,319
Unrated 390,699 131,403 - 522,102
Credit impaired - - 369,124 369,124
Gross carrying amount 28,331,327 4,182,766 369,124 32,883,217
Expected credit losses (49,135) (142,622) (171,332) (363,089)
Net carrying amount 28,282,192 4,040,144 197,792 32,520,128

Statutory deposit
Sovereign/Government backed 1,142,008 - - 1,142,008
Unrated 100 - - 100
Gross carrying amount 1,142,108 - - 1,142,108
Expected credit losses - - - -
Net carrying amount 1,142,108 - - 1,142,108

Credit related commitments and contingencies

Low 7,457,146 224,376 - 7,681,522
Medium 1,222,599 704,447 - 1,927,046
High 218,882 71,135 - 290,017
Unrated 497,553 1,433 - 498,986
Credit impaired - - 14,481 14,481
Gross carrying amount 9,396,180 1,001,391 14,481 10,412,052

Expected credit losses (6,097) (13,483) (9,002) (28,582)

Simplified Approach

More than
90 days
BANK Current past due Total
2019 RM’000 RM’000 RM’000

Other assets (exclude prepayment)

Gross carrying amount 302,221 29,604 331,825
Expected credit losses - (29,604) (29,604)
Net carrying amount 302,221 - 302,221

Under MFRS 139, all loans, advances and financing are categorised as either:

- Neither past due nor impaired;

- Past due but not impaired; or
- Impaired.

Past due loans/financing, advances and financing refer to loans that are overdue by one day or more. Impaired loans/financing are
classified in accordance to the BNM Revised Policy Document on Financial Reporting and Financial Reporting for Islamic Banking
Institutions.
232 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Distribution of loans, advances and financing by credit quality

GROUP BANK
2018 2018
RM’000 RM’000

Neither past due nor impaired 38,368,245 30,283,493

Past due but not impaired 1,361,609 1,016,197
Impaired 577,519 470,646
Gross loans, advances and financing 40,307,373 31,770,336
Less: Allowance for impairment losses
- Individual assessment (75,733) (64,967)
- Collective assessment (296,716) (220,435)
Net loans, advances and financing 39,934,924 31,484,934

Loans, advances and financing that are neither past due nor impaired

Analysis of loans, advances and financing that are neither past due nor impaired analysed based on the Group’s internal credit
grading system is as follows:

GROUP BANK
2018 2018
RM’000 RM’000

Grading classification
- Good 37,096,620 29,271,361
- Fair 1,271,625 1,012,132
38,368,245 30,283,493

The definition of the grading classification can be summarised as follows:

Good: Refers to loans, advances and financing which have never been past due in the last 6 months and have never undergone
any restructuring or rescheduling exercise previously.

Fair: Refers to loans, advances and financing which have been past due at some point within the last 6 months, or have undergone
restructuring or rescheduling exercise previously.

Loans, advances and financing that are past due but not impaired

An aging analysis of loans, advances and financing that are past due but not impaired is set out below.

For the purpose of this analysis an asset is considered past due and included below when any payment due under strict contractual
terms is received late or missed. The amount included is the entire financial asset, not just the payment of principal or interest/profit
or both overdue.
 2019 Annual Report 233

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Loans, advances and financing that are past due but not impaired (cont’d)

GROUP BANK
2018 2018
RM’000 RM’000

Past due up to 1 month 1,105,247 836,874

Past due > 1 - 2 months 221,479 159,159
Past due > 2 - 3 months 34,883 20,164
1,361,609 1,016,197

Loans, advances and financing assessed as impaired

An analysis of the gross amount of loans, advances and financing individually assessed as impaired by the Group and the Bank is
as follows:

GROUP BANK
2018 2018
RM’000 RM’000

Gross impaired loans 577,519 470,646

Gross individually assessed impaired loans [Note] 209,987 154,629

Less: Allowance for impairment losses
- Individual assessment (75,733) (64,967)
Net individually assessed impaired loans 134,254 89,662

Note:

Exclude individually assessed impaired loans which were fully collateralised and subsequently assessed under collective allowance
for the Group and the Bank at RM128,035,000 and RM126,404,000 respectively in prior year.

Other financial assets

Other financial assets include cash and short term funds, deposits and placements with other financial institutions, amounts due
from clients and brokers, debt securities, derivative financial assets, statutory deposits with BNM and other assets. Cash and
short term funds herein exclude cash in hand. Debt securities include financial assets held-for-trading, financial investments
available-for-sale and financial investments held-to-maturity. Financial assets held-for-trading and financial investments
available-for-sale are measured at fair value. The fair value will reflect the credit risk of the issuer.
234 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Other financial assets (cont’d)

Distribution of other financial assets by credit quality are summarised as below:

Neither Allowance for

past due impairment
GROUP nor impaired Impaired losses Total
2018 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 2,503,354 - - 2,503,354

Deposits and placements with banks and other
financial institutions 77,283 - - 77,283
Amounts due from clients and brokers 101,066 1,079 (840) 101,305
Financial assets held-for-trading 63,750 - - 63,750
Financial investments available-for-sale
(exclude equity securities) 8,326,333 9,420 (9,420) 8,326,333
Financial investments held-to-maturity 289,240 18,565 (14,193) 293,612
Derivative financial assets 84,455 - - 84,455
Statutory deposits 1,408,316 - - 1,408,316
Other assets (exclude prepayment) 125,519 32,017 (32,017) 125,519
12,979,316 61,081 (56,470) 12,983,927

Neither Allowance for

past due impairment
BANK nor impaired Impaired losses Total
2018 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds (exclude cash in hand) 1,450,557 - - 1,450,557

Deposits and placements with banks and other
financial institutions 77,283 - - 77,283
Financial assets held-for-trading 48,771 - - 48,771
Financial investments available-for-sale
(exclude equity securities) 6,284,804 11 (11) 6,284,804
Financial investments held-to-maturity 344,703 1,294 (1,294) 344,703
Derivative financial assets 84,455 - - 84,455
Statutory deposits 1,092,566 - - 1,092,566
Other assets (exclude prepayment) 161,956 27,578 (27,578) 161,956
9,545,095 28,883 (28,883) 9,545,095
 2019 Annual Report 235

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Other financial assets (cont’d)

Most listed and some unlisted securities are rated by external rating agencies. The Group and the Bank use external credit ratings
provided by RAM, MARC, FITCH, Moody’s and S&P. The table below presents an analysis of other financial assets by rating agency:

Deposits
and
placements
with banks Financial Financial Financial
Cash and and other assets investments investments Derivative
short-term financial held-for- available-for held-to- financial Statutory
GROUP funds institutions trading sale maturity assets deposits Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

By rating agencies

RAM
AAA 103,496 77,283 - 1,508,539 - 28,948 - 1,718,266
AA1 - - - 288,265 - 842 - 289,107
AA2 105,868 - - 386,986 - 24,556 - 517,410
AA3 50,009 - - 380,297 - 324 - 430,630
A1 59,250 - 12,623 73,250 - 34 - 145,157
A2 - - - - - - - -
P1 - - 40,904 14,978 - - - 55,882

MARC
AA - - - 151,794 - - - 151,794
AAA - - - 354,440 - - - 354,440
AA- - - - 100,280 - - - 100,280
A - - - - - 5 - 5

FITCH
AA 84 - - - - - - 84
BBB+ 947 - - - - - - 947

Moody’s
AA1 - - - - - - - -
AA2 - - - - - - - -
AA3 - - - - - 48 - 48
A1 397 - - - - 210 - 607
A3 154,649 - - - - - - 154,649

S&P
AA- 1,783 - - - - 743 - 2,526
A 1,132 - - - - - - 1,132
BBB+ 1,530 - - - - - - 1,530

Goverment backed 1,877,818 - 10,223 5,067,504 288,867 - 1,408,316 8,652,728

Unrated [Note] 146,391 - - - 4,745 28,745 - 179,881
2,503,354 77,283 63,750 8,326,333 293,612 84,455 1,408,316 12,757,103
236 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(v) Credit quality (cont’d)

Other financial assets (cont’d)

Most listed and some unlisted securities are rated by external rating agencies. The Group and the Bank use external credit ratings
provided by RAM, MARC, FITCH, Moody’s and S&P. The table below presents an analysis of other financial assets by rating agency:
(cont’d)

Deposits
and
placements
with banks Financial Financial Financial
Cash and and other assets investments investments Derivative
short-term financial held-for- available-for held-to- financial Statutory
BANK funds institutions trading sale maturity assets deposits Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

By rating agencies

RAM
AAA 100,506 77,283 - 1,107,723 - 28,948 - 1,314,460
AA1 - - - 201,941 - 842 - 202,783
AA2 105,868 - - 336,535 - 24,556 - 466,959
AA3 50,009 - - 82,194 - 324 - 132,527
A1 300,054 - 12,622 817,003 130,059 34 - 1,259,772
P1 - - 25,926 14,978 - - - 40,904

MARC
AA - - - 45,852 - - - 45,852
AAA - - - 307,873 - - - 307,873
AA- - - - 80,206 - - - 80,206
A - - - - - 5 - 5

FITCH
AA 84 - - - - - - 84
BBB+ 947 - - - - - - 947

Moody’s
AA3 - - - - - 48 - 48
A1 397 - - - - 210 - 607
A3 154,649 - - - - - - 154,649

S&P
AA- 1,783 - - - - 743 - 2,526
A 1,132 - - - - - - 1,132
BBB+ 1,530 - - - - - - 1,530

Goverment backed 587,207 - 10,223 3,290,499 214,307 - 1,092,566 5,194,802

Unrated [Note] 146,391 - - - 337 28,745 - 175,473
1,450,557 77,283 48,771 6,284,804 344,703 84,455 1,092,566 9,383,139

Note:

Unrated financial instruments comprise of placement with financial institutions where credit rating is not available, investments in bankers’
acceptances, negotiable instruments of deposits and debt securities that are no longer rated, or are exempted from credit rating.
 2019 Annual Report 237

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(a) Credit Risk (cont’d)

(vi) Sensitivity test

The Group and the Bank have performed expected credit losses sensitivity assessment on financial assets based on the changes in
key variables as below while all other variables remain unchanged. The sensitivity factors used are assumptions based on parallel
shifts in the key variables to project the impact on the expected credit losses of the Group and the Bank.

The table below outlines the effect of the changes in major key variables used on expected credit losses while other variables remain
constant:

2019 + -
GROUP MEV Change (%) RM’000 RM’000

Measurement variables
Retail
Consumption credit 3.3 6,382 (6,313)
House price index 7.1 (4,551) 6,241
Unemployment rate 0.2 3,564 (3,588)

Non-retail
3 months KLIBOR 0.4 16,772 (9,963)

2019 + -
BANK MEV Change (%) RM’000 RM’000

Measurement variables
Retail
Consumption credit 3.3 5,394 (5,353)
House price index 7.1 (3,582) 4,904
Unemployment rate 0.2 2,565 (2,582)

Non-retail
3 months KLIBOR 0.4 13,936 (8,278)

(b) Market Risk

Market Risk is the risk of loss of earnings arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices
and their implied volatilities.

The Group has established a framework of risk policies, measurement methodologies and risk limits as approved by the Group Risk
Management Committee (“GRMC”) to manage market risk. Market risk arising from the trading activities is controlled via position limits,
loss limits sensitivity limits and regular revaluation of positions versus market prices, where available.

The Group is also susceptible to exposure to market risk arising from changes in prices of the shares quoted on Bursa Malaysia, which will
impact on the Group’s amount due from clients and brokers. The risk is controlled by application of credit approvals, limits and monitoring
procedures.
238 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk

As a subset of market risk, interest/profit rate risk refers to the volatility in net interest/profit income as a result of changes in
interest/profit rate of return and shifts in the composition of the assets and liabilities. Interest rate/rate of return risk is managed
through interest/profit rate sensitivity analysis. The sensitivity in net interest/profit income from interest/profit rate movement is
monitored and reported to Management. In addition to pre-scheduled meetings, Group Assets and Liabilities Management Committee
(“GALCO”) will also deliberate on revising the Group’s and the Bank’s lending/financing and deposit rates in response to changes in
the benchmark rates set by the central bank.

The effects of changes in the levels of interest rates/rates of return on the market value of securities are monitored closely and
mark-to-market valuations are regularly reported to Management.

The Group and the Bank are exposed to various risks associated with the effects of fluctuations in the prevailing levels of interest/
profit rates on its financial position and cash flows. The effects of changes in the levels of interest rates/rates of return on the
market value of securities are monitored regularly and the outcomes of mark-to-market valuations are escalated to Management
regularly. The table below summarises the effective interest/profit rates at the end of the reporting period and the periods in which
the financial instruments will re-price or mature, whichever is the earlier.
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,208,638 - - - - - 596,096 - 1,804,734
Deposits and placements with
banks and other financial
institutions 500 - - - - - - - 500
Amounts due from clients and
brokers 3,338 - - - - - 73,670 - 77,008
Financial assets at fair value
through profit or loss - - - - - - 187,517 42,923 230,440
Financial investments at
fair value through other
comprehensive income 135,035 190,178 364,225 502,664 5,479,663 2,688,290 118,407 - 9,478,462
Financial investments at
amortised cost 34,867 3,790 5,000 119,816 65,000 - 7,247 - 235,720
Derivative financial assets - - - - - - - 55,442 55,442
Loans, advances and financing 35,649,421 1,557,935 701,796 1,190,989 1,899,093 1,347,128 (26,061)* - 42,320,301
Other financial assets** - - - - - - 1,700,692 - 1,700,692
Total assets 37,031,799 1,751,903 1,071,021 1,813,469 7,443,756 4,035,418 2,657,568 98,365 55,903,299
2019 Annual Report
239
 240

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Alliance Bank Malaysia Berhad (88103-W)

Liabilities
Deposits from customers 15,031,482 5,304,178 4,449,081 8,687,077 11,152,336 - 393,478 - 45,017,632
Deposits and placements of
banks and other financial
institutions 274,173 22,342 17,922 67,071 474,929 - 2,271 - 858,708
Financial liabilities designated
at fair value through profit
or loss 5,862 10,894 25,242 30,375 574,847 126,102 5,101 - 778,423
Amounts due to clients and
brokers - - - - - - 51,164 - 51,164
Derivative financial liabilities - - - - - - - 57,545 57,545
Recourse obligations on
loans and financing sold to
Cagamas - - - - 800,013 - 656 - 800,669
Subordinated obligations - - - - 1,449,468 - 30,754 - 1,480,222
Other financial liabilities 77,313 36,410 695 - 382,720 54,670 1,059,226 - 1,611,034
Total liabilities 15,388,830 5,373,824 4,492,940 8,784,523 14,834,313 180,772 1,542,650 57,545 50,655,397

On-balance sheet interest

sensitivity gap 21,642,969 (3,621,921) (3,421,919) (6,971,054) (7,390,557) 3,854,646 1,114,918 40,820 5,247,902

Note:

* Impaired loans/financing, expected credit losses and collective assessment allowance of the Group and the Bank are classified under the non-interest/profit sensitive column.
** Included statutory deposit and other assets.
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 2,156,551 - - - - - 612,207 - 2,768,758
Deposits and placements with
banks and other financial
institutions - 77,265 - - - - 18 - 77,283
Amounts due from clients and
brokers 1,302 - - - - - 100,003 - 101,305
Financial assets held-for-
trading - - - - - - - 63,750 63,750
Financial investments
available-for-sale 24,978 325,123 492,862 620,622 5,184,435 1,590,833 266,336 - 8,505,189
Financial investments
held-to-maturity - - 84,356 82,818 119,713 - 6,725 - 293,612
Derivative financial assets - - - - - - - 84,455 84,455
Loans, advances and financing 32,947,800 1,612,546 450,341 358,424 2,626,983 1,788,351 205,070* - 39,989,515
Other financial assets** - - - - - - 1,533,835 - 1,533,835
Total assets 35,130,631 2,014,934 1,027,559 1,061,864 7,931,131 3,379,184 2,724,194 148,205 53,417,702

2019 Annual Report
241
 242

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Alliance Bank Malaysia Berhad (88103-W)

Liabilities
Deposits from customers 16,798,741 4,052,178 4,316,145 8,329,210 1,164,868 - 8,079,318 - 42,740,460
Deposits and placements of
banks and other financial
institutions 249,495 13,117 13,944 22,649 571,472 - 3,194 - 873,871
Financial liabilities designated
at fair value through profit
or loss 5,686 12,644 14,160 2,532 260,227 383,460 3,529 - 682,238
Amounts due to clients and
brokers - - - - - - 75,103 - 75,103
Derivative financial liabilities - - - - - - - 154,686 154,686
Recourse obligations on
loans and financing sold to
Cagamas - - - 300,011 800,006 - 2,346 - 1,102,363
Subordinated obligations - - - - 1,348,909 - 30,705 - 1,379,614
Other financial liabilities 32,913 - 13,835 20,419 283,264 151,400 802,410 - 1,304,241
Total liabilities 17,086,835 4,077,939 4,358,084 8,674,821 4,428,746 534,860 8,996,605 154,686 48,312,576

On-balance sheet interest

sensitivity gap 18,043,796 (2,063,005) (3,330,525) (7,612,957) 3,502,385 2,844,324 (6,272,411) (6,481) 5,105,126

Note:

* Impaired loans/financing, expected credit losses and collective assessment allowance of the Group and the Bank are classified under the non-interest/profit sensitive column.
** Included statutory deposit and other assets.
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,004,644 - - - - - 567,351 - 1,571,995
Financial assets at fair value
through profit or loss - - - - - - 126,733 42,923 169,656
Financial investments at
fair value through other
comprehensive income 25,009 175,169 309,189 488,643 4,377,370 1,403,500 73,986 - 6,852,866
Financial investments at
amortised cost 34,868 - 2,500 99,770 172,500 - 2,292 - 311,930
Derivative financial assets - - - - - - - 55,442 55,442
Loans, advances and financing 27,900,278 1,184,947 523,683 1,162,718 1,159,138 686,178 6,034* - 32,622,976
Other financial assets** - - - - - - 1,444,329 - 1,444,329
Total assets 28,964,799 1,360,116 835,372 1,751,131 5,709,008 2,089,678 2,220,725 98,365 43,029,194
2019 Annual Report
243
 244

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Alliance Bank Malaysia Berhad (88103-W)

Liabilities
Deposits from customers 11,467,121 4,114,342 3,408,976 6,957,497 8,801,724 - 233,202 - 34,982,862
Deposits and placements of
banks and other financial
institutions 3,223 15,674 8,151 45,671 270,889 - 1,227 - 344,835
Financial liabilities designated
at fair value through profit
or loss 5,862 10,894 25,242 30,375 574,847 126,102 5,101 - 778,423
Derivative financial liabilities - - - - - - - 57,545 57,545
Recourse obligations on
loans and financing sold to
Cagamas - - - - 300,000 - 76 - 300,076
Subordinated obligations - - - - 1,448,826 - 30,754 - 1,479,580
Other financial liabilities 77,313 36,410 695 - 382,720 54,670 902,571 - 1,454,379
Total liabilities 11,553,519 4,177,320 3,443,064 7,033,543 11,779,006 180,772 1,172,931 57,545 39,397,700

On-balance sheet interest

sensitivity gap 17,411,280 (2,817,204) (2,607,692) (5,282,412) (6,069,998) 1,908,906 1,047,794 40,820 3,631,494

Note:

* Impaired loans/financing, expected credit losses and collective assessment allowance of the Group and the Bank are classified under the non-interest/profit sensitive column.
** Included statutory deposit and other assets.
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,191,507 - - - - - 524,454 - 1,715,961
Deposits and placements with
banks and other financial
institutions - 77,265 - - - - 18 - 77,283
Financial assets held-for-
trading - - - - - - - 48,771 48,771
Financial investments
available-for-sale 34,978 255,076 469,394 455,478 4,461,124 542,517 187,881 - 6,406,448
Financial investments held-to-
maturity - - 49,698 63,330 229,596 - 2,079 - 344,703
Derivative financial assets - - - - - - - 84,455 84,455
Loans, advances and financing 27,070,544 1,167,774 283,597 299,478 1,721,997 817,930 185,244* - 31,546,564
Other financial assets** - - - - - - 1,254,522 - 1,254,522
Total assets 28,297,029 1,500,115 802,689 818,286 6,412,717 1,360,447 2,154,198 133,226 41,478,707
2019 Annual Report
245
 246

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(i) Interest rate/profit rate risk (cont’d)

Non-trading book
Up to Non-interest/
BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years profit sensitive Trading book Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Alliance Bank Malaysia Berhad (88103-W)

Liabilities
Deposits from customers 12,660,602 3,315,387 3,331,588 5,679,854 865,845 - 7,655,094 - 33,508,370
Deposits and placements of
banks and other financial
institutions 58,587 13,117 12,774 18,597 333,872 - 2,291 - 439,238
Financial liabilities designated
at fair value through profit
or loss 5,686 12,644 14,160 2,532 260,227 383,460 3,529 - 682,238
Derivative financial liabilities - - - - - - - 154,686 154,686
Recourse obligations on
loans and financing sold to
Cagamas - - - 300,011 300,000 - 1,685 - 601,696
Subordinated obligations - - - - 1,348,378 - 30,646 - 1,379,024
Other financial liabilities 32,913 - 13,835 20,419 283,264 151,400 686,333 - 1,188,164
Total liabilities 12,757,788 3,341,148 3,372,357 6,021,413 3,391,586 534,860 8,379,578 154,686 37,953,416

On-balance sheet interest

sensitivity gap 15,539,241 (1,841,033) (2,569,668) (5,203,127) 3,021,131 825,587 (6,225,380) (21,460) 3,525,291

Note:

* Impaired loans/financing, expected credit losses and collective assessment allowance of the Group and the Bank are classified under the non-interest/profit sensitive column.
** Included statutory deposit and other assets.
 2019 Annual Report 247

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(ii) Foreign exchange risk

Foreign exchange risk refers to the risk that fair value or future cash flows of financial instruments will fluctuate because of the
movements in the exchange rates for foreign exchange positions taken by the Group and the Bank from time to time.

Foreign currency exchange risk is managed via approved risk limits and open positions are regularly revalued against current
exchange rates and reported to Management and Board.

The following table summarises the assets, liabilities and net open position by currency as at the end of the financial reporting
date, which are mainly in US Dollars, Pound Sterling, Euro Dollars, Australian Dollars and Singapore Dollars. Other foreign exchange
exposures include exposure to Japanese Yen, Chinese Yuan and New Zealand Dollars. The exposure was calculated only for monetary
balances denominated in currencies other than the functional currency of the Group and the Bank.

US Pound Euro Australian Singapore

GROUP/BANK Dollars Sterling Dollars Dollars Dollars Others Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term
funds 290,207 908 - 1,170 2,585 9,180 304,050
Loans, advances and
financing 287,023 94 26,098 - 1,204 306 314,725
Other financial assets 23,246 4 4 220 2 (7) 23,469
Total financial assets 600,476 1,006 26,102 1,390 3,791 9,479 642,244

Liabilities
Deposits from
customers 389,749 36,100 36,159 227,204 44,474 22,654 756,340
Deposits and
placements of
banks and other
financial institutions - - 289 - - 1,003 1,292
Other financial
liabilities 16,336 1,649 2,039 40,830 63 2,306 63,223
Total financial
liabilities 406,085 37,749 38,487 268,034 44,537 25,963 820,855

On-balance sheet
open position 194,391 (36,743) (12,385) (266,644) (40,746) (16,484) (178,611)
Off-balance sheet
open position (278,254) 34,755 10,360 252,142 18,716 28,059 65,778
Net open position (83,863) (1,988) (2,025) (14,502) (22,030) 11,575 (112,833)
248 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(ii) Foreign exchange risk (cont’d)

US Pound Euro Australian Singapore

GROUP/BANK Dollars Sterling Dollars Dollars Dollars Others Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term
funds 247,253 1,502 948 178 1,929 10,463 262,273
Deposits and
placements with
banks and other
financial institutions 77,283 - - - - - 77,283
Loans, advances and
financing 332,833 - 5,220 - 32,237 1,199 371,489
Other financial assets 39,817 - - 6 19 120 39,962
Total financial assets 697,186 1,502 6,168 184 34,185 11,782 751,007

Liabilities
Deposits from
customers 501,381 52,496 33,618 125,844 41,470 36,923 791,732
Deposits and
placements of
banks and other
financial institutions 19,318 - - - - 21,864 41,182
Financial liabilities
designated at fair
value - - - - - 911 911
Other financial
liabilities 13,530 431 2,463 6,071 - 1,804 24,299
Total financial
liabilities 534,229 52,927 36,081 131,915 41,470 61,502 858,124

On-balance sheet
open position 162,957 (51,425) (29,913) (131,731) (7,285) (49,720) (107,117)
Off-balance sheet
open position (190,218) 50,042 27,941 104,387 (11,117) 56,264 37,299
Net open position (27,261) (1,383) (1,972) (27,344) (18,402) 6,544 (69,818)
 2019 Annual Report 249

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(iii) Value at risk (“VaR”)

Value-at-risk (“VaR”) reflects the maximum potential loss of value of a portfolio resulting from market movements within a specified
probability of occurrence (level of confidence); for a specific period of time (holding period). For the Group and the Bank, VaR
is computed based on the historical simulation approach with parameters in accordance with BNM and Basel requirements.
Backtesting is performed daily to validate and reassess the accuracy of the VaR model. This involves the comparison of the daily VaR
values against the hypothetical profit and loss over the corresponding period.

The table below sets out a summary of the Group’s and the Bank’s VaR profile by financial instrument types for the Trading Portfolio:

Average
Balance for the year Minimum Maximum
RM’000 RM’000 RM’000 RM’000

GROUP
2019

FX related derivatives (162) (317) (162) (462)

Government securities (10,364) (8,148) (6,705) (10,364)
Private debt securities (4,406) (5,141) (3,873) (6,648)

BANK
2019

FX related derivatives (162) (317) (162) (462)

Government securities (5,826) (4,467) (3,114) (5,826)
Private debt securities (4,406) (4,935) (3,873) (6,648)

GROUP
2018

FX related derivatives (578) (1,179) (461) (2,706)

Government securities (4,093) (14,646) (4,093) (41,511)
Private debt securities (3,391) (8,761) (3,391) (14,624)

BANK
2018

FX related derivatives (578) (1,179) (461) (2,706)

Government securities (3,017) (11,387) (3,015) (32,749)
Private debt securities (1,308) (2,515) (1,070) (4,359)
250 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(iv) Interest rate risk/rate of return risk in the banking book

The following tables present the Group’s and the Bank’s projected sensitivity to a 100 basis point parallel shock to interest rates
across all maturities applied on the Group’s and the Bank’s interest sensitivity gap as at reporting date.

2019 2019
GROUP BANK
- 100 bps + 100 bps - 100 bps + 100 bps
Increase/(Decrease) Increase/(Decrease)
RM’000 RM’000 RM’000 RM’000

Impact on net profit after tax (90,574) 90,574 (74,614) 74,614

Impact on equity 267,440 (237,670) 161,525 (146,837)

2018 2018
GROUP BANK
- 100 bps + 100 bps - 100 bps + 100 bps
Increase/(Decrease) Increase/(Decrease)
RM’000 RM’000 RM’000 RM’000

Impact on net profit after tax (95,584) 95,584 (78,216) 78,216

Impact on equity 198,551 (173,091) 128,578 (109,818)

Note:

The foreign currency impact on net profit is considered insignificant as the individual exposure is less than 5% of Banking Book
assets/liabilities.
 2019 Annual Report 251

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(b) Market Risk (cont’d)

(v) Other risk measures

(i) Stress test

Stress testing is normally used by banks to gauge their potential vulnerability to exceptional but plausible events. The Group
performs stress testing regularly to measure and alert the Board and Management on the effects of potential political,
economic or other disruptive events on our exposures. The Group’s stress testing process is governed by the Stress Testing
Framework as approved by the Board. Stress testing is conducted on a bank-wide basis as well as on specific portfolios. The
Group’s bank-wide stress testing exercise uses a variety of broad macroeconomic indicators that are then translated into
stress impacts on the various business units. The results are then consolidated to provide an overall impact on the Group’s
financial results and capital requirements. Stress testing results are reported to the Board and Management to provide them
with an assessment of the financial impact of such events would have on the Group’s profitability and capital levels.

(ii) Sensitivity analysis

Sensitivity analysis is used to measure the impact of changes in individual stress factors such as interest/profit rates or
foreign exchange rates. It is normally designed to isolate and quantify exposure to the underlying risk. The Group and the
Bank perform sensitivity analysis such as parallel shifts of interest/profit rates on its exposures, primarily on the banking and
trading book positions.

(c) Liquidity Risk

Liquidity risk is the inability of the Group and the Bank to meet financial commitments when due.

The Group’s and the Bank’s liquidity risk profile is managed using liquidity risk management strategies set in the Liquidity Risk Management
Policy. Liquidity Risk Measures are monitored against approved thresholds by GALCO and GRMC. A contingency funding plan is also
established by the Group and the Bank as a forward-looking measure to ensure that liquidity risk can be addressed according to the
degrees of key risk indicators, and which incorporates alternative funding strategies which are ready to be implemented on a timely basis
to mitigate the impact of unforeseen adverse changes in liquidity in the market place.

