2009 Annual Report - EXIM...2009 Annual Report Taking on the global challenge with you Export-Import Bank of Malaysia Berhad (357198-K) Level 22, UBN Tower No. 10, Jalan P. Ramlee

2009 Annual ReportTaking on the global challenge with you

Export-Import Bank of Malaysia Berhad (357198-K)

Level 22, UBN Tower No. 10, Jalan P. Ramlee 50796 Kuala LumpurTel : +603-2034 6666 Fax : +603-2034 6699

www.exim.com.my

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A global challenge.The opportunity for all.In our efforts to be the country’s leading financial institutions for Malaysian cross-border ventures, our commitment is in supporting the export and import of Malaysian goods and services through providing innovative financial facilities and export credit insurance services.

The 'Rubic’s cube' symbolises the formidable challenge that we’ve taken on to be the best at what we do. Aligning strategic alliances with international associates and finding inventive solutions to expand cross-border ventures. Whatever the task at hand, we are dedicated to skillfully combine all our resources and expertise to create borderless opportunities for all Malaysians.

100

CORPORATEOVERVIEW

VISION, MISSION &SHARED VALUES

Vision

To be a leading financial institution for Malaysian cross-border ventures.

In defining the vis ion;

Leading means being a preferred financial institution for Malaysians seeking financing faci l it ies, insurance cover and advisory services when venturing business abroad.

Malaysian cross-border ventures means al l types of business ventures abroad participated by Malaysians that meet the requirement as specif ied under the Bank’s business rules.

Mission

As a development financial institution (DFI) we strive to;

Faci l itate Malaysia’s global businesses by providing banking and credit insurance

products and services;

Provide developmental advisory services in nurturing Malaysian cross-border business

ventures.

Shared Values

E - Efficient and professional delivery of products and services.

X - eXcellence in servicing our customers with full integrity.

I - Innovative in providing solutions to global f inancial needs of our customers.

M - Mutual respect among all staff and discipl ined teamwork in meeting the expectations

of stakeholders.

CORPORATEINFORMATION

2

DIRECTORS

Datuk Mohd Hashim bin Hassan(Chairman)

Mohd Fauzi bin Rahmat(Managing Director/ Chief Executive Officer)

Hj. Ab. Gani bin Haron

Hj. Zakaria bin Ismail

Dato’ Kamaruddin bin Ismail

Siti Zauyah binti Md. Desa

Dato’ Mohammed Hussein

Ir. Rosli Bin Mohamed Nor

SHARIAH COMMITTEE

Dato’ Hj. Mohd Mokhtar bin Hj Shafii (Chairman)

Hj. Abd. Rasid bin Abd. Kadir

Dr. Mohamad Sabri bin Zakaria

Hj. Aziz bin Mustapha

MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER

Mohd Fauzi bin Rahmat

COMPANY SECRETARY

Julina binti Mohd SallehLicense number (LS 0008055)

AUDITORS

Ernst & YoungLevel 23A, Menara Mil leniumJalan Damanlela Pusat Bandar Damansara50490 Kuala Lumpur

BANKERS

CIMB Bank Berhad

Maybank International (L) Ltd

Standard Chartered Bank - New York

Citibank Berhad

Commerzbank AG Frankfurt

RHB Bank Berhad

Bank Islam Malaysia Berhad

REGISTERED OFFICE

Level 22, UBN Tower No. 10, Jalan P. RamleeP.O. Box 1302850796 Kuala LumpurMALAYSIA

REPRESENTATIVE OFFICE

Pulau PinangNo. 2, Ground FloorLebuh Tenggiri DuaPusat Bandar Seberang Jaya13700 Seberang Jaya Penang, MALAYSIA

Johor Darul TakzimGround Floor, 95 Jalan DamaiTaman Seri Setia Off Jalan Stulang Darat80300 Johor BahruJohor, MALAYSIA

3

CONTENTSVision, Mission & Shared Values

Contents

Corporate Information

EXIM Bank in Brief

Message from The Chairman

Managing Director’s Operations Review

Board of Directors

Shariah Committee

Management Team

Organisational Structure

Banking and Credit Insurance Exposure

Corporate Governance Disclosure Report

Banking Portfolio 2009

Credit Insurance Portfolio 2009

Corporate Events

Financial Statements

1

2

3

4

5

8

14

19

21

22

23

24

29

30

31

33

CORPORATEINFORMATION

2

DIRECTORS

Datuk Mohd Hashim bin Hassan(Chairman)

Mohd Fauzi bin Rahmat(Managing Director/ Chief Executive Officer)

Siti Zauyah binti Md Desa


Hj. Ab. Gani bin Haron

Hj. Zakaria bin Ismail

Dato’ Mohammed Hussein

Ir. Rosli bin Mohamed Nor

SHARIAH COMMITTEE

Dato’ Hj. Mohd Mokhtar bin Hj. Shafii (Chairman)

Hj. Abd. Rasid bin Abd. Kadir

Dr. Mohamad Sabri bin Zakaria

Hj. Aziz bin Mustapha

MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER


COMPANY SECRETARY

Julina binti Mohd Salleh (LS 0008055)

AUDITORS

Ernst & YoungLevel 23A, Menara Mil leniumJalan Damanlela Pusat Bandar Damansara50490 Kuala Lumpur

BANKERS

CIMB Bank Berhad

Maybank International (L) Ltd

Standard Chartered Bank - New York

Citibank Berhad

Commerzbank AG Frankfurt

RHB Bank Berhad

Bank Islam Malaysia Berhad

REGISTERED OFFICE

Level 22, UBN Tower No. 10, Jalan P. Ramlee50250 Kuala LumpurMALAYSIA

REPRESENTATIVE OFFICE

Pulau PinangNo. 2, Ground FloorLebuh Tenggiri DuaPusat Bandar Seberang Jaya13700 Seberang Jaya Penang, MALAYSIA

Johor Darul TakzimGround Floor, 95 Jalan DamaiTaman Seri Setia Off Jalan Stulang Darat80300 Johor BahruJohor, MALAYSIA

3

CONTENTSVision, Mission & Shared Values

Contents

Corporate Information

EXIM Bank in Brief

Message from The Chairman

Managing Director’s Operations Review

Board of Directors

Shariah Committee

Management Team

Organisational Structure

Banking and Credit Insurance Exposure

Corporate Governance Disclosure Report

Banking Portfolio 2009

Credit Insurance Portfolio 2009

Corporate Events

Financial Statements

1

2

3

4

5

8

14

19

21

22

23

24

29

30

31

33

EXIM BANKIN BRIEF

EXIM BANKIN BRIEF

Background

Export-Import Bank of Malaysia Berhad (EXIM Bank)

was incorporated on 29 August 1995 as a government

owned development financial institution through a

wholly owned subsidiary of the Minister of Finance

Incorporated. The Bank was established to promote

reverse investment and export of strategic sectors

such as capital goods, infrastructure projects,

shipping, value added manufactured products and to

facilitate the entry of Malaysian companies to new

markets, particularly to the non-traditional markets.

Mandated Role

As an agency under the purview of the Ministry of

Finance, EXIM Bank’s mandated role as specified by

the Government is as follows: -

To provide credit facilities to finance and support

exports and imports of goods, services and overseas

projects with emphasis on non-traditional markets

as well as the provision of export credit insurance

serv ices , export f inanc ing insurance, overseas

investments insurance and guarantee facilities.

Clientele

The Bank’s clientele consists of large corporations,

SMEs, foreign governments and foreign companies

and cover all sectors ranging from trading,

manufacturing and infrastructure.

Strategic All iances

EX IM Bank cont inues to pursue a l l iances wi th

international associations and organisations and

have also executed several agreements to further

boost its business and market outlook.

As at to date, EXIM Bank is a member of the Berne

Union, an international organisation for Export

Credit Agencies; a member of Asian EXIM Banks

Forum, an associat ion of 9 EXIM Banks in Asia;

The Aman Union and Association of Development

Financing Institutions in Asia and the Pacific.

EXIM Bank in its export promotion effort also collaborates with Malaysian government agencies including Ministry of International Trade and Industry (MITI), Malaysia External Trade Development Corporation (MATRADE), Malaysian Industrial Development Authority (MIDA), Small And Medium Enterprise Corporation Malaysia (SMECorp), Construction Industry Development Board Malaysia (CIDB) and Professional Skills Development Centre (PSDC).

Current Faci l it ies Offered by EXIM Bank

1. Banking Faci l it ies

a. Conventional

Overseas Project Financing

Overseas Contract Financing

Buyer Credit

Export of Services Financing

Supplier Credit

Guarantee

Export Credit Refinancing (ECR) Scheme

EXIM Overseas Guarantee Faci l ity (EOGF)

MalaysiaKitchen Financing

b. Is lamic

Buyer Financing–i

Supplier Financing–i

MalaysiaKitchen Financing–i

IDB Co-Financing

Letter of Credit–i

Overseas Project Financing–i

Overseas Contract Financing–i

Bank Guarantee–i

2. Credit Insurance Faci l it ies

Comprehensive Policy (Shipments / Contracts)

Specific Policy (Contracts / Constructional

Works / Services)

Bank Letter of Credit Policy (BLCP)

Overseas Investment Insurance (Political

Risks Insurance Cover)

Buyer Credit Guarantee

Multi Currency Trade Financing (MCTF) Scheme

Indirect Exporters’ Financing Scheme (IEFS)

Bond Risk Insurance

Bond Indemnity Suppor†

4

MESSAGE FROMTHE CHAIRMAN


DatukMohd Hashim

bin Hassan

Chairman

“As a thrust that will support the

Bank’s vision of becoming the pre-

ferred export financial institution

for cross border ventures, the

research capability of the Bank

would be enhanced to provide a

more in-depth information and

understanding of select interna-

tional markets, business potential

and financing risks exposure.”



I am pleased to report that the Export- Import Bank of Malaysia Berhad (EXIM Bank)

continued to record improvement in the financial year ended 31 December 2009 despite the

challenging business condition. The higher net profit achieved and payment of dividend to

our shareholders amidst a diff icult operating environment is indeed satisfying. On behalf

of the Board, it is my pleasure to present EXIM Bank 2009 annual report.

FINANCIAL PERFORMANCE

The Bank’s net profit rose by 121.1% from RM16.1 mil l ion in 2008 to RM35.7 mil l ion in

2009, despite the decrease in revenue from RM262.7 mil l ion in 2008 to RM252.2 mil l ion in

2009. This was achieved with better cost management as well as improvement in asset and

l iabil ity management.

The stronger performance contributed to the further strengthening of the Bank’s balance

sheet with total assets stood at RM5.7 bil l ion in 2009 against RM5.5 bil l ion in 2008.

Earnings Per Share (EPS) rose from 0.90 sen in 2008 to 1.32 sen in 2009.

Against this backdrop, the Bank, with the approval of the regulator is paying the first 0.1%

dividend to our shareholders.

DEVELOPMENT

In 2009, the Bank continued its implementation of the Corporate Improvement Programme

(CIP) which has produced posit ive results. In this regards, the Part Two of the CIP or CIP 2

would be rolled out beginning July 2010. I am posit ive that the init iatives of CIP 2 wil l

enable the Bank to expand into new markets and introduce new products and services.

To set a clear direction forward for the Bank and inculcate professional working culture

amongst its staff, the Board has set new Vision and Mission statements and Corporate

Values. These were rolled out in September 2009.

It is envisaged that the implementation of these init iatives and the growing sentiment that

emerging economies such as Malaysia can return to the pre-cris is economic performance,

would enable EXIM Bank to carry out its mandate successfully in the future.

6



MOVING FORWARD

Moving forward, the Bank is actively pursuing the development of Shariah-compliant

products and services. In 2009, we have introduced Shariah-compliant f inancing faci l it ies

and we hope to launch Export Credit Insurance product based on Takaful or Is lamic

insurance principles in 2010.

As a thrust that wil l support the Bank’s vis ion of becoming the preferred export f inancial

institution for cross-border ventures, the research capabil ity of the Bank would be

enhanced to provide a more in-depth information and understanding of select

international markets, business potential and financing risks exposure. This effort is in l ine

with the Bank’s mission to provide developmental advisory services in nurturing Malaysian

companies for their cross-border ventures.

ACKNOWLEDGEMENTS

The Board of Directors wish to extend its gratitude and appreciation to the Government, its

relevant agencies as well as our other indirect stakeholders for their continued and

unwavering support towards EXIM Bank in achieving its intended mandate and posit ion in

the global arena.

To my fel low directors of the Board, thank you for your valuable contribution and

commitment. I also wish to thank al l EXIM Bank’s staff who have contributed to the success

of the Bank.

7

Datuk Mohd Hashim bin HassanChairman

MANAGING DIRECTOR’SOPERATIONS REVIEW


98

Building on the foundations of the turnaround achieved in 2008, Export- Import Bank of

Malaysia Berhad (EXIM Bank) achieved another set of strong financial results in 2009. The

Bank’s net profit rose 121.1% to RM35.7 mil l ion despite the decl ine in Malaysia’s exports

which subdued revenue growth during the year under review. The stronger performance is

credited to intensive recovery efforts and the implementation of several init iatives to

counter business and operational challenges in the l ight of the global economic

uncertainties.

During the year under review, proactive measures were also taken to strengthen the Bank’s

operational abil it ies to respond to the constantly changing business environment and

market needs. These included:

The continual implementation of Corporate Improvement Programme (CIP) that was

introduced in July 2008, and has s ince led to the overall improvements of the Bank’s

operational efficiency;

The setting up of the Bank’s own advisory and research unit dedicated to providing

quality and up-to-date information and analysis of the international business

scenario that affect the risks, business and operation of the Bank;

The review on both our banking and insurance business to streamline its execution

capabil ity in meeting the requirements of our increasingly demanding customers;

The rationalisation of representative offices in Seberang Prai (Pulau Pinang) and

Johor Bharu to better reach and service both our exist ing and potential customers;

i )

i i )

i i i )

iv)

Mohd Fauzibin Rahmat

ManagingDirector /

Chief ExecutiveOfficer

The implementation of aggressive recovery efforts for impaired financing exposures

that include rehabil itation, rescheduling and restructuring or outright recoveries;

The widening of cooperation with other export-credit agencies and financial

institutions to ensure common understanding and sharing of information in areas of

common interests in regions where we are currently operating;

The introduction of new Shariah-compliant products to meet the increasing demand

from certain segments of our customers, and

The further enhancement of the Bank’s supporting roles via the ongoing process of

core banking and insurance system as well as rating system to support our business,

operation and risk management.

v)

vi)

vi i )

vi i i )

Operationally, the Bank is implementing various init iatives along the on-going CIP and that

has produced posit ive results. To ensure only el igible customers receive funding, we have

implement business rules and el igibi l ity criteria in assessing al l applications submitted to

Bank. This would help the Bank in optimising the benefit for the country and improve

transparency. In the area of human capital development, we are optimising our human

capital and stabil ity in management succession. To this end, we have put in place a

performance-based reward system and a succession-planning model. In the area of process

improvement, the Bank aims to reduce processing time and improve corporate governance

by streamlining the terms of reference for al l the Board and management committees. Our

policies and procedures have been reviewed and updated to ensure adherence with the

industry’s best practices along with the support of new core banking and insurance system

to ensure al l aspects of banking and insurance operations are executed efficiently.

During the year under review, the Bank has also enhanced its cooperation with several

government agencies as part of its ongoing efforts to enhance its presence in the business

community. Among the key events include a successful seminar conducted in collaboration

with the Malaysian External Trade Development Corporation (MATRADE), where Malaysian

manufacturers were given clear perspectives on manufacturing investment faci l it ies which

the Bank could provide for expansion overseas. In addition to this, the Bank is also working

in collaboration with the Construction Industry Development Board (CIDB), to improve

awareness on the faci l it ies that were available for Malaysian contractors to expand

business overseas.



98

Building on the foundations of the turnaround achieved in 2008, Export- Import Bank of

Malaysia Berhad (EXIM Bank) achieved another set of strong financial results in 2009. The

Bank’s net profit rose 121.1% to RM35.7 mil l ion despite the decl ine in Malaysia’s exports

which subdued revenue growth during the year under review. The stronger performance is

credited to intensive recovery efforts and the implementation of several init iatives to

counter business and operational challenges in the l ight of the global economic

uncertainties.

During the year under review, proactive measures were also taken to strengthen the Bank’s

operational abil it ies to respond to the constantly changing business environment and

market needs. These included:

The continual implementation of Corporate Improvement Programme (CIP) that was

introduced in July 2008, and has s ince led to the overall improvements of the Bank’s

operational efficiency;

The setting up of the Bank’s own advisory and research unit dedicated to providing

quality and up-to-date information and analysis of the international business

scenario that affect the risks, business and operation of the Bank;

The review on both our banking and insurance business to streamline its execution

capabil ity in meeting the requirements of our increasingly demanding customers;

The rationalisation of representative offices in Seberang Prai (Pulau Pinang) and

Johor Bharu to better reach and service both our exist ing and potential customers;

i )

i i )

i i i )

iv)

Mohd Fauzibin Rahmat

ManagingDirector /

Chief ExecutiveOfficer

The implementation of aggressive recovery efforts for impaired financing exposures

that include rehabil itation, rescheduling and restructuring or outright recoveries;

The widening of cooperation with other export-credit agencies and financial

institutions to ensure common understanding and sharing of information in areas of

common interests in regions where we are currently operating;

The introduction of new Shariah-compliant products to meet the increasing demand

from certain segments of our customers, and

The further enhancement of the Bank’s supporting roles via the ongoing process of

core banking and insurance system as well as rating system to support our business,

operation and risk management.

v)

vi)

vi i )

vi i i )

Operationally, the Bank is implementing various init iatives along the on-going CIP and that

has produced posit ive results. To ensure only el igible customers receive funding, we have

implement business rules and el igibi l ity criteria in assessing al l applications submitted to

Bank. This would help the Bank in optimising the benefit for the country and improve

transparency. In the area of human capital development, we are optimising our human

capital and stabil ity in management succession. To this end, we have put in place a

performance-based reward system and a succession-planning model. In the area of process

improvement, the Bank aims to reduce processing time and improve corporate governance

by streamlining the terms of reference for al l the Board and management committees. Our

policies and procedures have been reviewed and updated to ensure adherence with the

industry’s best practices along with the support of new core banking and insurance system

to ensure al l aspects of banking and insurance operations are executed efficiently.

During the year under review, the Bank has also enhanced its cooperation with several

government agencies as part of its ongoing efforts to enhance its presence in the business

community. Among the key events include a successful seminar conducted in collaboration

with the Malaysian External Trade Development Corporation (MATRADE), where Malaysian

manufacturers were given clear perspectives on manufacturing investment faci l it ies which

the Bank could provide for expansion overseas. In addition to this, the Bank is also working

in collaboration with the Construction Industry Development Board (CIDB), to improve

awareness on the faci l it ies that were available for Malaysian contractors to expand

business overseas.



1110

On the international arena, the Bank has so far executed various agreements and

memorandums of understanding with 36 organisations including export- import banks and

export credit agencies of other countries. This number wil l continue to grow in l ine with

our efforts to faci l itate Malaysian businesses penetrating new markets globally. In 2009,

EXIM Bank signed the MOU with agencies in Egypt, Kazakhstan and Indonesia, where

Malaysian products and services have been increasingly accepted.

1. BANKING BUSINESSThe Bank’s banking business continued to remain the biggest contributor with an income

contribution of RM104.7 mil l ion or 41.5% of the Bank’s total income of RM252.2 mil l ion in

2009. A total of RM2.9 bil l ion new financing faci l it ies were approved by EXIM Bank in 2009,

which is 4 t imes more than the total of RM714.9 mil l ion in 2008.

The new financing went to three core segments namely Project Financing (RM909.8 mil l ion

or 31.1%), Buyer Financing (RM893.9 mil l ion or 30.6%) and Guarantees (RM744.5 mil l ion or

25.5%).

The substantial jump in new financing despite the prevail ing cris is conditions in 2009 is a

result of the very focussed strategies to tap new markets by extending the Bank’s reach to

new markets and customers and the introduction of the new products such as

Shariah-compliant f inancing faci l it ies. In addition, the ongoing implementation of the CIP

that was launched in 2008, helped enhance the Bank’s abil ity to respond to the constantly

changing business environment and market needs. Furthermore, the Bank believes

businesses would need EXIM Bank’s products and services, even in challenging economic

conditions.

The effectiveness of EXIM Bank’s focussed strategies is reflected in the overwhelming

response to our f inancing faci l it ies. In the first s ix months of 2009, even when the country’s

exports fel l 23.4%, we approved close to RM1.0 bil l ion in loans, compared to the RM714.9

mil l ion for the 12 months in 2008.

In terms of exposure, the ASEAN region remained the Bank’s largest market, comprising

36% of our banking business portfolio. West and Central Asia was a close second at 28%.

The rest came from East Asia, Africa, Europe and the Oceania.

In terms of sector coverage, the portfolio was biased towards construction comprising

infrastructure, public faci l it ies, housing and commercial complexes (49.7%), while

manufacturing comprised 17.2% and services 12.8%.