252 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(i) Liquidity risk for assets and liabilities based on remaining contractual maturities

The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities, commitments and
counter-guarantees are important factors in assessing the liquidity of the Group and the Bank. The table below provides analysis of
assets and liabilities into relevant maturity terms based on remaining contractual maturities:

Up to >1-3 >3-6 >6-12

GROUP 1 month months months months >1 year Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,804,734 - - - - 1,804,734
Deposits and placements with banks
and other financial institutions 500 - - - - 500
Amounts due from clients and brokers 77,008 - - - - 77,008
Financial assets at FVTPL 379 - 118 - 229,943 230,440
Financial investments at FVOCI 180,003 230,448 387,975 502,664 8,177,372 9,478,462
Financial investments at amortised
cost 37,164 4,549 4,994 119,816 69,197 235,720
Loans, advances and financing 8,681,232 2,125,500 883,666 136,537 30,493,366 42,320,301
Other financial and non-financial
assets 192,956 19,453 5,812 2,791 2,152,674 2,373,686
Total assets 10,973,976 2,379,950 1,282,565 761,808 41,122,552 56,520,851

Liabilities
Deposits from customers 25,836,029 5,376,065 4,509,248 8,733,406 562,884 45,017,632
Deposits and placements of banks
and other financial institutions 278,226 22,342 17,922 66,661 473,557 858,708
Financial liabilities designated at fair
value through profit or loss 9,446 17,970 34,361 29,644 687,002 778,423
Amounts due to clients and brokers 51,164 - - - - 51,164
Recourse obligations on loans and
financing sold to Cagamas - 656 - - 800,013 800,669
Subordinated obligations - - - - 1,480,222 1,480,222
Other financial and non-financial
liabilities 941,843 13,381 17,255 6,486 822,226 1,801,191
Total liabilities 27,116,708 5,430,414 4,578,786 8,836,197 4,825,904 50,788,009

Net maturity mismatch (16,142,732) (3,050,464) (3,296,221) (8,074,389) 36,296,648 5,732,842

 2019 Annual Report 253

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(i) Liquidity risk for assets and liabilities based on remaining contractual maturities (cont’d)

The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities, commitments and
counter-guarantees are important factors in assessing the liquidity of the Group and the Bank. The table below provides analysis of
assets and liabilities into relevant maturity terms based on remaining contractual maturities: (cont’d)

Up to >1-3 >3-6 >6-12

GROUP 1 month months months months >1 year Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 2,768,758 - - - - 2,768,758
Deposits and placements with banks
and other financial institutions - 77,283 - - - 77,283
Amounts due from clients and brokers 101,305 - - - - 101,305
Financial investment held-for-trading 14,978 25,926 167 - 22,679 63,750
Financial investment available-for-
sale 61,848 355,038 519,110 619,793 6,949,400 8,505,189
Financial investment held-to-maturity 1,228 744 84,423 82,636 124,581 293,612
Loans, advances and financing 7,889,140 1,974,013 995,242 187,093 28,944,027 39,989,515
Other financial and non-financial
assets 113,465 37,283 7,211 15,060 1,965,837 2,138,856
Total assets 10,950,722 2,470,287 1,606,153 904,582 38,006,524 53,938,268

Liabilities
Deposits from customers 24,747,374 4,098,867 4,396,044 8,391,457 1,106,718 42,740,460
Deposits and placements of banks
and other financial institutions 250,481 13,118 16,150 22,650 571,472 873,871
Financial liabilities designated at fair
value through profit or loss 1,759 1,869 21,315 15,600 641,695 682,238
Amounts due to clients and brokers 75,103 - - - - 75,103
Recourse obligations on loans and
financing sold to Cagamas - 2,346 - 300,011 800,006 1,102,363
Subordinated obligations 22,118 8,528 59 - 1,348,909 1,379,614
Other financial and non-financial
liabilities 560,648 17,982 52,857 47,094 946,448 1,625,029
Total liabilities 25,657,483 4,142,710 4,486,425 8,776,812 5,415,248 48,478,678

Net maturity mismatch (14,706,761) (1,672,423) (2,880,272) (7,872,230) 32,591,276 5,459,590

254 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(i) Liquidity risk for assets and liabilities based on remaining contractual maturities (cont’d)

The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities, commitments and
counter-guarantees are important factors in assessing the liquidity of the Group and the Bank. The table below provides analysis of
assets and liabilities into relevant maturity terms based on remaining contractual maturities: (cont’d)

Up to >1-3 >3-6 >6-12

BANK 1 month months months months >1 year Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,571,995 - - - - 1,571,995
Financial assets at FVTPL 379 - 118 - 169,159 169,656
Financial investments at FVOCI 58,511 199,629 325,205 488,643 5,780,878 6,852,866
Financial investments at amortised
cost 36,891 446 2,556 99,771 172,266 311,930
Loans, advances and financing 6,492,380 1,527,109 669,257 106,285 23,827,945 32,622,976
Other financial and non-financial
assets 267,702 18,497 5,812 2,791 2,661,243 2,956,045
Total assets 8,427,858 1,745,681 1,002,948 697,490 32,611,491 44,485,468

Liabilities
Deposits from customers 20,197,348 4,169,377 3,454,002 6,994,865 167,270 34,982,862
Deposits and placements of banks
and other financial institutions 3,224 15,674 9,378 45,260 271,299 344,835
Financial liabilities designated at fair
value through profit or loss 9,446 17,970 34,361 29,644 687,002 778,423
Recourse obligations on loans and
financing sold to Cagamas - 76 - - 300,000 300,076
Subordinated obligations 21,835 8,919 - - 1,448,826 1,479,580
Other financial and non-financial
liabilities 549,997 49,614 16,871 5,795 1,007,576 1,629,853
Total liabilities 20,781,850 4,261,630 3,514,612 7,075,564 3,881,973 39,515,629

Net maturity mismatch (12,353,992) (2,515,949) (2,511,664) (6,378,074) 28,729,518 4,969,839

 2019 Annual Report 255

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(i) Liquidity risk for assets and liabilities based on remaining contractual maturities (cont’d)

The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities, commitments and
counter-guarantees are important factors in assessing the liquidity of the Group and the Bank. The table below provides analysis of
assets and liabilities into relevant maturity terms based on remaining contractual maturities: (cont’d)

Up to >1-3 >3-6 >6-12

BANK 1 month months months months >1 year Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Assets
Cash and short-term funds 1,715,961 - - - - 1,715,961
Deposits and placements with banks
and other financial institutions - 77,283 - - - 77,283
Financial investment held-for-trading - 25,926 167 - 22,678 48,771
Financial investment available-for-
sale 61,449 274,130 489,924 455,660 5,125,285 6,406,448
Financial investment held-to-maturity 1,229 446 49,764 63,149 230,115 344,703
Loans, advances and financing 6,209,355 1,484,709 696,125 127,651 23,028,724 31,546,564
Other financial and non-financial
assets 132,875 29,877 7,173 14,735 2,528,449 2,713,109
Total assets 8,120,869 1,892,371 1,243,153 661,195 30,935,251 42,852,839

Liabilities
Deposits from customers 20,217,072 3,354,730 3,391,908 5,730,196 814,464 33,508,370
Deposits and placements of banks
and other financial institutions 59,539 13,117 14,113 18,598 333,871 439,238
Financial liabilities designated at fair
value through profit or loss 1,759 1,869 21,315 15,600 641,695 682,238
Recourse obligations on loans and
financing sold to Cagamas - 1,685 - 300,011 300,000 601,696
Subordinated obligations 22,118 8,528 - - 1,348,378 1,379,024
Other financial and non-financial
liabilities 460,982 17,012 52,630 46,640 920,310 1,497,574
Total liabilities 20,761,470 3,396,941 3,479,966 6,111,045 4,358,718 38,108,140

Net maturity mismatch (12,640,601) (1,504,570) (2,236,813) (5,449,850) 26,576,533 4,744,699

 256

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(ii) Contractual maturity of financial liabilities on an undiscounted basis

The table below presents the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities at the end of the reporting period. The amounts
disclosed in the table are the contractual undiscounted cash flows of all financial liabilities.

Up to
Alliance Bank Malaysia Berhad (88103-W)

GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non derivative financial liabilities

Deposits from customers 25,875,927 5,423,059 4,602,190 8,961,760 609,354 - 45,472,290
Deposits and placements of banks and other financial institutions 274,355 26,629 17,922 71,136 484,833 - 874,875
Financial liabilities designated at fair value through profit or loss 60,769 18,154 34,495 30,568 722,841 183,570 1,050,397
Recourse obligations on loans and financing sold to Cagamas - 8,882 5,494 21,265 878,453 - 914,094
Subordinated obligations 25,875 12,938 3,125 41,938 1,894,050 281,263 2,259,189
Other financial liabilities 1,154,277 470 995 2,078 887,849 - 2,045,669
27,391,203 5,490,132 4,664,221 9,128,745 5,477,380 464,833 52,616,514

Items not recognised in the statements of financial position

Financial guarantees 130,379 134,969 89,245 266,040 89,882 10,985 721,500
Credit related commitments and contingencies 9,954,752 115,655 45,497 93,651 1,826,460 265,521 12,301,536
10,085,131 250,624 134,742 359,691 1,916,342 276,506 13,023,036

Derivatives financial liabilities

Derivatives settled on a net basis
Interest rate derivatives and equity option (461) (301) (777) (1,031) (1,431) 119 (3,882)
Net outflow (461) (301) (777) (1,031) (1,431) 119 (3,882)

Derivatives settled on a gross basis

Outflow (1,190,844) (730,886) (693,948) (72,416) (135,742) - (2,823,836)
Inflow 1,187,151 723,433 687,341 70,461 130,687 - 2,799,073
(3,693) (7,453) (6,607) (1,955) (5,055) - (24,763)
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(ii) Contractual maturity of financial liabilities on an undiscounted basis (cont’d)

The table below presents the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities at the end of the reporting period. The amount
disclosed in the table are the contractual undiscounted cash flows of all financial liabilities. (cont’d)

Up to
GROUP 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non derivative financial liabilities

Deposits from customers 24,728,020 4,138,871 4,453,018 8,618,218 1,249,501 - 43,187,628
Deposits and placements of banks and other financial institutions 250,504 6,197 13,944 27,105 587,990 - 885,740
Financial liabilities designated at fair value through profit or loss 6,351 14,222 15,935 2,567 284,895 423,084 747,054
Amounts due to clients and brokers 75,103 - - - - - 75,103
Recourse obligations on loans and financing sold to Cagamas - 10,661 10,661 321,207 901,218 - 1,243,747
Subordinated obligations 25,875 13,163 - 39,038 462,300 1,406,100 1,946,476
Other financial liabilities 449,648 656 17,534 26,255 645,717 142,202 1,282,012
25,535,501 4,183,770 4,511,092 9,034,390 4,131,621 1,971,386 49,367,760

Items not recognised in the statements of financial position

Financial guarantees 84,641 244,156 102,040 167,005 121,920 11,009 730,771
Credit related commitments and contingencies 9,366,683 51,452 77,569 350,202 1,442,650 24,775 11,313,331
9,451,324 295,608 179,609 517,207 1,564,570 35,784 12,044,102

Derivatives financial liabilities

Derivatives settled on a net basis
Interest rate derivatives and equity option (236) (2,610) (2,352) (2,942) (8,735) 232 (16,643)
Net outflow (236) (2,610) (2,352) (2,942) (8,735) 232 (16,643)

Derivatives settled on a gross basis

Outflow (2,056,306) (419,572) (461,162) (296,537) (97,443) (5,778) (3,336,798)
Inflow 2,028,453 406,649 428,965 276,566 86,689 4,972 3,232,294
(27,853) (12,923) (32,197) (19,971) (10,754) (806) (104,504)
2019 Annual Report
257
 258

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(ii) Contractual maturity of financial liabilities on an undiscounted basis (cont’d)

The table below presents the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities at the end of the reporting period. The amount
disclosed in the table are the contractual undiscounted cash flows of all financial liabilities. (cont’d)

Up to
Alliance Bank Malaysia Berhad (88103-W)

BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non derivative financial liabilities

Deposits from customers 20,208,190 4,208,228 3,527,523 7,156,724 175,420 - 35,276,085
Deposits and placements of banks and other financial institutions 3,223 18,146 8,151 48,045 275,962 - 353,527
Financial liabilities designated at fair value through profit or loss 9,604 18,154 34,495 30,568 722,841 183,570 999,232
Recourse obligations on loans and financing sold to Cagamas - 3,388 - 10,276 337,383 - 351,047
Subordinated obligations 25,875 12,938 3,125 41,938 1,785,500 461,313 2,330,689
Other financial liabilities 544,206 36,561 226 694 990,612 - 1,572,299
20,791,098 4,297,415 3,573,520 7,288,245 4,287,718 644,883 40,882,879

Items not recognised in the statements of financial position

Financial guarantees 108,481 96,364 78,426 160,654 74,141 - 518,066
Credit related commitments and contingencies 8,101,228 66,521 34,918 87,485 1,363,401 240,433 9,893,986
8,209,709 162,885 113,344 248,139 1,437,542 240,433 10,412,052

Derivatives financial liabilities

Derivatives settled on a net basis
Interest rate derivatives and equity option (461) (301) (777) (1,031) (1,431) 119 (3,882)
Net outflow (461) (301) (777) (1,031) (1,431) 119 (3,882)

Derivatives settled on a gross basis

Outflow (1,190,844) (730,886) (693,948) (72,416) (135,742) - (2,823,836)
Inflow 1,187,151 723,433 687,341 70,461 130,687 - 2,799,073
(3,693) (7,453) (6,607) (1,955) (5,055) - (24,763)
45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(c) Liquidity risk (cont’d)

(ii) Contractual maturity of financial liabilities on an undiscounted basis (cont’d)

The table below presents the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities at the end of the reporting period. The amount
disclosed in the table are the contractual undiscounted cash flows of all financial liabilities. (cont’d)

Up to
BANK 1 month >1-3 months >3-6 months >6-12 months >1-5 years Over 5 years Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Non derivative financial liabilities

Deposits from customers 20,194,470 3,388,950 3,437,874 5,865,455 916,250 - 33,802,999
Deposits and placements of banks and other financial institutions 59,544 4,376 12,774 21,241 343,095 - 441,030
Financial liabilities designated at fair value through profit or loss 6,351 14,222 15,935 2,567 284,895 423,084 747,054
Recourse obligations on loans and financing sold to Cagamas - 6,726 6,688 313,377 351,047 - 677,838
Subordinated obligations 25,875 13,163 - 39,038 462,300 1,406,100 1,946,476
Other financial liabilities 389,938 656 17,534 26,255 589,350 142,202 1,165,935
20,676,178 3,428,093 3,490,805 6,267,933 2,946,937 1,971,386 38,781,332

Items not recognised in the statements of financial position

Financial guarantees 76,226 220,820 90,046 137,873 31,736 - 556,701
Credit related commitments and contingencies 7,549,654 45,861 72,315 338,040 1,088,876 24,246 9,118,992
7,625,880 266,681 162,361 475,913 1,120,612 24,246 9,675,693

Derivatives financial liabilities

Derivatives settled on a net basis
Interest rate derivatives and equity option (236) (2,610) (2,352) (2,942) (8,735) 232 (16,643)
Net outflow (236) (2,610) (2,352) (2,942) (8,735) 232 (16,643)

Derivatives settled on a gross basis

Outflow (2,056,306) (419,572) (461,162) (296,537) (97,443) (5,778) (3,336,798)
Inflow 2,028,453 406,649 428,965 276,566 86,689 4,972 3,232,294
(27,853) (12,923) (32,197) (19,971) (10,754) (806) (104,504)
2019 Annual Report
259
260 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

45. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(d) Operational and Shariah Compliance Risk

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from
external events. The definition of Operational Risk includes legal risk, but excludes strategic and reputational risk. Operational risk includes
Shariah non-compliance risk which arises from the Group’s failure to comply with the Shariah rules and principles determined by the
relevant Shariah advisory councils.

Group Operational Risk of Group Risk Management formulates and implements operational risk framework within the Group while the line
of businesses in conjunction with the Risk Control Officers are responsible for the management of their day-to-day operational and Shariah
non-compliance risks.

Operational and Shariah non-compliance risk management is a continual cyclic process which includes risk identification, assessment,
control, mitigation and monitoring. This includes analysing the risk profile of the Group, determining control gaps, assessing potential loss
and enhancing controls to mitigate the risks.

The main activities undertaken by the Group and the Bank in managing operational and Shariah non-compliance risks include the
identification of risks and controls, monitoring of key risk indicators, reviews of policies and procedures, operational risk and Shariah non-
compliance risk awareness training, and business continuity management.

The Group and the Bank apply the Basic Indicator Approach for operational risk capital charge computation.

46. CAPITAL COMMITMENTS

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Capital expenditure:

Authorised and contracted for 46,839 56,026 45,925 55,198

Authorised but not contracted for 123,701 113,418 121,441 111,664
170,540 169,444 167,366 166,862

47. LEASE COMMITMENTS

The Group and the Bank have lease commitments in respect of equipment on hire and premises, all of which are classified as operating leases. A
summary of the non-cancellable lease commitments are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Within one year 35,708 29,719 33,765 27,933

Between one to five years 43,506 40,510 42,241 37,810
79,214 70,229 76,006 65,743

The operating leases of the Group’s and the Bank’s premises typically cover for an initial period of two to three years with options for renewal.
These leases are cancellable but are usually renewed upon expiry or replaced by leases on other properties.
 2019 Annual Report 261

48. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group and the Bank make various commitments and incur certain contingent liabilities with legal recourse
to their customers. No material losses are anticipated as a result of these transactions.

The off-balance sheet notional exposures of the Group and the Bank are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Credit-related exposures
Direct credit substitutes [Note a] 650,663 719,148 490,085 564,446
Transaction-related contingent items [Note a] 680,097 739,535 609,843 651,896
Short-term self-liquidating trade-related contingencies 179,994 235,056 133,405 215,445
Forward assets purchase 236,985 - 211,985 -
Obligations under an on-going underwriting agreement 46,154 - - -
Irrevocable commitments to extend credit:
- maturity exceeding one year 1,319,483 1,056,899 904,181 744,972
- maturity not exceeding one year 8,308,840 7,543,400 6,461,733 5,748,870
Unutilised credit card lines 1,600,820 1,750,064 1,600,820 1,750,064
13,023,036 12,044,102 10,412,052 9,675,693

Derivative financial instruments [Note b]

Foreign exchange related contracts:
- one year or less 4,561,102 5,057,347 4,561,102 5,057,347
- over one year to three years 159,580 73,015 159,580 73,015
- over three years 10,209 17,385 10,209 17,385
Interest rate related contracts:
- one year or less 2,034,786 1,206,130 2,034,786 1,206,130
- over one year to three years 1,779,255 1,990,360 1,779,255 1,990,360
- over three years 2,503,968 2,146,310 2,503,968 2,146,310
Equity related contracts:
- one year or less 78,958 38,825 78,958 38,825
- over one year to three years 30,810 67,660 30,810 67,660
11,158,668 10,597,032 11,158,668 10,597,032
24,181,704 22,641,134 21,570,720 20,272,725

Notes:

(a) Included in direct credit substitutes and transaction-related contingent item are financial guarantee contracts of RM721,500,000 and
RM518,066,000 (2018: RM730,771,000 and RM556,701,000) for the Group and the Bank respectively, of which the fair value at the time
of issuance is RM Nil.

(b) These derivatives are valued on gross position basis and the unrealised gains or losses have been reflected in the statements of income
and statements of financial position as derivatives financial assets and derivatives financial liabilities. The fair value of derivatives are
disclosed under Note 12.
262 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

49. CAPITAL ADEQUACY

The capital adequacy ratios of the Group and the Bank are computed in accordance with Bank Negara Malaysia’s Capital Adequacy Framework.
The Framework sets out the approach for computing regulatory capital adequacy ratios, as well as the levels of those ratios at which banking
institutions are required to operate. The framework is to strengthen capital adequacy standards, in line with the requirements set forth under Basel
III. The risk-weighted assets of the Group and the Bank are computed using the Standardised Approach for credit risk and market risk, and the
Basic Indicator Approach for operational risk.

The capital adequacy ratios of the Group and the Bank are as follows:

GROUP BANK
2019 2018 2019 2018

Before deducting proposed dividends

CET 1 capital ratio 13.736% 13.695% 12.061% 11.680%
Tier 1 capital ratio 14.423% 14.123% 12.940% 12.217%
Total capital ratio 18.856% 18.638% 17.841% 17.122%

After deducting proposed dividends

CET 1 capital ratio 13.388% 13.393% 11.614% 11.302%
Tier 1 capital ratio 14.074% 13.821% 12.493% 11.839%
Total capital ratio 18.508% 18.337% 17.394% 16.744%

(a) Components of Common Equity Tier I (“CET I”), Tier I and Tier II capital under the revised Capital Adequacy Framework are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CET I Capital
Paid-up share capital 1,548,106 1,548,106 1,548,106 1,548,106
Retained profits 3,827,676 3,510,283 3,128,589 2,866,142
Regulatory reserves 178,397 186,064 160,798 160,029
FVOCI reserve/revaluation reserves 68,540 114,987 36,449 74,907
Capital reserves 100,150 100,150 95,515 95,515
5,722,869 5,459,590 4,969,457 4,744,699
Less: Regulatory adjustment
- Goodwill and other intangibles (432,961) (409,402) (323,804) (292,981)
- Deferred tax assets (72,972) (22,664) (50,116) (9,223)
- 55% of revaluation reserves (37,697) (63,243) (20,047) (41,199)
- Regulatory reserves (178,397) (186,064) (160,798) (160,029)
- Investment in subsidiaries, associate and joint venture (802) (693) (989,102) (989,102)
Total CET I Capital 5,000,040 4,777,524 3,425,590 3,252,165

Additional Tier 1 Capital Securities 249,792 149,293 249,445 149,316

Total Additional Tier 1 Capital 249,792 149,293 249,445 149,316

Total Tier I Capital 5,249,832 4,926,817 3,675,035 3,401,481

Tier II Capital
Subordinated obligations 1,199,676 1,199,675 1,199,381 1,199,062
Expected credit losses/collective assessment allowance and
regulatory reserves 414,258 375,710 322,740 296,765
Less: Regulatory adjustment
- Investment in Tier 2 capital instruments - - (130,000) (130,000)
Total Tier II Capital 1,613,934 1,575,385 1,392,121 1,365,827

Total Capital 6,863,766 6,502,202 5,067,156 4,767,308

 2019 Annual Report 263

49. CAPITAL ADEQUACY (CONT’D)

(b) The breakdown of risk-weighted assets (“RWA”) by exposures in each major risk category are as follows:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Credit risk 33,140,642 31,973,585 25,819,184 25,299,261

Market risk 274,942 110,857 274,942 110,389
Operational risk 2,984,529 2,801,473 2,307,070 2,433,159
Total RWA and capital requirements 36,400,113 34,885,915 28,401,196 27,842,809

Detailed information on the risk exposures above is presented in the Bank’s Pillar 3 Report.

(c) The capital adequacy ratios of the banking subsidiaries are as follows:

Alliance Alliance
Islamic Investment
Bank Bank
Berhad Berhad

2019
Before deducting proposed dividends
CET I capital ratio 11.690% 78.200%
Tier I capital ratio 12.950% 78.200%
Total capital ratio 15.762% 79.196%

After deducting proposed dividends

CET I capital ratio 11.339% 78.200%
Tier I capital ratio 12.599% 78.200%
Total capital ratio 15.411% 79.196%

2018
Before deducting proposed dividends
CET I capital ratio 12.569% 86.830%
Tier I capital ratio 12.569% 86.830%
Total capital ratio 15.421% 87.642%

After deducting proposed dividends

CET I capital ratio 12.198% 85.079%
Tier I capital ratio 12.198% 85.079%
Total capital ratio 15.050% 85.892%
264 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

50. CAPITAL

In managing its capital, the Group’s objectives are:

- to maintain sufficient capital resources to meet the regulatory capital requirements as set forth by Bank Negara Malaysia;

- to maintain sufficient capital resources to support the Group’s risk appetite and to enable future business growth; and

- to meet the expectations of key stakeholders, including shareholders, investors, regulators and rating agencies.

In line with this, the Group aims to maintain capital adequacy ratios that are comfortably above the regulatory requirement, while balancing
shareholders’ desire for sustainable returns and high standards of prudence.

The Group carries out stress testing to estimate the potential impact of extreme, but plausible, events on the Group’s earnings, balance sheet and
capital. The results of the stress test are to facilitate the formation of action plan(s) in advance if the stress test reveals that the Group’s capital
will be adversely affected. The results of the stress test are tabled to the Group Risk Management Committee for approval.

The Group’s and the Bank’s regulatory capital are determined under Bank Negara Malaysia’s Capital Adequacy Framework and their capital ratios
complied with the prescribed capital adequacy ratios.

51. FAIR VALUE MEASUREMENTS

(a) Determination of fair value and the fair value hierarchy

MFRS 13 Fair Value Measurement requires disclosure of financial instruments measured at fair value to be categorised according to a
hierarchy of valuation techniques, whether the inputs used are observable or unobservable. The following level of hierarchy are used for
determining and disclosing the fair value of the financial instruments:

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); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Group and the Bank recognise transfers between levels of the fair value hierarchy at the end of the reporting period during which the
transfer has occurred. The fair value of an asset to be transferred between levels is determined as of the date of the event or change in
circumstances that caused the transfer.

(i) Financial instruments in Level 1

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market
is regarded as active if quoted prices are readily and regularly available from an exchange and those prices represent actual and
regularly occurring market transactions on an arm’s length basis. This includes listed equities and corporate debt securities which
are actively traded.
 2019 Annual Report 265

51. FAIR VALUE MEASUREMENTS (CONT’D)

(a) Determination of fair value and the fair value hierarchy (cont’d)

(ii) Financial instruments in Level 2

Where fair value is determined using quoted prices in less active markets or quoted prices for similar assets and liabilities, such
instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Group and the Bank
then determine fair value based upon valuation techniques that use as inputs, market parameters including but not limited to yield
curves, volatilities and foreign exchange rates. The majority of valuation techniques employ only observable market data and so
reliability of the fair value measurement is high. These would include government securities, corporate private debt securities,
corporate notes and most of the Group’s and the Bank’s derivatives.

(iii) Financial instruments in Level 3

The Group and the Bank classify financial instruments as Level 3 when there is reliance on unobservable inputs to the valuation
model attributing to a significant contribution to the instrument value. Valuation reserves or pricing adjustments where applicable
will be used to converge to fair value.

The valuation techniques and inputs used generally depend on the contractual terms and the risks inherent in the instrument as
well as the availability of pricing information in the market. Principal techniques used include net tangible assets, net asset value,
discounted cash flows, and other appropriate valuation models. These includes private equity investments.
266 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

51. FAIR VALUE MEASUREMENTS (CONT’D)

(b) Financial instruments measured at fair value and the fair value hierarchy

The following tables show the Group’s and the Bank’s financial instruments which are measured at fair value at the reporting date analysed
by the various levels within the fair value hierarchy:

GROUP Level 1 Level 2 Level 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Assets
Financial assets at FVTPL
- Money market instruments - 41,002 - 41,002
- Unquoted securities - 1,921 187,517 189,438

Financial investments at FVOCI

- Money market instruments - 5,289,295 - 5,289,295
- Quoted securities in Malaysia 8 - - 8
- Unquoted securities - 4,189,159 - 4,189,159
Derivative financial assets - 55,442 - 55,442

Liabilities
Financial liabilities designated at fair value through
profit or loss - 778,423 - 778,423
Derivative financial liabilities - 57,545 - 57,545

GROUP Level 1 Level 2 Level 3 Total

2018 RM’000 RM’000 RM’000 RM’000

Assets
Financial assets held-for-trading
- Money market instruments - 40,905 - 40,905
- Unquoted securities - 22,845 - 22,845

Financial investments available-for-sale

- Money market instruments - 4,289,730 - 4,289,730
- Quoted securities in Malaysia 10 - - 10
- Unquoted securities - 4,036,603 178,846 4,215,449
Derivative financial assets - 84,455 - 84,455

Liabilities
Financial liabilities designated at fair value through
profit or loss - 682,238 - 682,238
Derivative financial liabilities - 154,686 - 154,686
 2019 Annual Report 267

51. FAIR VALUE MEASUREMENTS (CONT’D)

(b) Financial instruments measured at fair value and the fair value hierarchy (cont’d)

The following tables show the Group’s and the Bank’s financial instruments which are measured at fair value at the reporting date analysed
by the various levels within the fair value hierarchy: (cont’d)

BANK Level 1 Level 2 Level 3 Total

2019 RM’000 RM’000 RM’000 RM’000

Assets
Financial assets at FVTPL
- Money market instruments - 41,002 - 41,002
- Unquoted securities - 1,921 126,733 128,654

Financial investments at FVOCI

- Money market instruments - 4,405,360 - 4,405,360
- Quoted securities in Malaysia 8 - - 8
- Unquoted securities - 2,447,498 - 2,447,498
Derivative financial assets - 55,442 - 55,442

Liabilities
Financial liabilities designated at fair value through
profit or loss - 778,423 - 778,423
Derivative financial liabilities - 57,545 - 57,545

BANK
2018

Assets
Financial assets held-for-trading
- Money market instruments - 25,926 - 25,926
- Unquoted securities - 22,845 - 22,845

Financial investments available-for-sale

- Money market instruments - 3,970,261 - 3,970,261
- Quoted securities in Malaysia 10 - - 10
- Unquoted securities - 2,314,543 121,634 2,436,177
Derivative financial assets - 84,455 - 84,455

Liabilities
Financial liabilities designated at fair value through
profit or loss - 682,238 - 682,238
Derivative financial liabilities - 154,686 - 154,686

There were no transfers between levels of the fair value hierarchy for the Group and the Bank during the financial year ended 31 March
2019 and 31 March 2018.
268 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

51. FAIR VALUE MEASUREMENTS (CONT’D)

(b) Financial instruments measured at fair value and the fair value hierarchy (cont’d)

Reconciliation of movements in Level 3 financial instruments:

GROUP BANK
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

At beginning of financial year 178,846 170,239 121,634 111,377

Disposal - (4,970) - -
Partial distribution on liquidity shares (195) - (195) -
Total gains/(losses) recognised in:
- Other comprehensive income
(i) Revaluation reserves - 13,607 - 10,257
- Statement of income
(i) Loss arising from sales of financial investments
available-for-sale - (30) - -
(ii) Revaluation gain from financial assets at FVTPL 8,866 - 5,294
At end of financial year 187,517 178,846 126,733 121,634

The Group’s and the Bank’s exposure to financial instruments measured using unobservable inputs (Level 3) constitutes a small component
of the Group’s and the Bank’s portfolio of financial instruments. Changing one or more of the inputs to reasonable alternative assumptions
would not change the value significantly for the Level 3 financial instruments.