2. CREDIT INSURANCE BUSINESS The performance of the Credit Insurance Business reflected the challenging economic

conditions affecting global trade and hence most of Malaysia’s trading partners during the

year. Global trade shrunk to US$58,147.6 bi l l ion during the year and Malaysia’s trade with

its key trading partners also shrunk to RM988.2 bi l l ion during the same period. Malaysia’s

exports, primari ly commodities such as palm oil , crude oil and processed gas, as well as

natural rubber, continue to perform well price-wise, cushioning the impact of the global

economic uncertainties affecting key markets including the major markets of United States

of America and Europe.

Our insurance business has a direct correlation with the global trade volume as the Bank is

supporting exporters by providing credit insurance cover to mitigate their global trade risk.

In 2009, the Bank recorded a total gross premium of RM14.8 mil l ion or a reduction of 7.2%

from the previous year reflecting the overall soft global trade. Total face value in force was

RM2.9 bil l ion in 2009 compared with RM3.1 bil l ion in 2008.

Short term trade-related insurance products, designed to assist exporters in protecting

their trading shipments from buyer defaults, fared lower compared to 2008. The medium

and long-term insurance coverage also fared lower due to potential investors holding back

their investments in medium and long-term overseas projects.

Despite the lower volumes in 2009, EXIM Bank remained uniquely posit ioned to help

Malaysian companies whether they are exporting manufactured products or services.

MOVING FORWARDThe recovery of the global economy, especial ly Asia and the Middle East - North Africa

(MENA) regions, where EXIM Bank has major exposures would have a s ignificant impact on

the Bank’s performance for the current year.

While the recovery progress is expected to remain subdued in key markets of Europe and

North America, Asia (China) continues to buck the trend. The Chinese Government’s

st imulus package to develop its priority sectors and the country’s commitment to increase

investments in emerging economies would spil l over posit ively to the global economy,

especial ly Asia. However, events that happened in MENA region (particularly affecting the

markets of the United Arab Emirates) during 2009 would have an impact on the

performance of the Bank in the current year given the size of the Bank’s exposure to the

market.



1110

On the international arena, the Bank has so far executed various agreements and

memorandums of understanding with 36 organisations including export- import banks and

export credit agencies of other countries. This number wil l continue to grow in l ine with

our efforts to faci l itate Malaysian businesses penetrating new markets globally. In 2009,

EXIM Bank signed the MOU with agencies in Egypt, Kazakhstan and Indonesia, where

Malaysian products and services have been increasingly accepted.

1. BANKING BUSINESSThe Bank’s banking business continued to remain the biggest contributor with an income

contribution of RM104.7 mil l ion or 41.5% of the Bank’s total income of RM252.2 mil l ion in

2009. A total of RM2.9 bil l ion new financing faci l it ies were approved by EXIM Bank in 2009,

which is 4 t imes more than the total of RM714.9 mil l ion in 2008.

The new financing went to three core segments namely Project Financing (RM909.8 mil l ion

or 31.1%), Buyer Financing (RM893.9 mil l ion or 30.6%) and Guarantees (RM744.5 mil l ion or

25.5%).

The substantial jump in new financing despite the prevail ing cris is conditions in 2009 is a

result of the very focussed strategies to tap new markets by extending the Bank’s reach to

new markets and customers and the introduction of the new products such as

Shariah-compliant f inancing faci l it ies. In addition, the ongoing implementation of the CIP

that was launched in 2008, helped enhance the Bank’s abil ity to respond to the constantly

changing business environment and market needs. Furthermore, the Bank believes

businesses would need EXIM Bank’s products and services, even in challenging economic

conditions.

The effectiveness of EXIM Bank’s focussed strategies is reflected in the overwhelming

response to our f inancing faci l it ies. In the first s ix months of 2009, even when the country’s

exports fel l 23.4%, we approved close to RM1.0 bil l ion in loans, compared to the RM714.9

mil l ion for the 12 months in 2008.

In terms of exposure, the ASEAN region remained the Bank’s largest market, comprising

36% of our banking business portfolio. West and Central Asia was a close second at 28%.

The rest came from East Asia, Africa, Europe and the Oceania.

In terms of sector coverage, the portfolio was biased towards construction comprising

infrastructure, public faci l it ies, housing and commercial complexes (49.7%), while

manufacturing comprised 17.2% and services 12.8%.

2. CREDIT INSURANCE BUSINESS The performance of the Credit Insurance Business reflected the challenging economic

conditions affecting global trade and hence most of Malaysia’s trading partners during the

year. Global trade shrunk to US$58,147.6 bi l l ion during the year and Malaysia’s trade with

its key trading partners also shrunk to RM988.2 bi l l ion during the same period. Malaysia’s

exports, primari ly commodities such as palm oil , crude oil and processed gas, as well as

natural rubber, continue to perform well price-wise, cushioning the impact of the global

economic uncertainties affecting key markets including the major markets of United States

of America and Europe.

Our insurance business has a direct correlation with the global trade volume as the Bank is

supporting exporters by providing credit insurance cover to mitigate their global trade risk.

In 2009, the Bank recorded a total gross premium of RM14.8 mil l ion or a reduction of 7.2%

from the previous year reflecting the overall soft global trade. Total face value in force was

RM2.9 bil l ion in 2009 compared with RM3.1 bil l ion in 2008.

Short term trade-related insurance products, designed to assist exporters in protecting

their trading shipments from buyer defaults, fared lower compared to 2008. The medium

and long-term insurance coverage also fared lower due to potential investors holding back

their investments in medium and long-term overseas projects.

Despite the lower volumes in 2009, EXIM Bank remained uniquely posit ioned to help

Malaysian companies whether they are exporting manufactured products or services.

MOVING FORWARDThe recovery of the global economy, especial ly Asia and the Middle East - North Africa

(MENA) regions, where EXIM Bank has major exposures would have a s ignificant impact on

the Bank’s performance for the current year.

While the recovery progress is expected to remain subdued in key markets of Europe and

North America, Asia (China) continues to buck the trend. The Chinese Government’s

st imulus package to develop its priority sectors and the country’s commitment to increase

investments in emerging economies would spil l over posit ively to the global economy,

especial ly Asia. However, events that happened in MENA region (particularly affecting the

markets of the United Arab Emirates) during 2009 would have an impact on the

performance of the Bank in the current year given the size of the Bank’s exposure to the

market.



12

While the recovery of the global economy is expected to remain uncertain in the near term,

EXIM Bank continues to play its role as a pioneer in Malaysia’s efforts in opening up

non-traditional markets by providing financing and credit insurance faci l it ies for our

customers to take advantage of the recovering and growing global economy in a longer

term.

ACKNOWLEDGEMENTThe Bank’s performance in 2009, especial ly in our role as Malaysia’s Export Credit Agency

would not be possible without the confidence, support and trust of the Government and

Bank Negara Malaysia. A special thanks to the Government and Bank Negara Malaysia for

the support, and we look forward to their continuous support in the years to come.

I would also l ike to especial ly thank EXIM Bank’s Board of Directors for their invaluable

guidance and advice in ensuring the new mission and vis ion of the Bank is achieved.

Of course our achievements are due in no small measure to the commitment and dedication

of our staff and management who has been working tirelessly to deliver the results. I would

like to place on record our appreciation to all staff of EXIM Bank for their contribution to

another successful year. With their full support, commitment and dedication, I am confident

that EXIM Bank would record a much better performance in the years to come.

Another s ignificant development that would underpin Asian’s growth in trade is the

further l iberalisation of trade among countries in the region. From January 2010, s ix

Association of Southeast Asian Nations (ASEAN) countries, namely, Brunei, Indonesia,

Malaysia, The Phil ippines, Singapore and Thailand had fully implemented the ASEAN Free

Trade Agreement (AFTA). The remaining four ASEAN countries – Cambodia, Laos, Myanmar

and Vietnam would do so by 2015. The accelerated implementation of AFTA is driving

intra-regional trade growth and attracting higher inflows in foreign direct investments

into the region.

The recovery of Asia and the implementation of AFTA which would create opportunities for

trade and investment for Malaysian companies augurs well for EXIM Bank’s prospects. In

particular, the Bank could increase participation in the provision of faci l it ies for the

manufacturing sector, especial ly food industries, export credit services and trade insurance

for the burgeoning intra-Asian trade. There would also be opportunities in the construction

of infrastructure and property development, especial ly, government housing projects.

With business and operating strategies already in place and the progressive implementation

of the CIP that was instrumental in positioning EXIM Bank, the Bank is optimistic that it could

weather the global challenges in the current and future years.

To achieve our banking business targets, the banking business is restructured to be more

market-driven and to reflect a more global presence. In addition, it would be supported by

enhanced presence of information and research capacities as well as other support

elements. In addition, Shariah-based products would be gradually introduced to meet the

demand of the markets, especial ly the growing markets of Asia and Middle East.

The insurance business is improving its focus on both direct and indirect marketing efforts

to better reach exporters, local corporations as well as small and medium-scale enterprises

(SMEs), and commercial banks. Is lamic credit insurance or takaful products may also be

introduced to strengthen our presence in the markets, especial ly among members of the

Organisation of the Is lamic Conference (OIC) of the Middle East, Asia and North African

markets.

In order to house its growing corporate needs, the Bank has purchased a building in the

golden triangle of Kuala Lumpur to be its new corporate head office. This new corporate

head office would be more business-fr iendly, more accessible to customers and provide a

better work and business environment for both staff and customers al ike. The Bank is

expected to move to the new office building towards the end of 2010.

13

MOHD FAUZI BIN RAHMATManaging Director / Chief Executive Officer



12

While the recovery of the global economy is expected to remain uncertain in the near term,

EXIM Bank continues to play its role as a pioneer in Malaysia’s efforts in opening up

non-traditional markets by providing financing and credit insurance faci l it ies for our

customers to take advantage of the recovering and growing global economy in a longer

term.

ACKNOWLEDGEMENTThe Bank’s performance in 2009, especial ly in our role as Malaysia’s Export Credit Agency

would not be possible without the confidence, support and trust of the Government and

Bank Negara Malaysia. A special thanks to the Government and Bank Negara Malaysia for

the support, and we look forward to their continuous support in the years to come.

I would also l ike to especial ly thank EXIM Bank’s Board of Directors for their invaluable

guidance and advice in ensuring the new mission and vis ion of the Bank is achieved.

Of course our achievements are due in no small measure to the commitment and dedication

of our staff and management who has been working tirelessly to deliver the results. I would

like to place on record our appreciation to all staff of EXIM Bank for their contribution to

another successful year. With their full support, commitment and dedication, I am confident

that EXIM Bank would record a much better performance in the years to come.

Another s ignificant development that would underpin Asian’s growth in trade is the

further l iberalisation of trade among countries in the region. From January 2010, s ix

Association of Southeast Asian Nations (ASEAN) countries, namely, Brunei, Indonesia,

Malaysia, The Phil ippines, Singapore and Thailand had fully implemented the ASEAN Free

Trade Agreement (AFTA). The remaining four ASEAN countries – Cambodia, Laos, Myanmar

and Vietnam would do so by 2015. The accelerated implementation of AFTA is driving

intra-regional trade growth and attracting higher inflows in foreign direct investments

into the region.

The recovery of Asia and the implementation of AFTA which would create opportunities for

trade and investment for Malaysian companies augurs well for EXIM Bank’s prospects. In

particular, the Bank could increase participation in the provision of faci l it ies for the

manufacturing sector, especial ly food industries, export credit services and trade insurance

for the burgeoning intra-Asian trade. There would also be opportunities in the construction

of infrastructure and property development, especial ly, government housing projects.

With business and operating strategies already in place and the progressive implementation

of the CIP that was instrumental in positioning EXIM Bank, the Bank is optimistic that it could

weather the global challenges in the current and future years.

To achieve our banking business targets, the banking business is restructured to be more

market-driven and to reflect a more global presence. In addition, it would be supported by

enhanced presence of information and research capacit ies as well as other support

elements. In addition, Shariah-based products would be gradually introduced to meet the

demand of the markets, especial ly the growing markets of Asia and Middle East.

The insurance business is improving its focus on both direct and indirect marketing efforts

to better reach exporters, local corporations as well as small and medium-scale enterprises

(SMEs), and commercial banks. Is lamic credit insurance or takaful products may also be

introduced to strengthen our presence in the markets, especial ly among members of the

Organisation of the Is lamic Conference (OIC) of the Middle East, Asia and North African

markets.

In order to house its growing corporate needs, the Bank has purchased a building in the

golden triangle of Kuala Lumpur to be its new corporate head office. This new corporate

head office would be more business-fr iendly, more accessible to customers and provide a

better work and business environment for both staff and customers al ike. The Bank is

expected to move to the new office building towards the end of 2010.

13

MOHD FAUZI BIN RAHMATManaging Director / Chief Executive Officer

Datuk Mohd Hashim bin Hassan possesses a Bachelor degree in Agricultural Science

(Honours) from the University of Malaya, a Masters degree in Food Science from the Michigan

State University, USA and a Masters degree in Business Administration from the Ohio

University, USA.

He has a vast working experience with private companies as well as government l inked

corporations. During his early career development, Datuk Mohd Hashim worked with the

Malaysian Agricultural Research and Development Institute (MARDI) from 1970 to 1985 as

a Food Technology Officer and later Principle Research Officer and Director of the Food

Technology Divis ion. He joined Kumpulan FIMA Berhad as its General Manager in 1985. In

1990, Datuk Mohd Hashim was appointed as the Executive Director of Fima Metal Box

before serving Kedah State Development Corporation in 1993 to 1996 as its Chief Executive

Officer. At the same time, he was appointed the Managing Director of Kulim Technology

Park Corporation from 1994 to 1996 and the Executive Chairman of Bina Darulaman Berhad

ti l l 1997. Datuk Mohd Hashim joined Putrajaya Holdings Sdn. Bhd. as its Chief Executive

Officer and Director in 1996 and was appointed Chairman of the company in 2002. He was

also appointed as Chairman of Padiberas Nasional Berhad from 2004 to 2006 and Chairman

of Juta Asia Properties Sdn. Bhd. from 2005 to Apri l 2009. He was a member of the

Investment Committee and subsequently Director of Employees Provident Fund Board from

June 2005 to September 2008.

Currently he is a Director of Lebar Daun Berhad, Amanah Raya Berhad, Pembinaan BLT Sdn.

Bhd. and Chairman of Amanah Raya Development Sdn. Bhd. Datuk Mohd Hashim bin Hassan

was appointed as Chairman of EXIM Bank from May 2008.

14

BOARD OFDIRECTORS

DatukMohd Hashim

bin HassanChairman

15

BOARD OFDIRECTORS

Siti Zauyahbinti

Md DesaDirector

Mohd Fauzi bin Rahmat graduated from the

University of Southern Mississ ippi, USA. He began

his career with an Information Technology firm

prior to joining Citibank Berhad in 1990. After

serving Citibank for 15 years in various capacit ies

and special isations including marketing, product

development, f inancial control, customer support

and risk management, he joined Bank Is lam

Malaysia Berhad to head the Risk Management

Divis ion in July 2005. In September 2007, he was

appointed as the Chief Operating Officer of Bank

Pembangunan Malaysia Berhad. Subsequently he

was appointed as Managing Director/Chief

Executive Officer of EXIM Bank from Apri l 2008.

Currently he is also a Director of Malaysia External

Trade Development Corporation (MATRADE).

Funding), Loan Management, Financial Markets and

Actuary Division; Principle Assistant Secretary

(Multilateral Unit), Loan Management, Financial

Markets & Actuary Division; Assistance Secretary

(Multilateral and Bilateral Unit), Loan Management

& Financial Policy Division; Assistance Secretary

(Privatisation Unit), Finance Division; Assistance

Secretary (Free Trade Zone & Service Tax Unit), Tax

Analysis Division and Assistance Secretary (Armed

Forces Unit), Contract Management Division.

Siti Zauyah was appointed as a Director of EXIM

Bank in January 2009. Currently she is also Director

of Bank Pembangunan Malaysia Berhad and

Aerospace Technology Systems Corporation Sdn.

Bhd.

Throughout her career, Siti Zauyah has previously

served as an Alternate Director for Malaysia Airport

Holding Bhd., Director of Malaysia Airports (Sepang)

Sdn. Bhd., Malaysia Airports Management &

Technical Services Sdn. Bhd., Alternate Director for

Jambatan Kedua Sdn. Bhd., Social Security Fund of

Malaysia and National Defence University of

Malaysia. She has also served as a Quantity Surveyor

in Public Works Department, Assistant Lecturer in

Universiti Teknologi MARA (UiTM), Quantity

Surveyor in Hashim & Lim Consultancy and Director’s

Advisor to the constituency belonging to Malaysia,

Myanmar, Nepal, Singapore and Thailand in Asian

Development Bank, Manila.

Mohd Fauzibin RahmatManaging Director /Chief Executive Officer

Siti Zauyah binti Md Desa graduated with a MBA

International Banking (Board of Directors List) from

the University of Manchester, United Kingdom, BSc

(Hons) in Quantity Surveying from University of

Reading, UK and GCE ‘A’ Levels from Aston College,

Wrexham, Wales, UK. She also holds a Diploma in

Public Administrations from National Institute of

Public Administration (INTAN).

Siti Zauyah currently serves as Deputy Secretary,

(Economy) Investment, MOF (Inc) & Privatisation

Division. She had served the Ministry of Finance for

20 years in various capacities such as Deputy

Secretary (Infrastructure), Investment, MOF (Inc) &

Pr ivat i sat ion Div i s ion; Head of Sect ion (External

16

BOARD OFDIRECTORS

Hj. Ab. Ganibin Haron

Director

Accountant at Ministry of Education and Director

of Accountant General Department, Kelantan and

Selangor Branch from 1986 to 1997.

Between 1999 to 2007, Hj. Ab. Gani was appointed

as Director for the Central Operations & Agency

Services Division in Accountant General Department

& Accounting Development & Management Division

a n d t h e r e a f t e r t h e p o s t o f D e p u t y A c c o u n t a n t

G e n e r a l ( C o r p o r a t e ) & ( O p e r a t i o n s ) i n t h e

Accountant General Department, Headquarters. He

is currently a Director of YLI Holdings Berhad,

Amanah Raya Investment Bank Bhd, Amanah Raya

Trustee Bhd. and Chairman of Amanah Raya

Capita l Sdn. Bhd. Hj . Ab. Gani was appointed as

Director of EXIM Bank in May 2008.

Hj. Ab. Gani bin Haron holds a Bachelor of

Economics (Hons) from the University Malaya. He

began his career as Accountant, Accountant General

Department, Headquarters in 1977 before serving

as Assistant Director, Accountant General

Department, Perak Branch in 1978 and Director,

Accountant General Department for Malacca and

Pahang Branch in 1980. In 1982, Hj. Ab. Gani

served as Assistant Treasurer at State Treasury of

Sabah and later on, appointed as Deputy Head of

Dato’ Kamaruddin bin Ismail graduated from

University of Malaya in 1977 with a Bachelors of

Arts. He started his career as Assistant Director,

International Trade Divis ion, Ministry of

International Trade and Industry in 1978 before

serving as Senior Private Secretary to the Minister

in Prime Minister’s Department in 1982. Dato’

Kamaruddin has held various posit ions in the

Ministry of International Trade and Industry. He

w a s a p p o i n t e d D i r e c t o r o f D o m e s t i c T r a d e

Divis ion, Northern Branch in 1983, Principal

Assistant Director, Industries Divis ion in 1990,

Director of Industrial Policy Divis ion in 2001,

Director of Industrial Services Divis ion in 2002 and

Senior Director of Sectoral Policy and Industrial

Services from 2003 to 2008. He is currently the

Deputy Sec retary Genera l ( Indust ry ) . Dato ’

Kamaruddin was appointed as Director of EXIM

Bank in October 2008.

Dato’Kamaruddinbin IsmailDirector

17

Hj. Zakaria bin Ismail holds a Master of Arts in

Economics and Master in Business Administration

from University Boston, USA. Graduated with a

Bachelors of Economics (Honours) from University

of Malaya, he is an Associate of the Institute of

Bankers from The Institute of Bankers, London.

Beginning his career in 1974 with Bank Negara

Malaysia in the Banking Supervis ion Department,

he was temporari ly attached to the South-East

Asia Group International Monetary Fund, Washington

DC, USA as Assistant to the Executive Director

between 1984 to 1986.

Between 1986 to 2002, he moved to various

d e p a r t m e n t s w i t h i n B a n k N e g a r a M a l a y s i a

f r o m Economics, Banking, Investment, Insurance

Supervis ion and Insurance Regulation, holding

posit ions from Manager, Deputy Director and

D i r e c t o r . F r o m 2 0 0 2 t o 2 0 0 4 , h e w a s s e c o n d e d

a s M a n a g i n g D i r e c t o r f o r t h e E n t r e p r e n e u r s

Rehabilitation Fund, a fund established by Bank

Negara Malaysia to assist small and medium

entrepreneurs. Subsequently, he was seconded as

Director of Training and Administration for the

South East Asia Central Bank Training and Research

Centre (The SEACEN Centre) till November 2007. Hj.