(c) Fair values of financial instruments not carried at fair value

The following table summarises the carrying amounts and the fair values of financial instruments of the Group and the Bank which are not
carried at fair value in the statement of financial position. It does not include those short term/on demand financial assets and liabilities
where the carrying amounts are reasonable approximate to their fair values.

Fair value Carrying

GROUP Level 1 Level 2 Level 3 Total amount
2019 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
Deposits and placements with banks and
other financial institutions - 485 - 485 500
Financial investments at amortised cost - 200,268 - 200,268 235,720
Loans, advances and financing - - 42,861,780 42,861,780 42,320,301

Financial liabilities
Deposits from customers - 45,021,243 - 45,021,243 45,017,632
Deposits and placements of banks and
other financial institutions - 833,871 - 833,871 858,708
Recourse obligations on loans and
financing sold to Cagamas - 886,480 - 886,480 800,669
Subordinated obligations - 1,449,360 - 1,449,360 1,480,222
 2019 Annual Report 269

51. FAIR VALUE MEASUREMENTS (CONT’D)

(c) Fair values of financial instruments not carried at fair value (cont’d)

Fair value Carrying

GROUP Level 1 Level 2 Level 3 Total amount
2018 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
Financial investments held-to-maturity - 306,490 - 306,490 293,612
Loans, advances and financing - - 40,423,458 40,423,458 39,989,515

Financial liabilities
Deposits from customers - 42,742,783 - 42,742,783 42,740,460
Deposits and placements of banks and
other financial institutions - 855,375 - 855,375 873,871
Recourse obligations on loans
and financing sold to Cagamas - 1,219,264 - 1,219,264 1,102,363
Subordinated obligations - 1,184,048 - 1,184,048 1,379,614

Fair value Carrying

BANK Level 1 Level 2 Level 3 Total amount
2019 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
Financial investments at amortised cost - 276,582 - 276,582 311,930
Loans, advances and financing - - 32,965,110 32,965,110 32,622,976

Financial liabilities
Deposits from customers - 34,983,732 - 34,983,732 34,982,862
Deposits and placements of banks and
other financial institutions - 342,774 - 342,774 344,835
Recourse obligations on loans
and financing sold to Cagamas - 323,433 - 323,433 300,076
Subordinated obligations - 1,448,826 - 1,448,826 1,479,580

Fair value Carrying

BANK Level 1 Level 2 Level 3 Total amount
2018 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets
Financial investments held-to-maturity - 357,020 - 357,020 344,703
Loans, advances and financing - - 31,802,940 31,802,940 31,546,564

Financial liabilities
Deposits from customers - 33,508,377 - 33,508,377 33,508,370
Deposits and placements of banks and
other financial institutions - 433,145 - 433,145 439,238
Recourse obligations on loans and
financing sold to Cagamas - 642,664 - 642,664 601,696
Subordinated obligations - 1,172,415 - 1,172,415 1,379,024
270 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

51. FAIR VALUE MEASUREMENTS (CONT’D)

(c) Fair values of financial instruments not carried at fair value (cont’d)

The methods and assumptions used in estimating the fair values of financial instruments are as follows:

(i) Financial investments at amortised cost

The fair values are estimated based on quoted or observable market prices at the end of the reporting period. 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 a
similar instrument at the end of the reporting period.

(ii) 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 financing with remaining maturity of more than one year, the fair values are
estimated based on expected future cash flows of contractual instalment payments and discounted at applicable prevailing rates
at end of the reporting period offered to new borrowers with similar credit profiles. In respect of impaired loans, the fair values
represented by their carrying values, net of impairment allowances, being the expected recoverable amount.

(iii) Deposits from customers, deposits and placements of banks and other financial institutions

The fair values of deposit liabilities payable on demand (demand and savings deposits), or deposits with maturity of less than one
year are estimated to approximate their carrying amounts. The fair values of fixed deposits with remaining maturities of more than
one year are estimated based on expected future cash flows discounted at applicable prevailing rates offered for deposits of similar
remaining maturities. For negotiable instruments of deposits, the fair values are estimated based on quoted or observable market
prices as at the end of the reporting period. Where such quoted or observable market prices are not available, the fair values of
negotiable instruments of deposits are estimated using the discounted cash flow technique.

(iv) Recourse obligations on loans and financing sold to Cagamas

The fair values of recourse obligations on loans and financing sold to Cagamas are determined based on the discounted cash flows
of future instalment payments at applicable prevailing Cagamas rates as at the end of the reporting period.

(v) Other borrowings and subordinated obligations

The fair value of the other borrowings and subordinated bonds/notes is estimated based on the discounted cash flows techniques
using the current yield curve appropriate for the remaining term to maturity.
 2019 Annual Report 271

52. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

In accordance with MFRS 132 Financial Instruments: Presentation, the Group and the Bank report financial assets and financial liabilities on a net
basis on the statement of financial position, only if there is a legally enforceable right to set off the recognised amounts and there is intention to
settle on a net basis, or to realise the asset and settle the liability simultaneously. The following table shows the impact of netting arrangements
on:

(i) all financial assets and liabilities that are reported net on the statement of financial position; and

(ii) all financial assets and liabilities that are subject to enforceable master netting arrangements or similar agreements, but do not qualify for
statement of financial position netting.

(a) Financial assets

Gross amounts of Net amounts of Related amounts not set off

recognised financial in the statement of financial
Gross amounts financial liabilities assets position
of recognised set off in the presented in the
financial statement of statement of Financial Cash collateral
assets financial position financial position instruments received Net amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GROUP
2019
Derivative financial
assets 55,442 - 55,442 (14,492) (8,105) 32,845
Amount due from clients
and brokers 144,882 (67,874) 77,008 - - 77,008
Total 200,324 (67,874) 132,450 (14,492) (8,105) 109,853

GROUP
2018
Derivative financial
assets 84,455 - 84,455 (6,271) (32,751) 45,433
Amount due from clients
and brokers 188,129 (86,824) 101,305 - - 101,305
Total 272,584 (86,824) 185,760 (6,271) (32,751) 146,738

BANK
2019
Derivative financial
assets 55,442 - 55,442 (14,492) (8,105) 32,845

BANK
2018
Derivative financial
assets 84,455 - 84,455 (6,271) (32,751) 45,433
272 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

52. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONT’D)

(b) Financial liabilities

Gross amounts of Net amounts of Related amounts not set off

recognised financial in the statement of financial
Gross amounts financial assets liabilities position
of recognised set off in the presented in the
financial statement of statement of Financial Cash collateral
liabilities financial position financial position instruments pledged Net amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

GROUP
2019
Derivative financial
liabilities 57,545 - 57,545 (14,492) (22,541) 20,512
Amount due to clients
and brokers 119,038 (67,874) 51,164 - - 51,164
Total 176,583 (67,874) 108,709 (14,492) (22,541) 71,676

GROUP
2018
Derivative financial
liabilities 154,686 - 154,686 (6,271) (36,901) 111,514
Amount due to clients
and brokers 161,927 (86,824) 75,103 - - 75,103
Total 316,613 (86,824) 229,789 (6,271) (36,901) 186,617

BANK
2019
Derivative financial
liabilities 57,545 - 57,545 (14,492) (22,541) 20,512

BANK
2018
Derivative financial
liabilities 154,686 - 154,686 (6,271) (36,901) 111,514

For the financial assets and liabilities subject to enforceable master netting arrangements or similar arrangements, each agreement
between the Group and the Bank and the counterparty allows for net settlement of the relevant financial assets and liabilities when both
elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis, however,
each party to the master netting agreement or similar agreement will have the option to settle all such amounts on a net basis in the event
of default of the other party.
 2019 Annual Report 273

53. SEGMENT INFORMATION

The following segment information has been prepared in accordance with MFRS 8 Operating Segments, which defines the requirements for the
disclosure of financial information of an entity’s operating segments. The operating segments results are prepared based on the Group’s internal
management reporting reflective of the organisation’s management reporting structure.

Funds are allocated between segments and inter-segment funding cost transfers are reflected in net interest income. In addition to the operating
segments, the segment information disclosed also includes inter-segment eliminations. Transactions between reportable segments are eliminated
based on principles of consolidation as described in accounting policy. Intercompany transactions, balances and unrealised gains and losses on
transactions between Group’s companies are eliminated in inter-segment eliminations.

The Group is organised into the following key operating segments:

(i) Consumer Banking

Consumer Banking provides a wide range of personal banking solutions covering mortgages, term loans, personal loans, hire purchase
facilities, credit cards and wealth management (cash management, investment services, share trading, bancassurance and will writing).
Consumer Banking customers are serviced via branch network, call centre, electronic/internet banking channels, and direct sales channels.

(ii) Business Banking

Business Banking segment covers Small and Medium Enterprise (“SME”), Corporate and Commercial Banking. SME Banking customers
comprise self-employed, small and medium scale enterprises. Corporate and Commercial Banking serves public-listed and large corporate
business customers including family-owned businesses. Business Banking provides a wide range of products and services including loans,
trade finance, cash management, treasury and structured solutions.

(iii) Financial Markets

Financial Markets provide foreign exchange, money market, hedging and investment (capital market instruments) solutions for banking
customers. It also manages the assets and liabilities, liquidity and statutory reserve requirements of the banking entities in the Group.

(iv) Stockbroking and Corporate Advisory

Stockbroking and Corporate Advisory covers stockbroking activities and corporate advisory which includes initial public offering, equity
fund raising, debt fund raising, mergers and acquisitions and corporate restructuring.

(v) Others

Others refer to mainly other business operations such as unit trust, asset management, alternative distribution channels, trustee services
and head office.
 274

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

53. SEGMENT INFORMATION (CONT’D)

Stockbroking
Consumer Business Financial and Corporate Total Inter-segment
Group Banking Banking Markets Advisory Others Operations Elimination Total
As at 31 March 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net interest income

- External income 465,822 335,707 215,349 14,490 399 1,031,767 (33,684) 998,083
- Inter-segment (127,640) 104,394 33,032 (9,786) - - - -
Alliance Bank Malaysia Berhad (88103-W)

338,182 440,101 248,381 4,704 399 1,031,767 (33,684) 998,083

Net income from Islamic banking business 139,378 112,055 59,636 - 1,087 312,156 46,901 359,057
Other operating income 85,400 165,526 (19,017) 28,727 23,525 284,161 (19,200) 264,961
Net income 562,960 717,682 289,000 33,431 25,011 1,628,084 (5,983) 1,622,101
Other operating expenses (361,087) (259,262) (44,116) (38,060) (19,374) (721,899) 491 (721,408)
Depreciation and amortisation (6,312) (32,625) (13,150) (1,286) (166) (53,539) - (53,539)
Operating profit 195,561 425,795 231,734 (5,915) 5,471 852,646 (5,492) 847,154
(Allowance for)/write-back of expected credit losses on loans,
advances and financing and other financial assets (115,018) (16,578) 871 (125) - (130,850) 1 (130,849)
Write-back of expected credit losses on financial assets - - 115 - - 115 86 201
Write-back of/(allowance for) impairment losses on non-
financial assets - 148 - (27,337) - (27,189) 18,597 (8,592)
Segment results 80,543 409,365 232,720 (33,377) 5,471 694,722 13,192 707,914
Share of results of joint venture 109
Taxation (170,426)
Net profit for the financial year 537,597

Segment assets 22,149,320 20,476,010 15,345,234 349,018 38,299 58,357,881 (2,434,544) 55,923,337
Reconciliation of segment assets to consolidated assets:
Investment in joint venture 802
Property, plant and equipment 70,497
Tax recoverable and deferred tax assets 93,254
Intangible assets 432,961
Total assets 56,520,851
53. SEGMENT INFORMATION (CONT’D)

Stockbroking
Consumer Business Financial and Corporate Total Inter-segment
Group Banking Banking Markets Advisory Others Operations Elimination Total
As at 31 March 2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Net interest income

- External income 416,778 329,102 190,748 13,005 2,582 952,215 (27,064) 925,151
- Inter-segment (88,599) 80,102 16,222 (7,725) - - - -
328,179 409,204 206,970 5,280 2,582 952,215 (27,064) 925,151
Net income from Islamic banking business 113,858 99,461 56,929 - - 270,248 47,997 318,245
Other operating income 112,495 166,369 18,602 32,423 22,553 352,442 (23,815) 328,627
Net income 554,532 675,034 282,501 37,703 25,135 1,574,905 (2,882) 1,572,023
Other operating expenses (305,031) (290,864) (51,790) (37,404) (68,500) (753,589) 4,460 (749,129)
Depreciation and amortisation (25,830) (15,205) (2,657) (1,194) (6) (44,892) - (44,892)
Operating profit/(loss) before allowance 223,671 368,965 228,054 (895) (43,371) 776,424 1,578 778,002
(Allowance for)/write-back of impairment losses on loans,
advances and financing and other financial assets (81,284) (11,855) 36 58 (341) (93,386) - (93,386)
Allowance for impairment losses on non-financial assets - - (62) - - (62) - (62)
Segment result 142,387 357,110 228,028 (837) (43,712) 682,976 1,578 684,554
Share of results of joint venture 43
Taxation (191,369)
Net profit for the financial year 493,228

Segment assets 21,439,733 18,433,988 15,724,317 51,675 126,171 55,775,884 (2,341,752) 53,434,132
Reconciliation of segment assets to consolidated assets:
Investment in joint venture 693
Property, plant and equipment 69,373
Tax recoverable and deferred tax assets 24,668
Intangible assets 409,402
Total assets 53,938,268

2019 Annual Report
275
276 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

54. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

On 8 March 2019, the Bank issued RM100 million Additional Tier 1 Capital Securities under the RM1.0 billion Additional Tier 1 Capital Securities
Programme.

The details of issuance of new debts are disclosed in Note 27.

55. SUBSEQUENT EVENTS

There were no material event subsequent to the end of the financial year that require disclosure or adjustment.

56. CHANGES IN ACCOUNTING POLICIES

(a) Adoption of MFRS 9 “Financial Instruments”

The Group and the Bank have adopted MFRS 9 retrospectively with the date of initial application of 1 April 2018.

In accordance with the transition provision provided in MFRS 9, comparative for 2018 was not restated and continue to be reported under
the previous accounting policies governed under MFRS 139. The cumulative effect of initially applying MFRS 9 were recorded as an
adjustment to the opening balances of the retained profits as at 1 April 2018.

(i) Classification 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 (“FVTPL”) 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.

The combined application of the entity’s business model and cash flow characteristics of the financial assets do not result in
the significant change in the classification of financial asset other than the unquoted equity instruments which was previously
classified as available-for-sale, is now reclassified to financial assets at FVTPL. The reclassification has resulted in an increase of
RM143,184,000 and RM86,972,000 in the Group’s and the Bank’s opening retained profits respectively due to the transfer of related
fair value gains from financial instruments available-for-sale revaluation reserves to retained profits.

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 changes are:

(i) For financial liabilities classified as FVTPL, the fair value changes due to own credit risk should be recognised directly to OCI.
There is no subsequent recycling to profit or loss.

(ii) When a financial liability measured at amortised cost is modified without this resulting in derecognition, a gain or loss, being
the difference between the original contractual cash flows and the modified cash flows discounted at the original effective
interest rate, should be recognised immediately in profit or loss.

There will be no changes to the Group’s and the Bank’s accounting for financial liabilities. All the financial liabilities, except for
financial liabilities designated at fair value and derivatives financial liabilities which are at FVTPL, will remain as amortised cost as
there has not been significant change in the requirements for financial liabilities under MFRS 9.
 2019 Annual Report 277

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(a) Adoption of MFRS 9 “Financial Instruments” (cont’d)

(ii) Impairment of Financial Assets

MFRS 9 introduces an ECL model on impairment that replaces the incurred loss impairment model used in MFRS 139. The ECL
model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The level
of allowances for expected credit losses is explained under the significant accounting policies.

As a result of the adoption of the MFRS 9 ECL model in determining the allowances for ECL, the total ECL allowances computed
under MFRS 9 is higher by RM86,475,000 and RM62,658,000 for the Group and the Bank respectively, than the total allowances of
impairment losses on financial assets under MFRS 139.

(b) Adoption of MFRS 15 “Revenue from Contracts with Customers”

Effective from the financial year beginning on 1 April 2018, the Group and the Bank adopt MFRS 15 “Revenue from Contracts with
Customers” which 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.

The Group and the Bank have applied MFRS 15 with the date of initial application of 1 April 2018 by using the modified retrospective
transition method. Under this method, the Group and the Bank apply the new policy retrospectively only to contracts that are not completed
contracts at the date of initial application. Accordingly the comparative information was not restated and the cumulative effects of initial
application of MFRS 15 were recognised as an adjustment to the opening retained profits as at 1 April 2018. The comparative information
continued to be reported under the previous accounting policies governed under MFRS 118 and MFRS 111.

The adoption of the MFRS 15 has resulted in a decrease of RM15,500,000 in the Group’s and the Bank’s retained profits as at 1 April 2018. 
 278

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect

A reconciliation of the statement of financial position of the Group and the Bank upon adoption of MFRS 9 and MFRS 15 as at 1 April 2018 are as follow:

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

MFRS 139 MFRS 9

carrying Expected carrying
Alliance Bank Malaysia Berhad (88103-W)

MFRS 139 MFRS 9 amount credit amount MFRS 15 Restated

measurement measurement 31 March 2018 Reclassification Remeasurement losses 1 April 2018 adjustments 1 April 2018
GROUP category category RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds Loans and receivables Amortised Cost 2,768,758 - - (501) 2,768,257 - 2,768,257
Deposits and placements with banks and other
financial institutions Loans and receivables Amortised Cost 77,283 - - - 77,283 - 77,283
Amounts due from clients and brokers Loans and receivables Amortised Cost 101,305 - - - 101,305 - 101,305
Financial investments at FVTPL NA FVTPL - 242,596 - - 242,596 - 242,596
Financial investments at FVOCI NA FVOCI - 8,335,752 - - 8,335,752 - 8,335,752
Financial investments at amortised cost NA Amortised Cost - 514,106 - - 514,106 - 514,106
Financial assets held-for-trading (“HFT”) HFT NA 63,750 (63,750) - - - - -
Financial investments available-for-sale (“AFS”) AFS NA 8,505,189 (8,505,189) - - - - -
- Debt instrument AFS NA 8,326,333 (8,326,333) - - - - -
- Quoted equity instrument AFS NA 10 (10) - - - - -
- Unquoted equity instrument AFS NA 178,846 (178,846) - - - - -
Financial investments held-to-maturity (“HTM”) HTM NA 293,612 (293,612) - - - - -
Derivative financial assets FVTPL FVTPL 84,455 - - - 84,455 - 84,455
Loans, advances and financing Loans and receivables Amortised Cost 39,989,515 (220,494) (19,592) (90,879) 39,658,550 - 39,658,550
Other assets Loans and receivables Amortised Cost 141,949 - - - 141,949 - 141,949
Tax recoverable 2,004 - - 14,963 16,967 - 16,967
Statutory deposits Loans and receivables Amortised Cost 1,408,316 - - - 1,408,316 - 1,408,316
Investment in joint venture 693 - - - 693 - 693
Property, plant and equipment 69,373 - - - 69,373 - 69,373
Deferred tax assets 22,664 22,457 - - 45,121 - 45,121
Intangible assets 409,402 - - - 409,402 - 409,402
TOTAL ASSETS 53,938,268 31,866 (19,592) (76,417) 53,874,125 - 53,874,125

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect (cont’d)

A reconciliation of the statement of financial position of the Group and the Bank upon adoption of MFRS 9 and MFRS 15 as at 1 April 2018 are as follow: (cont’d)

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

MFRS 139 MFRS 9

carrying Expected carrying
MFRS 139 MFRS 9 amount credit amount MFRS 15 Restated
measurement measurement 31 March 2018 Reclassification Remeasurement losses 1 April 2018 adjustments 1 April 2018
GROUP category category RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LIABILITIES AND EQUITY

Deposits from customers Amortised Cost Amortised Cost 42,740,460 - - - 42,740,460 - 42,740,460
Deposits and placements of banks and other financial
institutions Amortised Cost Amortised Cost 873,871 - - - 873,871 - 873,871
Financial liabilities designated at fair value through
profit or loss FVTPL FVTPL 682,238 - - - 682,238 - 682,238
Amounts due to clients and brokers Amortised Cost Amortised Cost 75,103 - - - 75,103 - 75,103
Derivative financial liabilities FVTPL FVTPL 154,686 - - - 154,686 - 154,686
Recourse obligations on loans and financing sold to
Cagamas Amortised Cost Amortised Cost 1,102,363 - - - 1,102,363 - 1,102,363
Other liabilities Amortised Cost Amortised Cost 1,435,523 - - 44,000 1,479,523 15,500 1,495,023
Provision for taxation 22,661 - (4,702) (17,959) - - -
Provision for zakat 252 - - - 252 - 252
Deferred tax liabilities 11,907 (11,907) - - - - -
Subordinated obligations Amortised Cost Amortised Cost 1,379,614 - - - 1,379,614 - 1,379,614
TOTAL LIABILITIES 48,478,678 (11,907) (4,702) 26,041 48,488,110 15,500 48,503,610

Share capital 1,548,106 - - - 1,548,106 - 1,548,106

Reserves 3,911,484 43,773 (14,890) (102,458) 3,837,909 (15,500) 3,822,409
- Regulatory reserve 186,064 - - (17,330) 168,734 - 168,734
- FVOCI reserve - 15,576 - 1,347 16,923 - 16,923
- Revaluation reserve 114,987 (114,987) - - - - -
- Retained profits 3,510,283 143,184 (14,890) (86,475) 3,552,102 (15,500) 3,536,602
- Capital reserve 100,150 - - - 100,150 - 100,150
TOTAL EQUITY 5,459,590 43,773 (14,890) (102,458) 5,386,015 (15,500) 5,370,515

TOTAL LIABILITIES AND EQUITY 53,938,268 31,866 (19,592) (76,417) 53,874,125 - 53,874,125
2019 Annual Report

279
 280

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect (cont’d)

A reconciliation of the statement of financial position of the Group and the Bank upon adoption of MFRS 9 and MFRS 15 as at 1 April 2018 are as follow: (cont’d)

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

MFRS 139 MFRS 9

carrying Expected carrying
Alliance Bank Malaysia Berhad (88103-W)

MFRS 139 MFRS 9 amount credit amount MFRS 15 Restated

measurement measurement 31 March 2018 Reclassification Remeasurement losses 1 April 2018 adjustments 1 April 2018
BANK category category RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds Loans and receivables Amortised Cost 1,715,961 - - (501) 1,715,460 - 1,715,460
Deposits and placements with banks and other
financial institutions Loans and receivables Amortised Cost 77,283 - - - 77,283 - 77,283
Financial investments at FVTPL NA FVTPL - 170,405 - - 170,405 - 170,405
Financial investments at FVOCI NA FVOCI - 6,284,814 - - 6,284,814 - 6,284,814
Financial investments at amortised cost NA Amortised Cost - 525,035 - (425) 524,610 - 524,610
Financial assets held-for-trading HFT NA 48,771 (48,771) - - - - -
Financial investments available-for-sale AFS NA 6,406,448 (6,406,448) - - - - -
- Debt instrument AFS NA 6,284,804 (6,284,804) - - - - -
- Quoted equity instrument AFS NA 10 (10) - - - - -
- Unquoted equity instrument AFS NA 121,634 (121,634) - - - - -
Financial investments held-to-maturity HTM NA 344,703 (344,703) - - - - -
Derivative financial assets FVTPL FVTPL 84,455 - - - 84,455 - 84,455
Loans, advances and financing Loans and receivables Amortised Cost 31,546,564 (180,332) 6,557 (52,797) 31,319,992 - 31,319,992
Other assets Loans and receivables Amortised Cost 176,948 - - - 176,948 - 176,948
Statutory deposits Loans and receivables Amortised Cost 1,092,566 - - - 1,092,566 - 1,092,566
Investment in joint venture 989,102 - - - 989,102 - 989,102
Property, plant and equipment 67,834 - - - 67,834 - 67,834
Deferred tax assets 9,223 20,873 - - 30,096 - 30,096
Intangible assets 292,981 - - - 292,981 - 292,981
TOTAL ASSETS 42,852,839 20,873 6,557 (53,723) 42,826,546 - 42,826,546

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect (cont’d)

A reconciliation of the statement of financial position of the Group and the Bank upon adoption of MFRS 9 and MFRS 15 as at 1 April 2018 are as follow: (cont’d)

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2018

MFRS 139 MFRS 9

carrying Expected carrying
MFRS 139 MFRS 9 amount credit amount MFRS 15 Restated
measurement measurement 31 March 2018 Reclassification Remeasurement losses 1 April 2018 adjustments 1 April 2018
BANK category category RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

LIABILITIES AND EQUITY

Deposits from customers Amortised Cost Amortised Cost 33,508,370 - - - 33,508,370 - 33,508,370
Deposits and placements of banks and other financial
institutions Amortised Cost Amortised Cost 439,238 - - - 439,238 - 439,238
Financial liabilities designated at fair value through
profit or loss FVTPL FVTPL 682,238 - - - 682,238 - 682,238
Derivative financial liabilities FVTPL FVTPL 154,686 - - - 154,686 - 154,686
Recourse obligations on loans and financing sold to
Cagamas Amortised Cost Amortised Cost 601,696 - - - 601,696 - 601,696
Other liabilities Amortised Cost Amortised Cost 1,319,698 - - 27,290 1,346,988 15,500 1,362,488
Provision for taxation 23,190 - 1,574 (19,688) 5,076 - 5,076
Subordinated obligations Amortised Cost Amortised Cost 1,379,024 - - - 1,379,024 - 1,379,024
TOTAL LIABILITIES 38,108,140 - 1,574 7,602 38,117,316 15,500 38,132,816

Share capital 1,548,106 - - - 1,548,106 - 1,548,106

Reserves 3,196,593 20,873 4,983 (61,325) 3,161,124 (15,500) 3,145,624
- Regulatory reserve 160,029 - - 327 160,356 - 160,356
- FVOCI reserve - 8,808 - 1,006 9,814 - 9,814
- Revaluation reserve 74,907 (74,907) - - - - -
- Retained profits 2,866,142 86,972 4,983 (62,658) 2,895,439 (15,500) 2,879,939
- Capital reserve 95,515 - - - 95,515 - 95,515
TOTAL EQUITY 4,744,699 20,873 4,983 (61,325) 4,709,230 (15,500) 4,693,730

TOTAL LIABILITIES AND EQUITY 42,852,839 20,873 6,557 (53,723) 42,826,546 - 42,826,546

2019 Annual Report
281
282 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect (cont’d)

The following table reconciles the prior year’s allowance for impairment losses measured in accordance with MFRS 139 incurred loss
model to the new expected credit losses measured in accordance with MFRS 9 as at 1 April 2018:

MFRS 139 MFRS 9

carrying amount carrying amount
31 March 2018 Reclassification Remeasurement 1 April 2018
GROUP RM’000 RM’000 RM’000 RM’000

Cash and short-term funds - - 501 501

Amounts due from clients and brokers 840 - - 840
Financial investments at amortised cost - 14,193 - 14,193
Financial investments available-for-sale 9,409 (9,409) - -
Financial investments held-to-maturity 14,193 (14,193) - -
Loans, advances and financing 372,449 - 90,879 463,328
Other assets 32,017 - - 32,017
Other liabilities - - 44,000 44,000
FVOCI reserve - 9,409 1,347 10,756
428,908 - 136,727 565,635

MFRS 139 MFRS 9

carrying amount carrying amount
31 March 2018 Reclassification Remeasurement 1 April 2018
BANK RM’000 RM’000 RM’000 RM’000

Cash and short-term funds - - 501 501

Financial investments at amortised cost - 1,294 425 1,719
Financial investments held-to-maturity 1,294 (1,294) - -
Loans, advances and financing 285,402 - 52,797 338,199
Other assets 27,578 - - 27,578
Other liabilities - - 27,290 27,290
FVOCI reserve - - 1,006 1,006
314,274 - 82,019 396,293
 2019 Annual Report 283

56. CHANGES IN ACCOUNTING POLICIES (CONT’D)

(c) Financial effect (cont’d)

The following table reconciles the Statement of Changes in Equity as at 31 March 2018 and 1 April 2018 arising from the adoption of
MFRS 9 and MFRS 15:

GROUP BANK
RM’000 RM’000

Regulatory reserve
Closing balance under MFRS 139 as at 31 March 2018 186,064 160,029
- Transfer (to)/from retained profits (17,330) 327
Opening balance under MFRS 9 as at 1 April 2018 168,734 160,356

FVOCI reserve
Closing balance under MFRS 139 as at 31 March 2018 - -
- Transfer from revaluation reserve 114,987 74,907
- Effects of reclassification from financial investments available-for-sale to financial assets at fair
value through profit and loss (108,820) (66,099)
- Recognition of expected credit losses under MFRS 9 10,756 1,006
Opening balance under MFRS 9 as at 1 April 2018 16,923 9,814

Revaluation reserve
Closing balance under MFRS 139 as at 31 March 2018 114,987 74,907
- Transfer to FVOCI reserve (114,987) (74,907)
Opening balance under MFRS 9 as at 1 April 2018 - -

Retained profits
Closing balance under MFRS 139 as at 31 March 2018 3,510,283 2,866,142
- Effects of reclassification from financial investments available-for-sale to financial assets at fair
value through profit and loss 108,820 66,099
- Tax effects arising from reclassification from financial investments available-for-sale to financial
assets at fair value through profit and loss 34,364 20,873
- Remeasurement of financial assets (19,592) 6,557
- Tax effects arising from remeasurement of financial assets 4,702 (1,574)
- Recognition of expected credit losses under MFRS 9 (136,727) (82,019)
- Tax effects arising from recognition of expected credit losses under MFRS 9 32,922 19,688
- Transfer from/(to) regulatory reserve 17,330 (327)
Opening balance under MFRS 9 as at 1 April 2018 3,552,102 2,895,439
- Effects of adoption of MFRS 15 (15,500) (15,500)
Opening balance under MFRS 9 and MFRS 15 as at 1 April 2018 3,536,602 2,879,939
284 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

57. COMPARATIVES

(a) Interest income and interest expense on financial instruments that are measured at fair value through profit and loss are reclassified to
investment income in accordance to amendment to MFRS 101, where interest income on items that are not measured at amortised cost
or fair value through other comprehensive income will no longer be able to be included in interest revenue.