Zakaria was appointed as Director of EXIM Bank in

September 2008.

Dato’ Mohammed Hussein holds a Bachelor of

Commerce (Accounting) from the University of

Newcastle, Austral ia and has completed the

Harvard Business School Advanced Management

Program in Boston, USA.

H e h a s h a d a l o n g - s t a n d i n g c a r e e r o f 3 1 y e a r s

w i t h Maybank Group in which he held various

management pos i t ions . They inc lude Head of

Corporate Banking, Head of Commercial Banking,

Head of Malaysian Operations, Managing Director

of Aseambankers Malaysia Berhad, Head of

Investment Banking and Executive Director. Prior

to 2008, he was the Deputy President / Executive

Director / Chief Financial Officer.

Cur rent ly he i s a D i rec tor of Qui l l Cap i ta l

Management Sdn. Bhd., Hap Seng Consolidated

Bhd., Ancom Berhad, PNB Commercial Holdings

Sdn. Bhd. , CapitaCommerc ia l Management Pte

Ltd , Malays ia Commerc ia l Development Fund Pte

Ltd , MCB Bank L imited and PT Bank Maybank

Indocorp.

He is also on the Board of Directors of University

M a l a y s i a K e l a n t a n a n d C o r p o r a t e D e b t

Restructuring Committee, a committee sponsored

by Bank Negara Malaysia to resolve and

restructure corporate debts. Dato’ Mohammed

Hussein was appointed as Director of EXIM Bank in

November 2009.

Hj. Zakariabin IsmailDirector

Dato’Mohammed

HusseinDirector

BOARD OFDIRECTORS

18

BOARD OFDIRECTORS

Ir. Rosli binMohamedNorDirector

Ir . Rosl i bin Mohamed Nor holds a B.Sc. Civi l

Engineering degree from Brighton University,

United Kingdom.

He began his career in 1982 as a Design Engineer

with Engineering and Environmental Consultants

Sdn. Bhd. He held various posit ions in the design

firm before joining United Engineers (M) Sdn.

Bhd. in 1988 as a Senior Manager.

In 1992 he started his own construction business

by forming Benar Antara Sdn. Bhd., a PKK Class A,

CIDB G7 registered Bumiputra Contractor. The

company undertook various prestigious projects

that include highways, LRT tunnels, water

reservoirs, rai l l ines and many others. The

company has s ince been sold to a public l isted

company, but he remained as their Managing

Director t i l l 2000.

Then onwards he moved on to develop new

businesses, of which he has shareholdings in KMK

Plus Sdn. Bhd. (construction), Landas Idaman Sdn.

Bhd. (property development), Guomara Sdn. Bhd.

(coal trader) and a few others.

He has acumen in developing new businesses and

had gained the trust of two public l isted

companies namely United Engineers Bhd. and KUB

(M) Bhd. into appointing his companies as

business development advisors. Ir . Rosl i bin

Mohamed Nor was appointed as Director of EXIM

Bank in September 2009.

SHARIAHCOMMITTEE

Dato’ Hj. Mohd Mokhtar bin Hj. ShafiiChairman

Hj. Abd. Rasidbin Abd. Kadir

Member

Dr. Mohamad Sabri bin ZakariaMember

Hj. Azizbin Mustapha

Member

19

SHARIAHCOMMITTEE

SHARIAHCOMMITTEE

20

Dato’ Hj. Mohd Mokhtar bin Hj. Shafii holds a Diploma in Education from Kolej Islam Malaya and Master of Arts and Bachelor of Arts (Hons) in Islamic Studies-majoring Shariah from University Malaya. He has been the Chairman of EXIM Bank’s Shariah Committee since 2006.

He has served as a Shariah Committee Member in several organisations for over 25 years including Bank Kerjasama Rakyat Malaysia, Lembaga Tabung Haji as well as a member of Expert Consultation Panels of Jabatan Kemajuan Islam Malaysia (JAKIM).

Presently, he is the Chairman of Shariah Committee for Takaful Ikhlas Sdn. Bhd. and Shariah Committee member for Malaysian Rating Corporation Berhad (MARC) and OCBC Al-Amin Kuala Lumpur. He is a member of the Fatwa Council for Pahang and Selangor and also a senior member of the Islamic Religious Council for Pahang.

Dato’ Hj. Mohd Mokhtar bin Hj. ShafiiChairman

Hj. Abd. Rasid bin Abd. Kadir holds a Masters Degree in Business Administration (MBA), a Bachelor of Arts (Hons) in Economics and Diploma in Education and Islamic Studies from the National University of Malaysia. He also obtained a professional qualification in Islamic Financial Planner (Professional) from Islamic Banking and Finance Institute Malaysia (IBFIM), a programme jointly conducted with the Financial Planning Association of Malaysia (FPAM). He has been a member of EXIM Bank’s Shariah Committee since 2008.

He had served Bank Bumiputra Malaysia Berhad (BBMB) and Bank Muamalat Malaysia Berhad (BMMB) collectively for 30 years. His last appointment was as an Executive Vice President, Consumer Banking Division at BMMB. He is currently attached to the International Center of Education on Islamic Finance (INCEIF) as a Teaching Fellow and a Member of the Steering Committee for the setting up of a new Islamic Bank (2010).

Hj. Abd. Rasid bin Abd. KadirMember

Dr. Mohamad Sabri bin Zakaria holds a Doctor of Philosophy (PHD) in Fiqh@Usul Fiqh from International Is lamic University Malaysia ( I IUM), a Master of Arts (MA) in Is lamic Economics from University of Yarmouk, Jordan and a Bachelor of Arts (BA) in Shariah from Al-Azhar University, Egypt. He has been a member of EXIM Bank’s Shariah Committee since 2006.

Currently he is a member of academic staffs at the Department of Fiqh & Usul Fiqh, Kull iyah of Is lamic Revealed Knowledge & Human Sciences, International Is lamic University Malaysia ( I IUM). His f ield of special isation includes Is lamic Jurisprudence, Contemporary Fiqh Issues, Is lamic Law of Transaction, Is lamic Finance and Is lamic Economics.

Dr. Mohamad Sabri bin ZakariaMember

Hj. Aziz bin Mustapha holds Bachelor in Economics (Hons) in Accounting and a Diploma in Accounting from University Malaya. He has been a member of EXIM Bank’s Shariah Committee since 2006.

He began his career with the Bank of America and went on to become Assistant Vice President before joining Promet Bhd as Group Corporate Treasurer and Finance Director of the Property Division.

He has vast experience in share trading working as a Remisier for TA Securities Sdn. Bhd., Capital Corp Securities Sdn. Bhd. and Mohaiyani Securities Sdn. Bhd. He was also a Shareholder and Director of Mercury Securities Sdn. Bhd.

Hj. Aziz bin MustaphaMember

Adissadikin bin Ali

Chief Operating Officer

Badrul Hisham bin Mohd Salleh

Vice President, Risk Management

Thariq bin AbdullahVice President,

Legal & CorporateSecretarial

Aminuddin bin BashahVice President,

Credit Administration

Norzalizah binti Alias

Vice President,Audit and Examination

2122

MANAGEMENTTEAM

MANAGEMENTTEAM

Md Arop bin OthmanVice President,

Planning & Communications

Mokhlis bin Maizan

Senior Vice President,Business

Norlela binti Sulaiman

Vice President,Finance & Treasury


Managing Director/Chief Executive Officer

ORGANISATIONALSTRUCTURE

BOARD OF DIRECTORS

CHIEF OPERATING OFFICER

SHARIAH COUNCIL

BUSINESSGROUP

BUSINESS

BANKING /INSURANCE

PRODUCTDEVELOPMENT

MARKETING &PROMOTION

STRATEGICGROUP

PLANNING &COMMUNICATIONS

LEGAL & CORPORATESECRETARIAL

CORPORATEINTEGRITY

PLANNING

CORPORATE AFFAIRS & COMMUNICATION

LEGAL

CORPORATESECRETARIAL

BUSINESSSUPPORT

CREDITADMINISTRATION

RECOVERY

BANKING

INSURANCE

TECHNICALANALYSIS

INDEPENDENTSCORPORATE

SUPPORT

FINANCE &TREASURY

FINANCE

TREASURY

CORPORATESERVICES

ADMINISTRATION

PRODUCTIVITYQUALITY MGMT.

HUMAN CAPITALMANAGEMENT

AUDIT ANDEXAMINATION COMMITTEE

BOARD RISKMGMT. COMMITTEE

INFORMATION & TECHNOLOGY SERVICES

RISKMANAGEMENT

RISK STRATEGY& ANALYTICS

RISK ANALYSIS

RISK MONITORING& COMPLIANCE

GLOBAL ADVISORY& RESEARCH

AUDIT ANDEXAMINATION

FunctionalReporting

AdministrativeReporting

Division

22

MANAGING DIRECTOR / CHIEF EXECUTIVE OFFICER

CORPORATEOVERVIEW

BANKING AND CREDIT INSURANCEEXPOSURE

00

54

Australia

Austria

Argentina

Bahrain

Bangladesh

Belgium

Bosnia

Brazil

British VirginIsland

Brunei

Cambodia

Canada

China

Cuba

Czech Republic

Denmark

Egypt

Ethiopia

Fiji

France

Germany

Greece

Honduras

Hong Kong

Hungary

India

Indonesia

Iran

Ireland

Italy

Japan

Jordan

Laos

LibyaMaldives

Mauritius

Mexico

Morocco

MyanmarNepal

Netherlands

New Zealand

Norway

Oman

Pakistan

PapuaNew Guinea

Peru

Philippines

Poland

Portugal

Russia

SaudiArabia

Seychelles

Singapore

South Africa

South Korea

Spain

Sri Lanka

Sudan

Sweden

Switzerland

Syria

Taiwan

Thailand

Turkey

United Arab Emirates

United States of America

United Kingdom

Uzbekistan

Vietnam

Yemen

23

CORPORATE GOVERNANCEDISCLOSURE REPORT


25

The Board of Directors of Export- Import Bank of

Malaysia Berhad (EXIM Bank) have always placed

good corporate governance practices as one of its

highest priorit ies when conducting the Bank’s

business activit ies. As such, EXIM Bank puts the

utmost effort into observing the best corporate

governance practices to ensure that not only its

shareholders, but also other stakeholders, are well

protected at al l t imes.

Hence, EXIM Bank is ful ly committed and firmly

subscribes to the Principles and Best Practices in

Corporate Governance as set out in the Bank

Negara Malaysia’s Garis Panduan 4 (BNM/DFI/GP4)

– Guideline on Corporate Governance Standards

on Directorship for the Development Financial

Institutions, whereby the internal controls are

further strengthened to ensure proper checks and

balances are formed as an integral part of EXIM

Bank’s operations.

BOARD OF DIRECTORS

The Board of EXIM Bank consists of eight (8)

directors, out of which seven (7) are non-executive

directors. All Directors have the ski l ls and

experience in their respective areas of expertise,

which have contributed significantly to the

decis ion-making process of the Board. The

structure of EXIM Bank provides a clear separation

on functions, roles and responsibi l it ies between

the Chairman of the Board and the Managing

Director/Chief Executive Officer.

The Board of Directors meets at least once a month

to deliberate on, inter al ia, policy and strategic

issues and review of the financial performance as

well as credit operations of the Bank. In addition,

as prescribed by the Companies Commission of

Malaysia, al l Directors have attended the

Corporate Directors’ Training Programme.

The appointments of al l Directors are in

compliance with the BNM/DFI/GP4 and the Articles

of Association of the Company.

3. Functions and responsibil it ies

The responsibi l it ies of the AEC are as fol lows:

a. To ensure that there i s an open avenue of

communication between the internal auditors,

the external auditors and the Board of Directors.

b. To evaluate the adequacy and effectiveness of

the management control systems of the Bank

th rough the rev iew of the repor t s o f both

external auditors and internal auditors that

highlight internal accounting, organisational

a n d o p e r a t i n g c o n t r o l w e a k n e s s e s a n d t o

e n s u r e t h a t a p p r o p r i a t e c o r r e c t i v e a c t i o n s

are taken.

c . Rev iew any re lated party t ransact ions that

may ar i se within the Development F inancia l

Institution (DFI) group.

d. To ensure that the accounts are prepared in a

t ime ly and ac cura te manner w i th f requent

reviews of the adequacy of provisions against

cont ingenc ie s and bad and doubtfu l debt s .

Review the balance sheet and profit and loss

account for submiss ion to the fu l l board of

directors and ensure the prompt publication of

annual accounts.

e. To review internal controls, including the scope

of the internal audit programme, the internal

audi t f ind ings and recommend act ion to be

taken by management. The reports of internal

auditors and AEC should not be subject to the

c l e a r a n c e o f t h e c h i e f e x e c u t i v e o f f i c e r o r

executive directors.

f. T o r e v i e w w i t h t h e e x t e r n a l a u d i t o r s , t h e

scope of their audit plan, the system of internal

account ing cont ro l s , the aud i t report s , the

ass istance given by the management and its

s t a f f t o t h e a u d i t o r s a n d a n y f i n d i n g s a n d

actions to be taken. The AEC should also select

e x t e r n a l a u d i t o r s f o r a p p o i n t m e n t b y t h e

B o a r d e a c h y e a r a n d t o r e v i e w t h e i r

compensation, the scope and quality of their

work and their discharge or resignation.

BOARD COMMITTEES

As required by the BNM/DFI/GP4, EXIM Bank has

established the four (4) required committees at

Board level namely, Audit and Examination

Committee, Board Risk Management Committee,

Remuneration Committee and Nomination

Committee to assist the Board in the execution of

its duties and responsibi l it ies.

The details of the Board Committees are presented

as fol lows:

AUDIT AND EXAMINATION COMMITTEE

1. Objective

The Audit and Examination Committee’s ( ‘AEC’)

main objective is to evaluate the adequacy and

e f fec t i venes s of management cont ro l s y s tems

and compl iance with al l policies and guidelines

set by EXIM Bank, the Companies Act 1965 and

the Development Financial Institutions Act 2002

(DFIA). In addition, the Committee is responsible to

rev iew the f inanc ia l condit ion of the Bank, i t s

internal controls , performance and f indings of

t h e i n t e r n a l a u d i t o r s , a n d t o r e c o m m e n d t h e

appropriate remedial action regularly.

2. Composition

Members of the Committee are:

g. To ensure co-ordination where more than one

audit firms are involved.

h. To approve the Audit Charter before being

endorsed by the Board, so that the internal

audit functions may be effectively discharged.

i. To endorse the audit plan for the internal audit

and should be flexible to respond to changing

priorities and needs.

j. The AEC has the responsibility to ensure that

the internal audit staffs receive the necessary

training to perform the audit work.

k. T o r e v i e w t h e A u d i t a n d E x a m i n a t i o n

Department’s budget and staff ing to ensure

adequacy of staff with the relevant skills and

experience.

l . To direct and supervise any special project or

investigation considered necessary.

BOARD RISK MANAGEMENT COMMITTEE1. Objective The Board Risk Management Committee (BRMC) i s p r i m a r i l y r e s p o n s i b l e f o r t h e e f f e c t i v e f u n c t i o n i n g o f t h e B a n k ’ s r i s k m a n a g e m e n t function. 2. Composition Members of the Committee are:

i Ab. Gani bin Haron 6/6 i i Rajagopalan Pillay (resigned w.e.f. 02/08/2009) 5/5 i i i Dato’ Kamaruddin bin Ismail 2/6 iv Siti Zauyah binti Md Desa (appointed w.e.f 06/01/2009) 6/6 v Dato’ Mohammed Hussein (appointed w.e.f 18/11/2009) - vi Rosli bin Mohamed Nor (appointed w.e.f 02/09/2009) 1/1

NO. NO. OF MEETINGSATTENDED*

NAME OF DIRECTOR

*Reflects the number of meetings attended during the time the director held office

i Zakaria bin Ismail 4/4

i i Ab. Gani bin Haron 3/4

i i i Rajagopalan Pi l lay (resigned w.e.f 02/08/2009) 3/3

iv Rosl i bin Mohamed Nor (appointed w.e.f. 02/09/2009) 1/1

v Dato’ Kamaruddin bin Ismail 1/4


NAME OF DIRECTOR


24



25

The Board of Directors of Export- Import Bank of

Malaysia Berhad (EXIM Bank) have always placed

good corporate governance practices as one of its

highest priorit ies when conducting the bank’s

business activit ies. As such, EXIM Bank puts the

utmost effort into observing the best corporate

governance practices to ensure that not only its

shareholders, but also other stakeholders, are well

protected at al l t imes.

Hence, EXIM Bank is ful ly committed and firmly

subscribes to the Principles and Best Practices in

Corporate Governance as set out in the Bank

Negara Malaysia’s Garis Panduan 4 (BNM/DFI/GP4)

– Guideline on Corporate Governance Standards

on Directorship for the Development Financial

Institutions, whereby the internal controls are

further strengthened to ensure proper checks and

balances are formed as an integral part of EXIM

Bank’s operations.

BOARD OF DIRECTORS

The Board of EXIM Bank consists of eight (8)

directors, out of which seven (7) are non-executive

directors. All Directors have the ski l ls and

experience in their respective areas of expertise,

which have contributed significantly to the

decis ion-making process of the Board. The

structure of EXIM Bank provides a clear separation

on functions, roles and responsibi l it ies between

the Chairman of the Board and the Managing

Director/Chief Executive Officer.

The Board of Directors meets at least once a month

to deliberate on, inter al ia, policy and strategic

issues and review of the financial performance as

well as credit operations of the Bank. In addition,

as prescribed by the Companies Commission of

Malaysia, al l Directors have attended the

Corporate Directors’ Training Programme.

The appointments of al l Directors are in

compliance with the BNM/DFI/GP4 and the Articles

of Association of the Company.

3. Functions and responsibil it ies

The responsibi l it ies of the AEC are as fol lows:

a. To ensure that there i s an open avenue of

communication between the internal auditors,

the external auditors and the Board of Directors.

b. To evaluate the adequacy and effectiveness of

the management control systems of the Bank

th rough the rev iew of the repor t s o f both

external auditors and internal auditors that

highlight internal accounting, organisational

a n d o p e r a t i n g c o n t r o l w e a k n e s s e s a n d t o

e n s u r e t h a t a p p r o p r i a t e c o r r e c t i v e a c t i o n s

are taken.

c . Rev iew any re lated party t ransact ions that

may ar i se within the Development F inancia l

Institution (DFI) group.

d. To ensure that the accounts are prepared in a

t ime ly and ac cura te manner w i th f requent

reviews of the adequacy of provisions against

cont ingenc ie s and bad and doubtfu l debt s .

Review the balance sheet and profit and loss

account for submiss ion to the fu l l board of

directors and ensure the prompt publication of

annual accounts.

e. To review internal controls, including the scope

of the internal audit programme, the internal

audi t f ind ings and recommend act ion to be

taken by management. The reports of internal

auditors and AEC should not be subject to the

c l e a r a n c e o f t h e c h i e f e x e c u t i v e o f f i c e r o r

executive directors.

f. T o r e v i e w w i t h t h e e x t e r n a l a u d i t o r s , t h e

scope of their audit plan, the system of internal

account ing cont ro l s , the aud i t report s , the

ass istance given by the management and its

s t a f f t o t h e a u d i t o r s a n d a n y f i n d i n g s a n d

actions to be taken. The AEC should also select

e x t e r n a l a u d i t o r s f o r a p p o i n t m e n t b y t h e

B o a r d e a c h y e a r a n d t o r e v i e w t h e i r

compensation, the scope and quality of their

work and their discharge or resignation.

BOARD COMMITTEES

As required by the BNM/DFI/GP4, EXIM Bank has

established the four (4) required committees at

Board level namely, Audit & Examination

Committee, Remuneration Committee, Nomination

Committee and Board Risk Management

Committee to assist the Board in the execution of

its duties and responsibi l it ies.

The details of the Board Committees are presented

as fol lows:

AUDIT & EXAMINATION COMMITTEE

1. Objective

The Audi t & Examinat ion Commit tee ’ s ( ‘AEC ’ )

main objective is to evaluate the adequacy and

e f fec t i venes s of management cont ro l s y s tems

and compl iance with al l policies and guidelines

set by EXIM Bank, the Companies Act 1965 and

the Development Financial Institutions Act 2002

(DFIA). In addition, the Committee is responsible to

rev iew the f inanc ia l condit ion of the Bank, i t s

internal controls , performance and f indings of

t h e i n t e r n a l a u d i t o r s , a n d t o r e c o m m e n d t h e

appropriate remedial action regularly.

2. Composition


g. To ensure co-ordination where more than one

audit firms are involved.

h. To approve the Audit Charter before being

endorsed by the Board, so that the internal

audit functions may be effectively discharged.

i. To endorse the audit plan for the internal audit

and should be flexible to respond to changing

priorities and needs.

j. The AEC has the responsibility to ensure that

the internal audit staffs receive the necessary

training to perform the audit work.

k. T o r e v i e w t h e A u d i t a n d E x a m i n a t i o n

Department’s budget and staff ing to ensure

adequacy of staff with the relevant skills and

experience.

l . To direct and supervise any special project or

investigation considered necessary.

BOARD RISK MANAGEMENT COMMITTEE1. Objective The Board Risk Management Committee (BRMC) i s p r i m a r i l y r e s p o n s i b l e f o r t h e e f f e c t i v e f u n c t i o n i n g o f t h e B a n k ’ s r i s k m a n a g e m e n t function. 2. Composition Members of the Committee are:

i Ab. Gani bin Haron 6/6 i i Rajagopalan Pillay (resigned w.e.f. 02/08/2009) 5/5 i i i Dato’ Kamaruddin bin Ismail 2/6 iv Siti Zauyah binti Md Desa (appointed w.e.f 06/01/2009) 6/6 v Dato’ Mohammed Hussein (appointed w.e.f 18/11/2009) - vi Rosli bin Mohamed Nor (appointed w.e.f 02/09/2009) 1/1


NAME OF DIRECTOR


i Zakaria bin Ismail 4/4

i i Ab. Gani bin Haron 3/4

i i i Rajagopalan Pi l lay (resigned w.e.f 02/08/2009) 3/3

iv Rosl i bin Mohamed Nor (appointed w.e.f. 02/09/2009) 1/1

v Dato’ Kamaruddin bin Ismail 1/4


NAME OF DIRECTOR


24



• Cultivating a proactive risk management culture

with in the Bank so that r i sk management

processes are applied in the day-to-day business

and activities.

• Appropr iat ing independent rev iew of the

B a n k ’ s r i s k m a n a g e m e n t i n f r a s t r u c t u r e ,

c a p a b i l i t i e s , e n v i r o n m e n t a n d p r o c e s s e s

w h e r e n e c e s s a r y .

c . Measurement

• Approving risk methodologies for measuring

and managing risks aris ing from the Bank’s

business and operational activities.

• E n s u r i n g t h e a p p r o p r i a t e n e s s o f t h e r i s k

m e a s u r e m e n t m e t h o d o l o g i e s ( i n c l u d i n g

assumptions made within the methodologies)

under the prevailing business environment.

• Engaging external and independent reviewers

f o r t h e v a l i d a t i o n o f r i s k m e a s u r e m e n t

methodologies and outputs;

• Reviewing and recommending broad-based

r i sk l im i t s to the Board fo r approva l and

ensuring the risk limits are appropriate for the

Bank’s business activities;

• Approving detail risk limits based on broad-

based risk limits as approved by the Board and

ensuring the riks limits are appropriate for the

Bank’s business activities.

d. Processes and Technology Enabler

• Ensuring sufficient internal controls to detect

a n y d e f i c i e n c i e s i n t h e i n t e r n a l c o n t r o l

environment in a timely manner; reviewing

the independence and robus tnes s o f r i sk

management processess and internal controls

th roughout the Bank ; and approv ing the

Bank’s key risk control and mitigation processes.

• Periodically reviewing risk exposures of the

Bank in line with its risk strategy and objectives;

• Determining and empowering (to the Asset

Liability Committee or members of management)

the authority to approve deviations from limits

and the extent of deviation from limits.

3. Responsibil it ies

The Committee sha l l have the fo l lowing

spec i f i c responsibi l it ies regarding:-

a. Strategy

• Reviewing and recommending risk management

philosophy and strategy to the Board for Board’s

approval.

• Reviewing and approving the risk management

policies, controls and systems of the Bank in

line with the Board approved risk management

philosophy and strategy.

• Reviewing and proposing the setting of the risk

appetite/tolerance of the Bank at enterprise

and at strategic business unit levels to the Board.

• Approving new products/services, which are

fundamenta l l y d i f fe rent f rom the Bank ’ s

exist ing products/services, based on advice

from the Asset Liability Committee and Risk

Management Division. In the case of approval

be ing granted, to not i fy the Board of the

s ame in accordance w i th loca l regu la tory

requirements.

• Mainta in ing cont inued awarenes s of any

changes in the Bank’s risk profile to ensure

that the Bank’s business activities are in line

with the overall risk strategy.

b. Organisation

• Overseeing the overal l management of al l

risks covering market risk management, asset

a n d l i a b i l i t y m a n a g e m e n t , c r e d i t r i s k

management, country risk management and

operational risk management.

• Ensuring that there are clear and independent

report ing l ines and respons ibi l i t ies for the

overall business activities and risk management

functions and recommending risk management

der ived organi sat iona l a l ignments where

necessary to the Board.

26



27

3. Functions and Responsibil it ies

a) To propose and recommend to the Board the

remuneration policy and guidelines for the

Directors, MD/CEO, COO and CFO of EXIM Bank.

The remuneration policy should:-

i) Be documented and approved by the Board

and any changes there to should be subject

to the endorsement of the Board;

ii) R e f l e c t t h e e x p e r i e n c e a n d l e v e l o f

responsibility borne by individual Directors,

MD/CEO, COO and CFO.

iii) Be sufficient to attract and retain Directors,

MD/CEO, COO and CFO of cal iber needed

t o manage the Bank successfully; and

iv) Be balanced against the need to ensure that

the funds of the Bank are not used to

subsidise excessive remuneration package

and to ensure that remuneration is in line

with current industry best practices.

b) To propose or review and recommend to the

Board the specific remuneration packages for

Directors, MD/CEO, COO and CFO of EXIM BANK.

The remuneration packages should:-

i) Be based on an objective consideration and

approved by the Board;

ii) Take due consideration of the assessments

of the nominating committee of the

effectiveness and contribution of the

Director, MD/CEO, COO and CFO concerned;

iii) Not to be based on the sole discretion of

any one individual or restricted groups of

individuals; and

iv) Be compet i t i ve and cons i s tent wi th the

Bank’s culture, objectives and strategies.

c) To recommend to the Board with regards to the

payment guideline for staff bonus and

annual salary increment of the company.

• Approving the contingency plan for dealing

w i t h v a r i o u s e x t r e m e i n t e r n a l / e x t e r n a l

events/disasters.

• Ensuring the adequacy of tools, systems and

resources for the successful management of

risk management functions within the Bank.

• R e v i e w i n g t h e p r o g r e s s o f a l l c o r e r i s k

m a n a g e m e n t i n i t i a t i v e s w i t h i n t h e B a n k .

REMUNERATION COMMITTEE

1. Objective


NAME OF DIRECTOR


i Rajagopalan Pillay (resigned w.e.f. 02/08/2009) 3/3 i i Dato’ Mohammed Hussein (appointed w.e.f 18/11/2009) 1/1

i i i Ab. Gani bin Haron 4/6 iv Dr. Mohmad Isa Hussain (resigned w.e.f 06/01/2009) -

v Zakaria bin Ismail 5/6 vi Siti Zauyah binti Md Desa (appointed w.e.f 06/01/2009) 6/6

vi i Rosli bin Mohamed Nor (appointed w.e.f 02/09/2009) 2/2

2. Composition


The pr imary ob ject ive of the Remunerat ion

Committee ( ‘RC’ ) i s to prov ide a formal and

t r a n s p a r e n t p r o c e d u r e f o r d e v e l o p i n g a

remuneration policy for Directors, Managing

D i rec tor /Ch ief Execut ive Off i cer (MD/CEO) ,

Chief Operating Officer (COO) and Chief

Financing Off icer (CFO) (or i ts equivalent

respect ively) and ensuring that compensation

is competitive a n d c o n s i s t e n t w i t h t h e

B a n k ’ s c u l t u r e , objectives and strategies.



29

d) To formulate, review and recommend to the

Board in respect of human resource development

( t r a i n i n g ) p o l i c i e s a n d h u m a n r e s o u r c e

management pol ic ies , including the terms &

conditions of service of the company.

e) To oversee the recommendation by the MD/CEO

to the Board on the promotion and/or

upgrading the staff of EXIM Bank.

NOMINATION COMMITTEE

1. Objective

The primary objective of the Nomination

Committee (‘NC’) is to establish a documented,

f o r m a l a n d t r a n s p a r e n t p r o c e d u r e f o r t h e

a p p o i n t m e n t o f D i r e c t o r s , M a n a g i n g

Director/Chief Executive Officer (MD/CEO), Chief

Operating Officer (COO) and Chief Financial

Officer (CFO), (or its equivalent respectively) and

to assess the effectiveness of individual directors,

the board as a whole and the various committees

of the Board, the MD/CEO, COO and CFO.

2. Composition


3. Functions and Responsibil it ies

T h e f u n c t i o n s a n d r e s p o n s i b i l i t i e s o f t h e

Nomination Committee are as fol lows:

i) To establish minimum requirements for the

Board and the MD/CEO to perform their

responsibilities effectively. It is also responsible

for overseeing the overall composition of the

board in terms of the approriate size and skills,

the ba lance between execut i ve d i rec tor s ,

non-executive and independent directors, and

mix of sk i l l s and other core competenc ie s

required, through annual reviews;

i i ) To recommend and assess the nominees for

directorship, the directors to f i l l board

committees, as well as nominees for the

MD/CEO. This includes assessing directors

and MD/CEO proposed for reappointment,

before an application for verif ication is

submitted to Bank Negara Malaysia;

iii) To establish a mechanism for formal assessment

and assess the effectiveness of the board as a

whole, the contribution by each director to the

effectiveness of the board, the contribution of

t h e b o a r d ’ s v a r i o u s c o m m i t t e e s a n d t h e

performance of the board’s various committees;

iv) To recommend to the board regarding removal

of a director or MD/CEO if he is ineffective, errant or

negligent in discharging his responsibilities;

v) To ensure that all Directors undergo approriate

induction programmes and receive continuous

training; and

vi) To oversee appointment, management succession

planning and performance evaluation of COO

and CFO to the board and the removal of COO

and CFO if they are ineffective, errant and/or

negligent in discharging their responsibilities.

4. Assessment of mix of skills, experience and other

qualit ies of directors

The Board of Directors of EXIM Bank is comprised of

a good mix of members with the necessary expertise

and experience relevant to support the growth of

the Bank.


NAME OF DIRECTOR


i Rajagopalan Pillay (resigned w.e.f. 02/08/2009) 5/6 i i Rosli bin Mohamed Nor (appointed w.e.f 02/09/2009) 1/1

i i i Ab. Gani bin Haron 5/8 iv Dr. Mohmad Isa Hussain (resigned w.e.f 06/01/2009) -

v Zakaria bin Ismail 8/8 vi Siti Zauyah binti Md Desa (appointed w.e.f 06/01/2009) 7/7

vi i Dato Mohammed Hussein (appointed w.e.f 18/11/2009) -

28

29

BANKING PORTFOLIO2009

30

Loan and Guarantee Exposure - Faci l it ies

BuyerCredit

19.40%

OverseasProject

Financing19.54%

OverseasContractFinancing11.20%

ECR

19.18%

CommercialGuarantee

22.51%

Supplier Credit 5.67%MalaysiaKitchen 0.33%

Murabahah Financing 0.95%

EOGF 1.21%

Loan Outstanding - Region

SouthEast Asia44.51%

SouthAsia

9.11%South Central Asia 0.04%

Oceania 2.24%

Africa 2.51%

Latin America 1.40%

Central America 1.14%

EastAsia

15.79%

MiddleEast

18.71%

North America 0.55%

Europe 4.00%

Loan Outstanding - Sector

Agriculture 0.61%

Capital Goods 0.12%

Construction33.49%

Financial 1.14%

Government 7.33%

Manufacturing41.15%

Infrastructure 0.42%

Oil and Gas 1.08%

Oil Palm 2.05%

Restaurant 0.43%

Services 0.68%

Tourism 3.85%

Trading 4.05%

Transportation &Communication 3.60%

Loans and Guarantees Approval as at 31 December 2009

29

Total Exports Declared - Short Term Policy

Short Term Business Covered by Exports Declared

0

50

100

150

200

250

300

350

USA AUSTRALIA INDONESIA UNITED

KINGDOMTHAILAND

327.3

199.9

122.0

100.4

75.5

0

500

1000

1500

2000

2500

3000

2005 2006 2007 2008 2009

1,577

1,759

2,699

2,493

1,788

CREDIT INSURANCE PORTFOLIO2009

RM (m

illio

n)RM

(mill

ion)

29

BANKING PORTFOLIO2009

30

Loan and Guarantee Exposure - Faci l it ies

BuyerCredit

19.40%

OverseasProject

Financing19.54%

OverseasContractFinancing11.20%

ECR

19.18%

CommercialGuarantee

22.51%

Supplier Credit 5.67%MalaysiaKitchen 0.33%

Murabahah Financing 0.95%

EOGF 1.21%

Loan Outstanding - Region

SouthEast Asia44.51%

SouthAsia

9.11%South Central Asia 0.04%

Oceania 2.24%

Africa 2.51%

Latin America 1.40%

Central America 1.14%

EastAsia

15.79%

MiddleEast

18.71%

North America 0.55%

Europe 4.00%

Loan Outstanding - Sector

Agriculture 0.61%

Capital Goods 0.12%

Construction33.49%

Financial 1.14%

Government 7.33%

Manufacturing41.15%

Infrastructure 0.42%

Oil and Gas 1.08%

Oil Palm 2.05%

Restaurant 0.43%

Services 0.68%

Tourism 3.85%

Trading 4.05%

Transportation &Communication 3.60%

Loans and Guarantees Approval as at 31 December 2009

29

Total Exports Declared - Short Term Policy

Short Term Business Covered by Exports Declared

0

50

100

150

200

250

300

350

USA AUSTRALIA INDONESIA UNITED

KINGDOMTHAILAND

327.3

199.9

122.0

100.4

75.5

0

500

1000

1500

2000

2500

3000

2005 2006 2007 2008 2009

1,577

1,759

2,699

2,493

1,788

CREDIT INSURANCE PORTFOLIO2009

RM (m

illio

n)RM

(mill

ion)

CORPORATEEVENTS

CORPORATEEVENTS

05 January 2009

Meeting with H.E.Eng Rachid Mohamed

Rachid, Minister of Trade and

Industry of Egypt

31

08 January 2009

MATRADE’s Briefing & Consultation 200926 March 2009

MIRC Annual Funding &

Financing Forum 2009

26 March 2009

Visit by Students from UITM Arau Perl is

06 - 10 May 2009

Malaysia International Halal Showcase

(MIHAS 2009)16 July 2009

Seminar on Financing for Trade

in OIC Markets03 - 05 June 2009

SMIDEX 2009

30 March 2009

Signing Ceremony of Bi lateral

Cooperation Agreement Between EXIM

Bank Malaysia and PT Asei, Indonesia

08 Apri l 2009

Signing Ceremony for the Murabahah

Term Financing-i of RM55 Mil l ion

between Asian Finance Bank and

EXIM Bank Malaysia for the purchase of

Bangunan Darul Takaful

CORPORATEEVENTS

CORPORATEEVENTS

32

10 August 2009

Staff’s Children Education Incentive

10-12 October 2009

INTRADE Malaysia 200913 October 2009

EXIM Bank Hari Raya Gathering

& Long Service Award 2009

22 October 2009

Signing Ceremony of USD100 Mil l ion

Trade Finance Init iative Loan between

Japan Bank for International Cooperation

(JBIC) and EXIM Bank Malaysia

18 August 2009

Seminar on EXIM Overseas Guarantee

Faci l ity (EOGF)15 September 2009

CSR Project : Ramadhan Contribution

for Rumah Anak Yatim/Miskin,

Taman Baiduri

20 November 2009

Signing Ceremony Memorandum of

Understanding between EXIM Bank

Malaysia and Development Bank

of Kazakhstan 27 November 2009

CSR Project : Qurban Contribution 200916 November 2009

Visit by Ambassador of Republic of Sudan

FinancialStatements

Directors’ Report

Statement By Directors

Statutory Declaration

Independent Auditors’ Report

Balance Sheets

Income Statements

Statement Of Changes In Equity

Cash Flow Statements

Notes To The Financial Statements

34

38

39

40

42

43

44

45

47

33

FINANCIALSTATEMENTS Export-Import Bank of Malaysia Berhad

Annual Report 2009 (Company No. 357198 K) ( Incorporated in Malaysia)

FINANCIALSTATEMENTSExport-Import Bank of Malaysia Berhad


Directors' ReportThe Directors have pleasure in presenting their report and the audited financial statements of the Group and of

the Bank for the year ended 31 December 2009.

Principal activit ies

The principal activit ies of the Bank are to operate business of banking in the promotion and support of export,

import and investment for the country’s development by granting credit, issuing guarantees and providing other

related services.

The Bank is also engaged in the provision of export and domestic credit insurance faci l it ies and trade related

guarantees to Malaysian companies.

The principal activit ies of the subsidiaries are as disclosed in Note 12 to the financial statements.

The Bank commenced its Is lamic Banking operation during the financial year. There have been no other

s ignificant changes in the nature of the Group's and Bank's activit ies during the financial year.

Results

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

disclosed in the statements of changes in equity.

Dividends

At the forthcoming Annual General Meeting, a f inal dividend in respect of the financial year ended 31 December

2009, of 0.1% less 25% taxation on 2,708,665,283 ordinary shares, amounting to a dividend payable of

RM2,031,499 (0.075 sen net per ordinary share) wil l be proposed for the shareholder's approval. The financial

statements for the current f inancial year do not reflect this proposed dividend. Such dividend, if approved by the

shareholders, wil l be accounted for in equity as an appropriation of retained profits in the financial year ending

31 December 2010.

GroupRM'000

BankRM'000

35,664 38,395Profit for the year

34





Directors

The names of the Directors of the Bank in office since the date of the last report and at the date of this report are:

Datuk Mohd Hashim bin Hassan - Chairman

Encik Mohd Fauzi bin Rahmat

Haji Ab. Gani bin Haron

Haji Zakaria bin Ismail


Puan Siti Zauyah binti Md Desa

Ir. Rosli bin Mohamed Nor (appointed on 2.9.2009)

Dato’ Mohammed bin Che Hussein (appointed on 18.11.2009)

Encik Rajagopalan Pillay (resigned on 2.8.2009)

None of the Directors at the end of the financial year held any direct interest in the shares of the Bank or its related

companies during the financial year.

Directors' benefits

Since the end of the previous f inancial year, no Director of the Bank has received nor become entit led to receive

a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable

by Directors as shown in the financial statements) by reason of a contract made by the Bank or a related company

with the Director or with a f irm of which the Director is a member, or with a company in which the Director has

a substantial f inancial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling

Directors of the Bank to acquire benefits by means of the acquisit ion of shares in, or debentures of the Bank or

any other body corporate.

Issue of shares and debentures

There were no changes in the issued and paid up capital of the Group and Bank.

There were no issuance of debentures during the year.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Group and Bank during the year.

35





Other statutory information

(a) Before the balance sheets and income statements of the Group and of the Bank were made out, the Directors

took reasonable steps:

( i ) to ascertain that proper action had been taken in relation to the writing off of bad debts and the

making of al lowance for doubtful debts and satisf ied themselves that al l known bad debts had been

written off and that adequate provision had been made for doubtful debts; and

( i i ) to ensure 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.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

( i ) the amount written off for bad debts or the amount of the al lowance for doubtful debts in the financial

statements of the Group and of the Bank inadequate to any substantial extent; and

( i i ) the values attributed to current assets in the financial statements of the Group and of the Bank misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would

render adherence to the exist ing method of valuation of assets or l iabil it ies of the Group and of the Bank

misleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this

report or f inancial statements of the Group and of the Bank which would render any amount stated in the

f inancial statements misleading.

(e) As at the date of this report, there does not exist :

( i ) any charge on the assets of the Group and of the Bank which has arisen since the end of the financial year

which secures the l iabil it ies of any other person; or

( i i ) any contingent l iabil ity in respect of the Group and of the Bank which has arisen since the end of the

f inancial year.

(f) In the opinion of the Directors:

( i ) no contingent or other l iabil ity has become enforceable or is l ikely to become enforceable within the

period of twelve months after the end of the financial year which wil l or may affect the abil ity of the

Group and of the Bank to meet its obligations when they fal l due; and

( i i ) no item, transaction or event of a material and unusual nature has arisen in the interval between the end

of the financial year and the date of this report which is l ikely to affect substantial ly the results of the

operations of the Group and of the Bank for the financial year in which this report is made.

36





Other statutory information (continued)

Significant event

During the year, the Bank acquired freehold land and building located at Jalan Sultan Ismail , Kuala Lumpur for a

purchase consideration of RM30 mil l ion and RM33 mil l ion (Note 15).

Subsequent event

There were no material event subsequent to balance sheet date that require disclosure or adjustment to the

financial statements.

Auditors

The auditors, Ernst & Young, have expressed their wil l ingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 24 February 2010.

Datuk Mohd Hashim bin Hassan Mohd Fauzi bin Rahmat

37





Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

We, Datuk Mohd Hashim bin Hassan and Mohd Fauzi bin Rahmat, being two of the Directors of Export- Import

Bank of Malaysia Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial

statements set out on pages 42 to 101 are drawn up in accordance with provisions of the Companies Act, 1965 and

applicable Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia Guidelines so as to

give a true and fair view of the financial posit ion of the Group and of the Bank as at 31 December 2009 and of

the results and cash flows of the Group and of the Bank for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 24 February 2010.