The financial effects to the statements of Income for the financial year ended 31 March 2018 are as follows:

As previously
stated Reclassification As restated
RM’000 RM’000 RM’000

GROUP

Interest income 1,921,697 (23,819) 1,897,878

Interest expense (1,029,186) 56,459 (972,727)
Other operating income: 361,267 (32,640) 328,627
- Investment income 126,757 (32,640) 94,117

BANK

Interest income 1,898,299 (23,262) 1,875,037

Interest expense (998,364) 56,459 (941,905)
Other operating income: 361,707 (33,197) 328,510
- Investment income 159,630 (33,197) 126,433

(b) The following figures have been reclassified to conform with the presentation of the current financial year:

As previously
stated Reclassification As restated
RM’000 RM’000 RM’000

GROUP

Other assets 105,728 36,221 141,949

- Other receivables 32,173 36,221 68,394
Other liabilities (1,399,302) (36,221) (1,435,523)
- Other payables (254,276) (37,950) (292,226)
- Clearing account (201,208) 1,739 (199,469)
- Provision and accrual (131,272) (10) (131,282)

BANK

Other assets 140,727 36,221 176,948

- Other receivables 18,281 36,221 54,502
Other liabilities (1,283,477) (36,221) (1,319,698)
- Other payables (205,527) (37,950) (243,477)
- Clearing account (161,741) 1,739 (160,002)
- Provision and accrual (131,524) (10) (131,534)
 2019 Annual Report 285

BASEL II PILLAR 3
REPORT DISCLOSURE
CONTENTS

286 Overview
287 Scope of Application
287 Capital
2.1 Capital Adequacy Ratios
2.2 Capital Structure
2.3 Risk-Weighted Assets and Capital Requirements
294 Credit Risk
3.1 Distribution of Credit Exposures
3.2 Past Due Loans, Advances and Financing Analysis
3.3 Impaired Loans, Advances and Financing Analysis
3.4 Assignment of Risk-Weights for Portfolios Under the
Standardised Approach
3.5 Credit Risk Mitigation
3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk
333 Market Risk
335 Operational Risk
336 Equity Exposures in Banking Book
337 Interest Rate Risk/Rate of Return Risk in the Banking Book
339 Shariah Governance Disclosures

More on this subject:

https://www.alliancebank.com.my/
286 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE

for the financial year ended 31 March 2019

OVERVIEW

Bank Negara Malaysia’s (“BNM”) guidelines on capital adequacy require Alliance Bank Malaysia Berhad (“the Bank”) and its subsidiaries (“the Group”)
to maintain an adequate level of capital to withstand potential losses arising from its operations. BNM’s capital adequacy guidelines cover three main
aspects:

(a) Pillar 1 – covers the calculation of risk-weighted assets for credit risk, market risk and operational risk.

(b) Pillar 2 – involves assessment of other risks (e.g. interest rate risk in the banking book, liquidity risk and concentration risk) not covered under
Pillar 1. This promotes the adoption of forward-looking approaches to capital management and stress testing/risk simulation techniques.

(c) Pillar 3 – covers disclosure and external communication of risk and capital information by banks.

The Group maintains a strong capital base to support its current activities and future growth to meet regulatory capital requirements at all times and
buffer against potential losses.

To ensure that risks and returns are appropriately balanced, the Group has implemented a Group-wide Integrated Risk Management Framework, with
guidelines for identifying, measuring, and managing risks. This process includes quantifying and aggregating various risks in order to ensure the Group
and each entity has sufficient capital to cushion against unexpected losses and remain solvent.

In summary, the capital management process involves the following:

(i) Monitoring of regulatory capital and ensuring that the minimum regulatory requirements and approved internal ratios are adhered to;

(ii) Estimation of capital requirements based on ongoing forecasting and budgeting process; and

(iii) Regular reporting of regulatory and internal capital ratios to senior management and the Board.

In addition, the Group’s capital adequacy under extreme but plausible stress scenarios are periodically assessed via a Group-wide stress test exercise.
The results of the stress tests are reported to senior management, to provide them with an assessment of the financial impact of such events on the
Group’s earnings and capital.

The Group’s Pillar 3 Disclosure is governed by the Bank’s Pillar 3 Disclosure. This policy outlines the minimum disclosure standards, approach for
determining the appropriateness of information disclosed and the internal controls over the disclosure process.
 2019 Annual Report 287

1.0 SCOPE OF APPLICATION

The Pillar 3 Disclosure was prepared on a consolidated basis comprises information on Alliance Bank Malaysia Berhad (“the Bank”), its subsidiaries,
associate companies and joint venture. The Group offers Conventional and Islamic banking services. The latter includes accepting deposits and
providing financing under Shariah principles via the Bank’s wholly-owned subsidiary, Alliance Islamic Bank Berhad.

The basis of consolidation for the use of regulatory capital purposes is similar to that for financial accounting purposes. Investments in subsidiaries,
associate companies and joint venture are deducted from regulatory capital.

There were no significant restrictions or other major impediments on transfer of funds or regulatory capital within the Group.

There were no capital deficiencies in any of the subsidiaries of the Group as at the financial year end.

The capital adequacy information was computed in accordance with BNM’s Capital Adequacy Framework. The Group has adopted the Standardised
Approach for credit risk and market risk; and the Basic Indicator Approach for operational risk.

2.0 CAPITAL

In managing its capital, the Group’s objectives are:

(i) To maintain sufficient capital to meet the regulatory capital requirements as set forth by BNM;

(ii) To maintain sufficient capital to support the Group’s risk appetite and facilitate future business growth; and

(iii) To meet the expectations of key stakeholders, including shareholders, investors, regulators and rating agencies.

In line with this, the Group aims to maintain capital adequacy ratios that are above the regulatory requirements, while balancing shareholders’
desire for sustainable returns and prudential standards.

The Group carries out stress testing to estimate the potential impact of extreme but plausible events on the Group’s earnings, balance sheet and
capital. The results of the stress tests are to facilitate the formulation of contingency plan(s) where warranted. The results of the stress tests are
tabled to the Group Risk Management Committee for approval.
288 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

2.0 CAPITAL (CONT’D)

2.1 Capital Adequacy Ratios

(a) The capital adequacy ratios of the Bank and the Group are as follows:

BANK GROUP
2019 2018 2019 2018

Before deducting proposed dividends

CET I Capital Ratio 12.061% 11.680% 13.736% 13.695%
Tier I Capital Ratio 12.940% 12.217% 14.423% 14.123%
Total Capital Ratio 17.841% 17.122% 18.856% 18.638%

After deducting proposed dividends

CET I Capital Ratio 11.614% 11.302% 13.388% 13.393%
Tier I Capital Ratio 12.493% 11.839% 14.074% 13.821%
Total Capital Ratio 17.394% 16.744% 18.508% 18.337%

(b) The capital adequacy ratios of the banking subsidiaries are as follows:

Alliance Alliance
Islamic Investment
Bank Berhad Bank Berhad

2019
Before deducting proposed dividends
CET I Capital Ratio 11.690% 78.200%
Tier I Capital Ratio 12.950% 78.200%
Total Capital Ratio 15.762% 79.196%

After deducting proposed dividends

CET I Capital Ratio 11.339% 78.200%
Tier I Capital Ratio 12.599% 78.200%
Total Capital Ratio 15.411% 79.196%

2018
Before deducting proposed dividends
CET I Capital Ratio 12.569% 86.830%
Tier I Capital Ratio 12.569% 86.830%
Total Capital Ratio 15.421% 87.642%

After deducting proposed dividends

CET I Capital Ratio 12.198% 85.079%
Tier I Capital Ratio 12.198% 85.079%
Total Capital Ratio 15.050% 85.892%

The Group’s and the Bank’s capital ratios comply with the prescribed capital adequacy ratios under BNM’s Capital Adequacy
Framework.
 2019 Annual Report 289

2.0 CAPITAL (CONT’D)

2.2 Capital Structure

The following tables present the components of Common Equity Tier I (“CET I”), Tier I and Tier II capital.

BANK GROUP
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

CET I Capital
Paid-up share capital 1,548,106 1,548,106 1,548,106 1,548,106
Retained profits 3,128,589 2,866,142 3,827,676 3,510,283
Regulatory reserves 160,798 160,029 178,397 186,064
Revaluation reserves 36,449 74,907 68,540 114,987
Capital reserves 95,515 95,515 100,150 100,150
4,969,457 4,744,699 5,722,869 5,459,590
Less: Regulatory adjustment
- Goodwill and other intangibles (323,804) (292,981) (432,961) (409,402)
- Deferred tax assets (50,116) (9,223) (72,972) (22,664)
- 55% of revaluation reserves (20,047) (41,199) (37,697) (63,243)
- Regulatory reserves (160,798) (160,029) (178,397) (186,064)
- Investment in subsidiaries, associate and joint venture (989,102) (989,102) (802) (693)
Total CET I Capital 3,425,590 3,252,165 5,000,040 4,777,524
Additional Tier 1 Capital Securities1 249,445 149,316 249,792 149,293
Total Tier I Capital 3,675,035 3,401,481 5,249,832 4,926,817

Tier II Capital

Subordinated obligations 1,199,381 1,199,062 1,199,676 1,199,675

Expected credit loss*/collective assessment allowance and
regulatory reserves 322,740 296,765 414,258 375,710
Less: Regulatory adjustment
- Investment in Tier 2 capital instruments (130,000) (130,000) - -
Total Tier II Capital 1,392,121 1,365,827 1,613,934 1,575,385
Total Capital 5,067,156 4,767,308 6,863,766 6,502,202

* Expected credit loss for Stage 1 and Stage 2 only.

Note:

1
On 8 March 2019, the Bank issued RM100.0 million Additional Tier 1 Capital Securities in nominal value under Additional Tier 1
Capital Securities Programme up to RM1.0 billion.
290 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

2.0 CAPITAL (CONT’D)

2.3 Risk-Weighted Assets (“RWA”) and Capital Requirements

Regulatory Capital Requirements

The following tables present the minimum regulatory capital requirements of the Bank and the Group:

Risk-
BANK Gross Net Weighted Capital
2019 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-balance sheet exposures:

Sovereigns/Central banks 5,596,654 5,596,654 - -
Public sector entities 69,280 69,280 13,856 1,108
Banks, Development Financial Institutions (“DFIs”)
and Multilateral Development Banks 1,715,604 1,715,604 568,061 45,445
Insurance companies, securities firms and fund
managers 28,494 28,494 28,494 2,280
Corporates 14,760,638 13,523,216 11,591,934 927,355
Regulatory retail 7,519,108 6,845,343 5,286,525 422,922
Residential mortgages 12,335,936 12,326,574 5,320,900 425,672
Higher risk assets 9,472 9,466 14,200 1,136
Other assets 616,262 616,262 361,152 28,892
Equity exposures 126,741 126,741 126,743 10,139
Defaulted exposures 200,941 199,593 209,263 16,741
Total on-balance sheet exposures 42,979,130 41,057,227 23,521,128 1,881,690

Off-balance sheet exposures:

Credit-related off-balance sheet exposures 3,091,073 2,647,418 2,187,138 174,971
Derivative financial instruments 239,854 239,854 109,148 8,732
Defaulted exposures 1,360 860 1,770 142
Total off-balance sheet exposures 3,332,287 2,888,132 2,298,056 183,845

Total on and off-balance sheet exposures 46,311,417 43,945,359 25,819,184 2,065,535

(ii) Market Risk (Note 4.0)

Long Short
Interest rate risk Position Position 149,542 11,963
Foreign currency risk 5,598,049 (5,562,082) 124,410 9,953
11,575 (124,410)
Option risk 5,609,624 (5,686,492) 990 79
Total 274,942 21,995

(iii) Operational Risk - - 2,307,070 184,566

Total 46,311,417 43,945,359 28,401,196 2,272,096
 2019 Annual Report 291

2.0 CAPITAL (CONT’D)

2.3 RWA and Capital Requirements (cont’d)

Regulatory Capital Requirements (cont’d)

The following tables present the minimum regulatory capital requirements of the Bank and the Group (cont’d):

Risk-
GROUP Gross Net Weighted Capital
2019 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-balance sheet exposures:

Sovereigns/Central banks 8,186,546 8,186,546 - -
Public sector entities 196,261 196,261 39,253 3,140
Banks, DFIs and Multilateral Development Banks 829,576 829,576 164,010 13,121
Insurance companies, securities firms and fund
managers 35,557 35,557 35,556 2,844
Corporates 19,580,592 17,950,144 14,854,259 1,188,340
Regulatory retail 9,999,499 9,245,382 7,256,654 580,532
Residential mortgages 16,073,138 16,062,759 6,981,541 558,523
Higher risk assets 11,086 11,080 16,621 1,330
Other assets 694,371 694,371 438,729 35,098
Equity exposures 187,525 187,525 187,525 15,002
Defaulted exposures 262,387 259,915 271,190 21,695
Total on-balance sheet exposures 56,056,537 53,659,116 30,245,338 2,419,627

Off-balance sheet exposures:

Credit-related off-balance sheet exposures 3,920,784 3,400,266 2,783,856 222,708
Derivative financial instruments 239,854 239,854 109,148 8,732
Defaulted exposures 1,718 1,218 2,300 184
Total off-balance sheet exposures 4,162,356 3,641,339 2,895,304 231,624

Total on and off-balance sheet exposures 60,218,893 57,300,455 33,140,642 2,651,251

(ii) Market Risk (Note 4.0)

Long Short
Interest rate risk Position Position 149,542 11,963
Foreign currency risk 5,598,049 (5,562,082) 124,410 9,953
11,575 (124,410)
Option risk 5,609,624 (5,686,492) 990 79
Total 274,942 21,995

(iii) Operational Risk - - 2,984,529 238,762

Total 60,218,893 57,300,455 36,400,113 2,912,008
292 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

2.0 CAPITAL (CONT’D)

2.3 RWA and Capital Requirements (cont’d)

Regulatory Capital Requirements (cont’d)

The following tables present the minimum regulatory capital requirements of the Bank and the Group (cont’d):

Risk-
BANK Gross Net Weighted Capital
2018 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-balance sheet exposures:

Sovereigns/Central banks 4,800,900 4,800,900 - -
Public sector entities 59,446 59,446 11,889 951
Banks, DFIs and Multilateral Development Banks 2,212,038 2,212,038 671,377 53,710
Insurance companies, securities firms and fund
managers 37,884 37,851 37,851 3,028
Corporates 13,887,523 12,773,551 10,997,016 879,762
Regulatory retail 7,451,752 6,732,624 5,147,926 411,834
Residential mortgages 11,911,755 11,902,044 5,295,448 423,636
Higher risk assets 2,801 2,795 4,192 335
Other assets 529,608 529,608 264,204 21,136
Equity exposures 121,644 121,644 121,646 9,732
Defaulted exposures 313,098 311,149 404,843 32,387
Total on-balance sheet exposures 41,328,449 39,483,650 22,956,392 1,836,511

Off-balance sheet exposures:

Credit-related off-balance sheet exposures 2,800,489 2,406,616 2,212,069 176,966
Derivative financial instruments 254,986 254,986 122,904 9,832
Defaulted exposures 5,267 5,267 7,896 632
Total off-balance sheet exposures 3,060,742 2,666,869 2,342,869 187,430
Total on and off-balance sheet exposures 44,389,191 42,150,519 25,299,261 2,023,941

(ii) Market Risk (Note 4.0)

Long Short
Interest rate risk Position Position 15,289 1,223
Foreign currency risk 76,686 (70,016) 94,541 7,563
7,016 (94,542)
Option risk 83,702 (164,558) 559 45
Total 110,389 8,831

(iii) Operational Risk - - 2,433,159 194,653

Total 44,389,191 42,150,519 27,842,809 2,227,425
 2019 Annual Report 293

2.0 CAPITAL (CONT’D)

2.3 RWA and Capital Requirements (cont’d)

Regulatory Capital Requirements (cont’d)

The following tables present the minimum regulatory capital requirements of the Bank and the Group (cont’d):

Risk-
GROUP Gross Net Weighted Capital
2018 Exposures Exposures Assets Requirements
Exposure Class RM’000 RM’000 RM’000 RM’000

(i) Credit Risk

On-balance sheet exposures:

Sovereigns/Central banks 7,715,107 7,715,107 - -
Public sector entities 211,083 211,083 42,217 3,377
Banks, DFIs and Multilateral Development Banks 1,315,416 1,315,416 261,255 20,900
Insurance companies, securities firms and fund
managers 63,080 63,047 63,047 5,044
Corporates 18,530,955 17,092,449 14,147,528 1,131,801
Regulatory retail 10,019,382 9,229,348 7,164,075 573,127
Residential mortgages 14,354,700 14,343,762 6,356,377 508,510
Higher risk assets 3,195 3,189 4,783 383
Other assets 639,421 639,421 374,017 29,921
Equity exposures 178,856 178,856 178,858 14,309
Defaulted exposures 385,914 383,181 494,731 39,578
Total on-balance sheet exposures 53,417,109 51,174,859 29,086,888 2,326,950

Off-balance sheet exposures:

Credit-related off-balance sheet exposures 3,511,989 3,039,708 2,748,471 219,878
Derivative financial instruments 254,986 254,986 122,904 9,832
Defaulted exposures 11,080 10,217 15,322 1,226
Total off-balance sheet exposures 3,778,055 3,304,911 2,886,697 230,936
Total on and off-balance sheet exposures 57,195,164 54,479,770 31,973,585 2,557,886

(ii) Market Risk (Note 4.0)

Long Short
Interest rate risk Position Position 15,757 1,261
Foreign currency risk 91,664 (70,016) 94,541 7,563
7,016 (94,542)
Option risk 559 45
98,680 (164,558)
Total 110,857 8,869

(iii) Operational Risk - - 2,801,473 224,118

Total 57,195,164 54,479,770 34,885,915 2,790,873

Note:

Under Islamic banking, the Group does not use Profit-sharing Investment Account (“PSIA”) as a risk absorbent mechanism.

The Bank and the Group do not have exposure to any Large Exposure Risk for equity holdings as specified under BNM’s Guidelines on
Investment in Shares, Interest-in-Shares and Collective Investment Schemes.
294 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK

Credit risk is the risk of financial loss resulting from the failure of the Bank’s borrowers or counterparties to fulfil their contractual obligations to
repay their loans or to settle financial commitments.

Credit Risk Management

The Board, via the Group Risk Management Committee (“GRMC”), established a Credit Risk Management Framework (“CRMF”) which outlines the
broad principles for managing credit risk of the Group.

Credit approval is under the purview of the Executive Committee, Group Management Credit Committee and Credit Underwriters, depending on
the size and complexity of the loans.

Retail loans are subject to portfolio reviews and corporate loans are subject to periodic individual borrower or group reviews. The Portfolio Review
Committee for the respective lines of business, assisted by embedded risk units, helps to manage the portfolio quality. The process also ensures
alignment of business strategy with the Bank’s risk appetite.

Potential problem loans or issues on portfolio are identified through our Early Warning Framework and thematic reviews, where applicable.
Recovery of impaired loans are carried out internally or through authorised agents.

The Portfolio Review Committees for the respective lines of business, assisted by embedded risk units, helps to manage the portfolio quality. 
Portfolio risk reports are reviewed and action plans are formulated to manage identified risks. 

Entity level Risk Dashboards are escalated to the Executive Risk Management Committee (Senior Management Level), Group Risk Management
Committee (Board Level) and the Board for deliberation and strategic direction.

Group Risk Management is responsible for assessing the adequacy and effectiveness of the risk management framework, policies and guidelines.
Embedded risk units are responsible for monitoring business activities and ensuring that they are carried out within the approved policies and
business models.

Stress testing is used to identify potential vulnerable risk areas of the Bank’s portfolios to stress events and assess the impact to earnings and
capital. Stress tests are performed using a variety of market and economic assumptions to assess possible vulnerability and formulate effective
mitigation actions when required. Sensitivity analysis are conducted to assess potential effect of individual risk factors.

Group Internal Audit reviews the Bank’s credit processes regularly and recommends corrective measures or enhancements. These reviews
provide senior management with assurance that the policies, processes and guidelines are adhered to.

Impaired Loans and Provisions

Past due accounts are loan accounts with any payment of principal and/or interest due and not paid, but are not classified as impaired. Loans
are classified as impaired if the mandatory impairment thresholds are exceeded or judgmentally impaired when there are reasonable grounds to
believe that the borrower may not be able to repay the entire loan amount.

Provisions for expected credit losses are carried out based on the MFRS 9 approach, loans with defined risk characteristics are transferred to
Stage 2 and provisions are estimated based on potential losses for the remaining lifetime of the exposures. Impaired loans are classified as
Stage 3 under MFRS 9. Loans that are not classified as Stage 2 or 3 will remain in Stage 1 where provisions will be estimated based on probability
of default over the next 12 months.

Please refer to Note 2(k)(i) of the audited financial statements for accounting policies on impairment of financial assets.
 2019 Annual Report 295

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures

(a) Geographical Distribution

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by geographical distribution.
Exposures are allocated to the region in which the branch is located and are disclosed before taking into account of any collateral
held or other credit enhancements and after allowance for impairment, where appropriate.

Geographical region
Outside
BANK Northern Central Southern Sabah Sarawak Malaysia Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term

funds - 1,292,132 - - - 24,753 1,316,885
Financial assets at fair
value through profit
or loss - 42,923 - - - - 42,923
Financial investments
at fair value
through other
comprehensive
income - 6,852,858 - - - - 6,852,858
Financial investments
at amortised cost - 311,930 - - - - 311,930
Derivative financial
assets - 55,442 - - - - 55,442
Loans, advances and
financing 2,206,689 23,649,545 3,966,339 2,166,621 722,691 - 32,711,885
Statutory deposits - 1,142,108 - - - - 1,142,108
Total on-balance
sheet 2,206,689 33,346,938 3,966,339 2,166,621 722,691 24,753 42,434,030

Financial guarantees 71,471 354,069 42,526 38,622 11,378 - 518,066

Credit-related
commitments and
contingencies 853,568 7,096,695 1,013,416 624,008 306,300 - 9,893,986
Total off-balance
sheet 925,039 7,450,763 1,055,942 662,630 317,677 - 10,412,052
Total credit exposure 3,131,728 40,797,701 5,022,281 2,829,251 1,040,368 24,753 52,846,082
296 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(a) Geographical Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by geographical distribution.
Exposures are allocated to the region in which the branch is located and are disclosed before taking into account of any collateral
held or other credit enhancements and after allowance for impairment, where appropriate (cont’d):

Geographical region
Outside
GROUP Northern Central Southern Sabah Sarawak Malaysia Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term

funds - 1,524,871 - - - 24,753 1,549,624
Deposits and
placements with
banks and other
financial institutions - 500 - - - - 500
Amounts due from
clients and brokers 11,527 55,322 10,159 - - - 77,008
Financial assets at fair
value through profit
or loss - 42,923 - - - - 42,923
Financial investments
at fair value through
other comprehensive
income - 9,478,454 - - - - 9,478,454
Financial investments
at amortised cost - 235,720 - - - - 235,720
Derivative financial
assets - 55,442 - - - - 55,442
Loans, advances and
financing 3,071,510 30,376,554 5,240,640 2,859,102 965,175 - 42,512,982
Statutory deposits - 1,521,592 - - - - 1,521,592
Total on-balance
sheet 3,083,037 43,291,377 5,250,800 2,859,102 965,175 24,753 55,474,245

Financial guarantees 80,179 519,451 57,431 52,646 11,793 - 721,500

Credit-related
commitments and
contingencies 1,203,797 8,500,343 1,349,365 788,017 460,014 - 12,301,536
Total off-balance
sheet 1,283,976 9,019,794 1,406,796 840,663 471,807 - 13,023,036
Total credit exposure 4,367,013 52,311,172 6,657,596 3,699,765 1,436,982 24,753 68,497,280

Note:

The classification of financial instruments under MFRS9 was adopted with effect from 1 April 2018. Please refer to Note 56 of the
financial statement.
 2019 Annual Report 297

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(a) Geographical Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by geographical distribution.
Exposures are allocated to the region in which the branch is located and are disclosed before taking into account of any collateral
held or other credit enhancements and after allowance for impairment, where appropriate (cont’d):

Geographical region
Outside
BANK Northern Central Southern Sabah Sarawak Malaysia Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term

funds - 1,428,981 - - - 21,576 1,450,557
Deposits and
placements with
banks and other
financial institutions - 77,283 - - - - 77,283
Financial assets held-
for-trading - 48,771 - - - - 48,771
Financial investments
available-for-sale - 6,284,804 - - - - 6,284,804
Financial investments
held-to-maturity - 344,703 - - - - 344,703
Derivative financial
assets - 84,455 - - - - 84,455
Loans, advances and
financing 2,122,103 23,064,355 3,794,976 1,985,937 654,300 - 31,621,671
Statutory deposits - 1,092,566 - - - - 1,092,566
Total on-balance
sheet 2,122,103 32,425,918 3,794,976 1,985,937 654,300 21,576 41,004,811

Financial guarantees 55,509 398,635 42,934 45,088 14,535 - 556,701

Credit-related
commitments and
contingencies 828,695 6,569,110 829,182 618,932 273,075 - 9,118,992
Total off-balance
sheet 884,204 6,967,745 872,115 664,019 287,610 - 9,675,693
Total credit exposure 3,006,307 39,393,663 4,667,091 2,649,956 941,910 21,576 50,680,504
298 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(a) Geographical Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by geographical distribution.
Exposures are allocated to the region in which the branch is located and are disclosed before taking into account of any collateral
held or other credit enhancements and after allowance for impairment, where appropriate (cont’d):

Geographical region
Outside
GROUP Northern Central Southern Sabah Sarawak Malaysia Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term

funds - 2,481,778 - - - 21,576 2,503,354
Deposits and
placements with
banks and other
financial institutions - 77,283 - - - - 77,283
Amounts due from
clients and brokers 13,920 83,873 3,512 - - - 101,305
Financial assets held-
for-trading - 63,750 - - - - 63,750
Financial investments
available-for-sale - 8,326,333 - - - - 8,326,333
Financial investments
held-to-maturity - 293,612 - - - - 293,612
Derivative financial
assets - 84,455 - - - - 84,455
Loans, advances and
financing 2,815,996 28,829,752 4,918,978 2,598,098 961,745 - 40,124,570
Statutory deposits - 1,408,316 - - - - 1,408,316
Total on-balance
sheet 2,829,916 41,649,153 4,922,490 2,598,098 961,745 21,576 52,982,979

Financial guarantees 63,441 550,533 55,015 47,209 14,574 - 730,771

Credit-related
commitments and
contingencies 1,118,225 7,775,286 1,073,320 1,036,449 310,051 - 11,313,331
Total off-balance
sheet 1,181,666 8,325,819 1,128,335 1,083,657 324,625 - 12,044,102
Total credit exposure 4,011,582 49,974,972 6,050,825 3,681,756 1,286,370 21,576 65,027,081
3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(b) Industry Distribution

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by sector. The analysis is based on the sector in which the customers are engaged:

Financial,
Insurance, Agriculture,
Government Business Transport, Manufacturing,
& Central Services & Storage & Wholesale &
BANK Bank Real Estate Communication Retail Trade Construction Household Others Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 692,477 624,408 - - - - - 1,316,885

Financial assets at fair value
through profit or loss 41,002 1,909 7 4 1 - - 42,923
Financial investments at fair value
through other comprehensive
income 3,705,868 2,098,405 743,892 173,009 131,684 - - 6,852,858
Financial investments at
amortised cost 101,446 164,961 - 25,011 - - 20,512 311,930
Derivative financial assets - 35,438 - - - - 20,004 55,442
Loans, advances and financing - 3,480,049 517,512 10,066,243 1,203,030 17,147,433 297,618 32,711,885
Statutory deposits 1,142,108 - - - - - - 1,142,108
Total on-balance sheet 5,682,900 6,405,171 1,261,411 10,264,267 1,334,715 17,147,433 338,134 42,434,030