Datuk Mohd Hashim bin Hassan Mohd Fauzi bin Rahmat

38





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

We, Datuk Mohd Hashim bin Hassan and Mohd Fauzi bin Rahmat, being the Directors primari ly responsible for the

financial management of Export- Import Bank of Malaysia Berhad, do solemnly and sincerely declare that the

accompanying financial statements set out on pages 42 to 101 are in our opinion correct, and we 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 Datuk Mohd Hashim bin

Hassan and Mohd Fauzi bin Rahmat

at Kuala Lumpur in the Federal Territory

on 24 February 2010

Before me,

Datuk Mohd Hashim bin Hassan

39





Independent Auditors' Reportto the member of Export-Import Bank of Malaysia Berhad (Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of Export- Import Bank of Malaysia Berhad, which comprise the balance

sheets as at 31 December 2009 of the Group and of the Bank, and the income statements, statements of changes

in equity and cash flow statements of the Group and of the Bank for the year then ended, and a summary of

s ignificant accounting policies and other explanatory notes, as set out on pages 42 to 101.

Directors’ responsibi l ity for the financial statements

The directors of the Bank are responsible for the preparation and fair presentation of these financial statements

in accordance with Financial Reporting Standards as modified by Bank Negara Malaysia/Development Financial

Institutions Guidelines. This responsibi l ity includes: designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of f inancial statements that are free from material

misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making

accounting estimates that are reasonable in the circumstances.

Auditors’ responsibi l ity

Our responsibi l ity is to express an opinion on these financial statements based on our audit. We conducted our

audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on our judgement, including the assessment of r isks of

material misstatement of the financial statements, whether due to fraud or error. In making those risk

assessments, we consider internal control relevant to the Bank’s preparation and fair presentation of the

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the Bank's internal control. An audit also includes

evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates

made by the directors, as well as evaluating the overall presentation of the financial statements.

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

opinion.

40





Independent Auditors' Reportto the member of Export-Import Bank of Malaysia Berhad (Incorporated in Malaysia) (continued)

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the Companies Act, 1965

and Financial Reporting Standards in Malaysia as modified by Bank Negara Malaysia/Development Financial

Institutions Guidelines so as to give a true and fair view of the financial posit ion of the Group and of the Bank

as at 31 December 2009 and of the financial performance and cash flows of the Group and of the Bank for the

year then ended.

Report on other legal and regulatory requirements

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank

and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisf ied that the financial statements of the subsidiaries that have been consolidated with the

f inancial statements of the Bank are in form and content appropriate and proper for the purposes of the

preparation of the consolidated financial statements and we have received satisfactory information and

explanations required by us for those purposes.

(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualif ication and

did not include any comment required to be made under Section 174(3) of the Act.

Other matters

This report is made solely to the member of the Bank, as a body, in accordance with Section 174 of the Companies

Act, 1965 in Malaysia and for no other purpose. We do not assume responsibi l ity to any other person for the

content of this report.

Ernst & Young

AF: 0039

Chartered Accountants

Kuala Lumpur, Malaysia

24 February 2010

Abdul Rauf bin Rashid

No. 2305/05/10(J)

Chartered Accountant

41





Balance Sheets as at 31 December 2009

Group Bank

Assets

Cash and bank balances 4 11,582 8,695 11,582 8,695

Deposits and placements with banks and other financial institutions 5 2,639,097 1,771,528 2,639,097 1,771,528

Investments securities 6 370,047 336,425 370,047 336,425

Amount due from ECR debtors 7 757,950 1,860,922 757,950 1,860,922

Loans, advances and financing 8 1,809,346 1,481,223 1,809,346 1,481,223

Premium receivables 9 2,828 1,329 2,828 1,329

Other receivables, deposits and prepayments 10 47,706 58,558 47,706 58,558

Deferred tax assets 11 8,075 11,262 10,385 11,262

Investment in subsidiaries 12 - - 64,176 73,419

Investment properties 13 1,859 2,073 1,859 2,073

Intangible asset 14 933 1,654 933 1,654

Property and equipment 15 73,994 4,126 73,994 4,126

Total assets 5,723,417 5,537,795 5,789,903 5,611,214

Liabilities

Loans and borrowings 16 2,690,977 2,504,917 2,690,977 2,504,917

Other payables and accruals 17 96,396 111,736 96,396 111,736

Amount due to subsidiaries 35 - - 64,176 73,840

Deferred income 18 15,000 30,017 15,000 30,017

Provision for claims 19 27,744 33,489 27,744 33,489

Total liabilities 2,830,117 2,680,159 2,894,293 2,753,999

Financed by:

Share capital 20 2,708,665 2,708,665 2,708,665 2,708,665

Retained profits 21 184,635 148,971 186,945 148,550

Shareholder's funds 2,893,300 2,857,636 2,895,610 2,857,215

Total liabilities and shareholder's funds 5,723,417 5,537,795 5,789,903 5,611,214

Commitments and contingencies 34 1,830,013 2,217,902 1,830,013 2,217,902

2009 2008 2009 2008

Note RM'000 RM'000 RM'000 RM'000

Restated Restated

The accompanying notes form an integral part of the f inancia l statements.42





The accompanying notes form an integral part of the f inancia l statements.

Bank

Income Statements for the year ended 31 December 2009

Group

2009 2008 2009 2008

Note RM'000 RM'000 RM'000 RM'000

Restated Restated

Operating revenue 22 212,317 223,311 212,317 223,311

Interest income 23 188,839 224,257 188,839 224,257

Interest expense 24 (38,980) (48,783) (38,980) (48,783)

Net interest income 149,859 175,474 149,859 175,474

Underwriting results 25 45,460 17,565 45,460 17,565

Income from Islamic Banking 39 2,105 - 2,105 -

Other income 26 5,612 37,995 5,612 37,995

Net income 203,036 231,034 203,036 231,034

Overhead expenses 27 (48,945) (35,489) (48,905) (35,447)

Operating profit 154,091 195,545 154,131 195,587

Write-back of/(Allowance for)

diminution in value of investment 10,231 (17,135) 10,231 (17,135)

Allowance for diminution in value of

investment in a subsidiary - - (9,243) -

Allowance for losses on loans,

advances and financing 30 (103,102) (165,409) (103,102) (165,409)

Profit before taxation 61,220 13,001 52,017 13,043

Taxation 31 (25,556) 3,133 (13,622) 3,569

Net profit for the year 35,664 16,134 38,395 16,612

Earnings per share basic (sen) 32 1.32 0.90 1.42 0.92

43





Statements of Changes In Equity for the year ended 31 December 2009

Group

Distributable

At 1 January 2008, as previously stated 730,450 108,440 838,890

Prior year adjustments (Note 37) - 24,397 24,397

At 1 January 2008 as restated 730,450 132,837 863,287

Issue of shares 1,978,215 - 1,978,215

Net profit for the year - 16,134 16,134

At 31 December 2008 as restated 2,708,665 148,971 2,857,636

At 1 January 2009, as previously stated 2,708,665 128,617 2,837,282


At 1 January 2009 as restated 2,708,665 148,971 2,857,636


At 31 December 2009 2,708,665 184,635 2,893,300

Bank

At 1 January 2008, as previously stated 730,450 107,541 837,991


At 1 January 2008 as restated 730,450 131,938 862,388

Issue of shares 1,978,215 - 1,978,215


At 31 December 2008 as restated 2,708,665 148,550 2,857,215

At 1 January 2009, as previously stated 2,708,665 128,196 2,836,861


At 1 January 2009 as restated 2,708,665 148,550 2,857,215


At 31 December 2009 2,708,665 186,945 2,895,610

Share Retained Total capital profits

RM'000 RM'000 RM'000






Cash Flow Statements for the year ended 31 December 2009

Group Bank

2009 2008 2009 2008

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

Restated Restated

Cash flows from operating activities

Profit before taxation 61,220 13,001 52,017 13,043

Adjustments for:

(Write-back of) /Allowance for diminution

in value of investment (10,231) 17,135 (10,231) 17,135

Specific allowance

- Charge for the year (174,313) (179,114) (174,313) (179,114)

- Written back 74,795 (11,734) 74,795 (11,734)

General allowance

- Charge/ (Written back) for the year 3,584 (1,971) 3,584 (1,971)

Provision for claims

- Insurance contracts (3,137) 14,339 (3,137) 14,339

Depreciation

- Property and equipment 1,510 2,032 1,510 2,032

- Investment properties 34 33 34 33

Amortisation of intangible assets 1,249 - 1,249 -

Impairment of investment properties 180 - 180 -

Allowance for diminution in value of investment

in a subsidiary - - 9,243 -

Dividend income (520) (1,041) (520) (1,041)

Gain on disposal of property and equipment - (27) - (27)

Unrealised foreign exchange loss 3,636 37,632 3,636 37,632

Loss on disposal of investment 308 1,078 308 1,078

Amortisation of premiums less accretion of discounts (329) (1,104) (329) (1,104)

Sundry debtors written off 102 38 102 38

Unearned premium reserves (2,416) (1,626) (2,416) (1,626)

Operating profit before changes in working capital (44,328) (111,329) (44,288) (111,287)

Changes in working capital:

Loans, advances and financing (434,537) (337,977) (434,537) (337,977)

Other assets (10,397) 8,449 (10,397) 8,449

Other liabilities (27,941) (98,217) (27,941) (98,217)

Amount due to subsidiaries - - (9,664) (478)

Cash used in operations (517,203) (539,074) (526,827) (539,510)

Claims paid – insurance contracts (2,608) (35,773) (2,608) (35,773)

Income tax paid (25,874) (9,622) (16,250) (9,186)

Income tax refund 23,153 - 23,153 -

Net cash used in operating activities (522,532) (584,469) (522,532) (584,469)

45





The accompanying notes form an integral part of the f inancia l statements.

Cash Flow Statements for the year ended 31 December 2009 (continued)

Group Bank

2009 2008 2009 2008

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

Restated Restated

Cash flows from investing activities

Dividend received 520 1,041 520 1,041

Proceeds from disposal of investment 11,651 18,430 11,651 18,430

Proceeds from disposal of property and equipment - 27 - 27

Purchase of property and equipment (71,766) (1,963) (71,766) (1,963)

Purchase of intangible assets (140) - (140) -

Purchase of investments (35,345) (182,925) (35,345) (182,925)

Net cash used in investing activities (95,080) (165,390) (95,080) (165,390)

Cash flows from financing activities

Net drawdown of term loans 186,060 117,313 186,060 117,313

Net repayment from ECR debtors 1,102,972 94,062 1,102,972 94,062

Net cash generated from financing activities 1,289,032 211,375 1,289,032 211,375

Net increase/(decrease) in cash and cash equivalents 671,420 (538,484) 671,420 (538,484)

Cash and cash equivalents at beginning of year 1,780,223 1,960,479 1,780,223 1,960,479

Cash and cash equivalents at end of year 2,451,643 1,421,995 2,451,643 1,421,995

Group Bank

2009 2008 2009 2008

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

Cash and bank balances 11,582 8,695 11,582 8,695

Deposits and placements with financial institution 2,639,097 1,771,528 2,639,097 1,771,528

2,650,679 1,780,223 2,650,679 1,780,223

Cash and cash equivalents inc luded in the cash f low statements comprise the fol lowing balance sheet amounts:

46





Notes To The Financial Statements 31 December 2009

1. Corporate information

Export- Import Bank of Malaysia Berhad is a public l imited l iabil ity company, incorporated and domici led in

Malaysia. The registered office and principal place of business of the Bank is located at Level 22, UBN Tower,

No. 10, Jalan P. Ramlee, 50250 Kuala Lumpur.

The consolidated financial statements as at and for the year ended 31 December 2009 comprise the Bank and

its subsidiaries (together, referred to as "the Group").

The Bank is principally engaged in business of banking in the promotion and support of export, import and

investment for the country’s development by granting credit, issuing guarantees and providing other related

services. The Bank is also engaged in the provision of export and domestic credit insurance faci l it ies and trade

related guarantees to Malaysian companies. The Bank commenced its Is lamic banking operation during the

financial year. There have been no other s ignificant changes in nature of the Bank's activit ies during the

year.

The principal activit ies of the subsidiaries are as stated in Note 12.

The financial statements were approved by the Board of Directors on 24 February 2010.

The financial statements of the Group and of the Bank have been prepared in accordance with the

provisions of the Companies Act, 1965 and applicable Financial Reporting Standards (“FRSs”) in Malaysia

as modified by Bank Negara Malaysia/Development Financial Institutions ("BNM/DFIs") Guidelines.

The financial statements disclosed those activit ies relating to Is lamic Banking Business in Note 39 to the

financial statements. Those activit ies generally refer to the provision of banking activit ies under the

principles of Shariah.

The financial statements of the Group and of the Bank have been prepared under the historical cost

convention unless otherwise indicated in the accounting policies below.

The financial statements are presented in Ringgit Malaysia (RM), which is also the functional currency of

the Group and of the Bank.

2. Significant accounting policies

2.1 Basis of preparation

47





Notes To The Financial Statements 31 December 2009 (continued)

Subsidiaries are entit ies, including unincorporated entit ies, controlled by the Group. Control

exists when the Group has the abil ity to exercise its power to govern the financial and operating

policies of an entity so as to obtain benefits from its activit ies. In assessing control, potential

voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated

using the purchase method of accounting.

In the Bank’s separate financial statements, investments in subsidiaries are stated at cost less

impairment losses. On disposal of such investments, the difference between net disposal

proceeds and their carrying amounts is included in income statement.

2. Significant accounting policies (continued)

2.2 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation

(i) Subsidiaries

The consolidated financial statements comprise the financial statements of the Bank and its

subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are

prepared for the same reporting date as the Bank.

Subsidiaries are consolidated from the date of acquisit ion, being the date on which the Group

obtains control, and continue to be consolidated unti l the date that such control ceases. In

preparing the consolidated financial statements, intragroup balances, transactions and

unrealised gains or losses are el iminated in ful l . Uniform accounting policies are adopted in the

consolidated financial statements for l ike transactions and events in s imilar circumstances.

Acquisit ions of subsidiaries are accounted for using the purchase method. The purchase method

of accounting involves al locating the cost of the acquisit ion to the fair value of the assets

acquired and l iabil it ies and contingent l iabil it ies assumed at the date of acquisit ion. The cost of

an acquisit ion is measured as the aggregate of the fair values, at the date of exchange, of the

assets given, l iabil it ies incurred or assumed, and equity instruments issued, plus any costs

directly attributable to the acquisit ion.

( i i ) Basis of consolidation

48







All items of property and equipment are init ial ly recorded at cost. 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 wil l f low to the Bank and the cost

of the item can be measured rel iably. The carrying amount of replaced part is derecognised. All other

repairs and maintenance are charged to profit or loss when they are incurred.

When significant parts of an item of property and equipment have different useful l ives, they are

accounted for as separate items (major components) of property and equipment.

Subsequent to init ial recognition, property 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 losses is in accordance with Note 2.2(e).

Freehold land has an unlimited useful l ife and therefore is not depreciated.

Depreciation of other property and equipment is provided for on a straight-l ine basis to write off

the cost of each asset over its estimated useful l ives as fol lows:

Building 50 years

Office equipment 5 years

Renovation and improvement 10 years

Motor vehicles 5 years

Furniture, electrical f itt ings and equipment 10 years

Computers 3 years

The residual values, useful l ife 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 and equipment.

An item of property 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 and

the net carrying amount, if any, is recognised in profit or loss.

2.2 Summary of significant accounting policies (continued)

(b) Property and equipment

49







Acquired computer software l icenses are capital ised on the basis of the costs incurred to acquire and

bring the specif ic software to use. The costs are amortised over their useful l ives of three (3) 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 each balance sheet date.

The policy for the recognition and measurement of impairment is in accordance with Note 2.2(e).

Costs associated with maintaining computer software programmes are recognised as expenses when

incurred. Costs that are directly associated with the production of identif iable and unique software

products controlled by the Group and the Bank, and that wil l 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.


(c) Intangible Assets: Computer Software

Investment properties are properties which are owned to earn rental income or for capital

appreciation or for both. These include land held for a currently undetermined future use.

Investment properties are stated at cost less accumulated depreciation and impairment losses, consistent

with the accounting policy for property and equipment as stated in accounting policy Note 2.2(b).

Depreciation is charged to the income statement on a straight-l ine basis over the estimated useful

l ives of f ifty (50) years for buildings. Freehold land is not depreciated.

(d) Investment properties

The carrying amount of the assets, other than deferred tax assets, non-current asset held for sales

and financial assets (other than investments in subsidiaries) , are reviewed at each reporting date to

determine whether there is any indication of impairment. If any such indication exists , then the

asset’s recoverable amount is estimated to determine the amount of impairment loss.

An impairment loss is recognised in the income statement in the period in which it arises, unless the

asset is carried at a revalued amount, in which case the impairment loss is accounted for as a

revaluation decrease to the extent that the impairment loss does not exceed the amount held in the

asset revaluation reserve for the same asset.

(e) Impairment of non-financial assets

50







Financial instruments are recognised in the balance sheet when the Group and the Bank have become

a party to the contractual provisions of the instrument.

Financial instruments are classif ied as assets, l iabil it ies or equity in accordance with the substance of

the contractual arrangement. Interest, dividends, gains and losses relating to a f inancial instrument

classif ied as an asset or a l iabil ity, are reported as expense or income. Distributions to holders of

f inancial instruments classif ied as equity are charged directly to equity. Financial instruments are

offset when the Group or the Bank have a legally enforceable r ight to offset and intends to settle

either on a net basis or to realise the asset and settle the l iabil ity s imultaneously.


(f) Financial Instruments

Loans, advances and financing are stated at cost less any al lowances for losses on loans,

advances and financing.

Allowances for losses on loans, advances and financing are made with regard to specif ic r isks

relating to those loans, advances and financing that have been individually reviewed and

specif ical ly identif ied as sub-standard, doubtful or bad.

A general al lowance of 1.5% of total outstanding loans, advances and financing ( including

accrued interest) , net of specif ic al lowance for losses on loans, advances and financing, is

maintained by the Group and the Bank against r isks which are not specif ical ly identif ied, in

accordance with BNM/DFI/GP3.

An uncollectible loan or portion of a loan classif ied as bad is written off after taking into

consideration the realisable value of collateral , if any, when in the opinion of management,

there is no prospect of recovery.

Values assigned to collaterals held for non-performing loans are determined based on the

realisable values of the properties, being the forced sale value provided by independent

parties/valuers, with no value assigned to the realisable value of the properties held as

collaterals for non-performing loans which are in arrears for more than seven (7) years.

The portion of non-performing loans where no realisable value has been assigned wil l be

provided for.

( i ) Loans, advances and financing

51








(f) Financial Instruments (continued)

Investments in debt and equity securit ies are recognised init ial ly at fair value plus attributable

transaction costs.

Subsequent to init ial recognition:

- Investments in non-current equity securit ies other than investment in subsidiary, are stated

at cost less al lowance for diminution in value,

- Investments in non-current debt securit ies are stated at amortised cost using the effective

interest method less al lowance for diminution in value,

- All current investments are carried at the lower of cost and market value, determined on an

aggregate portfoll io basis by category of investments.

Where in the opinion of the Directors, there is a decl ine other than temporary in the value of

non-current equity securit ies and non-current debt securit ies other than investment in

subsidiary, the al lowance for diminution in value is recognised as an expense in the financial

year in which the decl ine is identif ied.

On disposal of an investment, the difference between net disposal proceeds and its carrying

amount is recognised in the income statement.

All investments in debt and equity securit ies are accounted for using settlement date

accounting. Settlement date accounting refers to:

- the recognition of an asset on the day it is received by the entity, and

- the derecognition of an asset and recognition of any gain or loss on disposal on the date it is

delivered.

( i i ) Investments in debt and equity securit ies

52








(f) Financial Instruments (continued)

Receivables are init ial ly recognised at cost when the contractual r ight to receive cash or another

f inancial asset from another entity is established.

Subsequent to init ial recognition, receivables are stated at cost less al lowance for doubtful

debts.

Receivables are not held for the purpose of trading.

( i i i ) Receivables

Cash and cash equivalents consist of cash on hand and bank balances, deposits with banks and

highly l iquid investments which have an insignificant r isk of changes in value. For the purpose

of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts and

pledged deposits , if any.

( iv) Cash and cash equivalents

Payables and accruals are stated at cost which is the fair value of the consideration to be paid

in the future for goods and services received.

(v) Payables and accruals

All loans and borrowings are recorded at the amount of proceeds received, net of directly

attributable transaction costs. All borrowing costs are recognised as an expense in the income

statement in the period in which they are incurred.

(vi) Interest bearing loans and borrowings

(g) Employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual

leave and sick leave are measured on an undiscounted basis and are expensed as the related

service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus if the

Group and the Bank have a present legal or constructive obligation to pay this amount as a

result of past service provided by the employees and the obligation can be estimated rel iably.

The Group’s and the Bank's contribution to statutory pension funds is charged to the income

statements in the year to which they relate. Once the contributions have been paid, the Group

and the Bank have no further payment obligations.