Financial guarantees - 77,195 27,895 383,755 15,081 4,544 9,596 518,066

Credit-related commitments and
contingencies 141,985 1,285,169 120,734 4,014,944 1,448,995 2,536,013 346,146 9,893,986
Total off-balance sheet 141,985 1,362,364 148,629 4,398,699 1,464,076 2,540,557 355,742 10,412,052
Total credit risk 5,824,885 7,767,534 1,410,040 14,662,966 2,798,791 19,687,990 693,875 52,846,082
2019 Annual Report
299
 300

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(b) Industry Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by sector. The analysis is based on the sector in which the customers are engaged (cont’d):

Financial,
Alliance Bank Malaysia Berhad (88103-W)

Insurance, Agriculture,
Government Business Transport, Manufacturing,
& Central Services & Storage & Wholesale &
GROUP Bank Real Estate Communication Retail Trade Construction Household Others Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 1,040,926 508,698 - - - - - 1,549,624

Deposits and placements with banks
and other financial institutions - 500 - - - - - 500
Amounts due from clients and
brokers - 665 - - - - 76,343 77,008
Financial assets at fair value through
profit or loss 41,002 1,909 7 4 1 - - 42,923
Financial investments at fair value
through other comprehensive
income 5,293,442 2,520,795 1,149,358 245,233 269,626 - - 9,478,454
Financial investments at amortised
cost 121,789 43,404 - 50,015 - - 20,512 235,720
Derivative financial assets - 35,438 - - - - 20,004 55,442
Loans, advances and financing - 4,451,999 695,780 12,952,982 1,406,180 22,560,416 445,625 42,512,982
Statutory deposits 1,521,592 - - - - - - 1,521,592
Total on-balance sheet 8,018,750 7,563,409 1,845,145 13,248,234 1,675,807 22,560,416 562,484 55,474,245

Financial guarantees - 79,794 33,041 542,131 52,123 4,586 9,825 721,500

Credit-related commitments and
contingencies 141,985 1,540,262 125,463 5,141,861 1,611,172 3,356,111 384,682 12,301,536
Total off-balance sheet 141,985 1,620,056 158,504 5,683,992 1,663,295 3,360,697 394,507 13,023,036
Total credit risk 8,160,735 9,183,465 2,003,649 18,932,226 3,339,102 25,921,113 956,991 68,497,280
3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(b) Industry Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by sector. The analysis is based on the sector in which the customers are engaged (cont’d):

Financial,
Insurance, Agriculture,
Government Business Transport, Manufacturing,
& Central Services & Storage & Wholesale &
BANK Bank Real Estate Communication Retail Trade Construction Household Others Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 587,207 863,350 - - - - - 1,450,557

Deposits and placements with
banks and other financial
institutions - 77,283 - - - - - 77,283
Financial assets held-for-trading - 38,549 10,222 - - - - 48,771
Financial investments available-
for-sale 2,863,925 2,453,110 679,796 182,188 105,785 - - 6,284,804
Financial investments held-to-
maturity 121,271 223,432 - - - - - 344,703
Derivative financial assets - 56,969 - - - - 27,486 84,455
Loans, advances and financing - 3,936,962 353,452 8,783,073 1,073,400 17,069,873 404,911 31,621,671
Statutory deposits 1,092,566 - - - - - - 1,092,566
Total on-balance sheet 4,664,969 7,649,655 1,043,470 8,965,261 1,179,186 17,069,873 432,397 41,004,811

Financial guarantees - 31,839 26,419 432,615 37,837 7,638 20,353 556,701

Credit-related commitments and
contingencies - 1,292,655 122,364 3,509,320 1,382,911 2,302,406 509,336 9,118,992
Total off-balance sheet - 1,324,494 148,783 3,941,935 1,420,748 2,310,044 529,689 9,675,693
Total credit risk 4,664,969 8,974,149 1,192,253 12,907,196 2,599,934 19,379,917 962,085 50,680,503
2019 Annual Report
301
 302

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(b) Industry Distribution (cont’d)

The following tables represent the Bank’s and the Group’s major types of gross credit exposure by sector. The analysis is based on the sector in which the customers are engaged (cont’d):

Financial,
Alliance Bank Malaysia Berhad (88103-W)

Insurance, Agriculture,
Government Business Transport, Manufacturing,
& Central Services & Storage & Wholesale &
GROUP Bank Real Estate Communication Retail Trade Construction Household Others Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 1,877,748 625,606 - - - - - 2,503,354

Deposits and placements with
banks and other financial
institutions - 77,283 - - - - - 77,283
Amounts due from clients and
brokers - 670 - - - - 100,635 101,305
Financial assets held-for-trading - 53,527 10,223 - - - - 63,750
Financial investments available-
for-sale 3,853,263 2,806,383 1,161,400 208,142 297,146 - - 8,326,333
Financial investments held-to-
maturity 141,686 151,926 - - - - - 293,612
Derivative financial assets - 56,969 - - - - 27,486 84,455
Loans, advances and financing - 4,954,492 501,987 11,408,031 1,370,993 21,373,155 515,912 40,124,570
Statutory deposits 1,408,316 - - - - - - 1,408,316
Total on-balance sheet 7,281,013 8,726,856 1,673,610 11,616,173 1,668,138 21,373,155 644,033 52,982,979

Financial guarantees - 36,669 31,573 576,904 57,355 7,680 20,590 730,771

Credit-related commitments and
contingencies - 1,453,597 128,259 4,495,893 1,515,553 2,900,735 819,294 11,313,331
Total off-balance sheet - 1,490,266 159,831 5,072,797 1,572,909 2,908,415 839,884 12,044,102
Total credit risk 7,281,013 10,217,122 1,833,442 16,688,970 3,241,047 24,281,570 1,483,917 65,027,081
 2019 Annual Report 303

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(c) Residual Contractual Maturity

The following tables represent the residual contractual maturity for major types of gross credit exposure for on-balance sheet
financial assets of the Bank and the Group:

Up to >1-3 >3-6 >6-12

BANK 1 month months months months >1 year Total
2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 1,316,885 - - - - 1,316,885

Financial assets at fair value through
profit or loss 379 - 118 - 42,425 42,923
Financial investments at fair value
through other comprehensive
income 58,511 199,629 325,205 488,643 5,780,869 6,852,858
Financial investments at amortised
cost 36,891 446 2,556 99,771 172,266 311,930
Loans, advances and financing 6,554,099 1,545,631 677,178 105,355 23,829,622 32,711,885
Statutory deposits - - - - 1,142,108 1,142,108
Derivative financial assets 8,010 5,003 5,812 2,791 33,826 55,442
Total on-balance sheet exposure 7,974,775 1,750,709 1,010,870 696,560 31,001,116 42,434,030

GROUP
2019

Cash and short-term funds 1,549,624 - - - - 1,549,624

Deposits and placements with banks
and other financial institutions 500 - - - - 500
Amounts due from clients and brokers 77,008 - - - - 77,008
Financial assets at fair value through
profit or loss 379 - 118 - 42,425 42,923
Financial investments at fair value
through other comprehensive
income 180,003 230,448 387,975 502,664 8,177,363 9,478,454
Financial investments at amortised
cost 37,164 4,549 4,994 119,816 69,196 235,720
Loans, advances and financing 8,755,066 2,146,717 892,728 135,785 30,582,686 42,512,982
Statutory deposits - - - - 1,521,592 1,521,592
Derivative financial assets 8,010 5,004 5,812 2,791 33,825 55,442
Total on-balance sheet exposure 10,607,754 2,386,718 1,291,628 761,056 40,427,087 55,474,245
304 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.1 Distribution of Credit Exposures (cont’d)

(c) Residual Contractual Maturity (cont’d)

The following tables represent the residual contractual maturity for major types of gross credit exposure for on-balance sheet
financial assets of the Bank and the Group (cont’d):

Up to >1-3 >3-6 >6-12

BANK 1 month months months months >1 year Total
2018 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 1,450,557 - - - - 1,450,557

Deposits and placements with banks
and other financial institutions - 77,283 - - - 77,283
Financial assets held-for-trading - 25,926 167 - 22,678 48,771
Financial investments
available-for-sale 61,449 274,130 489,924 455,660 5,003,641 6,284,804
Financial investments
held-to-maturity 1,229 446 49,764 63,149 230,115 344,703
Loans, advances and financing 6,240,348 1,494,915 700,136 127,353 23,058,919 31,621,671
Statutory deposits - - - - 1,092,566 1,092,566
Derivative financial assets 17,806 25,115 4,083 11,223 26,229 84,455
Total on-balance sheet exposure 7,771,389 1,897,814 1,244,074 657,385 29,434,149 41,004,811

GROUP
2018

Cash and short-term funds 2,503,354 - - - - 2,503,354

Deposits and placements with banks
and other financial institutions - 77,283 - - - 77,283
Amounts due from clients and brokers 101,305 - - - - 101,305
Financial assets held-for-trading 14,978 25,926 167 - 22,678 63,750
Financial investments
available-for-sale 61,848 355,038 519,110 619,793 6,770,545 8,326,333
Financial investments
held-to-maturity 1,229 744 84,422 82,636 124,581 293,612
Loans, advances and financing 7,927,745 1,986,359 1,000,365 187,192 29,022,910 40,124,570
Statutory deposits - - - - 1,408,316 1,408,316
Derivative financial assets 17,806 25,115 4,083 11,223 26,229 84,455
Total on-balance sheet exposure 10,628,265 2,470,464 1,608,147 900,843 37,375,260 52,982,979
 2019 Annual Report 305

3.0 CREDIT RISK (CONT’D)

3.2 Past Due Loans, Advances and Financing Analysis

Past due but not impaired loans, advances and financing are loans where the customers have failed to make a principal and/or interest
payment when contractually due, and include loans which are due one or more days after the contractual due date but not more than
three months. For loans that are structured to pay principal and/or interest at quarterly interval or longer, a default of payment will trigger
an impairment immediately. Under MFRS 9, exposures more than 30 days past due are transferred to Stage 2.

The following tables represent the past due loans, advances and financing analysed by sector:

BANK GROUP
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Financial, insurance & business services and real estate 66,885 39,321 77,853 44,396
Transport, storage & communication 23,510 12,370 30,506 12,922
Agriculture, manufacturing, wholesale & retail trade 380,443 107,956 522,877 127,504
Construction 214,987 37,965 224,120 42,113
Household 956,887 814,802 1,360,089 1,130,620
Others 3,192 3,783 28,584 4,054
1,645,903 1,016,197 2,244,029 1,361,609

Past due loans, advances and financing analysed by significant geographical areas:

BANK GROUP
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Northern region 127,766 75,634 180,081 107,468

Central region 1,200,186 700,806 1,626,610 926,597
Southern region 177,217 134,561 256,933 194,492
Sabah region 113,043 85,781 148,531 110,336
Sarawak region 27,691 19,415 31,874 22,716
1,645,903 1,016,197 2,244,029 1,361,609
306 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.2 Past Due Loans, Advances and Financing Analysis (cont’d)

The following tables represent the loans, advances and financing by sector, where past due exposures are included under Stage 2 and
Stage 3:

31 March 2019 31 March 2018

Non-credit
Non-credit Impaired Credit Impaired Total impaired Credit impaired
12 months ECL Lifetime ECL Lifetime ECL Collectively Individually
(Stage 1) (Stage 2) (Stage 3) Assessed Assessed
Sector RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

BANK

Financial, insurance &

business services
and real estate 2,930,949 530,927 24,264 3,486,140 - -
Transport, storage &
communication 415,838 101,592 3,027 520,457 - -
Agriculture,
manufacturing,
wholesale & retail
trade 7,688,544 2,328,371 114,135 10,131,050 - -
Construction 870,175 330,024 21,786 1,221,985 - -
Household 16,190,136 836,086 197,271 17,223,493 - -
Others 235,685 55,766 8,641 300,092 - -
28,331,327 4,182,766 369,124 32,883,217 - -

GROUP

Financial, insurance &

business services
and real estate 3,762,480 670,415 25,503 4,458,398 - -
Transport, storage &
communication 564,253 131,380 3,394 699,027 - -
Agriculture,
manufacturing,
wholesale & retail
trade 9,840,739 3,035,916 155,162 13,031,817 - -
Construction 1,041,903 360,673 27,515 1,430,090 - -
Household 21,056,625 1,350,005 256,386 22,663,015 - -
Others 377,250 62,208 8,643 448,100 - -
36,643,249 5,610,597 476,602 42,730,447 - -
 2019 Annual Report 307

3.0 CREDIT RISK (CONT’D)

3.2 Past Due Loans, Advances and Financing Analysis (cont’d)

The following tables represent the loans, advances and financing by geographical region, where past due exposures are included under
Stage 2 and Stage 3:

31 March 2019 31 March 2018

Non-credit
Non-credit Impaired Credit Impaired Total impaired Credit Impaired
12 months ECL Lifetime ECL Lifetime ECL Collectively Individually
(Stage 1) (Stage 2) (Stage 3) Assessed Assessed
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

BANK

Geographic
Distribution
Northern region 1,787,685 403,588 39,874 2,231,147 - -
Central region 20,640,286 2,872,670 246,940 23,759,896 - -
Southern region 3,588,410 351,830 49,183 3,989,423 - -
Sabah region 1,785,547 366,194 22,554 2,174,295 - -
Sarawak region 529,399 188,484 10,573 728,456 - -
28,331,327 4,182,766 369,124 32,883,217 - -

GROUP

Geographic
Distribution
Northern region 2,482,149 567,523 49,667 3,099,338 - -
Central region 26,358,419 3,833,533 326,983 30,518,935 - -
Southern region 4,709,670 500,028 63,369 5,273,067 - -
Sabah region 2,389,205 453,346 25,317 2,867,868 - -
Sarawak region 703,806 256,166 11,267 971,239 - -
36,643,249 5,610,597 476,602 42,730,447 - -
308 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.3 Impaired Loans, Advances and Financing Analysis

Impaired loans, advances and financing are exposures where the customers have failed to make a principal and/ or interest payment for
more than three months. In addition, where customers are deemed incapable of continuing repayment obligations, the exposures will be
judgmentally impaired. Where exposures are restructured or rescheduled due to increase in credit risk, the exposures are also classified as
impaired.

Impaired loans, advances and financing analysed by sectors:

BANK GROUP
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Financial, insurance & business services and real estate 24,264 103,133 25,503 106,333
Transport, storage & communication 3,027 5,028 3,394 5,991
Agriculture, manufacturing, wholesale & retail trade 114,135 127,274 155,162 169,844
Construction 21,786 11,450 27,515 13,271
Household 197,271 212,935 256,386 271,254
Others 8,641 10,826 8,643 10,826
369,124 470,646 476,602 577,519

Credit provisions on loans, advances and financing analysed by sectors:

Non-credit Impaired Credit Impaired ECL charged/

12 months Lifetime Lifetime (write-back) Stage 3
ECL ECL ECL for the write-off
BANK (Stage 1) (Stage 2) (Stage 3) year (net) for the year
2019 RM’000 RM’000 RM’000 RM’000 RM’000

Financial, insurance & business services

and real estate 3,572 9,090 6,091 3,879 (619)
Transport, storage & communication 956 4,650 2,946 (457) (469)
Agriculture, manufacturing, wholesale &
retail trade 15,854 74,557 64,807 20,102 (24,079)
Construction 1,562 11,568 18,955 15,964 (236)
Household 26,543 41,073 76,059 48,007 (41,612)
Others 647 1,683 2,475 194 (587)
49,135 142,622 171,332 87,689 (67,602)
 2019 Annual Report 309

3.0 CREDIT RISK (CONT’D)

3.3 Impaired Loans, Advances and Financing Analysis (cont’d)

Credit provisions on loans, advances and financing analysed by sectors (cont’d):

Non-credit Impaired Credit Impaired ECL charged/

12 months Lifetime Lifetime (write-back) Stage 3
ECL ECL ECL for the write-off
GROUP (Stage 1) (Stage 2) (Stage 3) year (net) for the year
2019 RM’000 RM’000 RM’000 RM’000 RM’000

Financial, insurance & business services

and real estate 4,598 11,603 6,400 3,191 (647)
Transport, storage & communication 1,130 6,405 3,247 (1,095) (469)
Agriculture, manufacturing, wholesale &
retail trade 19,728 88,997 78,835 25,609 (24,586)
Construction 1,897 12,934 23,909 20,030 (262)
Household 44,317 90,524 102,598 84,607 (74,276)
Others 1,009 2,055 2,476 195 (587)
72,679 212,519 217,465 132,537 (100,827)

Individual
assessment
made for/ Individual
Individual Collective write-back assessment
assessment assessment during the write-off
BANK allowance allowance year (net) for the year
2018 RM’000 RM’000 RM’000 RM’000

Financial, insurance & business services and real estate 1,992 29,353 1,044 -
Transport, storage & communication 2,510 4,667 1,930 (9,561)
Agriculture, manufacturing, wholesale & retail trade 47,416 96,493 12,928 (3,953)
Construction 2,665 8,980 3,888 (8,663)
Household 7,523 78,624 2,432 (2,440)
Others 2,861 2,318 1,863 -
64,967 220,435 24,085 (24,617)

GROUP
2018

Financial, insurance & business services and real estate 2,904 34,075 1,957 -
Transport, storage & communication 2,510 6,300 1,930 (9,561)
Agriculture, manufacturing, wholesale & retail trade 55,267 115,199 18,954 (3,953)
Construction 3,265 11,425 3,968 (8,708)
Household 8,926 126,796 3,204 (3,007)
Others 2,861 2,921 1,863 -
75,733 296,716 31,876 (25,229)
310 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.3 Impaired Loans, Advances and Financing Analysis (cont’d)

Impaired loans, advances and financing and credit provisions analysed by significant geographical areas:

Non-credit Credit
Impaired Impaired Impaired
loans, 12 months Lifetime Lifetime
advances ECL ECL ECL
BANK and financing (Stage 1) (Stage 2) (Stage 3)
2019 RM’000 RM’000 RM’000 RM’000

Northern region 39,874 4,097 17,596 24,458

Central region 246,940 37,056 97,747 110,352
Southern region 49,183 4,531 12,249 23,082
Sabah region 22,554 2,110 8,326 7,673
Sarawak region 10,573 1,342 6,704 5,765
369,124 49,135 142,622 171,332

GROUP
2019

Northern region 49,667 6,430 24,795 27,829

Central region 326,982 53,944 149,923 142,380
Southern region 63,370 7,688 19,785 32,427
Sabah region 25,316 3,039 10,403 8,766
Sarawak region 11,267 1,577 7,613 6,064
476,602 72,679 212,519 217,465

Impaired
loans, Individual Collective
advances assessment assessment
BANK and financing allowance allowance
2018 RM’000 RM’000 RM’000

Northern region 34,658 7,299 26,602

Central region 336,653 42,378 144,320
Southern region 65,560 11,848 27,381
Sabah region 24,263 645 16,431
Sarawak region 9,512 2,797 5,701
470,646 64,967 220,435

GROUP
2018

Northern region 42,540 7,863 33,287

Central region 417,859 48,402 197,424
Southern region 78,417 15,284 37,739
Sabah region 28,145 1,387 20,620
Sarawak region 10,558 2,797 7,646
577,519 75,733 296,716
 2019 Annual Report 311

3.0 CREDIT RISK (CONT’D)

3.3 Impaired Loans, Advances and Financing Analysis (cont’d)

Movements in the credit provisions for impairment on loans, advances and financing are as follows:

31 March 2019 31 March 2018

Non-credit Impaired Credit
Collectively Assessed Impaired
Collectively
Assessed
12 months Lifetime Lifetime
ECL ECL ECL Collectively Individually
(Stage 1) (Stage 2) (Stage 3) Total Assessed Assessed
BANK RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated 285,402 234,637 64,147
Effect of adoption of MFRS 9 52,797 - -
As restated 43,894 137,652 156,653 338,199 234,637 64,147
Transfer to Stage 1 15,264 (90,649) (5,930) (81,315) - -
Transfer to Stage 2 (24,760) 154,042 (71,881) 57,401 - -
Transfer to Stage 3 (148) (65,538) 178,889 113,203 - -
Financial assets derecognised other than
write-off (26,381) (118,951) (16,490) (161,822) - -
Changes due to change in credit risk (5,213) 5,001 (4,699) (4,911) 30,618 24,085
New financial assets originated or purchased 46,449 120,924 7,800 175,173 - -
Other adjustment 30 150 - 180 - -
Total charge to income statement on
allowance 5,241 4,979 87,689 97,909 30,618 24,085
Unwind of discount - - (5,408) (5,408) - -
Write-off - (9) (67,602) (67,611) (43,468) (24,617)
Transfer (to)/from collective assessment
allowance to individual assessment
allowance - - - - (1,352) 1,352
At the end of the financial year 49,135 142,622 171,332 363,089 220,435 64,967
312 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.3 Impaired Loans, Advances and Financing Analysis (cont’d)

Movements in the credit provisions for impairment on loans, advances and financing are as follows (cont’d):

31 March 2019 31 March 2018

Non-credit Impaired Credit
Collectively Assessed Impaired
Collectively
Assessed
12 months Lifetime Lifetime
ECL ECL ECL Collectively Individually
(Stage 1) (Stage 2) (Stage 3) Total Assessed Assessed
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2018
As previously stated 372,449 313,328 66,627
Effect of adoption of MFRS 9 90,879 - -
As restated 66,941 203,691 192,696 463,328 313,328 66,627
Transfer to Stage 1 24,268 (132,004) (7,270) (115,006) - -
Transfer to Stage 2 (40,020) 232,846 (103,159) 89,667 - -
Transfer to Stage 3 (181) (114,361) 254,377 139,835 - -
Financial assets derecognised other than
write-off (39,199) (152,890) (19,415) (211,504) - -
Changes due to change in credit risk (9,934) 20,361 (7,814) 2,613 73,699 31,876
New financial assets originated or purchased 70,774 154,861 15,818 241,453 - -
Other adjustment 30 150 - 180 - -
Total charge to income statement on
allowance 5,738 8,963 132,537 147,238 73,699 31,876
Unwind of discount - - (6,941) (6,941) - -
Write-off - (135) (100,827) (100,962) (87,852) (25,229)
Transfer (to)/from collective assessment
allowance to individual assessment
allowance - - - - (2,459) 2,459
At the end of the financial year 72,679 212,519 217,465 502,663 296,716 75,733
3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach

The following tables represent the credit exposures by risk-weights and after credit risk mitigation:

Exposures after netting and credit risk mitigation

Insurance Total
Banks, Companies, Exposures
DFIs & Securities after Total
Sovereigns/ Public Multilateral Firms & Higher Netting & Risk-
BANK Central Sector Development Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
2019 Banks Entities Banks Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
Risk-Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 5,808,639 - 5,024 - 711,113 - - - 255,110 - 6,779,886 -

20% 1,225 84,527 1,066,451 - 1,495,449 - 367 - - - 2,648,019 529,604
35% - - - - - - 7,444,373 - - - 7,444,373 2,605,531
50% - - 822,688 - 52,337 17,844 4,503,977 - - - 5,396,846 2,698,423
75% - - - - - 6,922,612 17,145 - - - 6,939,757 5,204,819
100% - - 322 29,350 12,950,265 637,477 542,517 - 361,152 126,738 14,647,821 14,647,822
150% - - - - 39,761 37,390 - 11,503 - 3 88,657 132,986
Total exposures 5,809,864 84,527 1,894,485 29,350 15,248,925 7,615,323 12,508,379 11,503 616,262 126,741 43,945,359 25,819,184

Risk-weighted assets by
exposures 245 16,905 624,956 29,350 13,335,165 5,894,445 5,412,969 17,255 361,152 126,743 25,819,184

Average risk-weight 0% 20% 33% 100% 87% 77% 43% 150% 59% 100% 59%

Deduction from Capital

base - - - - - - - - - - -
2019 Annual Report
313
 314

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables represent the credit exposures by risk-weights and after credit risk mitigation (cont’d):

Exposures after netting and credit risk mitigation

Insurance Total
Banks, Companies, Exposures
Alliance Bank Malaysia Berhad (88103-W)

DFIs & Securities after Total

Sovereigns/ Public Multilateral Firms & Higher Netting & Risk-
GROUP Central Sector Development Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
2019 Banks Entities Banks Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
Risk-Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 8,398,532 - 45,217 - 1,175,890 - - - 255,110 - 9,874,749 -

20% 1,225 215,508 869,585 - 2,392,195 - 467 - 665 - 3,479,645 695,929
35% - - - - - - 9,779,655 - - - 9,779,655 3,422,879
50% - - 93,219 - 69,070 25,413 5,791,700 - - - 5,979,402 2,989,700
75% - - - - - 8,828,371 17,838 - - - 8,846,209 6,634,658
100% - - 322 36,462 16,438,395 1,325,366 800,774 - 438,597 187,522 19,227,438 19,227,440
150% - - - - 53,538 46,624 - 13,192 - 3 113,357 170,036
Total exposures 8,399,757 215,508 1,008,343 36,462 20,129,088 10,225,774 16,390,434 13,192 694,372 187,525 57,300,455 33,140,642

Risk-weighted assets by
exposures 245 43,102 220,849 36,462 17,031,677 8,029,287 7,132,975 19,788 438,730 187,527 33,140,642

Average risk-weight 0% 20% 22% 100% 85% 79% 44% 150% 63% 100% 58%

Deduction from Capital

base - - - - - - - - - - -
3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables represent the credit exposures by risk-weights and after credit risk mitigation (cont’d):

Exposures after netting and credit risk mitigation

Insurance Total
Banks, Companies, Exposures
DFIs & Securities after Total
Sovereigns/ Public Multilateral Firms & Higher Netting & Risk-
BANK Central Sector Development Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
2018 Banks Entities Banks Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
Risk-Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 4,800,900 - - - 383,680 - - - 265,404 - 5,449,984 -

20% - 74,458 1,562,541 - 1,704,378 - 456 - - - 3,341,833 668,366
35% - - - - - - 6,739,628 - - - 6,739,628 2,358,870
50% - - 830,379 - 68,050 5,895 4,468,233 - - - 5,372,557 2,686,279
75% - - - - - 7,051,491 17,402 - - - 7,068,893 5,301,670
100% - - 22 53,466 12,346,197 402,310 776,879 - 264,204 121,641 13,964,719 13,964,719
150% - - - - 110,301 97,790 - 4,811 - 3 212,905 319,357
Total exposures 4,800,900 74,458 2,392,942 53,466 14,612,606 7,557,486 12,002,598 4,811 529,608 121,644 42,150,519 25,299,261

Risk-weighted assets by
exposures - 14,892 727,720 53,466 12,886,549 5,840,560 5,383,008 7,217 264,205 121,646 25,299,261

Average risk-weight 0% 20% 30% 100% 88% 77% 45% 150% 50% 100% 60%

Deduction from Capital

base - - - - - - - - - - -
2019 Annual Report
315
 316

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables represent the credit exposures by risk-weights and after credit risk mitigation (cont’d):

Exposures after netting and credit risk mitigation

Insurance Total
Banks, Companies, Exposures
Alliance Bank Malaysia Berhad (88103-W)

DFIs & Securities after Total

Sovereigns/ Public Multilateral Firms & Higher Netting & Risk-
GROUP Central Sector Development Fund Regulatory Residential Risk Other Equity Credit Risk Weighted
2018 Banks Entities Banks Managers Corporates Retail Mortgages Assets Assets Exposures Mitigation Assets
Risk-Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 7,775,107 - 45,149 - 882,250 - - - 265,404 - 8,967,910 -

20% - 230,095 1,359,993 - 2,532,554 - 610 - - - 4,123,252 824,650
35% - - - - - - 8,198,999 - - - 8,198,999 2,869,650
50% - - 91,034 - 83,423 8,505 5,343,650 - - - 5,526,612 2,763,306
75% - - - - - 9,086,689 18,776 - - - 9,105,465 6,829,099
100% - - 22 78,661 15,772,308 983,255 911,720 - 374,017 178,853 18,298,836 18,298,836
150% - - - - 139,867 113,620 - 5,206 - 3 258,696 388,044
Total exposures 7,775,107 230,095 1,496,198 78,661 19,410,402 10,192,069 14,473,755 5,206 639,421 178,856 54,479,770 31,973,585

Risk-weighted assets by
exposures - 46,019 317,538 78,661 16,530,331 7,972,954 6,467,399 7,809 374,017 178,858 31,973,585

Average risk-weight 0% 20% 21% 100% 85% 78% 45% 150% 58% 100% 59%

Deduction from Capital

base - - - - - - - - - - -
 2019 Annual Report 317

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

For the purpose of determining counterparty risk-weights, the Group uses external credit assessments from Rating Agency Malaysia
(“RAM”), Malaysian Rating Corporation (“MARC”), Standard and Poor’s (“S&P”), Moody’s, Fitch, and Rating and Investment (“R&I”). In the
context of the Group’s portfolio, external credit assessments are mainly applicable to banks/financial institutions and rated corporations.
The Group follows the process prescribed under BNM’s Capital Adequacy Framework to map the ratings to the relevant risk-weights.
The ratings are monitored and updated regularly to ensure that the latest and most appropriate risk-weights are applied in the capital
computation.