( i ) Short term employee benefits

53








(g) Employee benefits (continued)

Termination benefits are recognised as an expense when the Group and the Bank are

demonstrably committed, without realist ic possibi l ity of withdrawal, to a formal detailed plan

to terminate employment before the normal retirement date. Termination benefits for

voluntary redundancies are recognised if the Group and the Bank have made an offer

encouraging voluntary redundancy, it is probable that the offer wil l be accepted, and the

number of acceptances can be estimated rel iably.

( i i ) Termination benefits

Defined contribution plans are post-employment benefit plans under which the Group and the

Bank pay fixed contributions into separate entit ies or funds and wil l have no legal or

constructive obligation to pay further contributions if any of the funds do not hold sufficient

assets to pay al l employee benefits relating to employee services in the current and preceding

financial years. Such contributions are recognised as an expense in the income statement as

incurred. As required by law, companies in Malaysia make such contributions to the Employees

Provident Fund (“EPF”).

( i i i ) Defined contribution plan

A provision is recognised if , as a result of past event, the Group and the Bank have a present legal

and constructive obligation that can be estimated rel iably, and it is probable that an outflow of

economic benefits wil l be required to settle the obligation. Provision are determined by discounting

the expected future cash flow at a pre-tax rate that reflects current market assessment of the time

value of money and the risks specif ic to the l iabil ity.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Where it is not probable that an outflow of economic benefits wil l be required, or the amount

cannot be estimated rel iably, the obligation is disclosed as a contingent l iabil ity, unless the

probabil ity of outflow of economic benefits is remote. Possible obligations, whose existence wil l

only be confirmed by the occurrence or non-occurrence of one or more future events are also

disclosed as contingent l iabil it ies unless the probabil ity of outflow of economic benefits is remote.

Where the Group and the Bank enter into financial guarantee contracts to guarantee the

indebtedness of other companies, the Group and the Bank treat the guarantee contract as a

contingent l iabil ity unti l such time as it becomes probable that the Group and the Bank wil l be

required to make a payment under the guarantee.

(h) Provisions

54








A liabil ity for outstanding claims is recognised when a claimable event occurs and/or the Group and

the Bank are notif ied. The amount of outstanding claims is the best estimate of the expenditure

required together with related expenses less recoveries, if any, to settle the present obligation at the

balance sheet date.

Provision is also made for the cost of claims, together with related expenses, and IBNR at balance

sheet date, using a mathematical method of estimation by an external independent qualified actuary.

( i ) Provision for claims

(j) Deferred income

Income aris ing from guarantee provided is recognised over the period of r isk on a straight-l ine

basis . Should a claim be paid or provided for in respect of such policies, the balance of the

premium shall be recognised in the financial year in which the claim is made.

( i ) Arising from guarantee faci l ity

(k) Government Funds

Government funds comprise of the following:

Unearned Premium Reserves (“UPR”) represent the portion of the net premiums of insurance

policies written that relate to the unexpired periods of policies at the end of the financial year.

In determining the UPR at the balance sheet date, the method that most accurately reflect the

actual unearned premium is used as fol lows:

- In respect of short term comprehensive policies, 75% of the premium is recognised in the financial

year in which the policies are issued. The remaining 25% of the premium is transferred to the

unearned premium reserves and is recognised in the following financial year.

- In respect of medium and long term policies, the premium is recognised over the period of r isk

on a straight-l ine basis .

( i i ) Unearned premium reserve

The primary objective is to encourage Malaysian cit izens and Malaysian companies involved in

the food and beverages industry to venture abroad. In this respect, the Bank received fund from

the Government of Malaysia ("the Government") to be disbursed as loans under this scheme.

( i ) Malaysian Kitchen Financing Faci l ity ("MKFF") Scheme

55








(k) Government Funds (continued)

The total placement amount and the interest income shall be refunded to the Government upon

expiry of the agreement.The interest income earned on the loans f inanced by the Government

funds and from the investment of the unuti l ised fund are recognised as amount payable to

Government in accordance with the placement agreement.

The Bank received in return, a management fee of 1.5% of total placement amount. The fee

income is recognised in the income statement in accordance with Note 2.2(l)( i i i ) . Credit losses or

charges as a result of loan default are shared equally between the Bank and Government in

accordance with the terms of the placement agreement. The portion of al lowance for loan losses

borne by the Bank is recognised in the income statement in accordance with Note 2.2(f)( i ) .

( i ) Malaysian Kitchen Financing Faci l ity ("MKFF") Scheme (continued)

(l) Revenue recognition

(i) Interest income from loans, advances and financing

Revenue is recognised to the extent that it is probable that the economic benefits wil l f low to the

Group and the Bank and the revenue can be rel iably measured.

Interest income is recognised in the income statement for al l interest bearing assets on an

accrual basis , using the effective interest method.

When an account becomes non-performing, interest accrued and recognised as income prior to

the date the loan is c lassif ied as non-performing is reversed out of income and set-off against

the accrued interest receivables amount in the balance sheet. Thereafter, interest on the

non-performing loan shall be recognised as income on a cash basis .

Customers’ account for revolving credit and term loan are deemed to be non-performing where

repayments are in arrears for more than three (3) months and six (6) months, respectively from

the first day of default or after maturity date. The policy on interest recognition on

non-performing loans is in conformity with the Guidelines on Financial Reporting for Licensed

Institutions issued by Bank Negara Malaysia.

Interest expense on borrowings of the Group and the Bank are recognised on an accrual basis .

56








(l) Revenue recognition (continued)

(i i ) Dividend income

Dividend income is recognised when the right to receive payment is established.

( i i i ) Fee income

Fee income from bank guarantee arrangement and letter of credit is recognised on an accrual basis.

( iv) Premium income

Premium income is recognised as income in the financial year in respect of r isks assumed during

that particular f inancial year. Method of deferral of premium income is as stated in Note 2.2(j) .

Premium income from reinsurance is recognised based on periodic advices received from ceding

insurers.

Income tax on the profit or loss for the year comprises current and deferred taxes. 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 rate that has been enacted at the balance sheet date.

Deferred tax is provided for, using the l iabil ity method. In principle, deferred tax l iabil it ies are

recognised for al l taxable temporary differences and deferred tax assets are recognised for al l

deductible temporary differences, unused tax losses and unused tax credits to the extent that it is

probable that taxable profit wil l be available against which the deductible temporary differences,

unused tax losses and unused tax credits can be uti l ised. Deferred tax is not recognised if the

temporary difference arises from goodwil l or negative goodwil l or from the init ial recognition of an

asset or l iabil ity 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 rate that is expected to apply in the year when the asset is

realised or the l iabil ity is settled, based on tax rate that has been enacted or substantivly enacted at

the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit

or loss for the year, except when it arises from a transaction which is recognised directly in equity,

in which case the deferred tax is also charged or credited directly in equity, or when it arises from a

business combination that is an acquisit ion, in which case the deferred tax is included in the resulting

goodwil l or negative goodwil l .

(m) Income tax

57








(n) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group

entit ies at exchange rates at the dates of the transactions.

Monetary assets and l iabil it ies denominated in foreign currencies at the balance sheet date are

retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and

l iabil it ies denominated in foreign currencies are translated at exchange rates at the dates of the

transactions except for those that are measured at fair value, which are retranslated to the

functional currency at the exchange rate at the date that the fair value was determined. Foreign

currency differences aris ing on retranslation are recognised in the income statement.

(o) Adoption of new and revised FRSs

At the date of authorisation of these financial statements, the following new FRSs, amendments to

FRS and Interpretations have been issued but are not yet effective and have not been adopted by

the Group and the Bank:

Effective dates for

f inancial periods

beginning on or after

FRS 8 - Operating Segments*

FRS 4 - Insurance Contract

FRS 7 - Financial Instruments: Disclosures

FRS 123 - Borrowing Costs

FRS 139 - Financial Instruments: Recognition and Measurement

Amendments to FRS 2 - Share-based Payment

- Vesting Conditions and Cancellations *

Amendments to FRS 1 - First-t ime Adoption of Financial

Reporting Standards and FRS 127 - Consolidated and

Separate Financial Statements: Cost of an Investment

in a Subsidiary, Jointly Controlled Entity or Associate

FRS 3 - Business Combination (Revised)*

FRS 127 - Consolidated and Separate Financial Statements (Revised)

Amendments to FRS 2- Share-based Payment*

Amendments to FRS 5 - Non-current Assets Held for Sale

and Discontinued Operations*

Amendment to FRS 138 - Intangible Assets

Amendments to FRS 139 Financial Instruments :

Recognition and Measurement

1 July 2009

1 January 2010

1 January 2010

1 January 2010

1 January 2010

1 January 2010

1 January 2010

1 July 2010

1 July 2010

1 July 2010

1 July 2010

1 July 2010

1 July 2010

58








3. Significant accounting estimates and judgement

3.1 Key Sources of Estimation Uncertainty

The above FRSs and IC Interpretations wil l take effect from financial periods beginning on or after

1 January 2010 except for FRS 8 which wil l be effective for f inancial periods beginning on or after 1

July 2009.

The impact of applying FRS 4, FRS 7 and FRS 139 on the financial statements upon first adoption as

required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimates and

Errors are not disclosed by virtue of the exemptions given in the respective FRSs.

FRS 8, FRS 123, FRS 127, Amendments to FRS 1, IC Interpretation 9 and 10 are not expected to have

significant impact on the financial statements of the Group and the Bank.

* These FRSs and IC Interpretations are not applicable to the Group and the Bank.

The key assumptions concerning the future and other key sources of estimation uncertainty at the

balance sheet date, that have a s ignificant r isk of causing a material adjustments to the carrying amounts

of assets and l iabil it ies within the next f inancial year are discussed overleaf.

(o) Adoption of new and revised FRSs (continued)

IC Interpretation 9 - Reassessment of Embedded Derivatives

IC Interpretation 10 - Interim Financial Reporting and Impairment

IC Interpretation 11 - FRS 2 - Group and Treasury Share Transactions *

IC Interpretation 13 - Customer Loyalty Programmes *

IC Interpretation 14 - FRS 119 - The Limit on a Defined Benefit Asset,

Minimum Funding Requirements and their Interaction*

IC Interpretation 12 - Service Concession Arrangements*

IC Interpretation 15 - Agreements for the Construction of Real Estate*

IC Interpretation 16 - Hedges of Net Investment in a Foreign Operation *

IC Interpretation 17 - Distributions of Non-cash Assets to Owners *

Amendments to IC Interpretation 9 - Reassessment of Embedded Derivatives

1 January 2010

1 January 2010

1 January 2010

1 January 2010

1 January 2010

1 July 2010

1 July 2010

1 July 2010

1 July 2010

1 July 2010

Effective dates for

financial periods

beginning on or after

59






3. Significant accounting estimates and judgement (continued)

3.1 Key Sources of Estimation Uncertainty (continued)

The principal uncertainty in the credit insurance business arises from the technical provisions which

include the provisions of premium and claims l iabil it ies. The premium l iabil it ies comprise unearned

premium reserves while claim l iabil it ies comprises provision for outstanding claims. The estimation

bases for unearned premium reserves is explained in the related accounting policy statement.

Generally, c laims l iabil it ies are determined based upon previous claims experience, exist ing

knowledge of events, the terms and conditions of the relevant policies and interpretation of

circumstances. Particularly relevant is past experience with similar cases, historical c laims

development trends, legislative changes, judicial decis ions and economic conditions. It is certain

that actual future premiums and claims l iabil it ies wil l not exactly develop as projected and may vary

from the projections.

The estimates of premiums and claims l iabil it ies are therefore sensit ive to various factors and

uncertainties. The establishment of technical provisions in an inherently uncertain process and, as a

consequence of this uncertainty, the eventual settlement of premiums and claims l iabil it ies may vary

from the init ial estimates.

There may be significant reporting lags between the occurrence of an insured event and the time it

is actually reported. Following the identif ication and notif ication of an insured loss, there may sti l l

be uncertainty as to the magnitude of the claim. There are many factors that wil l determine the

level of uncertainty such as inflation, inconsistent judicial interpretations, legislative changes and

claims handling procedures.

(a) Uncertainty in accounting estimates for credit insurance business

The Group and the Bank review the doubtful loans, advances and financing at each reporting date

to assess whether al lowances for impairment should be recorded in the financial statements. In

particular, judgement is required in the identif ication of doubtful loans, and the estimation of

realisable amount from the doubtful loans when determining the level of al lowance required.

The Group and the Bank have adopted certain criteria in the identif ication of doubtful loans, which

include classifying loans as non-performing when repayments are in arrears for more than three (3)

months for revolving credit and s ix (6) months for term loan. Specif ic al lowances for doubtful loans

are provided after taking into consideration of the values assigned to collateral . The values assigned

to collateral are estimated based on market value and/or forced sales value, as appropriate and

conforms with BNM/DFI/GP3. In addition to the specif ic al lowances made, the Group and the Bank

also make general al lowance against exposure not specif ical ly identif ied based on a certain

percentage of total outstanding loans ( including accrued interest) , net of specif ic al lowance for bad

and doubtful debts. Such estimates are based on assumptions about a number of factors and actual

results may differ, resulting in future changes to the al lowance.

(b) Allowance for losses on loans, advances and financing

60





3. Significant accounting estimates and judgement (continued)

4. Cash and bank balances

3.1 Key Sources of Estimation Uncertainty (continued)

The Group and the Bank assess whether there is any indication that an investment securit ies may be

impaired at each balance sheet date.

If indicators are present, these assets are subject to an impairment review. The impairment review

comprises a comparison of the carrying amount of the investment and the investment's estimated

recoverable amount.

Judgements made by management in the process of applying the Group and Bank's accounting

policies in respect of investment securit ies are as fol lows:

( i ) The Group and the Bank determines whether its investments are impaired following certain

indications of impairment such as, amongst others, prolonged shortfal l between market value

and carrying amount, significant changes with adverse effects on the investment and deteriorating

f inancial performance of the investment due to observed changes and fundamentals.

( i i ) Depending on their nature and the industries in which the investments relate to, judgements are

made by management to select suitable methods of valuation such as, amongst others, discounted

cash flow, realisable net asset value and sector average price-earning ratio methods.

Once a suitable method of valuation is selected, management makes certain assumptions concerning

the future to estimate the recoverable amount of the investment. These assumptions and other key

sources of estimation uncertainty at the balance sheet date, may have a s ignificant r isk of causing a

material adjustment to the carrying amounts of the investments within the next f inancial year.

Depending on the specif ic individual investment, assumptions made by management may include,

amongst others, assumptions on expected future cash flows, revenue growth, discount rate used for

purposes of discounting future cash flows which incorporates the relevant r isks, and expected future

outcome of certain past events.

(c) Allowance for diminution in value of investments securit ies


Group and Bank

2008

RM'000

8,695

2009

RM'000

11,582 Cash and bank balances

61






5. Deposits and placements with banks and other f inancial institutions

6. Investments securit ies

Included in deposits and placements with banks and other f inancial intitutions are placement of the

unuti l ised fund from the Government of Malaysia under MKFF Scheme amounting to RM158,861,000 (2008:

RM45,563,000).

Group and Bank

2008

RM'000

908,194

576,067

287,267

1,771,528

2009

RM'000

1,743,597

563,933

331,567

2,639,097

Deposits and placements with:

Licensed banks

Licensed finance company

Other f inancial institution

2008

Market value

RM'000

19,198

-

19,198

At cost

RM'000

53,985

(37,194)

16,791

10,050

312,000

322,050

(2,416)

319,634

336,425

2009

At cost

RM'000

56,646

(26,854)

29,792

10,000

333,000

343,000

(2,745)

340,255

370,047

Group and Bank

(a) Quoted securit ies

Quoted shares in Malaysia

Less: al lowance for diminution in value

(b) Unquoted securit ies:

Bonds

Private debt securit ies

Accretion of discount

Total

Market value

RM'000

29,792

-

29,792

62






The amount represents block discounting of bi l ls faci l ity provided to participating banks in Malaysia granted

under Export Credit Refinancing ("ECR") Scheme. The primary objective of the Scheme is for the promotion

of Malaysian export by offering competit ive rates to banks participating in the ECR Scheme for on-lending

to exporters. The Scheme was funded by borrowings from the Ministry of Finance and Bank Negara Malaysia

prior to 3 June 2008. The Bank originally acted as the operator of the Scheme in the disbursement of such

loans to participating banks.

Pursuant to a loan settlement agreement entered by the Bank with the Government of Malaysia on 3 June

2008, the borrowings were capital ised as share capital of the Bank via issuance of 1,978,215,656 new

ordinary shares of RM 1 each at par. Effective from the date, the Bank became the owner of the Scheme.

7. Amount due from ECR debtors

Group and Bank

2008

RM'000

1,860,922

1,860,922

2009

RM'000

757,950

757,950

Gross loan outstanding

The maturity structure of the ECR debtors are as fol lows:

Maturity within one year

8. Loans, advances and financing

Group and Bank

2008

RM'000

Restated

1,920,184

5,141

12,784

(100,635)

1,837,474

(332,077)

(24,174)

1,481,223

2009

RM'000

2,365,139

12,951

12,671

(130,837)

2,259,924

(422,820)

(27,758)

1,809,346

Loans and financing

Loans under MKFF Scheme

Staff loans and advances

Less: interest- in-suspense

Gross loans and financing

Less: al lowance for losses on loans, advances and financing

- Specif ic

- General

63






The maturity structure of the loans, advances and financing are as fol lows:

8. Loans, advances and financing (continued)

Group and Bank

2008

RM'000

Restated

746,172

500,790

205,866

384,646

1,837,474

2009

RM'000

439,756

298,115

123,222

1,398,831

2,259,924


One year to three years

Three years to f ive years

Over f ive years

Group and Bank

2008

RM'000

Restated

617,262

(332,077)

285,185

1,837,474

(332,077)

1,505,397

18.9%

8.5%

2009

RM'000

961,085

(422,820)

538,265

2,259,924

(422,820)

1,837,104

29.3%

20.7%

Gross non performing loan, advances and financing

Less: specif ic al lowance

Net non performing loan, advances and financing

Gross loans, advances and financing

Less: specif ic al lowance

Net loans, advances and financing

Ratio of net non-performing loans, advances and

f inancing to net total loans, advances and financing

Ratio of net non-performing loans, advances and

f inancing to net total loans, advances and financing

and amount due from ECR debtors (Note 7)

Non-performing loan, advances and financing ("NPL") balances are as fol lows:

64






Movements in the al lowance for losses on loans, advances and financing are as fol lows:

8. Loans, advances and financing (continued)

Group and Bank

2008

RM'000

Restated

274,767

179,114

(11,734)

167,380

(110,070)

-

332,077

2009

RM'000

332,077

174,313

(74,795)

99,518

(10,992)

2,217

422,820

Specific al lowance

Balance at 1 January

Allowance made during the year (Note 30)

Amount written back (Note 30)

Net charge to income statements

Amount written off

Allowance recoverable from the Government of Malaysia for MKFF Scheme

Balance at 31 December

9. Premium receivables

Group and Bank

2008

RM'000

2,901

(1,572)

1,329

2009

RM'000

4,379

(1,551)

2,828

Premium receivables

Less: al lowance for doubtful debts

Group and Bank

2008

RM'000

26,145

(1,971)

24,174

1.61%

2009

RM'000

24,174

3,584

27,758

1.51%

General al lowance

Balance at 1 January

Allowance made during the year (Note 30)


% of net loans, advances and financing

65






10. Other receivables, deposits and prepayments

Group and Bank

2008

RM'000

Restated

24,696

6,686

27,176

58,558

2009

RM'000

34,683

5,495

7,528

47,706

Interest receivables

Other receivables, deposits and prepayments

Tax recoverables

11. Deferred tax assets

Accelerated capital

al lowance on property and,

equipment

RM'000

(998)

(38)

(1,036)

(1,036)

10

(1,026)

Other

deductible temporary

differences

RM'000

8,691

(4,206)

4,485

4,485

4,616

9,101

Unuti l ised tax losses

RM'000

-

6,839

6,839

6,839

(6,839)

-

Unabsorbed capital

al lowances

RM'000

-

974

974

974

(974)

-

Total

RM'000

7,693

3,569

11,262

11,262

(3,187)

8,075

At 1 January 2008

Recognised in income statement

At 31 December 2008 as restated

At 1 January 2009 as restated


At 31 December 2009

Recognised deferred tax assets

Deferred tax assets of the Group:

Accelerated capital

al lowance on property and,

equipment

RM'000

(998)

(38)

(1,036)

(1,036)

10

(1,026)

Other

deductible temporary

differences

RM'000

8,691

(4,206)

4,485

4,485

6,926

11,411

Unuti l ised tax losses

RM'000

-

6,839

6,839

6,839

(6,839)

-

Unabsorbed capital

al lowances

RM'000

-

974

974

974

(974)

-

Deferred tax assets of the Bank:

At 1 January 2008


At 31 December 2008 as restated

At 1 January 2009 as restated


At 31 December 2009

Total

RM'000

7,693

3,569

11,262

11,262

(877)

10,385

66






11. Deferred tax assets (continued)

Group

2008

RM'000

67,341

-

25%

16,835

2009

RM'000

67,332

-

25%

16,833

Unuti l ised tax losses in a subsidiary

Tax rate

Unrecognised deferred tax assets

No deferred tax has been recognised for the following items:

12. Investment in subsidiaries

Bank

2008

RM'000

73,419

-

73,419

2009

RM'000

73,419

(9,243)

64,176

The deductible temporary differences do not expire under current tax legislation unless there is a substantial

change in shareholders (more than 50%). If there is substantial change in shareholders, unuti l ised tax losses

carry-forwards amounting to RM67,332,000 wil l not be available to the Group. Deferred tax assets have not

been recognised in respect of these items because it is not probable that future taxable profit wil l be

available against which the Group can uti l ise the benefits there from.

Malaysian Export Credit Insurance Berhad, wholly owned subsidiary of the Bank was formerly engaged in the

provision of export and domestic credit insurance facilities and guarantees. The Company is currently dormant.

On 6 Apri l 2009, Pengkalan Megaria Sdn Bhd, with a paid up capital of RM2 was set up to act as a trustee

for a vessel which was previously assigned as a collateral for a f inancing given by the Bank. The Company is

currently dormant.

Unquoted shares

At cost

Less: al lowance for diminution in value

The subsidiaries, al l incorporated in Malaysia, are as fol lows:

Name of company

Malaysian Export Credit

Insurance Berhad

Pengkalan Megaria Sdn Bhd

Effective ownership interest (%)Principal activit ies

Dormant

Dormant

Country of

Malaysia

Malaysia

2009

100

100

2008

100

-

67






13. Investment properties

Group and Bank

2008

RM'000

2,850

394

350

744

33

-

777

2,073

2009

RM'000

2,850

427

350

777

34

180

991

1,859

Investment properties were valued by Raine & Horne International Zaki + Partners Sdn. Bhd. as at 31

December 2009, an independent professional valuer. Fair value is determined by reference to open market

values on an exist ing use basis .

Cost

As at 1 January/ 31 December

Accumulated depreciation and impairment loss

As at 1 January

Accumulated depreciation

Accumulated impairment losses

Charge for the year

Impairment loss

As at 31 December

Carrying amount

Group and Bank

2008

RM'000

1,130

880

63

2,073

2,140

2009

RM'000

1,130

667

62

1,859

2,630

Included in the above are:

Freehold land

Buildings

Long term leasehold building with unexpired lease

period of more than 50 years

Fair value of investment properties

68






14. Intangible Asset

Computer software

Cost

As at 1 January

Additions

Transfer from Property and equipment (Note 15)

As at 31 December

Accumulated depreciation

As at 1 January

Charge for the year

Transfer from Property and equipment (Note 15)

As at 31 December

Carrying amounts

Group and Bank

69

2008

RM'000

Restated

-

-

1,828

1,828

-

-

174

174

1,654

2009

RM'000

1,828

140

388

2,356

174

1,249

1,423

933

-






15. Property and equipment

Furniture electrical

fittings and equipment

RM'000

Total

RM'000

Work-in- progress

RM'000

Computer

RM'000

Motor vehicles

RM'000

Renovation and

improvements

RM'000

Office equipment

RM'000

Freehold Land

RM'000

Building

RM'000

Cost

As at 1 January

as restated

Additions

Transfer (to) / from

work-in-progress

Transfer to

Intangible Assets

(Note 14)

As at 31 December

Accumulated

depreciation

As at 1 January

as restated

Charge for the year

As at 31 December

Carrying amounts

As at 31 December

2009

-

30,000*

-

-

30,000

-

-

-

30,000

-

33,000*

-

-

33,000

-

330

330

32,670

726

78

-

-

804

491

87

578

226

1,674

495

-

-

2,169

422

187

609

1,560

427

231

-

-

658

297

99

396

262

1,302

237

-

-

1,539

945

251

1,196

343

8,539

618

475

-

9,632

7,941

556

8,497

1,135

1,554

7,107

(475)

(388)

7,798

-

-

-

7,798

14,222

71,766

-

(388)

85,600

10,096

1,510

11,606

73,994

Group and Bank

During the year, the Bank acquired freehold land and building located at Jalan Sultan Ismail , Kuala Lumpur for

a purchase consideration of RM30 mil l ion and RM33 mil l ion respectively, to be its new head office upon

completion of renovation works anticipated to be in the financial year 31 December 2010.

*

70






15. Property and equipment (continued)

16. Loans and borrowings

Furniture electrical

fittings and equipment

RM'000

Total

RM'000

Work-in- progress

RM'000

Computer

RM'000

Motor vehicles

RM'000

Renovation and

improvements

RM'000

Office equipment

RM'000

Freehold Land

RM'000

Building

RM'000

Cost

As at 1 January

Additions

Transfer (to) / from

work-in-progress

Transfer to

Intangible Assets

(Note 14)

Disposal

As at 31 December

Accumulated

depreciation

As at 1 January

Charge for the year

Transfer (to)

Intangible

Disposals

As at 31 December

Carrying amounts

As at 31 December

2008

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

679

47

-

-

-

726

411

80

-

491

235

1,667

7

-

-

-

1,674

264

158

-

422

1,252

538

-

-

-

(111)

427

340

68

(111)

297

130

1,245

57

-

-

-

1,302

806

139

-

945

357

8,966

785

616

(1,828)

-

8,539

6,528

1,587

(174)

-

7,941

598

1,103

1,067

(616)

-

-

1,554

-

-

-

-

1,554

14,198

1,963

-

(1,828)

(111)

14,222

8,349

2,032

(174)

(111)

10,096

4,126

Group and Bank Restated

Group and Bank

2008

RM'000

669,951

109,068

595,157

1,130,741

2,504,917

2009

RM'000

807,896

31,544

621,019

1,230,518

2,690,977

Term loans - unsecured

Repayable within one year

One year to two years

Two years to f ive years

Over f ive years

71





Loan principal of RM35,000,000 (2008 - RM35,000,000) by way of a deposit placement, repayable after a

period of 15 years.

The loan was obtained on 17 November 1995. Interest on the loan is charged at the rate of 2.50% (2008

- 2.50%) per annum.

Revolving multi-currency loan of 1 year up to an aggregate of USD120,000,000 (approximately

RM411,180,000) renewable after one year.

The loan was obtained on 14 September 2006 in the amount of USD100,000,000 and was subsequently

renewed on 9 September 2009 with the additional amount of USD20,000,000 and wil l be renewable after

one year. Interest rate on the loan is charged at the rate of 0.65% above the cost of fund ("COF").

Revolving US Dollar loan of 3 years up to an aggregate of USD50,000,000 (approximately RM171,325,000)

(2008 - USD50,000,000 (approximately RM173,375,000)) renewable after three years.

The loan was obtained on 27 December 2006. Interest on the loan is charged at the rate of 0.39% (2008

- 0.39%) above Singapore Inter Bank Offer Rate (“SIBOR”) per annum.

Revolving US Dollar loan up to an aggregate of USD11,000,000 (approximately RM37,692,000) (2008 -

USD11,000,000 (approximately RM38,143,000)) .

The loan was obtained on 31 March 2000. Interest on the loan is charged at the rate of 0.40% (2008 -

0.40%) above COF.


16. Loans and borrowings (continued)

Term loans contractual repayment schedule are as fol lows:

2022

2021

2010

2010

2022

2021

2009

1,176,274

1,256,896

10,148

247,659

2,690,977

1,238,183

1,097,923

168,811

2,504,917

508,370

41,719

10,148

247,659

807,896

488,217

12,923

168,811

669,951

24,411

7,133

-

-

31,544

74,068

35,000

-

109,068

587,813

33,206

-

-

621,019

595,157

-

-

595,157

55,680

1,174,838

-

-

1,230,518

80,741

1,050,000

-

1,130,741

RM'000

2009

- USD

- RM

- YEN

- EURO

2008

- USD

- RM

- EURO

Year of maturity

Carrying amount

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

Under 1 year

1 - 2 years

2 - 5 years

Over 5 years Group and Bank

Term loans consist of the following faci l it ies:

(a)

(b)

(c)

(d)

72







Term loan of USD12,000,000 (approximately RM41,118,000) (2008 - USD12,000,000 (approximately

RM41,610,000)) repayable within a period of three years.

The loan was obtained on 3 November 2006. Interest on the loan is charged at the rate of 0.50% (2008

- 0.50%) above London Interbank Offer Rate ("LIBOR") per annum.


RM13,870,000)) repayable by 5 semi-annual instal lments commencing February 2007.

The loan was obtained on 5 August 2005. Interest on the loan is charged at the rate of 0.45% (2008 -

0.45%) above LIBOR per annum.

The loan has been fully repaid during the year.


RM35,542,000)) repayable by 20 scheduled quarterly instal lments commencing May 2006.




RM48,476,000)) repayable by 27 scheduled quarterly instal lments commencing March 2006.




RM69,350,000)) repayable by 32 quarterly instal lments commencing September 2007.

The loan was obtained on 30 June 2006. Interest on the loan is charged at the rate of 0.33% (2008 -



RM12,136,000)) repayable by 8 scheduled semi-annual instal lments commencing September 2006.

The loan was obtained on 30 June 2006. Interest on the loan is charged at the rate of 0.22% (2008 -


(e)

(f)

(g)

(h)

( i )

( j )

73






RM'000

Over 5 years


Fixed rate term loan of USD3,588,889 (approximately RM12,297,000) (2008 - USD3,588,889

(approximately RM12,444,000)) repayable by 34 equal monthly instal lments one month after the date of

the first drawdown.

The loan was obtained on 16 March 2006. Interest on the loan is charged at the fixed rate of 5.40% (2008

- 5.40%) per annum.


Term loan of RM1,000,000,000 (2008 - RM1,000,000,000) from the Ministry of Finance (“MOF”) and Bank

Negara Malaysia (“BNM”) repayable after a period of 15 years.

The loan was obtained on 18 December 2006. Interest on the loan is charged at the fixed rate of 1.00%

(2008 - 1.00%) per annum.

Term loan up to an aggregate of USD200,000,000 (approximately RM685,300,000) (2008 -

USD200,000,000 (approximately RM693,500,000)) .

The loan is repayable semi-annually within 14 semi-annual instal lments from 26 October 2002 and

ending on 26 Apri l 2009.

The loan was obtained on behalf of the Bank on 3 May 1999 by the Bank’s previous holding company and

is guaranteed by the Government of Malaysia. Interest on the loan is charged at 0.20% (2008 - 0.20%)

above the lending bank’s Long Term Prime Lending Rate or Fiscal Investment and Loans Program Rate

per annum. Interest on the scheme is paid directly to the lending bank by the Bank.


Term loan up to an aggregate of USD300,000,000 (approximately RM1,027,950,000) (2008 -

USD300,000,000 (approximately RM1,040,250,000)) .

The loan is repayable semi-annually within 14 semi-annual instal lments from 26 July 2002 and ending on

26 January 2009.

The loan was obtained on 2 February 1999 and is guaranteed by the Government of Malaysia. Interest on

the loan is charged at 0.80% (2008 - 0.80%) above Tokyo Inter Bank Offer Rate (“TIBOR”) per annum.


(k)

( l )

(m)

(n)

74







Fixed rate term loan of USD2,750,000 (approximately RM9,423,000) (2008 - USD2,750,000 (approximately

RM9,536,000)) repayable by 32 monthly instal lments one month after the date of the first drawdown.

The loan was obtained on 10 January 2007. Interest on loan is charged at the fixed rate of 5.37% (2008

- 5.37%) per annum.



RM121,363,000)) . The loan is repayable semi-annually within 28 semi-annual instal lments from 12 August

2008 and ending on 12 February 2022.

The loan was obtained on 25 Apri l 2006. Interest on the loan is charged at 0.395% (2008 - 0.395%) above

LIBOR per annum.

Syndicated term loan of USD150,000,000 (approximately RM513,975,000) (2008 - USD150,000,000

(approximately RM520,125,000)) repayable within a period of f ive years.

The loan was obtained on 14 November 2007. Interest on loan is charged at 0.20% (2008 - 0.20%) above

LIBOR per annum.

Revolving loan of USD40 mil l ion up to an aggregate of USD40,000,000 (approximately RM137,060,000)

(2008 - USD40,000,000 (approximately RM138,700,000)) renewable after 3 years.

The loan was obtained on 16 May 2007. Interest on the loan is charged at the rate of 0.48% (2008 -


Term loan of USD25,000,000 (approximately RM85,663,000) (2008- USD25,000,000) (approximately

RM86,688,000) repayable within a period of one year.

The loan was renewed on 14 December 2009. Interest on the loan is charged at the rate of 1.30% (2008

- 1.20%) above Singapore Interbank Offer Rate (“SIBOR”) per annum.

Term financing of RM55,000,000,000 repayable after a period of 5 years.

The financing was obtained on 8 Apri l 2009. Profit on the f inancing is charged at the rate of 0.50%

above the Bank's Base Financing Rate per annum.

Revolving Yen loan of 6 months up to an aggregate of USD20,000,000 equivalent (approximately

RM68,530,000).

The loan was obtained on 25 June 2009. Interest on the loan is charged at the rate of 1.00% above Yen

London Inter Bank Offer Rate ("YenLIBOR") per annum.

(o)

(p)

(q)

(r)

(s)

(t)

(u)

75






RM'000

Over 5 years


Term loan up to an aggregate of USD100,000,000 (approximately RM342,650,000).

The loan is repayable semi-annually after a grace period of 30 months from 21 Apri l 2012 and ending on

21 October 2014.

The loan was obtained on 22 October 2009. Interest on the loan is charged at 0.60% above LIBOR per

annum.

Term loan of EUR25,000,000 (approximately RM123,465,000) repayable within a period of one year.

The loan was obtained on 2 December 2009. Interest on the loan is charged at the rate of 0.80% above

Europe Interbank Offer Rate ("EURIBOR") per annum.

Included in the term loan is a placement from the Government of Malaysia amounting to RM170,100,000

for the purpose of providing loans to qualif ied applicants under the Malaysia The Truly Asian Kitchen or

Malaysia Kitchen Program.

The placement is interest-free and repayable after a period of 15 years from dates of disbursement of 31

December 2007 and 15 January 2009.

(v)

(w)

(x)

17. Other payables and accruals

Group and Bank

2008

RM'000

82,845

1,574

6,444

20,873

111,736

2009

RM'000

65,916

3,018

3,517

23,945

96,396

Sinking fund and debt services reserve accounts

Amount due to the Government of Malaysia

Interest payable

Others

76






18. Deferred income

Group and Bank

2008

RM'000

Restated

16,208

10,916

(14,399)

12,725

18,918

(1,626)

17,292

30,017

2009

RM'000

12,725

(3,758)

(8,843)

124

17,292

(2,416)

14,876

15,000

( i ) Aris ing from guarantee from banking activit ies

As at 1 January

(Reversal) /addition during the year

Recognised to income statement

As at 31 December

( i i ) Insurance – unearned premium reserve

As at 1 January

Decrease in reserve (Note 25)

As at 31 December

19. Provision for claims

Group and Bank

2008

RM'000

Restated

54,923

14,339

(35,773)

33,489

2009

RM'000

33,489

(3,137)

(2,608)

27,744

Aris ing from insurance contracts

As at 1 January

(Reversal) /provision during the year

Paid during the year

As at 31 December

77






RM'000

Over 5 years

20. Share capital

3,000,000,000

1

3,000,000,001

2,708,665,283

-

2,708,665,283

1

2,708,665,284

3,000,000,000

1

3,000,000,001

2,708,665,283

-

2,708,665,283

1

2,708,665,284

3,000,000,000

1

3,000,000,001

730,449,627

1,978,215,656

2,708,665,283

1

2,708,665,284

3,000,000,000

1

3,000,000,001

730,449,627

1,978,215,656

2,708,665,283

1

2,708,665,284

Authorised

Ordinary shares

of RM1 each

Special Rights

Redeemable

(Preference share

of RM1 each)

At 31 December

Issued and fully paid

Ordinary shares of

RM1 each

Increase during

the year

Special Rights

Redeemable

(Preference share

of RM1 each)

At 31 December

Amount 2009

Number of shares

2009 Amount

2008

Number of shares

2008

Group and Bank

The Special Right Redeemable Share (“Special Right”) may be held or transferred only to the Minister of

Finance ( Incorporated) or it successors or any Minister, representative or any person acting on behalf of the

Government of Malaysia.

The Special Right shareholder shall have the right from time to time to appoint any person to be an

appointed Director (“Government Appointed Director”), so that there shall not be more than four

Government appointed Directors at any time.

The Special Right shareholder or any person acting on its behalf shall be entit led to receive notice of and to

attend and speak at al l general meetings of any meeting of any class of shareholders of the Bank, but the

Special Share shall carry neither r ight to vote nor any other r ights at any such meeting.

In a distr ibution of capital in a winding up of the Bank, the Special Right shareholder shall be entit led to

repayment of the capital paid up on the Special Share in priority to any repayment of capital to any other

member. The Special Share shall confer no other r ight to participate in the capital or profits of the Bank.

78






20. Share capital (continued)

21. Retained profits

The Special Right shareholder may subject to the provision of the Companies Act, 1965, require the Bank to

redeem the Special Share at par at any time by serving written notice upon the Bank and delivering the

relevant share certif icate.

The Special Right shareholder shall determine on general guidelines pertaining to lending, investments and

divestment by the Bank from time to time as deemed appropriate.

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance

with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entit led to

deduct tax on dividend paid, credited or distr ibuted to its shareholders, and such dividends wil l be exempted

from tax in the hands of the shareholders ("single t ier system"). However, there is a transit ional period of

s ix years, expiring on 31 December 2013, to al low companies to pay franked dividends to their shareholders

under l imited circumstances. Companies also have an irrevocable option to disregard the 108 balance and opt

to pay dividends under the single t ier system. The change in the tax legislation also provides for the 108

balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Bank did not elect for the irrevocable option to disregard the section 108 balance. Accordingly, during

the transit ional period, the Bank may uti l ise the credit in the section 108 balance as at 31 December 2009 to

distribute cash dividend payments to ordinary shareholders as defined under the Finance Act, 2007.

As at 31 December 2009, the Bank has sufficient tax credit in the 108 balance to pay franked dividends

amounting to RM131,980,275 out of its retained earnings. If the balance of the retained earnings of

RM54,965,238 were to be distributed as dividends, the Bank may distribute such dividends under the single

t ier system.

22. Operating revenue

Operating revenue of the Bank comprises interest income from banking, income from recovery, ECR income,

guarantee, cross border credit, supplier credit fee, charges on letter of credit and premium income.