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”):

BANK
2019

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On and Off Balance-Sheet Exposures

(i) Exposures risk-weighted using Sovereigns

and Central Banks rating
Sovereigns and Central Banks (See Note 1) - 5,809,864 - - - 5,809,864
Corporates - 711,113 - - - 711,113
Banks, DFIs and Multilateral Development Banks - 5,024 - - - 5,024
- 6,526,001 - - - 6,526,001

(ii) Exposures risk-weighted using Banking

Institutions long-term rating
Banks, DFIs and Multilateral Development Banks 410,209 1,204,056 13,482 - 213,397 1,841,144

Exposures risk-weighted using Banking

Institutions short-term rating
Banks, DFIs and Multilateral Development Banks 48,318 - - - - 48,318
458,527 1,204,056 13,482 - 213,397 1,889,462
318 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

BANK
2019

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures (cont’d)

(iii) Exposures risk-weighted using Corporate

long-term rating
Public Sector Entities 61,105 - - - 23,422 84,527
Corporates 1,495,449 47,617 - - 14,484,498 16,027,564
Insurance Companies, Securities Firms &
Fund Managers - - - - 29,354 29,354

Exposures risk-weighted using Corporate

short-term rating
Public Sector Entities - - - - - -
Corporates - - - - - -
Insurance Companies, Securities Firms &
Fund Managers - - - - - -
1,556,554 47,617 - - 14,537,274 16,141,445
 2019 Annual Report 319

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

GROUP
2019

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures

(i) Exposures risk-weighted using Sovereigns

and Central Banks rating
Sovereigns and Central Banks (See Note 1) - 8,399,756 - - - 8,399,756
Corporates - 1,175,891 - - - 1,175,891
Banks, DFIs and Multilateral Development Banks - 45,217 - - - 45,217
- 9,620,864 - - - 9,620,864

(ii) Exposures risk-weighted using Banking

Institutions long-term rating
Banks, DFIs and Multilateral Development Banks 427,124 222,121 13,482 - 213,397 876,124

Exposures risk-weighted using Banking

Institutions short-term rating
Banks, DFIs and Multilateral Development Banks 87,001 - - - - 87,001
514,125 222,121 13,482 - 213,397 963,125
320 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

GROUP
2019

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures (cont’d)

(iii) Exposures risk-weighted using Corporate

long-term rating
Public Sector Entities 122,437 - - - 93,071 215,508
Corporates 2,392,195 62,478 - - 18,442,901 20,897,574
Insurance Companies, Securities Firms &
Fund Managers - - - - 36,468 36,468

Exposures risk-weighted using Corporate

short-term rating
Public Sector Entities - - - - - -
Corporates - - - - - -
Insurance Companies, Securities Firms &
Fund Managers - - - - - -
2,514,632 62,478 - - 18,572,440 21,149,550
 2019 Annual Report 321

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

BANK
2018

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures

(i) Exposures risk-weighted using Sovereigns

and Central Banks rating
Sovereigns and Central Banks (See Note 1) - 4,800,900 - - - 4,800,900
Corporates - 383,680 - - - 383,680
- 5,184,580 - - - 5,184,580

(ii) Exposures risk-weighted using Banking

Institutions long-term rating
Banks, DFIs and Multilateral Development Banks 475,428 1,274,546 403,451 - 224,537 2,377,962

Exposures risk-weighted using Banking

Institutions short-term rating
Banks, DFIs and Multilateral Development Banks 14,978 - - - - 14,978
490,406 1,274,546 403,451 - 224,537 2,392,940
322 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

BANK
2018

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures (cont’d)

(iii) Exposures risk-weighted using Corporate

long-term rating
Public Sector Entities 55,778 - - - 18,678 74,456
Corporates 1,704,377 58,704 - - 13,789,513 15,552,594
Insurance Companies, Securities Firms &
Fund Managers - - - - 53,514 53,514

Exposures risk-weighted using Corporate

short-term rating
Public Sector Entities - - - - - -
Corporates - - - - - -
Insurance Companies, Securities Firms &
Fund Managers - - - - - -
1,760,155 58,704 - - 13,861,705 15,680,564
 2019 Annual Report 323

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

GROUP
2018

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures

(i) Exposures risk-weighted using Sovereigns

and Central Banks rating
Sovereigns and Central Banks (See Note 1) - 7,775,108 - - - 7,775,108
Corporates - 882,250 - - - 882,250
Banks, DFIs and Multilateral Development Banks - 45,149 - - - 45,149
- 8,702,507 - - - 8,702,507

(ii) Exposures risk-weighted using Banking

Institutions long-term rating
Banks, DFIs and Multilateral Development Banks 576,166 231,916 403,451 - 224,537 1,436,070

Exposures risk-weighted using Banking

Institutions short-term rating
Banks, DFIs and Multilateral Development Banks 14,978 - - - - 14,978
591,144 231,916 403,451 - 224,537 1,451,048
324 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.4 Assignment of Risk-Weights for Portfolios Under the Standardised Approach (cont’d)

The following tables show the rated credit exposures according to ratings by approved Eligible Credit Assessment Institutions (“ECAIs”) (cont’d):

GROUP
2018

Ratings by Approved ECAIs* Total

Aaa to Aa3/ A1 to A3/ Baa1 to Ba3/ B1 to C/
Moody’s Unrated
P-1 P-2 P-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
S&P Unrated
A-1 A-2 A-3 Others
AAA to AA-/ A+ to A-/ BBB+ to BB-/
FITCH B+ to D Unrated
F1+, F1 A-2 F3
Exposure Class
AAA to AA3/ A+ to A3/ BBB1+ to B to D/
RAM Unrated
P-1 P-2 BB3/ P-3 NP
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
MARC Unrated
MARC-1 MARC-2 MARC-3 MARC-4
AAA to AA-/ A+ to A-/ BBB+ to BB-/ B+ to D/
R&I Unrated
a-1+, a-1 a-2 a-3 b, c
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and Off Balance-Sheet Exposures (cont’d)

(iii) Exposures risk-weighted using Corporate

long-term rating
Public Sector Entities 137,353 - - - 92,739 230,092
Corporates 2,532,552 73,250 - - 17,632,805 20,238,607
Insurance Companies, Securities Firms &
Fund Managers - - - - 78,709 78,709

Exposures risk-weighted using Corporate

short-term rating
Public Sector Entities - - - - - -
Corporates - - - - - -
Insurance Companies, Securities Firms &
Fund Managers - - - - - -
2,669,905 73,250 - - 17,804,253 20,547,408

Note 1: The Federal Government and Central Bank of Malaysia are accorded 0% risk-weight as provided under the Capital Adequacy
Framework.

*Upper Range = Long-Term Rating, Lower Range = Short-Term Rating

Note:

There is no outstanding securitisation contract in the Bank that requires disclosure of ratings and short-term rating of securitisation by
approved ECAIs.
 2019 Annual Report 325

3.0 CREDIT RISK (CONT’D)

3.5 Credit Risk Mitigation (“CRM”)

As a practical approach towards mitigating credit risk, the Group accepts a wide range of collaterals. Main types of collateral acceptable to
the Group include cash, guarantees, commercial and residential real estate, and physical collateral/financial collateral, e.g. motor vehicles
or shares. Guarantees are accepted only when the financial standing of the guarantors have been ascertained.

However, for capital computation purposes, the BNM guidelines apply more restrictive rules on collaterals that qualify as credit risk
mitigants. As a result, not all of the collaterals accepted by the Group can be used to reduce our capital adequacy requirement.

The following tables represent the Bank’s/Group’s credit exposure including off-balance sheet items under the standardised approach, the
total exposure (after, where applicable, eligible netting benefits) that is covered by eligible guarantees and credit derivatives; and eligible
collateral after haircuts, allowed under the Capital Adequacy Framework.

Exposures Exposures
covered by covered by Exposures
guarantees/ eligible covered by
BANK Exposures credit financial other eligible
2019 before CRM derivatives collateral collateral
Exposure Class RM’000 RM’000 RM’000 RM’000

Credit Risk
On-balance sheet exposures:
Sovereigns/Central banks 5,596,654 - - -
Public sector entities 69,280 - - -
Banks, DFIs and Multilateral Development Banks 1,715,604 - - -
Insurance companies, securities firms and fund managers 28,494 - - -
Corporates 14,760,638 - 1,237,422 -
Regulatory retail 7,519,108 - 673,765 -
Residential mortgages 12,335,936 - 9,362 -
Higher risk assets 9,472 - 5 -
Other assets 616,262 - - -
Equity exposures 126,741 - - -
Defaulted exposures 200,941 - 1,347 -
Total on-balance sheet exposures 42,979,130 - 1,921,901 -

Off-balance sheet exposures:

Off-balance sheet exposures other than OTC derivatives or
credit derivatives 3,330,927 - 443,656 -
Defaulted exposures 1,360 - 500 -
Total off-balance sheet exposures 3,332,287 - 444,156 -
Total on and off-balance sheet exposures 46,311,417 - 2,366,057 -
326 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.5 Credit Risk Mitigation (“CRM”) (cont’d)

Exposures Exposures
covered by covered by Exposures
guarantees/ eligible covered by
GROUP Exposures credit financial other eligible
2019 before CRM derivatives collateral collateral
Exposure Class RM’000 RM’000 RM’000 RM’000

Credit Risk
On-balance sheet exposures:
Sovereigns/Central banks 8,186,546 - - -
Public sector entities 196,261 - - -
Banks, DFIs and Multilateral Development Banks 829,576 - - -
Insurance companies, securities firms and fund managers 35,557 - - -
Corporates 19,580,592 - 1,630,447 -
Regulatory retail 9,999,499 - 754,117 -
Residential mortgages 16,073,138 - 10,379 -
Higher risk assets 11,086 - 5 -
Other assets 694,371 - - -
Equity exposures 187,525 - - -
Defaulted exposures 262,387 - 2,470 -
Total on-balance sheet exposures 56,056,537 - 2,397,418 -

Off-balance sheet exposures:

Off-balance sheet exposures other than OTC derivatives or
credit derivatives 4,160,638 - 520,517 -
Defaulted exposures 1,718 - 500 -
Total off-balance sheet exposures 4,162,356 - 521,017 -
Total on and off-balance sheet exposures 60,218,893 - 2,918,435 -
 2019 Annual Report 327

3.0 CREDIT RISK (CONT’D)

3.5 Credit Risk Mitigation (“CRM”) (cont’d)

Exposures Exposures
covered by covered by Exposures
guarantees/ eligible covered by
BANK Exposures credit financial other eligible
2018 before CRM derivatives collateral collateral
Exposure Class RM’000 RM’000 RM’000 RM’000

Credit Risk
On-balance sheet exposures:
Sovereigns/Central banks 4,800,900 - - -
Public sector entities 59,446 - - -
Banks, DFIs and Multilateral Development Banks 2,212,038 - - -
Insurance companies, securities firms and fund managers 37,884 - 33 -
Corporates 13,887,523 - 1,113,972 -
Regulatory retail 7,451,752 - 719,128 -
Residential mortgages 11,911,755 - 9,711 -
Higher risk assets 2,801 - 6 -
Other assets 529,608 - - -
Equity exposures 121,644 - - -
Defaulted exposures 313,098 - 1,949 -
Total on-balance sheet exposures 41,328,449 - 1,844,799 -

Off-balance sheet exposures:

Off-balance sheet exposures other than OTC derivatives or
credit derivatives 3,055,475 - 393,872 -
Defaulted exposures 5,267 - - -
Total off-balance sheet exposures 3,060,742 - 393,872 -
Total on and off-balance sheet exposures 44,389,191 - 2,238,671 -
328 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.5 Credit Risk Mitigation (“CRM”) (cont’d)

Exposures Exposures
covered by covered by Exposures
guarantees/ eligible covered by
GROUP Exposures credit financial other eligible
2018 before CRM derivatives collateral collateral
Exposure Class RM’000 RM’000 RM’000 RM’000

Credit Risk
On-balance sheet exposures:
Sovereigns/Central banks 7,715,107 - - -
Public sector entities 211,083 - - -
Banks, DFIs and Multilateral Development Banks 1,315,416 - - -
Insurance companies, securities firms and fund managers 63,080 - 33 -
Corporates 18,530,955 - 1,438,506 -
Regulatory retail 10,019,382 - 790,034 -
Residential mortgages 14,354,700 - 10,938 -
Higher risk assets 3,195 - 6 -
Other assets 639,421 - - -
Equity exposures 178,856 - - -
Defaulted exposures 385,914 - 2,733 -
Total on-balance sheet exposures 53,417,109 - 2,242,250 -

Off-balance sheet exposures:

Off-balance sheet exposures other than OTC derivatives or
credit derivatives 3,766,975 - 472,280 -
Defaulted exposures 11,080 - 863 -
Total off-balance sheet exposures 3,778,055 - 473,143 -
Total on and off-balance sheet exposures 57,195,164 - 2,715,393 -

3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk

Counterparty Credit Risk (“CCR”) is the risk that the counterparty to a transaction involving financial instruments such as foreign exchange
and derivatives, defaults before the final settlement of the transaction’s cash flows. Unlike a loan where the credit risk is unilateral i.e. only
the lending bank faces the risk of loss, CCR on derivatives creates bilateral risk of loss. This means either party of the transaction can incur
losses depending on the market value of the derivative, which can vary over time with the movement of underlying market factors.

For derivatives, the Group is not exposed to credit risk for the full face value of the contracts. The CCR is limited to the potential cost of
replacing the cash-flow if the counterparty defaults. As such, the credit equivalent amount will depend, inter alia, on the maturity of the
contract and on the volatility of the rates underlying that type of instrument.

Derivatives are mainly utilised for hedging purposes with minimal trading exposures. CCR arising from the derivatives is managed via
counterparty limits, which is set based on the counterparty’s size and credit rating. These limits are monitored daily by Group Risk
Management.
 2019 Annual Report 329

3.0 CREDIT RISK (CONT’D)

3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk (cont’d)

CCR is further mitigated via netting agreements, e.g. under the International Swaps and Derivatives Association (“ISDA”) master agreement.
The ISDA agreement contractually binds both parties to apply close-out netting across all outstanding transactions covered by this
agreement should either party default or other such predetermined credit events occur.

CCR is measured via the current exposure method whereby the credit equivalent exposure for derivatives is the sum of the positive
mark-to-market exposure plus the potential future exposure which is equivalent to an add-on factor multiplied by the notional amount. The
add-on factors are as stipulated by BNM.

The off-balance sheet exposures and their related counterparty credit risk of the Bank and the Group are as follows:

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
BANK Amount Contracts Amount Assets
2019 RM’000 RM’000 RM’000 RM’000

Credit-related exposures
Direct credit substitutes 490,085 - 490,010 414,325
Transaction-related contingent items 609,843 - 300,635 189,732
Short-term self-liquidating trade-related contingencies 133,405 - 26,681 22,845
Forward asset purchase 211,985 - 211,985 -
Obligations under an on-going underwriting agreement - - - -
Irrevocable commitments to extend credit:
• maturity exceeding one year 904,181 - 450,612 379,036
• maturity not exceeding one year 6,461,733 - 1,292,346 935,922
Unutilised credit card lines 1,600,820 - 320,164 247,048
10,412,052 - 3,092,433 2,188,908

Derivative financial instruments

Foreign exchange related contracts:
• one year or less 4,561,102 19,668 68,441 29,095
• over one year to three years 159,580 239 9,852 8,022
• over three years 10,209 - 868 868
Interest rate related contracts:
• one year or less 2,034,786 1,649 5,401 1,543
• over one year to three years 1,779,255 7,108 32,711 8,548
• over three years 2,503,968 25,341 114,912 57,257
Equity related contracts:
• one year or less 78,958 97 4,835 2,397
• over one year to three years 30,810 847 2,835 1,418
11,158,669 54,949 239,854 109,148
21,570,721 54,949 3,332,287 2,298,056
330 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk (cont’d)

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
GROUP Amount Contracts Amount Assets
2019 RM’000 RM’000 RM’000 RM’000

Credit-related exposures
Direct credit substitutes 650,663 - 650,588 561,367
Transaction-related contingent items 680,097 - 335,763 212,536
Short-term self-liquidating trade-related contingencies 179,994 - 35,999 31,609
Forward asset purchase 236,985 - 236,985 -
Obligations under an on-going underwriting agreement 46,154 - 23,077 23,077
Irrevocable commitments to extend credit:
• maturity exceeding one year 1,319,483 - 658,158 509,949
• maturity not exceeding one year 8,308,840 - 1,661,768 1,200,570
Unutilised credit card lines 1,600,820 - 320,164 247,047
13,023,036 - 3,922,502 2,786,156

Derivative financial instruments

Foreign exchange related contracts:
• one year or less 4,561,102 19,668 68,441 29,095
• over one year to three years 159,580 239 9,852 8,022
• over three years 10,209 - 868 868
Interest rate related contracts:
• one year or less 2,034,786 1,649 5,401 1,543
• over one year to three years 1,779,255 7,108 32,711 8,548
• over three years 2,503,968 25,341 114,912 57,257
Equity related contracts:
• one year or less 78,958 97 4,835 2,397
• over one year to three years 30,810 847 2,835 1,418
11,158,669 54,949 239,854 109,148
24,181,704 54,949 4,162,356 2,895,304
 2019 Annual Report 331

3.0 CREDIT RISK (CONT’D)

3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk (cont’d)

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
BANK Amount Contracts Amount Assets
2018 RM’000 RM’000 RM’000 RM’000

Credit-related exposures
Direct credit substitutes 564,446 - 564,446 494,530
Transaction-related contingent items 651,896 - 325,948 244,337
Short-term self-liquidating trade-related contingencies 215,445 - 43,089 39,457
Irrevocable commitments to extend credit:
• maturity exceeding one year 744,972 - 372,486 336,606
• maturity not exceeding one year 5,748,870 - 1,149,774 834,826
Unutilised credit card lines 1,750,064 - 350,013 270,209
9,675,693 - 2,805,756 2,219,965

Derivative financial instruments

Foreign exchange related contracts:
• one year or less 5,057,347 57,169 94,639 41,707
• over one year to three years 73,015 - 3,964 3,964
• over three years 17,385 - 1,536 1,536
Interest rate related contracts:
• one year or less 1,206,130 1,050 5,343 1,801
• over one year to three years 1,990,360 7,158 38,427 11,888
• over three years 2,146,310 18,864 102,929 57,951
Equity related contracts:
• one year or less 38,825 - 2,330 1,148
• over one year to three years 67,660 404 5,817 2,909
10,597,032 84,645 254,986 122,904
20,272,725 84,645 3,060,742 2,342,869
332 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

3.0 CREDIT RISK (CONT’D)

3.6 Off-Balance Sheet Exposures and Counterparty Credit Risk (cont’d)

Positive
Fair Value Credit Risk-
Principal of Derivative Equivalent Weighted
GROUP Amount Contracts Amount Assets
2018 RM’000 RM’000 RM’000 RM’000

Credit-related exposures
Direct credit substitutes 719,148 - 719,148 636,319
Transaction-related contingent items 739,535 - 369,768 274,015
Short-term self-liquidating trade-related contingencies 235,056 - 47,011 42,975
Irrevocable commitments to extend credit:
• maturity exceeding one year 1,056,899 - 528,450 479,335
• maturity not exceeding one year 7,543,400 - 1,508,680 1,060,940
Unutilised credit card lines 1,750,064 - 350,013 270,209
12,044,102 - 3,523,069 2,763,793

Derivative financial instruments

Foreign exchange related contracts:
• one year or less 5,057,347 57,169 94,639 41,707
• over one year to three years 73,015 - 3,964 3,964
• over three years 17,385 - 1,536 1,536
Interest rate related contracts:
• one year or less 1,206,130 1,050 5,343 1,801
• over one year to three years 1,990,360 7,158 38,427 11,888
• over three years 2,146,310 18,864 102,929 57,951
Equity related contracts:
• one year or less 38,825 - 2,330 1,148
• over one year to three years 67,660 404 5,817 2,909
10,597,032 84,645 254,986 122,904
22,641,134 84,645 3,778,055 2,886,697
 2019 Annual Report 333

4.0 Market Risk

Market Risk is defined as the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices.

Market Risk Management

The Board, via the Group Risk Management Committee (GRMC) provides oversight on market risk management activities. Its responsibilities
include reviewing and approving risk management policies, risk exposures and limits whilst ensuring the necessary infrastructure and resources
are in place.

At senior management level, the Group Assets and Liabilities Management Committee (“GALCO”) manages the Group’s market risk by reviewing
and recommending market risk frameworks and policies; ensuring that market risk limits and parameters are within the approved thresholds; and
aligning market risk management with business strategy and planning.

Organisationally, market risks are managed collectively via the Three Lines of Defence concept. Group Financial Markets, as the risk taking unit
assumes ownership of the risk and manages the risk within the approved policies, risk limits and parameters as set by the GRMC or GALCO. The
risk control function is undertaken by Group Risk Management which provides independent monitoring, valuation and reporting of the market
exposures. This is supplemented by periodic review by Group Internal Audit.

For the Group, market risk is managed on an integrated approach which involves the following processes:

(i) Identification of market risk in new products and changes in risk profiles of existing exposures;

(ii) Assessment of the type and magnitude of market risks which takes into account the activity and market role undertaken;

(iii) Adoption of various market risk measurement tools and techniques to quantify market risk exposures; and

(iv) Scheduled and exception reporting on market risk exposures.

Market risk exists in the Group’s activities in fixed income securities, foreign exchange and financial derivatives, which are transacted primarily
by Group Financial Markets (Treasury) department. Trading positions are held intentionally for short-term resale and with the intent of benefiting
from actual or expected short-term price movements while banking book positions are held until maturity or as available-for-sale. Hence, these
positions are susceptible to market movements.

These exposures are governed by approved policies, risk limits and parameters which are set vis-a-vis the Group’s risk appetite and strategy.
Besides that, treasury activities are monitored and reported independently by Group Market Risk on a daily basis. Any limit breaches or exceptions
are reported to GALCO and GRMC.

Hedging Policies and Strategies

The Group had established a hedging policy which outlines the broad principles and policies governing hedging activities by the Group. Generally,
the Group enters into hedges to manage or reduce risk exposures. All hedging strategies are approved by the GALCO and monitored independently
by Group Market Risk Management. Further, all hedging strategies are designated upfront and recorded separately under the hedging portfolios.
Hedging positions and effectiveness, if any, are monitored and reported monthly to senior management.

Market Risk Capital Charge

For the Group, the market risk charge is computed on the standardised approach and the capital charges are mainly on the fixed income
securities, foreign exchange and financial derivatives portfolios, if any.
334 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

4.0 MARKET RISK (CONT’D)

Regulatory Capital Requirements

The risk-weighted assets and capital requirements for the various categories of risk under market risk are as follows:

BANK GROUP
Risk- Risk-
Weighted Capital Weighted Capital
Assets Requirements Assets Requirements
2019 RM’000 RM’000 RM’000 RM’000

Interest rate risk

• General interest rate risk 149,162 11,933 149,163 11,933
• Specific interest rate risk 379 30 379 30
149,542 11,963 149,542 11,963

Option risk 990 79 990 79

Foreign exchange risk 124,410 9,953 124,410 9,953
274,942 21,995 274,942 21,995

2018

Interest rate risk

• General interest rate risk 11,971 958 11,971 958
• Specific interest rate risk 3,318 265 3,786 303
15,289 1,223 15,757 1,261

Option risk 559 45 559 45

Foreign exchange risk 94,541 7,563 94,541 7,563
110,389 8,831 110,857 8,869
 2019 Annual Report 335

5.0 OPERATIONAL RISK

Operational risk is the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external
events. It includes legal risk but excludes strategic and reputation risks.

Operational Risk Management

Management, escalation and reporting of operational risks are instituted through the Group Operational Risk Management Committee (GORMC),
Group Risk Management Committee (GRMC) as well as the Board.

The Board, via the GRMC provides oversight on operational risk management activities.

At senior management level, GORMC manages the day-to-day operational risk exposures. The roles and responsibilities of GORMC include:

(i) Providing strategic guidance on operational issues and monitor the implementation of Operational Risk Management (ORM) framework;
(ii) Reviewing and monitoring operational risk issues, reports and action plans;
(iii) Evaluating and agree on initiatives to strengthen operational processes or infrastructure; and
(iv) Promoting risk awareness and operational risk management culture.

The Group practices operational risk management as outlined in the ORM Framework, in accordance with Basel and regulatory guidelines. The
Group applies operational risk tools and methodologies in the identification, assessment, measurement, control and monitoring of operational
risks. Other efforts by the Group include the ORM awareness training which is given to all staff and regular business continuity and disaster
recovery plans.

The Group adopts the Basic Indicator Approach for computation of operational Risk-Weighted Asset (RWA).
336 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

6.0 EQUITY EXPOSURES IN BANKING BOOK

The Bank and the Group hold equity positions in the banking book as a result of debt to equity conversion, for social-economic purposes, or to
maintain strategic relationships. All equities are held at fair value. For quoted equities, fair value is estimated based on quoted or observable
market price at the end of the reporting period. For unquoted equities, the fair value is estimated using approved valuation techniques.

Any gains and losses arising from the returns and changes in fair value of these equities holdings are reflected in the Statement of Income.

The following table shows the equity exposures in banking book:

BANK GROUP
Gross credit Risk-weighted Gross credit Risk-weighted
exposures assets exposures assets
2019 RM’000 RM’000 RM’000 RM’000

Publicly traded
Holding of equity investments 8 8 8 8

Privately held
For socio-economic purposes 126,730 126,730 187,514 187,514
Not for socio-economic purposes 3 4 3 4
126,741 126,742 187,525 187,526

2018

Publicly traded
Holding of equity investments 10 10 10 10

Privately held
For socio-economic purposes 121,631 121,631 178,843 178,843
Not for socio-economic purposes 3 5 3 5
121,644 121,646 178,856 178,858
 2019 Annual Report 337

6.0 EQUITY EXPOSURES IN BANKING BOOK (CONT’D)

Gains and losses on equity exposures in the banking book

The table below present the gains and losses on equity exposures in banking book:

BANK GROUP
2019 2018 2019 2018
RM’000 RM’000 RM’000 RM’000

Realised gains/(losses) recognised in the statement of

comprehensive income
• Privately held equity investments - 18,343 - 18,343
- 18,343 - 18,343

Unrealised (losses)/gains recognised in revaluation reserve

• Publicly traded equity investments (1) (5) (1) (5)
• Privately held equity investments 5,294 (8,086) 8,866 (4,776)
5,293 (8,091) 8,865 (4,781)

7.0 INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK

Interest rate risk/rate of return risk in the banking book (“IRR/RORBB”) is the risk that occurs when movements in interest rates affect a banking
organisation’s earnings or economic value. Changes in interest rate/profit rate affects the Group’s earnings by altering interest rate-sensitive
income and expenses, affecting its net interest income (NII). It also affects the underlying value of banking assets, liabilities and off-balance sheet
instruments as the present value of future cash flows change when interest rate/profit rate change.

Risk Governance

IRR/RORBB is managed collectively by GALCO, Group Financial Markets, Group Finance and Group Risk Management. Each of the above parties has
clearly defined roles and responsibilities to provide oversight and manage IRR/RORBB within the defined framework and structure as approved by
the GRMC/Board. GALCO assumes the overall responsibility in managing IRR/RORBB by setting the directions, strategy and risk limits/parameters
for the Bank/Group. Group Financial Markets is tasked to execute the approved strategy by managing the assets/liabilities as well as the funding
and liquidity needs of the Bank/Group. Group Finance and Group Risk Management provide support in respect of risk monitoring and reporting of
the banking book exposures; and ensuring regulatory as well as accounting requirements are met.

IRR/RORBB Management

The guiding principles in managing IRR/RORBB include:

(i) Adopting a prudent approach to manage IRR/RORBB in ways that commensurate with the Group’s size and business activities. This
is achieved via establishing robust IRR/RORBB policies, measures and strategies which are complemented by regular monitoring and
reporting.

(ii) Checking to ensure that IRR/RORBB are accurately measured and any mismatches are identified, reviewed and reported monthly to GALCO.

(iii) Setting proper gapping limits and the limits are monitored closely.

(iv) Practicing comprehensive IRR/RORBB reporting and review process, with aggregated information and supporting details to facilitate
assessment of the Group’s sensitivity to changes in market conditions.
338 Alliance Bank Malaysia Berhad (88103-W)

BASEL II PILLAR 3 REPORT DISCLOSURE (Cont’d)

for the financial year ended 31 March 2019

7.0 INTEREST RATE RISK/RATE OF RETURN RISK IN THE BANKING BOOK (CONT’D)

IRR/RORBB Management (cont’d)

The Bank uses a range of tools, including the following primary measures to quantify and monitor IRR/RORBB:

(i) Repricing gap analysis to measure interest rate/profit rate from the earnings perspective i.e. impact of interest rate/profit rate changes to
earnings in the short-term.

(ii) Net interest income/profit income simulation to assess the impact of interest rate/profit rate changes on short term earnings volatility.

(iii) Economic value (“EVE”) simulations which measures the asset-liability impact of adverse interest rate/profit rate movements on the
economic value of the Bank’s capital.

Group Risk Management performs independent monitoring of the interest rate/profit rate benchmarks to ensure compliance. Any exceptions are
reported and appropriate remedial actions are taken, where necessary. Schedule reporting via risk dashboards are provided to senior management,
GRMC and Board. The risk dashboards provide a gauge on the IRR/RORBB of the Group.

The Group is guided by BNM’s guidelines and Basel standards on management of IRR/RORBB.

The following tables present the Bank’s projected sensitivity to a 100 basis point parallel shock to interest rates across all maturities applied on
the Bank’s interest sensitivity gap as at reporting date.