79






23. Interest income

Group and Bank

2008

RM'000

Restated

162,512

7,529

55,739

10,971

1,104

(13,598)

224,257

2009

RM'000

88,910

32,047

58,368

16,492

329

(7,307)

188,839

Loans, advances and financing

- Interest income other than recoveries from

non-performing loans

- Recoveries from non-performing loans

Money at cal l and deposit placements with banks

and financial institutions

Investment securit ies

Amortisation of premiums less accretion of discounts

Interest income suspended

Total

25. Underwriting results

Group and Bank

2008

RM'000

16,006

-

16,006

1,626

17,632

727

18,359

(794)

17,565

2009

RM'000

14,851

(4,401)

10,450

2,416

12,866

888

13,754

31,706

45,460

Gross premiums

Reinsurance

Net premium

Movement from unearned premium reserves (Note 18)

Net earned premiums

Add: other fee income

Less: net claims recovered/( incurred) (Note 25.1)

Underwriting surplus

24. Interest expense

Group and Bank

2008

RM'000

48,783

2009

RM'000

38,980 Term loans

80






25. Underwriting results (continued)

26. Other income

Group and Bank

2008

RM'000

Restated

23,249

1,041

50,827

(37,632)

27

-

483

37,995

2009

RM'000

15,745

520

(9,963)

(3,636)

-

2,159

787

5,612

Fee income

Dividend income from:

- Shares quoted in Malaysia

Foreign exchange ( loss) /gain

- realised

- unrealised

Gain on disposal of property and equipment

Rental income

Others

25.1 Net claims recovered/(incurred)

Group and Bank

2008

RM'000

(35,773)

13,545

-

(22,228)

54,923

(33,489)

(794)

2009

RM'000

(2,608)

28,970

(401)

25,961

33,489

(27,744)

31,706

Gross claims paid less salvage

Recoveries

Bad debt written off

Net claims paid

Add: net outstanding claims at the beginning of the year

Less: net outstanding claims at the end of the year

Net claims recovered/ ( incurred)

81






27. Overhead expenses

Bank Note

2008

RM'000

21,730

5,987

282

7,448

35,447

2009

RM'000

27,758

8,800

804

11,543

48,905

Group

2008

RM'000

21,730

5,987

282

7,490

35,489

2009

RM'000

27,758

8,800

804

11,583

48,945

Personnel costs

Establishment related expenses

Promotion and marketing expenses

General administrative expenses

( i )

( i i )

( i i i )

( iv)

( i ) Personnel costs

Group and Bank

2008

RM'000

16,766

2,474

2,490

21,730

2009

RM'000

22,101

2,675

2,982

27,758

Salaries, al lowances and bonuses

Social security cost

Other staff related expenses

( i i ) Establishment related expenses

Group and Bank

2008

RM'000

2,032

33

-

-

2,476

1,446

5,987

2009

RM'000

1,510

34

1,249

180

3,202

2,625

8,800

Depreciation:

- Property and equipment

- Investment properties

Amortisation of intangible assets

Impairment of investment properties

Rental of leasehold land and premises

Repairs and maintenance of property and equipment

82






28. Directors' fees and remuneration

Bank

2008

RM'000

524

68

592

351

Group

2008

RM'000

524

68

592

351

Directors of the Bank:

Executive Directors:

Salary and other remuneration,

including meeting al lowances

Pension cost - defined contribution plan

Non-executive Directors:

Fees

27. Overhead expenses (continued)

(i i i ) Promotion and marketing expenses

Group and Bank

2008

RM'000

282

2009

RM'000

804 Advertisement and publicity

( iv) General administrative expenses

Bank

2008

RM'000

1,032

150

5,700

340

38

188

7,448

2009

RM'000

1,761

155

7,806

1,634

102

85

11,543

Group

2008

RM'000

1,032

155

5,737

340

38

188

7,490

2009

RM'000

1,761

161

7,840

1,634

102

85

11,583

Administrative expenses

Auditors' remuneration

General expenses

Professional fees

Sundry debtors written off

Others

2009

RM'000

551

82

633

307

2009

RM'000

551

82

633

307

83






28. Directors' fees and remuneration (continued)

Bank

2008

RM'000

-

-

-

943

943

Group

2008

RM'000

23

-

23

966

966

Directors of the Subsidiaries:

Non-executive Directors:

Fees

Other remuneration

Total

Total (excluding benefits- in-kind)

2009

RM'000

-

-

-

940

940

2009

RM'000

-

-

-

940

940

Group

2008

RM'000

-

1

1

3

8

13

Number of Directors of the Bank whose remuneration fal ls into

the following bands:

Number of Executive Directors:

RM600,001 to RM650,000

RM350,001 to RM400,000

RM200,001 to RM250,000

Number of Non-executive Directors:

RM50,001 to RM100,000

RM0 to RM50,000

2009

RM'000

1

-

-

2

7

10

84






29. Key management personnel compensation

Bank

2008

RM'000

351

717

96

813

1,164

Group

2008

RM'000

374

717

96

813

1,187

Directors

- fees

Other key management personnel:

- Short-term employee benefits

- Contributions to Employees Provident Fund

2009

RM'000

307

984

145

1,129

1,436

2009

RM'000

307

984

145

1,129

1,436

The key management personnel compensations are as fol lows:

Key management personnel comprise persons having authority and responsibi l ity for planning, directing and

controll ing the activit ies of the entity either directly or indirectly. They comprise members of the Board of

Directors, the Managing Director/ Chief Executive Officer and Chief Operating Officer of the Group and the Bank.

30. Allowance for losses on loans, advances and financing

Group and Bank

85

Allowance for losses on loans, advances and financing

(a) Specif ic al lowance

- Charge for the year

- Written back

(b) General al lowance

- Charge for the year

2008

RM'000

Restated

179,114

(11,734)

(1,971)

165,409

2009

RM'000

174,313

(74,795)

3,584

103,102






31. Taxation

Bank

2008

RM'000

Restated

-

-

(3,569)

(3,569)

Group

2008

RM'000

Restated

-

436

(3,569)

(3,133)

Income tax expense

- Current year

- Under provision in prior years

Deferred tax expense

- Origination and reversal of

temporary differences

2009

RM'000

12,745

-

877

13,622

2009

RM'000

12,745

9,624

3,187

25,556

Income tax is calculated at the Malaysian statutory tax rate of 25% (2008: 26%) of the estimated assessable

profit for the year. The computation of deferred tax as at 31 December 2009 has reflected these changes.

Bank

2008

RM'000

Restated

13,043

3,391

190

721

2,397

(17,053)

6,785

(3,569)

-

(3,569)

Group

2008

RM'000

Restated

13,001

3,380

201

1,382

2,397

(17,714)

6,785

(3,569)

436

(3,133)

Reconcil iation of effective tax expense

Profit before taxation

Income tax using Malaysian tax

rate of 25% (2008 : 26%)

Non-deductible expenses

Effect of change in tax rate

Other items

Recognition of previously

unrecognised deferred tax assets

Prior year adjustment (Note 37)

Underprovision in prior years

Total

2009

RM'000

52,017

13,004

209

-

409

-

-

13,622

-

13,622

2009

RM'000

61,220

15,305

218

-

409

-

-

15,932

9,624

25,556

86






32. Earnings per share

Bank

2008

RM'000

Restated

730,449

1,071,533

1,801,982

16,612

0.92

Group

2008

RM'000

Restated

730,449

1,071,533

1,801,982

16,134

0.90

Issued ordinary share at 1 January

Weighted average number of

shares issued during the year

Weighted average ordinary shares outstanding

Profit after taxation (RM'000)

Earnings per share (sen)

2009

RM'000

2,708,665

-

2,708,665

38,395

1.42

2009

RM'000

2,708,665

-

2,708,665

35,664

1.32

The earnings per ordinary share has been calculated based on the profit after taxation and the weighted

average number of ordinary during the period.

33. Dividends

At the forthcoming Annual General Meeting, a f inal dividend in respect of the financial year ended 31

December 2009, of 0.1% less 25% taxation on 2,708,665,283 ordinary shares, amounting to a dividend

payable of RM2,031,499 (0.075 sen net per ordinary share) wil l be proposed for the shareholder's approval.

The financial statements for the current f inancial year do not reflect this proposed dividend. Such dividend,

if approved by the shareholders, wil l be accounted for in equity as an appropriation of retained profits in

the financial year ending 31 December 2010.

34. Commitments and contingencies Group and Bank

2008

RM'000

1,085,856

205

1,086,061

737,631

331,210

1,068,841

63,000

2,217,902

2009

RM'000

932,713

4,732

937,445

518,329

317,495

835,824

56,744

1,830,013

87

Banking operation commitments

Contracted but not provided for:

Guarantee faci l ity

Letter of credit

Insurance operation commitments

Contracted but not provided for:

Within one year

One year or later and no later than five years

Operational commitments

Approved but not contracted for:

Within one year

Total commitments and contingencies






35. Related parties

For the purposes of these financial statements, parties are considered to be related to the Group, if the

Group or the Bank has the abil ity, directly or indirectly, to control the party or exercise s ignificant influence

over the party in making financial and operating decis ions, or vice versa, or where the Group or the Bank and

the party are subject to common control or common significant influence. Related parties may be individuals

or other entit ies.

The Group has related party relationships with its subsidiaries (see note 12), Directors and key management

personnel.

Key management personnel is defined as those persons having authority and responsibi l ity for planning,

directing and controll ing the activit ies of the Group either directly or indirectly. The key management

personnel includes the Managing Director/ Chief Executive Officer and Chief Operating Officer of the Group

and the Bank. The key management personnel compensation is disclosed in Note 29.

The significant outstanding balances of the Bank with the related companies are as fol lows:

36. Financial instruments

Exposure to currency, interest rate, credit and l iquidity r isk arises in the normal course of the Group’s

business.

Financial r isk management policies

The Bank’s f inancial r isk management policies seek to enhance shareholder's value. The Bank focuses on the

unpredictabil ity of f inancial markets and seeks to minimise potential adverse effects on the financial

performance of the bank.

The Risk Management Divis ion of the Bank is responsible for formulating policies and the oversight of credit,

market l iquidity and operational r isks.

Financial r isk management is carried out through risk assessment and reviews, internal control systems and

adherence to Group’s f inancial r isk management policies, which are reported to and approved by the Board

of Directors. The Board also approves the treasury practices which cover the management of these risks.

Group and Bank

2008

RM'000

73,840

2009

RM'000

64,176

Amount due to subsidiaries:

Payables

The amounts due to subsidiaries are unsecured, interest free and have no fixed term of repayment.

88






36. Financial instruments (continued)

(a) Foreign currency risk

The Group is exposed to foreign currency r isk mainly on deposits , loans, advances and financing, and

borrowings that are denominated in currencies other than the functional currency of the Group. The

currency giving rise to this r isk is primari ly U.S. Dollars (USD).

The Bank’s policy is to minimise the exposure to foreign currency r isks aris ing from lending activit ies by

monitoring and obtaining the Board’s approval for funding requisitions that matched the foreign currencies.

The main areas of f inancial r isks faced by the Bank and the policies in respect of the major areas of treasury

activit ies are set out as fol lows:

(b) Interest rate r isk

The Bank’s interest rate exposure arises from the Bank’s borrowings and deposits are managed through

the use of matching interest rate profi les.

(c) Credit r isk

Credit r isk arises in the banking business from lending activit ies, the provision of guarantees including

letters of credit and commitments to lend, investment in bonds and notes and financial markets

transactions and other associated activit ies.

The Bank’s approach on credit r isk is applied by separating prudential control from operational

management. Responsibi l ity for approval of credit rests at management. Management uti l ises analytical

tools to rate f inancial attributes of customers.

Counter-party posit ions are also monitored on a regular basis and dealing activity is controlled through

the provisions of dealing mandates and the operations of standard settlement instructions in l ine with

market practices.

The credit r isk of the Bank's f inancial assets as disclosed arises from default of the counter-party, with

maximum exposure equal to the carrying amount of these financial assets.

(d) Liquidity r isks

The Bank’s exposure to l iquidity r isk is managed by maintaining a diversity of funding sources and

spreading debt repayment over a range of maturit ies.

The Bank’s l iquidity requirement is being managed on a day-to-day basis by the Treasury Department that

is responsible for ensuring funding is readily available for the Bank’s transactions.

89






36. Financial r isk management (continued)

2 - 3 years

RM'000

More than

5 years

RM'000

4 - 5 years

RM'000

3 - 4 years

RM'000

1 - 2 years

RM'000

Less than

1 year

RM'000

Total

RM'000

Note

Average effective interest

rate

%

2009

Financial assets

Fixed rate instruments

Deposits and placements

with banks and other

financial institutions

Investment securities

Amount due from

ECR debtors

Loans, advances and

financing

Floating rate

instruments

Loans, advances and

financing

Financial liabilities


Term loans

Floating rate

instruments

Term loans

2.44

4.56

2.30

3.00

4.17-8.6

1.00-5.40

1.47

5

6

7

8

8

16

16

2,639,097

340,255

757,950

12,951

1,796,395

1,205,100

1,485,877

2,639,097

330,205

757,950

-

1,796,395

35,000

1,485,877

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

9,614

-

-

-

-

-

-

3,337

-

-

-

-

10,050

-

-

-

1,170,100

-

Group and Bank

Effective interest rates and repricing analysis

In respect of interest-earning financial assets and interest-bearing financial l iabil it ies, the following table

indicates their average effective interest rates at the balance sheet date and the periods in which they

reprice or mature, whichever is earl ier:

90






36. Financial r isk management (continued)

2 - 3 years

RM'000

More than

5 years

RM'000

4 - 5 years

RM'000

3 - 4 years

RM'000

1 - 2 years

RM'000

Less than

1 year

RM'000

Total

RM'000

Note

Average effective interest

rate

%

2008

Financial assets



with banks and other

financial institutions

Investment securities

Amount due from

ECR debtors

Loans, advances and

financing

Floating rate

instruments

Loans, advances and

financing

Financial liabilities


Term loans

Floating rate

instruments

Term loans

3.50

4.37 - 7.75

3.50

3.00

5.50 - 8.30

1.00 - 5.40

5.40

5

6

7

8

8

16

16

1,771,528

319,634

1,860,922

5,141

1,476,082

1,101,179

1,403,738

1,771,528

309,584

1,860,922

-

1,476,082

16,179

1,403,738

-

-

-

-

-

35,000

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,141

-

-

-

-

10,050

-

-

-

1,050,000

-

Group and Bank

Restated

Effective interest rates and repricing analysis (continued)

91







Fair values

The carrying amounts of cash and cash equivalents, other receivables and other payables and short term

borrowings approximate fair values due to the relatively short term nature of these financial instruments.

It was not practicable to estimate fair value of the Group’s investment in unquoted securit ies due to the lack

of comparable quoted market prices and l iabil ity to estimate fair value without incurring excessive cost.

The fair values of f inancial assets and l iabil it ies together with the carrying amount shown in the balance

sheets are as fol lows:

The fair value of quoted securit ies is their quoted bid price at the balance sheet date. The method and

assumptions used in estimating the fair values of other f inancial instruments are as fol lows:

(a) Loans, advances and financing

The fair values of f ixed loans with remaining maturity of less than one year and variable rate loans are

estimated to approximate their carrying values. For f ixed rate loans with maturit ies of more than one year,

the fair values are estimated based on expected future cash flows of contractual instal lment payments and

discounted at prevail ing rates at balance sheet date offered for s imilar loans to new borrowers with similar

credit profi les, where applicable. For non-performing loans, the fair values are deemed to approximate the

carrying values, net of interest in suspense and specif ic al lowance for bad and doubtful debts and financing.

2008

Fairvalue

RM'000

1,771,528

1,860,922

1,476,791

19,198

319,634

2,434,868

Carryingamount

RM'000

1,771,528

1,860,922

1,481,223

16,791

319,634

2,504,917

2009

Carryingamount

RM'000

2,639,097

757,950

1,809,346

29,792

340,255

2,690,977

Group and Bank

Financial assets


Amount due from ECR debtors


Quoted securit ies

Unquoted securit ies

Financial l iabil it ies

Long term loans

Fair value

RM'000

2,639,097

757,950

1,814,618

29,792

340,022

2,663,047

92







(b) Long term loans

The fair values of Government loans, f ixed loans with remaining maturity of less than one year and variable

rate loans are estimated to approximate their carrying values. For f ixed rate loans with maturit ies of more

than one year, the fair values are estimated based on expected future cash flows of contractual instal lment

payments and discounted at prevail ing rates at balance sheet date obtained for s imilar loans with similar

maturit ies, where applicable.

37. Prior year adjustments

( i ) Change in the assessment of al lowance for losses, advances and financing

The Group and the Bank restated the opening balances of retained profit of the prior and current years to

recognise the effect of the adjustment to al lowance for losses on loans, advances and financing for a

f inancing account based on an appropriate effective interest method. The effects on retained profits and

current year's net profit are disclosed in Note 37(iv) below.

( i i ) Writeback of unearned premium reserve


reflect the appropriate unearned premium reserve balances of prior years. The effects on retained profits

and current year's net profit are disclosed in Note 37(iv) below.

( i i i ) General al lowance for Bank Guarantees


reflect the appropriate al lowance for Bank Guarantees balances of prior years. The effects on retained

profits and current year's net profit are disclosed in Note 37(iv) below.

93






37. Prior year adjustments (continued)

( iv) Effects of prior year adjustments

Bank

2008

RM'000

107,541

12,609

2,733

9,055

-

131,938

2009

RM'000

128,196

12,609

2,733

11,797

(6,785)

148,550

Group

2008

RM'000

108,440

12,609

2,733

9,055

-

132,837

2009

RM'000

128,617

12,609

2,733

11,797

(6,785)

148,971

At 1 January, as previously

stated

Prior year adjustments:

Note 37 ( i )

Note 37 ( i i )

Note 37 ( i i i )

Taxation

At 1 January, as restated

(v) Restatement of comparatives due to prior year adjustments:

Asrestated

RM'000

1,481,223

11,262

30,017

33,489

148,971

Prioryear

Adjustment RM'000

12,609

(6,785)

(2,733)

(11,797)

20,354

Aspreviously

stated RM'000

1,468,614

18,047

32,750

45,286

128,617

Note

37 ( i )

37 ( i i )

37 ( i i i )

37(i) to 37 ( i i i )

Group


Deferred tax assets

Deferred income

Provision for claim

Retained profits

1,481,223

11,262

30,017

33,489

148,550

12,609

(6,785)

(2,733)

(11,797)

20,354

1,468,614

18,047

32,750

45,286

128,196

37 ( i )

37 ( i i )

37 ( i i i )

37(i) to 37 ( i i i )

Bank


Deferred tax assets

Deferred income

Provision for claim

Retained profits

94






38. Comparative

Certain comparative figures have been reclassified to conform to current year's presentation, as shown below:

RM'000

1,654

4,126

RM'000

1,654

(1,654)

RM'000

-

5,780

Group and Bank

Balance Sheet

Intangible asset

Property and equipment

224,257

37,995

(17,135)

165,409

7,529

17,135

(17,135)

4,787*

216,728

20,860

-

160,622

Income Statement

Interest Income

Other income

Write-back of/(Allowance for)

diminution in value of investment

Allowances for losses on loans, advances

and financing

* Included in adjustment for al lowances for losses in loans, advances and financing is amount adjusted in

the prior year retained profits of RM2,742,000.

The comparative f igures in respect of f inancial year ended 31 December 2008 have been audited by a f irm

other than Ernst & Young.

Aspreviously

stated

AsrestatedAdjustment

95






39. Is lamic banking business

Balance sheets as at 31 December Group

and Bank

2009

RM'000

505

39,482

24,699

36,648

222

101,556

52

100,000

1,504

101,504

101,556

Note

(a)

(b)

(c)

(d)

Assets

Cash and bank balances

Deposits and placements with banks and other f inancial

institutions

Investments securit ies

Advances and financing

Other receivables

Total assets

Liabil it ies

Other l iabil it ies

Financed by:

Is lamic banking funds

Reserves

Is lamic banking funds

Total l iabil it ies and Islamic banking funds

The Bank commenced the Is lamic Banking business during the year. The state of affairs as at 31 December

2009 and results for the financial year then ended under the Is lamic Banking are as below:







39. Is lamic banking business (continued)

Income statements for the financial year ended 31 December Group

and Bank

2009

RM'000

2,105

(559)

1,546

(42)

1,504

-

1,504

Note

(e)

(f)

Income derived from investment of Is lamic

banking funds

Allowance for losses on advances and financing

Net income

Administrative expenses

Profit before taxation and zakat

Taxation and zakat

Profit for the year

Statement of changes in Is lamic Banking Fund for the year ended 31 December

Total RM'000

100,000

1,504

101,504

Retained

Profit RM'000

-

1,504

1,504

Is lamic Banking

Fund RM'000

100,000

-

100,000

Group and Bank

Transfer of fund

Net profit for the year

At 31 December 2009

The accompanying notes form an integral part of the f inancia l statements. 97







Cash flow statements for the financial year ended 31 December Group

and Bank

2009

RM'000

1,504

559

(699)

1,364

(222)

52

(37,207)

(36,013)

(24,000)

(24,000)

100,000

100,000

39,987

-

39,987

505

39,482

39,987

Cash flows from operating activit ies

Profit before taxation

Adjustments for:

Allowance for losses on advances and financing


Operating profit before working capital changes

Changes in working capital :

Other assets

Other l iabil it ies

Advances and financing

Net cash used in operating activit ies

Cash flow from investing activit ies

Purchase of investments

Net cash used in investing activit ies

Cash flows from financing activit ies

Increase in Is lamic banking fund

Net cash generated from financing activit ies

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Cash and cash equivalents

comprise:

Cash and bank balances

Deposits and placements with financial institutions








Notes to the financial statements for the financial year ended 31 December 2009

(a) Cash and bank balances

Groupand Bank

2009

RM'000

505 Cash and bank balances

Groupand Bank

2009

RM'000

Deposits are placed with:

Licensed bank

Other f inancial institution

(b) Deposits and placements with banks and other f inancial institutions

14,482

25,000

39,482

Groupand Bank

2009

RM'000

Unquoted investments:

Private debt securit ies

Amortisation of premiums less accretion of discounts

(c) Investments securit ies

25,000

(301)

24,699

99







Notes to the financial statements for the financial year ended 31 December 2009 (continued)

(d) Advances and financing Groupand Bank

Murabahah

Less: unearned income

Less: al lowance for losses on advances and financing

- General

Net advances and financing

The maturity structure of the advances and financing are as fol lows:


Movements in the al lowance for bad and doubtful debts and financing are as fol lows:

Groupand Bank

2009

RM'000

(559)

(559)

1.50%

General al lowance

Balance at 1 January -

Allowance made during the year


% of net loans, advances and financing

Groupand Bank

2009

RM'000

241

1,145

699

20

2,105

General al lowance

Advances and financing:

Murabahah

Deposit and placement with Financial Institution


Others

(e) Income derived from investment of Is lamic Banking Fund

2009

RM'000

37,657

(450)

37,207

(559)

36,648

36,648

100







Notes to the financial statements for the financial year ended 31 December 2009 (continued)

(f) Allowance for losses on advances and financing

Groupand Bank

2009

RM'000

(559)Allowance for doubtful f inancing

101

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102

Documents

2009 Annual Report - EXIM...2009 Annual Report Taking on the global challenge with you Export-Import Bank of Malaysia Berhad (357198-K) Level 22, UBN Tower No. 10, Jalan P. Ramlee