BANK GROUP
+ 100 bps + 100 bps
2019 RM’000 RM’000

Impact on net interest income (“NII”)

Ringgit Malaysia 98,176 119,176

Impact on Economic Value (“EV”)

Ringgit Malaysia (38,605) (125,355)

2018

Impact on net interest income (“NII”)

Ringgit Malaysia 102,916 125,768

Impact on Economic Value (“EV”)

Ringgit Malaysia 29,042 (24,233)

Note:

The foreign currency impact on NII/EV are considered insignificant as the exposure is less than 5% of the respective total Banking Book assets
and liabilities.
 2019 Annual Report 339

8.0 SHARIAH GOVERNANCE DISCLOSURES

Shariah Non-Compliance Risk arises from the risk of failure to comply with Shariah rules and principles as determined by Shariah Advisory
Council of Bank Negara Malaysia and Alliance Islamic Bank’s (AIS) Shariah Committee. To manage the risks, AIS has adopted the following guiding
principles:

(i) A sound Shariah Compliance Framework which governs the operations of AIS and outlines the roles of key functionalities within AIS,
including but not limited to the Shariah risk management process. This is in line with the Shariah Governance Framework issued by BNM.

(ii) The Board of Directors, assisted by the Shariah Committee and senior management, provide oversight on Shariah compliance aspects of
AIS’ overall operations. This amongst others include:

- Oversight and implementation of the Shariah Compliance Framework;

- Regular review of Shariah non-compliant income and issues;
- Addressing Shariah non-compliance finding; and
- Ensuring compliance with regulatory and internal requirements including disclosures.

(iii) Appointment of a qualified Shariah Committee member who also serves as AIS’ Board member; serving as a ‘bridge’ between the Board
and the Shariah Committee.

(iv) Ongoing Shariah reviews and training to raise risk awareness and ensure compliance to Shariah rules and principles. This includes:

- Regular assessment on Shariah compliance in the activities and operations of AIS. The findings of the review are reported to the
Shariah Committee for deliberation and decision.
- Perform research and studies on Shariah issues, including providing day-to-day Shariah advice and consultancy to relevant parties.
- Conduct Shariah-related training and ongoing engagement with relevant parties to raise awareness on Shariah non-compliance risk.

(v) Escalation and reporting processes of Shariah non-compliant income and issues governed through designated escalation channels, which
include the Board and the Shariah Committee.

(vi) Periodic engagement between the Board and the Shariah Committee to discuss on Shariah research, Shariah compliance and scholar’s
view on Islamic banking activities.

Shariah Non-Compliant Income and Events

During the financial year end, there was one (1) Shariah non-compliance event detected from the ongoing reviews of the Bank’s operational
processes. Necessary efforts have been taken to rectify the Shariah non-compliance event, which was tracked and escalated to the Shariah
Committee and the Board. There was no Shariah non-compliant income to be disposed off in accordance with Shariah Committee’s decision.
340 Alliance Bank Malaysia Berhad (88103-W)

LIST OF PROPERTIES
as at 31 March 2019

Remaining
Lease Age of Built-Up Net Book
Year of Period Property Area Value
No Location Current Use Purchase1 Tenure (Expiry Year) (Years)2 (Sq Ft)3 (RM'000)4

1 1, Jalan Tembaga SD5/2A Alliance Bank’s 1991 Freehold - 26 9,179 665

Bandar Sri Damansara branch/office
52100 Kepong, Kuala Lumpur premises
2 150 - 152, Jalan Cerdas Alliance Bank’s 1997 Leasehold 59 years 40 11,704 2,151
Taman Connaught branch/office 99 years 2078
56000 Kuala Lumpur premises
3 43 & 45, Jalan Bunga Tanjung 6A Alliance Bank’s 1998 Leasehold 62 years 37 8,120 1,076
Taman Putra branch/office 99 years 2081
68000 Ampang, Selangor premises
4 1960 E & F, Jalan Stadium Alliance Bank’s 1979 Leasehold 20 years 40 4,537 326
05100 Alor Setar, Kedah branch/office 60 years 2039
premises
5 Ground & Mezzanine Floor Alliance Bank’s 1994 Freehold - 25 6,103 1,490
Wisma Malvest branch/office
20 & 20A Jalan Tun Dr Awang premises
Sungai Nibong Kecil
11900 Bayan Lepas, Pulau Pinang
6 70 & 71, Block 10 Alliance Bank’s 2007 Leasehold 50 years 13 9,405 1,939
Jalan Laksamana Cheng Ho branch/office 60 years 2069
93200 Kuching, Sarawak premises
7 B-400, Jalan Beserah Alliance Bank’s 1996 Freehold - 28 6,688 353
25300 Kuantan, Pahang branch/office
premises
8 LG134/LG135/G128/F89 Alliance Bank’s 1984 Freehold - 35 5,414 760
Holiday Plaza branch/office
Jalan Dato Sulaiman premises
80250 Johor Bharu, Johor
9 Lot 1 & 3 Alliance Bank’s 1994 Freehold - 26 24,334 1,365
Jalan Permas Jaya 10/2 branch/office
Bandar Baru Permas Jaya premises
81750 Johor Bahru, Johor
10 3 & 5, Jalan Bentara 1 Alliance Bank’s 1996 Freehold - 36 5,412 818
Tun Aminah branch/office
81300 Johor Bahru, Johor premises
11 Unit 01-G & 01-1 Alliance Bank’s 1997 Freehold - 20 7,277 1,407
Seremban City branch/office
Jalan Tunku Munawir premises
70000 Seremban, Negeri Sembilan
12 101 & 103, Alliance Bank’s 1995 Leasehold 75 years 22 8,640 528
Jalan Melaka Raya 24 branch/office 99 years 2094
Taman Melaka Raya premises
75000 Melaka
13 Lot 7 & 9, Block D Alliance Bank’s 1995 Leasehold 904 years 19 7,495 860
Nountun Industrial Estate branch/office 999 years 2923
89350 Inanam premises
Kota Kinabalu, Sabah
 2019 Annual Report 341

Remaining
Lease Age of Built-Up Net Book
Year of Period Property Area Value
No Location Current Use Purchase1 Tenure (Expiry Year) (Years)2 (Sq Ft)3 (RM'000)4

14 Lot 4-6, Block K Alliance Bank’s 1980 Leasehold 52 years 41 13,979 390
Sinsuran Complex branch/office 99 years 2071
88000 Kota Kinabalu, Sabah premises
15 Lot 1086, Jalan Utara Alliance Bank’s 1981 Leasehold 42 years 56 14,948 457
W.D.T. 127 branch/office 99 years 2061
91009 Tawau, Sabah premises
16 Lot 8, Block A Alliance Bank’s 1984 Leasehold 882 years 33 4,500 208
Beaufort Jaya Commercial Centre branch/office 999 years 2901
89808 Beaufort, Sabah premises
17 Lot 1, Block C Alliance Bank’s 1992 Leasehold 61 years 34 4,800 364
Mile 4 1/2 Jalan Utara branch/office 99 years 2080
Bandar Kim Fung premises
90307 Sandakan, Sabah
18 1 & 2, Block A, Jalan Jungkat Alliance Bank’s 1993 Leasehold 905 years 25 7,085 273
Pangie Light Industrial Complex branch/office 999 years 2924
89909 Tenom, Sabah premises
19 17, 19 & 21, Jalan USJ 9/5 Alliance Bank’s 1996 Freehold - 23 12,892 2,113
47620 Subang Jaya, Selangor branch/office
premises
20 2 & 3 Block A, Phase III Alliance Bank 1992 Leasehold 62 years 23 9,667 781
Luyang Commercial Centre e-Lobby 99 years 2081
Damai Plaza, Jalan Damai
88300 Kota Kinabalu, Sabah
21 59-61, Jalan Tiga Alliance Bank’s 1963 Leasehold 870 years 61 9,900 661
90702 Sandakan, Sabah branch/office 999 years 2889
premises
22 MPWPL U 0072 & 0073 Alliance Bank’s 1979 Leasehold 38, 44 years 53 5,800 597
Jalan Merdeka branch/office 99 years 2057, 2063 53
87008 Labuan premises
23 Lot 84, Jalan Gaya Alliance Bank’s 1985 Leasehold 863 years 61 10,040 1,665
88000 Kota Kinabalu, Sabah branch/office 999 years 2882
premises
24 45, Jalan Sungai Besi Indah 1/21 Alliance Bank’s 2001 Leasehold 72 years 18 9,706 1,232
43300 Balakong, Selangor branch/office 99 years 2091
premises
25 3, Jalan SS 15/2A, Alliance Bank’s 2005 Freehold - 34 35,926 6,110
Wisma Projass (3 Alliance) branch/office
47500 Subang Jaya, Selangor premises

Notes:
1
The Year of Purchase is based on Sale & Purchase Agreement. In the event that Sale & Purchase Agreement is not available, it is based on the date
of registration of ownership specified in the title document
2
The Age of Property is based on Certificate of Fitness for Occupation. In the event that the Certificate of Fitness for Occupation is not available, it
is based on the issuance date of the title document
3
The Built-Up Area is based on the valuation report conducted in December 2017
4
Net Book Value as at 31 March 2019 (information as provided by Group Finance)
342 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORY
as at 31 March 2019

PERAK

Ipoh
40 & 42, Persiaran Greenhill
30450 Ipoh, Perak
Tel : 05-241 2342/3
05-241 2346/8
Fax : 05-241 2355

Sitiawan
23 & 24, Jalan Raja Omar
Taman Selamat
ALLIANCE BANK ALLIANCE ISLAMIC 32000 Sitiawan, Perak
MALAYSIA BERHAD BANK BERHAD Tel : 05-691 1212
Fax : 05-691 7975
HEAD OFFICE HEAD OFFICE
3rd Floor, Menara Multi-Purpose 22nd Floor, Menara Multi-Purpose SELANGOR
Capital Square Capital Square
No. 8, Jalan Munshi Abdullah No. 8, Jalan Munshi Abdullah Aman Suria Damansara
50100 Kuala Lumpur 50100 Kuala Lumpur J-G-23 & J-G-25, Block J
Tel : 03-2604 3333 Tel : 03-2604 3333 Jalan PJU 1/43, PJU1
Fax : 03-2694 6200 Fax : 03-2698 4691 Aman Suria Damansara
47301 Petaling Jaya, Selangor
www.alliancebank.com.my www.alliancebank.com.my/islamic/home Tel : 03-7880 8842
Fax : 03-7880 4299

Ampang Point
Ground & Mezzanine Floor
65, Jalan Mamanda 9
BRANCHES PULAU PINANG
Ampang Point
Taman Dato Ahmad Razali
Beach Street
KEDAH 68000 Ampang, Selangor
Ground Floor, Bangunan Barkath
Tel : 03-4252 3822
21, Beach Street
Alor Setar Fax : 03-4252 3877
10300 Georgetown, Pulau Pinang
1960 E & F, Jalan Stadium Tel : 04-262 8100
05100 Alor Setar, Kedah Balakong
Fax : 04-261 3300
Tel : 04-731 0744 45, Jalan Sungai Besi Indah 1/21
Fax : 04-733 8055 Taman Sungai Besi Indah
Bukit Mertajam
43300 Seri Kembangan, Selangor
Ground & 1st Floor
Lunas, Kulim Tel : 03-8948 6972
Wisma Ng Ah Yan
888 & 889, Jalan Aman Fax : 03-8948 9530
42, Lebuh Nangka 2
Taman Sejahtera Taman Mutiara
09600 Lunas, Kulim, Kedah Bandar Bukit Tinggi
14000 Bukit Mertajam, Pulau Pinang
Tel : 04-484 3275/76/78 56, Lorong Batu Nilam 4B
Tel : 04-530 3130
Fax : 04-484 3277 Bandar Bukit Tinggi
Fax : 04-530 7433
41200 Klang, Selangor
Sejati Indah, Sungai Petani Tel : 03-3324 1122
Butterworth
Ground Floor, Wisma Uni-Green Fax : 03-3324 3311
4105-4107, Jalan Bagan Luar
18, Jalan Permatang Gedong 12000 Butterworth, Pulau Pinang
Taman Sejati Indah Bandar Puteri Puchong
Tel : 04-331 4863/64
08000 Sungai Petani, Kedah 11 & 13, Jalan Puteri 2/1
Fax : 04-323 2824
Tel : 04-431 1673/81 Bandar Puteri Puchong
04-431 2139 47100 Puchong, Selangor
Sungai Nibong Kecil
Fax : 04-431 1687 Tel : 03-8063 2833
Ground & Mezzanine Floor
Fax : 03-8063 2711
Wisma Malvest, 20 & 20A
Jalan Tun Dr Awang
Sungai Nibong Kecil
11900 Bayan Lepas, Pulau Pinang
Tel : 04-642 5918
Fax : 04-642 5924
 2019 Annual Report 343

SELANGOR (cont’d) Rawang KUALA LUMPUR

71, Jalan Bandar Rawang 2
CP Tower, Petaling Jaya Bandar Baru Rawang Bangsar
Unit 1-2, CP Tower 48000 Rawang, Selangor No. 1, Jalan Telawi 5
11, Jalan 16/11 Tel : 03-6091 7622 Bangsar Baru
46350 Petaling Jaya, Selangor Fax : 03-6091 7922 59100 Kuala Lumpur
Tel : 03-7957 3366 Tel : 03-2284 8633
Fax : 03-7957 3360 Seri Kembangan Fax : 03-2284 9616
31-1 & 31-2
Damansara Uptown Jalan Serdang Perdana 2/1 Capital Square
Unit 102 & 103 Taman Serdang Perdana Ground Floor
Level 1, Uptown 2 43300 Seri Kembangan, Selangor Menara Multi-Purpose
2, Jalan SS21/37 Tel : 03-8941 6610 Capital Square
Damansara Uptown Fax : 03-8941 6620 No. 8, Jalan Munshi Abdullah
47400 Petaling Jaya, Selangor 50100 Kuala Lumpur
Tel : 03-7660 9798 Shah Alam Tel : 03-2604 3333
Fax : 03-7660 9799 Ground & 1st Floor Fax : 03-2694 6867
2, Jalan Murni 25/61
Kajang Taman Sri Muda, Seksyen 25 GTower, Jalan Tun Razak
Lot 4 & 5, Jalan Jeloh 3 40400 Shah Alam, Selangor Lot No. G-06, Ground Floor
Off Jalan Bukit Tel : 03-5121 9336 GTower, No. 199, Jalan Tun Razak
43000 Kajang, Selangor Fax : 03-5121 9373 50400 Kuala Lumpur
Tel : 03-8733 5966 Tel : 03-2164 8240
Fax : 03-8736 4004 Sri Damansara Fax : 03-2168 8390
1, Jalan Tembaga SD 5/2A
Klang Bandar Sri Damansara Jalan Ipoh
Ground Floor 52100 Selangor 41 & 43, Jalan Sultan Azlan Shah
1, Lorong Kasawari 4B Tel : 03-6275 0144/0529/0684 51200 Kuala Lumpur
Taman Eng Ann Fax : 03-6272 1732 Tel : 03-4041 2288
41150 Klang, Selangor Fax : 03-4041 3868
Tel : 03-3345 3700 SS2, Petaling Jaya
Fax : 03-3345 3733 53 & 55, Jalan SS2/55 Jalan Sultan Ismail
47300 Petaling Jaya, Selangor Mezzanine Floor
Kota Damansara Tel : 03-7875 8255 Menara Prudential
7-G & 9-G, Jalan PJU 5/20 Fax : 03-7874 0973 10, Jalan Sultan Ismail
Pusat Perdagangan Kota Damansara 50250 Kuala Lumpur
PJU 5 Kota Damansara Subang Jaya Tel : 03-2070 4477
47810 Petaling Jaya, Selangor 3 Alliance Fax : 03-2070 4900
Tel : 03-6142 8632 3, Jalan SS15/2A
Fax : 03-6142 8732 47500 Subang Jaya, Selangor Kepong
Tel : 03-5634 2870 Ground Floor, 52, Jalan Prima
Pandan Indah Fax : 03-5634 1128 Vista Magna, Metro Prima Kepong
Ground & Mezzanine Floor 52100 Kuala Lumpur
11 & 13, Jalan Pandan Indah 4/34 Taman Putra Tel : 03-6257 9997
Pandan Indah, 55100 Selangor 43-45, Jalan Bunga Tanjung 6A Fax : 03-6257 9996
Tel : 03-4295 7300 Taman Putra
Fax : 03-4296 4107 68000 Ampang, Selangor Kuchai Entrepreneurs Park
Tel : 03-4291 7740 1, Jalan 1/116B
Puchong Jaya Fax : 03-4296 1250 Kuchai Entrepreneurs Park
11, Jalan Kenari 5 58200 Kuala Lumpur
Bandar Puchong Jaya USJ, Subang Jaya Tel : 03-7984 8800
47100 Puchong Jaya, Selangor Ground Floor Fax : 03-7981 6486
Tel : 03-8075 9185 17, 19 & 21, Jalan USJ 9/5N
Fax : 03-8075 9200 47620 UEP Subang Jaya, Selangor Mid Valley
Tel : 03-8024 1300 15-G & 15-1
Fax : 03-8023 4379 The Boulevard Offices
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Tel : 03-2283 1849
Fax : 03-2282 4430
344 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORY (Cont’d)
as at 31 March 2019

KUALA LUMPUR (cont’d) PUTRAJAYA Permas Jaya

1 & 3, Jalan Permas Jaya 10/2
Mont’Kiara Putrajaya Bandar Baru Permas Jaya
Unit A-0G-02, Block A Ground Floor, Menara Ikhlas 81750 Johor Bahru, Johor
Plaza Mont’Kiara (Boulevard Plaza) Tel : 07-386 2480
2, Jalan Kiara, Mont’Kiara No. 17, Persiaran Perdana Fax : 07-386 2478
50480 Kuala Lumpur Presint 3
Tel : 03-6203 1543 62100 Putrajaya Segamat
Fax : 03-6201 2607 Wilayah Persekutuan Putrajaya No. 109A & 109B
Tel : 03-8889 1788 Jalan Genuang
Segambut Fax : 03-8889 1799 85000 Segamat, Johor
Ground Floor Tel : 07-931 1170
22, Wisma Sin Hoh Huat JOHOR Fax : 07-931 2727
Persiaran Segambut Tengah
51200 Kuala Lumpur Batu Pahat Taman Molek
Tel : 03-6257 2105 Ground, 1st & 2nd Floor 1 & 1-01, Jalan Molek 1/29
Fax : 03-6257 6186 2 & 4, Jalan Kundang 3 Taman Molek
Taman Bukit Pasir 81100 Johor Bahru, Johor
Selayang 83000 Batu Pahat, Johor Tel : 07-355 6577
71 & 73, Jalan 2/3A Tel : 07-431 4088 Fax : 07-355 4677
Pusat Bandar Utara Selayang Fax : 07-434 0033
KM 12, Jalan Ipoh Taman Nusa Bestari
68100 Batu Caves, Kuala Lumpur Bukit Bakri, Muar 1-G & 1-01, Jalan Bestari 6/2
Tel : 03-6135 1800 88, Jalan Tepi Pasar Taman Nusa Bestari
Fax : 03-6135 1787 Bukit Bakri 81300 Skudai, Johor
84200 Muar, Johor Tel : 07-237 8301
Setapak Tel : 06-986 7633 Fax : 07-237 8621
No. D-1-2, D-2-2 & D-3-2 Fax : 06-986 6721
StarParc Point Taman Pelangi
Taman Danau Ibu Kota Holiday Plaza, Johor Bahru Ground Floor, Shoplot Nos. 1 & 3
Jalan Genting Klang, Setapak Unit G128, Holiday Plaza Jalan Perang, Taman Pelangi
53300 Kuala Lumpur Jalan Dato Sulaiman 80400 Johor Bahru, Johor
Tel : 03-4143 9643 Century Garden Tel : 07-332 4050/1/4
Fax : 03-4143 9568 80250 Johor Bahru, Johor Fax : 07-333 7411
Tel : 07-331 1200
Taman Connaught Fax : 07-331 1207 Tun Aminah
150-152, Jalan Cerdas 3 & 5, Jalan Bentara 1
Taman Connaught Johor Jaya Taman Ungku Tun Aminah
56000 Kuala Lumpur 50 & 52, Jalan Dedap 13 81300 Skudai, Johor
Tel : 03-9102 3973 Taman Johor Jaya Tel : 07-554 0031
Fax : 03-9102 3740 81100 Johor Bahru, Johor Fax : 07-554 2494
Tel : 07-353 5388
Taman Maluri Fax : 07-355 7377 MELAKA
254 & 254A, Jalan Mahkota
Taman Maluri, Cheras Kelapa Sawit, Kulai Melaka
55100 Kuala Lumpur 16 & 17, Jalan Susur Satu 101 & 103
Tel : 03-9285 4133 26th Mile, Jalan Air Hitam Jalan Melaka Raya 24
Fax : 03-9283 1397 Kelapa Sawit Taman Melaka Raya
81030 Kulai, Johor 75000 Melaka
Taman Tun Dr Ismail Tel : 07-652 3704/5/7 Tel : 06-284 9249
No. 6-3-0 & 6-3-1 Fax : 07-652 3706 Fax : 06-284 9248
Sinaran TTDI
Jalan Tun Mohd Fuad 3 Kluang
Taman Tun Dr Ismail No. 73, Ground Floor
60000 Kuala Lumpur Jalan Rambutan
Tel : 03-7729 8239 86000 Kluang, Johor
Fax : 03-7729 8237 Tel : 07-772 9911
Fax : 07-772 6611
 2019 Annual Report 345

NEGERI SEMBILAN Federal House, Kingfisher’s Park, KK Sinsuran

(Service Centre) Lot 4, 5, & 6, Block K
Seremban Aras 1, Blok A Sinsuran Complex
1G & 1-1, Seremban City Centre Kompleks Pentadbiran Kerajaan 88000 Kota Kinabalu, Sabah
Jalan Tuanku Munawir Persekutuan Sabah, Jalan UMS Tel : 088-237 762
70000 Seremban, Negeri Sembilan 88400 Kota Kinabalu, Sabah Fax : 088-212 511
Tel : 06-762 5610/21 Tel : 088-484 718
Fax : 06-762 5612 Fax : 088-484 712 Tambunan
Lot 1, Block B
PAHANG Inanam, Kota Kinabalu Sedco Shophouses, W.D.T. 55
Ground, 1st & 2nd Floor 89659 Tambunan, Sabah
Kuantan Lot 7 & 9, Block D Tel : 087-771 171
B400, Jalan Beserah Nountun Industrial Estate Fax : 087-771 157
25300 Kuantan, Pahang 89350 Inanam, Kota Kinabalu, Sabah
Tel : 09-567 2508 Tel : 088-435 761 Tawau
Fax : 09-567 9044 Fax : 088-435 770 1086, Jalan Utara, W.D.T. 127
91009 Tawau, Sabah
TERENGGANU Jalan Gaya Tel : 089-776 000
82 & 84, Jalan Gaya Fax : 089-763 287
Kuala Terengganu 88000 Kota Kinabalu, Sabah
Ground & Mezzanine Floor Tel : 088-251 177 Tenom
Wisma Kam Choon Fax : 088-223 629 Ground & Mezzanine Floor
101, Jalan Kampong Tiong Shoplot Nos 1 & 2, Block A
20100 Kuala Terengganu, Terengganu Keningau Pangie Light Industrial Complex
Tel : 09-623 5244 Lot No. 1, Block B-8 Jalan Jungkat, Tenom New Township
Fax : 09-623 6379 Jalan Arusap P.O. Box 379
89000 Keningau, Sabah 89909 Tenom, Sabah
Tel : 087-330 301 Tel : 087-737 757
SABAH
Fax : 087-330 294 Fax : 087-737 762
Bandar Kim Fung, Sandakan
Kota Marudu SARAWAK
Lot 1, Block C, Bandar Kim Fung
Shoplot No. 8, Block E
Mile 41/2, Jalan Utara P.O. Box 163
Sedco Shophouses Bintulu
Post Office, Mile 1 1/2, Jalan Utara
P.O. Box 260 No. 24, Bintulu Parkcity Commerce Square
90307 Sandakan, Sabah
89108 Kota Marudu, Sabah Phase 1, Jalan Tun Ahmad Zaidi
Tel : 089-275 020/21
Tel : 088-661 104 97000 Bintulu, Sarawak
Fax : 089-275 027
Fax : 088-661 106 Tel : 086-318 626
Beaufort Fax : 086-318 621
Kundasang
Lot B, Block A, Beaufort Jaya
Shoplot No. 6, Block B Kuching
Commercial Centre, P.O. Box 220
Sedco Shophouses 178, Jalan Chan Chin Ann
89808 Beaufort, Sabah
P.O. Box 152 93100 Kuching, Sarawak
Tel : 087-211 721
89308 Ranau, Sabah Tel : 082-257 129
Fax : 087-212 392
Tel : 088-889 679 Fax : 082-257 275
Fax : 088-889 676
Donggongon
Wisma PPS Laksamana
Lahad Datu 70 & 71, Block 10
Donggongon New Township
Lot 1 MDLD 4709 Jalan Laksamana Cheng Ho
W.D.T. No. 56
Jalan Kastam Lama 93200 Kuching, Sarawak
80509 Penampang, Sabah
91100 Lahad Datu, Sabah Tel : 082-230 888
Tel : 088-713 411/2
Tel : 089-883 911/5 Fax : 082-235 567
088-718 980
Fax : 089-883 916
Fax : 088-718 634
Miri
Sandakan Ground & 1st Floor
59-61 Block 20 Lot 353, Block 7
Jalan Tiga, Bandar Sandakan Miri Concession Land District
90000 Sandakan, Sabah (Pelita Commercial Centre)
Tel : 089-275 193 Jalan Miri Pujut
Fax : 089-271 641 98000 Miri, Sarawak
Tel : 085-427 535
Fax : 085-425 362
346 Alliance Bank Malaysia Berhad (88103-W)

DIRECTORY (Cont’d)
as at 31 March 2019

SARAWAK (cont’d) PULAU PINANG

Sibu Pulau Pinang

Ground Floor Ground & Mezzanine Floor
32, Jalan Bako Bangunan Barkath
Brooke Drive 3 21, Lebuh Pantai
96000 Sibu, Sarawak 10300 Pulau Pinang
Tel : 084-317 628 Tel : 04-261 1688
Fax : 084-317 148 Fax : 04-261 6363

LABUAN KUALA LUMPUR

ALLIANCEDBS
Labuan Kuala Lumpur RESEARCH SDN BHD
MPWPL U 0072 & 0073 17th Floor, Menara Multi-Purpose
Jalan Merdeka, P.O. Box 396 Capital Square HEAD OFFICE
87008 Labuan FT No. 8, Jalan Munshi Abdullah 19th Floor, Menara Multi-Purpose
Tel : 087-412 826 50100 Kuala Lumpur Capital Square
Fax : 087-415 446 Tel : 03-2604 3333 No. 8, Jalan Munshi Abdullah
Fax : 03-2697 2929 50100 Kuala Lumpur
Tel : 03-2604 3333
JOHOR
www.allianceinvestmentbank.com.my
Kluang
No. 73, Ground Floor
Jalan Rambutan
86000 Kluang, Johor
Tel : 07-771 7922
Fax : 07-777 1079

PAHANG
ALLIANCE INVESTMENT
Kuantan
BANK BERHAD Ground, Mezzanine & 1st Floor
(A participating organisation of
B-400, Jalan Beserah
Bursa Malaysia Securities Berhad)
25300 Kuantan, Pahang
Tel : 09-566 0800
HEAD OFFICE
Fax : 09-566 0801 ALLIANCE TRUSTEE
19th Floor, Menara Multi-Purpose
Capital Square
BERHAD
No. 8, Jalan Munshi Abdullah TERENGGANU
HEAD OFFICE
50100 Kuala Lumpur
Kuala Terengganu 18th Floor, Menara Multi-Purpose
Tel : 03-2604 3333
Ground & Mezzanine Floor Capital Square
Fax : 03-2692 8787
Wisma Kam Choon No. 8, Jalan Munshi Abdullah
101, Jalan Kampong Tiong 50100 Kuala Lumpur
www.allianceinvestmentbank.com.my
20100 Kuala Terengganu, Terengganu Tel : 03-2604 3333
Tel : 09-631 7922 Fax : 03-2698 0393
Fax : 09-631 3255

BRANCHES

KEDAH

Alor Setar
Lot T-30, 2nd Floor
Wisma PKNK
Jalan Sultan Badlishah
05000 Alor Setar, Kedah
Tel : 04-731 7088
Fax : 04-731 8428
 2019 Annual Report 347

ANALYSIS OF SHAREHOLDINGS
as at 21 May 2019

Class of securities : Ordinary shares

Issued and paid-up share capital : RM1,548,105,929
Voting rights : One vote per ordinary share

Shareholdings Distribution Schedule

No. of % of No. of % of
Size of Shareholdings Shareholders Shareholders Shares Held Issued Shares

Less than 100 1,945 11.71 36,897 0.01

100 – 1,000 4,013 24.16 3,051,217 0.19
1,001 – 10,000 8,010 48.21 33,787,811 2.18
10,001 – 100,000 2,065 12.43 63,717,316 4.11
100,001 – less than 5% of issued shares 578 3.48 833,435,273 53.84
5% and above of issued shares 2 0.01 614,077,415 39.67
Total 16,613 100.00 1,548,105,929 100.00

Thirty (30) Largest Shareholders

No. of % of
Name Shares Held Issued Shares

1. CIMB Group Nominees (Tempatan) Sdn Bhd 449,857,775 29.06

– Exempt AN for DBS Bank Ltd (SFS)
2. Citigroup Nominees (Tempatan) Sdn Bhd 164,219,640 10.61
– Employees Provident Fund Board
3. Focus Asia Strategies Ltd 73,528,700 4.75
4. Medimetro (M) Sdn Bhd 56,000,000 3.62
5. Citigroup Nominees (Tempatan) Sdn Bhd 45,581,000 2.94
– Exempt AN for AIA Bhd
6. Fields Equity Management Ltd 31,470,900 2.03
7. Citigroup Nominees (Tempatan) Sdn Bhd 31,232,200 2.02
– Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
8. Cartaban Nominees (Asing) Sdn Bhd 27,328,000 1.77
– Exempt AN for State Street Bank & Trust Company (West CLTOD67)
9. Eden Engineering Sdn Bhd 19,700,000 1.27
10. Cartaban Nominees (Tempatan) Sdn Bhd 19,458,500 1.26
– PAMB for Prulink Equity Fund
11. HSBC Nominees (Asing) Sdn Bhd 19,364,217 1.25
– JPMCB NA for Vanguard Emerging Markets Stock Index Fund
12. Citigroup Nominees (Asing) Sdn Bhd 18,034,800 1.17
– Exempt AN for Citibank New York (Norges Bank 14)
13. HSBC Nominees (Asing) Sdn Bhd 16,210,753 1.05
– JPMCB NA for Vanguard Total International Stock Index Fund
14. Citigroup Nominees (Asing) Sdn Bhd 15,186,000 0.98
– CBNY for Dimensional Emerging Markets Value Fund
15. Maybank Nominees (Tempatan) Sdn Bhd 15,044,700 0.97
– Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100)
348 Alliance Bank Malaysia Berhad (88103-W)

ANALYSIS OF SHAREHOLDINGS (Cont’d)

as at 21 May 2019

No. of % of
Name Shares Held Issued Shares

16. Citigroup Nominees (Asing) Sdn Bhd 12,158,600 0.79

– Exempt AN for Citibank New York (Norges Bank 1)
17. Cartaban Nominees (Asing) Sdn Bhd 10,111,800 0.65
– GIC Private Limited for Government of Singapore (C)
18. Citigroup Nominees (Tempatan) Sdn Bhd 10,106,900 0.65
– Employees Provident Fund Board (CIMB PRIN)
19. HSBC Nominees (Asing) Sdn Bhd 9,500,000 0.61
– Exempt AN for Bank Julius Baer & Co. Ltd. (Singapore BCH)
20. Citigroup Nominees (Asing) Sdn Bhd 8,272,300 0.53
– CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc
21. Citigroup Nominees (Tempatan) Sdn Bhd 7,978,300 0.52
– Employees Provident Fund Board (Aberdeen)
22. Citigroup Nominees (Tempatan) Sdn Bhd 7,663,500 0.49
– Great Eastern Life Assurance (Malaysia) Berhad (Par 3)
23. HSBC Nominees (Asing) Sdn Bhd 6,842,800 0.44
– HSBC BK PLC for Saudi Arabian Monetary Authority
24. Citigroup Nominees (Tempatan) Sdn Bhd 6,722,600 0.43
– Great Eastern Life Assurance (Malaysia) Berhad (LSF)
25. Citigroup Nominees (Tempatan) Sdn Bhd 6,526,600 0.42
– Kumpulan Wang Persaraan (Diperbadankan) (Principal EQITS)
26. Citigroup Nominees (Tempatan) Sdn Bhd 6,465,100 0.42
– Kumpulan Wang Persaraan (Diperbadankan) (Aberdeen)
27. DB (Malaysia) Nominee (Asing) Sdn Bhd 6,024,400 0.39
– BNYM SA/NV for People’s Bank of China (SICL Asia EM)
28. Permodalan Nasional Berhad 5,932,500 0.38
29. Citigroup Nominees (Tempatan) Sdn Bhd 5,845,300 0.38
– Employees Provident Fund Board (Affin-HWG)
30. HSBC Nominees (Asing) Sdn Bhd 5,499,800 0.36
– JPMCB NA for MSCI Equity Index Fund B - Malaysia
Total 1,117,867,685 72.21
 2019 Annual Report 349

SUBSTANTIAL SHAREHOLDERS
as at 21 May 2019

No. of Ordinary Shares

Direct % of Indirect % of % of
Name of Substantial Shareholder Interest Issued Shares Interest Issued Shares Total Issued Shares

Vertical Theme Sdn Bhd 449,857,775 29.06 - - 449,857,775 29.06

Langkah Bahagia Sdn Bhd - - 449,857,775 1
29.06 449,857,775 29.06
Duxton Investments Pte Ltd - - 449,857,7751 29.06 449,857,775 29.06
Ong Beng Seng - - 449,857,775 2
29.06 449,857,775 29.06
Ong Tiong Sin - - 449,857,775 2
29.06 449,857,775 29.06
Seow Lun Hoo - - 449,857,775 2
29.06 449,857,775 29.06
Fullerton Financial Holdings Pte Ltd - - 449,857,7753 29.06 449,857,775 29.06
Fullerton Management Pte Ltd - - 449,857,775 4
29.06 449,857,775 29.06
Temasek Holdings (Private) Limited - - 450,030,888 5
29.07 450,030,888 29.07
Singapore Minister for Finance - - 450,030,888 6
29.07 450,030,888 29.07
Employees Provident Fund Board 194,465,740 12.56 - - 194,465,740 12.56

Notes:

1
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Vertical Theme Sdn Bhd.
2
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Langkah Bahagia Sdn Bhd.
3
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Duxton Investments Pte Ltd.
4
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Fullerton Financial Holdings Pte Ltd.
5
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Fullerton Management Pte Ltd and Fullerton (Private) Limited.
6
Deemed interested by virtue of Section 8 of the Companies Act 2016 held through Temasek Holdings (Private) Limited.

DIRECTORS’ SHAREHOLDINGS
as at 21 May 2019

Save as disclosed below, none of the other Directors have any interest in the shares of the Bank or in any of the Bank’s related corporation as at
21 May 2019:

No. of Alliance Bank Shares Held

Name Direct % Indirect %

Ho Hon Cheong - - 1,000^ *

Notes:

* Negligible
^ Indirect interest in the Bank's shares by virtue of Section 59(11)(c) of the Companies Act 2016
350 Alliance Bank Malaysia Berhad (88103-W)

SENIOR MANAGEMENT’S SHAREHOLDINGS

as at 21 May 2019

Save as disclosed below, the Group Chief Executive Officer and none of the other Senior Management have any interest in the shares of the Bank
or in any of the Bank’s related corporation as at 21 May 2019:

No. of Alliance Bank Shares Held

Name Direct % Indirect %

Aaron Sum Wei Wern 146,200 0.01 - -

(Head, Group Strategy & Performance Management)

Chew Siew Suan 197,900 0.01 - -

(Head, Group Human Resource)

Ernest Kwong Kah Wah 122,300 0.01 - -

(Head, Group SME Banking )

Foziakhatoon Binti Amanulla Khan 92,400 0.01 - -

(Chief Business Development Officer)

Lee Wei Yen 219,800 0.01 - -

(Group Company Secretary)

Leong Sow Yoke 303,500 0.02 - -

(Group Chief Internal Auditor)

Mahesh S/O Shri Pranlal Rupawalla 56,400 * - -

(Chief Executive Officer, Alliance Investment Bank Berhad)

Pang Choon Han 501,200 0.03 - -

(Group Chief Risk Officer)

Peter Fong Seow Loong 69,500 * - -

(Group Chief Credit Officer)

Rizal IL-Ehzan Fadil Azim 47,500 * - -

(Chief Executive Officer, Alliance Islamic Bank Berhad)

Tan Eng Kiang 79,600 0.01

(Head, Group Financial Markets)

Note:

* Negligible
 2019 Annual Report 351

NOTICE OF 37TH ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the 37th Annual General Meeting of Alliance Bank Malaysia Berhad (“the Bank”) will be held at Grand Ballroom,
Level 2, InterContinental Kuala Lumpur, 165 Jalan Ampang, 50450 Kuala Lumpur on Thursday, 25 July 2019 at 11.00 a.m. for the following purposes:

AGENDA

As Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 March 2019 together with the Reports Please refer to
of the Directors and Auditors thereon. Explanatory Note (i)

2. To approve the payment of Directors’ fees and Board Committees’ fees amounting to RM2,040,083 in respect of Ordinary Resolution 1
the financial year ended 31 March 2019.

3. To approve Directors’ benefits (other than Directors’ fees and Board Committees’ fees) payable up to an amount Ordinary Resolution 2
of RM1,200,000 from 26 July 2019 to the next Annual General Meeting of the Bank.

4. To re-elect Mr Kuah Hun Liang who retires by rotation pursuant to Article 87 of the Bank’s Constitution. Ordinary Resolution 3

5. To re-elect Mr Lee Ah Boon who retires by rotation pursuant to Article 87 of the Bank’s Constitution. Ordinary Resolution 4

6. To re-elect Tan Sri Dato’ Ahmad Bin Mohd Don who retires by rotation pursuant to Article 87 of the Bank’s Ordinary Resolution 5
Constitution.

7. To re-elect Ms Susan Yuen Su Min who retires pursuant to Article 93 of the Bank’s Constitution. Ordinary Resolution 6

8. To re-appoint PricewaterhouseCoopers PLT as Auditors of the Bank and authorise the Directors to fix their Ordinary Resolution 7
remuneration.

As Special Business

9. To consider and if thought fit, to pass the following Special Resolution:

Proposed Amendments to the Constitution of Alliance Bank Malaysia Berhad Special Resolution 1

“THAT the Constitution of the Bank be altered and/or modified, in the form and manner as set out in Appendix I to
the Notice of the 37th Annual General Meeting (“Proposed Amendments”) AND THAT the Board of Directors of the
Bank be and is hereby authorised to do all acts and things and take all such steps as may be deemed necessary
to give full effect to the Proposed Amendments.”

10. To transact any other business for which due notice shall have been given in accordance with the Bank’s
Constitution and/or the Companies Act 2016.

BY ORDER OF THE BOARD

LEE WEI YEN (MAICSA 7001798)

Group Company Secretary

Kuala Lumpur
25 June 2019
352 Alliance Bank Malaysia Berhad (88103-W)

NOTICE OF 37TH ANNUAL GENERAL MEETING (Cont’d)

Notes:

1. A Member entitled to attend, participate, speak and vote at the meeting is entitled to appoint a proxy or proxies to attend, participate, speak and
vote in his/her stead. A proxy may but need not be a Member of the Bank.
2. To be valid, the duly completed Form of Proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified
copy of that power or authority must be deposited at the registered office of the Bank at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8,
Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than forty-eight (48) hours before the time set for holding the meeting.
3. A Member who is an Exempt Authorised Nominee which holds ordinary shares in the Bank for multiple beneficial owners in one securities account
(omnibus account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus
account it holds.
4. A Member other than an Exempt Authorised Nominee shall be entitled to appoint not more than two (2) proxies to attend, participate, speak and
vote at the same meeting.
5. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholdings
to be represented by each proxy.
6. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly
authorised.
7. A shareholder whose name appears in the General Meeting Record of Depositors as at 18 July 2019 shall be regarded as a Member entitled to
attend, participate, speak and vote at the meeting or appoint a proxy or proxies to attend, participate, speak and vote in his/her stead.
8. By submitting the duly executed Form of Proxy, the Member and his/her proxy consent to the Bank (and/or its agents/service providers) collecting,
using and disclosing the personal data therein in accordance with the Personal Data Protection Act 2010 for the purposes of this Annual General
Meeting and any adjournment thereof.

EXPLANATORY NOTES

(i) Item 1 on the Agenda – Audited Financial Statements for the financial year ended 31 March 2019

This Agenda item is laid before the Annual General Meeting pursuant to Section 340(1) of the Companies Act 2016, and does not require a formal
approval of the shareholders. As such, it is meant for discussion only and not put forward for voting.

(ii) Ordinary Resolution 1 – Directors’ fees and Board Committees’ fees

The Non-Executive Directors of the Bank are entitled to annual Directors’ fees and annual Board Committees’ fees (if applicable).

For the financial year ended 31 March 2019, the Board has engaged an independent consultant to carry out a review on the remuneration of the
Non-Executive Directors to determine if the remuneration of Non-Executive Directors of the Bank continues to be in line with the industry taking
into consideration the complexities of the Bank’s business and operations.

On the recommendation of the Group Nomination & Remuneration Committee, the Board agreed for the proposed revision to the remuneration of
Non-Executive Directors as set out in the table below for tabling to the shareholders of the Bank for approval.

Proposed for Financial Year Ended Financial Year Ended

Description 31 March 2019 (RM) 31 March 2018 (RM)

Annual Directors’ Fees

- Non-Executive Chairman 250,000 200,000
- Non-Executive Director 120,000 92,000

Annual Board Committees’ Fees

- Chairman 50,000 40,000
- Member 35,000 25,000
 2019 Annual Report 353

(iii) Ordinary Resolution 2 – Directors’ benefits (other than Directors’ fees and Board Committees’ fees)

The Directors’ benefits (other than Directors’ fees and Board Committees’ fees) comprise sitting allowances and other benefits for Non-Executive
Directors, as set out below:

(a) Sitting allowance

The current meeting sitting allowance of RM1,100 per meeting is proposed to be revised to RM1,500 per meeting effective from the
financial year ended 31 March 2019.

(b) Other benefits include company car and driver allowance (for Chairman only), insurance coverage and other claimable benefits.

The total amount of Directors’ benefits (other than Directors’ fees and Board Committees’ fees) from 26 July 2019 to the next Annual General
Meeting of the Bank is estimated based on the proposed meeting sitting allowance and takes into account other related factors including the
estimated number of meetings for the Board and Board Committees from this Annual General Meeting up to the next Annual General Meeting in
2020.

(iv) Special Resolution 1 – Proposed Amendments to the Constitution of Alliance Bank Malaysia Berhad

The Proposed Amendments will bring the Bank’s Constitution to be in line with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The proposed Special Resolution 1, if passed, will give full effect to the Proposed Amendments with immediate effect.
354 Alliance Bank Malaysia Berhad (88103-W)

APPENDIX I TO NOTICE OF 37TH ANNUAL GENERAL MEETING

PROPOSED AMENDMENTS TO THE CONSTITUTION OF THE BANK

Article Existing Provision Proposed Amendments Rationale

95. Directors’ Remuneration Directors’ Remuneration

The Directors shall be paid by way of fees The Directors shall be paid by way of fees for their To align with the Main
for their services, such fixed sum (if any) as services, such fixed sum (if any) as shall from time to Market Listing Requirements
shall from time to time be determined by the time be determined by the Company in general meeting of Bursa Malaysia Securities
Company in general meeting and such fees and such fees shall be divided among the Directors Berhad.
shall be divided among the Directors in such in such proportions and manner as the Directors may
proportions and manner as the Directors may determine and in default of agreement equally, except
determine and in default of agreement equally, that if a Director has held office for part only of the
except that if a Director has held office for part period in respect of which such fees are payable, such
only of the period in respect of which such fees a Director shall be entitled only to that proportion of the
are payable, such a Director shall be entitled fees as is related to the period during which he has held
only to that proportion of the fees as is related office PROVIDED ALWAYS that:-
to the period during which he has held office
PROVIDED ALWAYS that:-
......... .........

(c) fees payable to Directors shall not (c) fees and any benefits payable to Directors shall
be increased except pursuant to a not be increased except pursuant to a resolution
resolution passed at a general meeting passed be subject to annual shareholder
where notice of the proposed increase approval at a general meeting where notice
has been given in the notice convening of the proposed increase has been given in the
the meeting; notice convening the meeting;

119(a). Alternate Directors Alternate Directors

A Director may appoint any other person A Director may appoint any other person approved by To align with the Main
approved by a majority of his co-Directors a majority of his co-Directors to act as his alternate Market Listing Requirements
to act as his alternate provided that any fee provided that such person is not a Director of the of Bursa Malaysia Securities
paid by the Company to the alternate shall be Company and does not act as an alternate for more Berhad.
deducted from that Director’s remuneration. than one Director of the Company. any Any fee paid
The alternate Director shall not be required to by the Company to the alternate shall be deducted from
hold any shares in the Company but shall be that Director’s remuneration.
entitled to receive notices of all meetings and to
attend, speak and vote, and be counted for the The alternate Director shall not be required to hold any
quorum, and generally to exercise all powers, shares in the Company but shall be entitled to receive
rights, duties and authorities of the Director notices of all meetings and to attend, speak and vote,
appointing him, at any such meeting at which and be counted for the quorum, and generally to
the Director appointing him is not present. For exercise all powers, rights, duties and authorities of the
the avoidance of doubt, an alternate Director Director appointing him, at any such meeting at which
may not vote nor attend any meeting at which the Director appointing him is not present. For the
the Director appointing him is present. Any avoidance of doubt, an alternate Director may not vote
appointment so made may be revoked at any nor attend any meeting at which the Director appointing
time by the appointor or by a majority of the him is present. Any appointment so made may be
Directors, and any appointment or revocation revoked at any time by the appointor or by a majority of
under this Article shall be effected by notice in the Directors, and any appointment or revocation under
writing to be delivered to the Secretary of the this Article shall be effected by notice in writing to be
Company. An alternate Director shall ipso facto delivered to the Secretary of the Company. An alternate
cease to be an alternate Director if his appointor Director shall ipso facto cease to be an alternate Director
for any reason ceases to be a Director. if his appointor for any reason ceases to be a Director.
 2019 Annual Report 355

PROPOSED AMENDMENTS TO THE CONSTITUTION OF THE BANK

Article Existing Provision Proposed Amendments Rationale

124. Meeting of Committees Meeting of Committees

Unless otherwise determined by the Directors, Unless otherwise determined by the Directors, the quorum To align with the functionality
the quorum for executive committee meetings for executive committee meetings shall be three (3) of the Board and other
shall be three (3) members. Decisions made members. Decisions made by the executive committee Board Committees of the
by the executive committee will have to meet will have to meet unanimous agreement to be carried Bank whereby decisions
unanimous agreement of all its members by a majority of votes of all its members present at are carried by a majority
present at its meetings. its meetings. In the case of an equality of votes, the of votes and in case of
chairman of the executive committee meeting shall an equality of votes, the
have a second or casting vote. chairman of the executive
committee shall have a
....... ....... second or casting vote.

151. Service of Notices Service of Notices and/or documents

Notice of a meeting of Members shall be in writing Notice of a meeting of Members or any document To enable the Bank to send
and shall be given to the Members either in hard required to be sent to Members shall be in writing any documents required to
copy, in Electronic Form, or partly in hard copy and and shall be given to the Members either in hard copy, be sent to Members of the
partly in Electronic Form. in Electronic Form, or partly in hard copy and partly in Bank via Electronic Form,
Electronic Form. in addition to notice of a
meeting of Members which
(a) In view of the above, a notice: (a) In view of the above, a notice or any document is in line with the Main
required to be sent to Members: Market Listing Requirements
of Bursa Malaysia Securities
....... ....... Berhad.

(b) Notice of a meeting of Members shall (b) Notice of a meeting of Members or any document
not be validly given by the Company by required to be sent to Members shall not be
means of the Company’s website unless validly given by the Company by means of the
a notification to that effect is given in Company’s website unless a notification to that
accordance with this Article. effect is given in accordance with this Article.

(c) The Company shall notify a Member (c) The Company shall notify a Member of the
of the publication of the notice on the publication of the notice of a meeting of Members
website and such notification shall be in or document required to be sent to Members on
writing and shall be given in hard copy or the website and such notification shall be in writing
Electronic Form stating: and shall be given in hard copy or Electronic Form
stating, where applicable:
(i) that it concerns a meeting of
Members; (i) that it concerns a meeting of Members;
(ii) the place, date and time of the (ii) the place, date and time of the meeting; and
meeting; and (iii) whether the meeting is an annual general
(iii) whether the meeting is an annual meeting.
general meeting.

(d) The notice shall be made available on the (d) The notice of a meeting of Members shall be
website throughout the period beginning made available on the website throughout the
from the date of the notification referred to period beginning from the date of the notification
in Article 151(c) until the conclusion of the referred to in Article 151(c) until the conclusion of
meeting. the meeting.

152. When service effected When service effected Administrative changes.

(e) – (i) To renumber as (b) – (f)

356 Alliance Bank Malaysia Berhad (88103-W)

STATEMENT ACCOMPANYING NOTICE OF

37TH ANNUAL GENERAL MEETING
(Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing Requirements)

The profiles of the Directors who are standing for re-election at the 37th Annual General Meeting are set out below.

(i) Profile of Mr Kuah Hun Liang

Senior Independent Non-Executive Director
Member of Group Audit Committee
Malaysian / Male / Aged 57

Mr Kuah Hun Liang was appointed to the Alliance Bank Malaysia Berhad Board of Directors on 15 December 2011.

Mr Kuah holds a Bachelor of Science (Honours) degree in Applied Economics from the University of East London, United Kingdom.

He has over 30 years of experience in the financial services industry. He began his career at Public Bank in 1983, and thereafter joined Deutsche
Bank AG (Deutsche Bank) in 1989 as Treasurer. He was promoted as Head of Global Markets when Deutsche Bank ventured into investment
banking. In 2000, he was appointed as an Executive Director of Deutsche Bank (M) Berhad. In 2002, he was promoted to Managing Director and
Chief Executive Officer, and held both positions until 2006.

Mr Kuah is the Chairman of Alliance Investment Bank Berhad. He also holds directorships in public companies listed on Bursa Malaysia namely,
Rexit Berhad and MPHB Capital Berhad. In addition, he serves as a Director on the Board of Multi-Purpose Capital Holdings Berhad.

(ii) Profile of Mr Lee Ah Boon

Non-Independent Non-Executive Director
Chairman of Executive Committee
Member of Group Nomination & Remuneration Committee
Singaporean / Male / Aged 68

Mr Lee Ah Boon was appointed to the Alliance Bank Malaysia Berhad Board of Directors on 18 April 2012.

Mr Lee holds a Bachelor of Accounting (Honours) degree from the National University of Singapore.

He joined Citibank in 1990 and held various Consumer Banking roles in Singapore including that of Chief Financial Officer, Senior Operations
Officer, Head of Credit Card business and Business Manager. In 2005, he started up Citibank’s Consumer Business in China and returned to
Singapore as Regional Operations Head of Citibank. He then moved to Barclays Bank in early 2009 as its International Technology Head for the
Global Retail and Consumer Bank Business.

In September 2010, Mr Lee left Barclays Bank and joined Fullerton Financial Holdings (International) Pte Ltd, a subsidiary of Temasek Holdings
(Private) Limited, as its Chief Operating Officer. He remained for three years until his retirement in November 2013.

Mr Lee is currently an Advisor of Fullerton Financial Holdings (International) Pte Ltd. He also serves as a Director on the Board of Alliance
Investment Bank Berhad.

(iii) Profile of Tan Sri Dato’ Ahmad Bin Mohd Don

Chairman of the Board, Independent Non-Executive Director
Member of Group Nomination & Remuneration Committee
Malaysian / Male / Aged 71

Tan Sri Dato’ Ahmad Bin Mohd Don was appointed as Chairman of the Alliance Bank Malaysia Berhad Board of Directors on 1 February 2017.

Tan Sri Dato’ Ahmad is a summa cum laude graduate in Economics and Business from the Aberystwyth University, United Kingdom. He is also a
Fellow of the Institute of Chartered Accountants in England and Wales, and a Member of the Malaysian Institute of Certified Public Accountants.

Tan Sri Dato’ Ahmad has extensive experience in finance and banking. His work experience covers various capacities with Pernas Securities Sdn
Bhd, Permodalan Nasional Berhad, and Malayan Banking Berhad. He served as Group Managing Director and Chief Executive Officer of Malayan
Banking Berhad from 1991 to 1994. Between May 1994 and August 1998, Tan Sri Dato’ Ahmad was the Governor of Bank Negara Malaysia.

Tan Sri Dato’ Ahmad is Chairman on the Board of Sunway REIT Management Sdn Bhd (manager of Sunway Real Estate Investment Trust listed on
Bursa Malaysia) and a Director on the Board of United Malacca Berhad (listed on Bursa Malaysia).
 2019 Annual Report 357

(iv) Profile of Ms Susan Yuen Su Min

Independent Non-Executive Director
Member of Group Nomination & Remuneration Committee
Malaysian / Female / Aged 59

Ms Susan Yuen Su Min was appointed to the Alliance Bank Malaysia Berhad Board of Directors on 15 October 2018.

Ms Susan Yuen holds a Bachelor of Computer Science (Honours) degree from the University of London, United Kingdom.

Ms Susan Yuen has over 30 years of working experience in the banking industry. She has served in a number of banking establishments including
Maybank and HSBC Malaysia. She was also previously attached to the National Bank of Abu Dhabi Malaysia Berhad (NBAD) where she was the
Regional CEO Asia and Country CEO Malaysia from 2014 to 2018. Prior to joining NBAD, she served as CEO of ANZ Banking Group in Hong Kong
from 2009 to 2014.

Ms Susan Yuen serves as an Independent Director on the Board of Chubb Insurance Malaysia Berhad.

Additional information of the Directors who are standing for re-election at the 37th Annual General Meeting:

(i) Directors’ interest in the securities of the Bank and its subsidiaries

None of the Directors have any interest in the securities of the Bank and its subsidiaries.

(ii) Family Relationship

None of the Directors have any family relationship with other Directors and/or major shareholders of the Bank.

(iii) Conflict of interest

None of the Directors have any personal pecuniary interests which are in conflict with the Bank or its subsidiaries.

(iv) List of convictions for offences and public sanction or penalty

None of the Directors have been convicted of any offences within the past 5 years (other than traffic offences) nor have they been imposed any
public sanction or penalty by the relevant regulatory bodies during the financial year ended 31 March 2019.
This page is intentionally left blank.
FORM OF PROXY CDS Account No.
No. of Shares Held

I/We (full name in block letters)

identity card no./company registration no.

of

being a Member of ALLIANCE BANK MALAYSIA BERHAD hereby appoint

NRIC No.

of

and/or failing him/her NRIC No.

of

as my/our proxy/proxies to vote for me/us on my/our behalf at the 37th Annual General Meeting of the Bank to be held at Grand Ballroom, Level 2,
InterContinental Kuala Lumpur, 165 Jalan Ampang, 50450 Kuala Lumpur on Thursday, 25 July 2019 at 11.00 a.m. and at any adjournment thereof.

NO. RESOLUTIONS *FOR *AGAINST

Ordinary Resolutions:
1. To approve the payment of Directors’ fees and Board Committees’ fees amounting to RM2,040,083 in
respect of the financial year ended 31 March 2019
2. To approve Directors’ benefits (other than Directors’ fees and Board Committees’ fees) payable up to an
amount of RM1,200,000 from 26 July 2019 to the next Annual General Meeting of the Bank
3. To re-elect Mr Kuah Hun Liang who retires by rotation pursuant to Article 87 of the Bank’s Constitution
4. To re-elect Mr Lee Ah Boon who retires by rotation pursuant to Article 87 of the Bank’s Constitution
5. To re-elect Tan Sri Dato’ Ahmad Bin Mohd Don who retires by rotation pursuant to Article 87 of the
Bank’s Constitution
6. To re-elect Ms Susan Yuen Su Min who retires pursuant to Article 93 of the Bank’s Constitution
7. To re-appoint PricewaterhouseCoopers PLT as Auditors of the Bank and authorise the Directors to fix
their remuneration
Special Resolution:
1. Proposed Amendments to the Constitution of Alliance Bank Malaysia Berhad

* Please indicate with an “X” on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at
his/her discretion.

As witness my/our hand(s) this day of 2019.

Shareholding represented by Proxy

Proxy 1 %
Proxy 2 %
Signature of Member Total %

Notes:
1. A Member entitled to attend, participate, speak and vote at the meeting is entitled to appoint a proxy or proxies to attend, participate, speak and vote in his/her stead. A proxy may
but need not be a Member of the Bank.
2. To be valid, the duly completed Form of Proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority must
be deposited at the registered office of the Bank at 3rd Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than forty-eight
(48) hours before the time set for holding the meeting.
3. A Member who is an Exempt Authorised Nominee which holds ordinary shares in the Bank for multiple beneficial owners in one securities account (omnibus account), there is no limit
to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds.
4. A Member other than an Exempt Authorised Nominee shall be entitled to appoint not more than two (2) proxies to attend, participate, speak and vote at the same meeting.
5. Where a Member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholdings to be represented by each proxy.
6. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorised.
7. A shareholder whose name appears in the General Meeting Record of Depositors as at 18 July 2019 shall be regarded as a Member entitled to attend, participate, speak and vote at
the meeting or appoint a proxy or proxies to attend, participate, speak and vote in his/her stead.
8. By submitting the duly executed Form of Proxy, the Member and his/her proxy consent to the Bank (and/or its agents/service providers) collecting, using and disclosing the personal
data therein in accordance with the Personal Data Protection Act 2010 for the purposes of this Annual General Meeting and any adjournment thereof.
fold this flap for sealing

then fold here

Affix Stamp

GROUP COMPANY SECRETARY

ALLIANCE BANK MALAYSIA BERHAD
3rd Floor, Menara Multi-Purpose
Capital Square, No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur, Malaysia.

1st fold here

362 Alliance Bank Malaysia Berhad (88103-W)

NOTES TO THE FINANCIAL STATEMENTS (Cont’d)

for the financial year ended 31 March 2019

www.alliancebank.com.my

AllianceBankMalaysia AllianceBankMY

ALLIANCE BANK MALAYSIA BERHAD (88103-W)

3rd Floor, Menara Multi-Purpose, Capital Square,
No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.
Tel : 03-2604 3333 Fax : 03-2694 6200