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(6463-H

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2013

Annual Report

Safeguarding
Our Brand Value
Financial Statements

Safeguarding Our Brand Value
As the global economy moves amidst challenges, we continue to enhance value whilst
safeguarding the integrity of what we represent. At Public Bank, we have remained committed
to a superior standard of excellence. We have focused on strategies that set the benchmark. We
have delivered results towards our most vital component – you. We have ensured that our
stakeholders are always in good hands.
Safeguarding our brand value encompasses all areas of our business, ensuring that in the pursuit
of banking excellence, we remain steadfast in protecting and guarding our stakeholders for a
sustainably stable future. This year’s theme is depicted by a pair of hands protectively holding
the Public Bank logo, symbolising the brand as a valuable asset, worth its weight in gold.

CORPORATE
PHILOSOPHY
PUBLIC BANK CARES …
For Its Customers
By providing the most courteous and efficient
service in every aspect of its business
By being innovative in the development of new
banking products and services
For Its Employees
By promoting the well-being of its staff through
attractive remuneration and fringe benefits
By promoting good staff morale through proper
staff training and development and provision of
opportunities for career advancement
For Its Shareholders
By forging ahead and consolidating its position as
a stable and progressive financial institution
By generating profits and a fair return on their
investment
For the Community It Serves
By assuming its role as a socially responsible
corporate citizen in a tangible manner
By adhering closely to national policies and
objectives thereby contributing towards the
progress of the nation

… WITH INTEGRITY

CORPORATE
MISSION
To sustain the position of being the most
efficient, profitable and respected premier
financial institution in Malaysia.

WHAT’S INSIDE
Financial Highlights
Simplified Group Balance Sheet
Five-year Group Financial Summary
Summary of Five-year Group Growth
Segmental Analysis
Analysis of The Financial Statements
Statement of Responsibility by Directors

2
3
4
6
8
9
15

Financial Statements

16

Basel II
Pillar 3 Disclosure

259

PUBLIC BANK BERHAD
ANNUAL REPORT 2013

2

FINANCIAL
HIGHLIGHTS
Group

Bank

2013

2012

2013

2012

15,264
5,655
5,310
4,065

14,058
5,329
5,047
3,827

11,504
4,747
4,647
3,705

10,630
4,711
4,627
3,707

305,725
219,416
250,873
20,424

274,824
196,052
225,042
18,018

252,839
182,405
201,872
18,822

228,576
162,969
181,688
16,895

FINANCIAL RATIOS (%)
Profitability Ratios
Net interest margin on average interest bearing assets 1
Net return on equity 2
Return on average assets
Return on average risk-weighted assets

2.9
22.4
1.8
2.8

3.1
24.1
1.9
2.9

2.7
22.0
1.9
2.9

2.9
25.0
2.1
3.2

Capital Adequacy Ratios
Common Equity Tier I capital ratio
Tier I capital ratio
Total capital ratio

9.3
11.1
14.3

N/A
11.4
14.7

10.9
13.0
14.1

N/A
13.6
14.5

0.7

0.7

0.6

0.6

PROFITABILITY (RM’Million)
Operating revenue
Operating profit
Profit before tax expense and zakat
Net profit attributable to equity holders of the Bank
KEY BALANCE SHEET DATA (RM’Million)
Total assets
Loans, advances and financing
Deposits from customers
Shareholders’ equity

Asset Quality Ratio
Gross impaired loans ratio
1
2

Excluding negotiable instruments of deposit and money market deposits which are on-lent to interbank.
Based on equity attributable to equity holders of the Bank, adjusted for dividend declared subsequent to year end.

2.2%

2.1%

2.1%

2.3%

10.3%

9.8%

13.5%

14.6%

2012

3

2013

ANNUAL REPORT 2013

71.8%

71.3%

ASSETS
Cash and balances with banks and reverse repurchase agreements
Loans, advances and financing

3.6%
3.0%

1.3%

Portfolio of financial investments

Statutory deposits with Central Banks

5.3%

0.2%

3.4%
2.3%

1.2%

Other assets (including intangible assets)

5.5%

0.2%

82.1%

81.9%
5.3%

4.7%

2012

2013

LIABILITIES & EQUITY
Deposits from customers

PUBLIC BANK BERHAD

SIMPLIFIED GROUP
BALANCE SHEET

Deposits from banks

Debt securities issued and other borrowed funds

Bills and acceptances payable and other liabilities
Share capital

Reserves

Non-controlling interests

PUBLIC BANK BERHAD

FIVE-YEAR GROUP
FINANCIAL SUMMARY

0.7%

RM5.31bil

GROSS IMPAIRED LOANS RATIO

PROFIT BEFORE TAX

ANNUAL REPORT 2013

4

Year Ended 31 December

2013

2012#

2011#

2010

2009

OPERATING RESULTS (RM’Million)
Operating profit
Profit before tax expense and zakat
Net profit attributable to equity holders of the Bank

5,655
5,310
4,065

5,329
5,047
3,827

5,200
4,878
3,684

4,738
4,086
3,048

4,015
3,321
2,517

305,725
219,416
284,528
250,873
201,258
3,532
20,424
87,986

274,824
196,052
256,106
225,042
177,035
3,532
18,018
79,458

250,773
175,953
234,262
200,371
157,297
3,532
15,813
70,847

226,988
154,864
212,644
176,872
143,639
3,532
13,692
69,206

217,136
135,336
205,421
170,892
127,623
3,532
11,023
61,435

116.1

109.3

105.2

87.2

73.3

52.0

583.2

50.0

514.5

48.0

451.5

45.5

391.0

41.3
1 for 68
319.4

19.40
19.54
68,668

16.28
16.30
57,521

13.38
13.20
47,066

13.02
13.00
45,964

11.30
11.26
39,868

2.7
2.7
44.8
44.8
16.7
3.3

3.1
3.1
45.3
45.3
14.9
3.2

3.6
3.6
48.3
48.3
12.7
3.0

3.5
3.5
52.3
52.3
14.9
3.3

3.7
5.1
56.6
79.3
15.4
3.5

KEY BALANCE SHEET DATA (RM’Million)
Total assets
Loans, advances and financing
Total liabilities
Deposits from customers
Core customer deposits
Paid-up capital
Shareholders’ equity
Commitments and contingencies
SHARE INFORMATION AND VALUATION
Share Information
Per share (sen)
Basic/Diluted earnings
Net dividend
– Cash dividend
– Share dividend
Net assets
Share price as at 31 December (RM)
– Local
– Foreign
Market capitalisation (RM’Million)
Valuations (Local Share)
Net dividend yield (%)
Net dividend yield (including share dividend) (%)
Dividend payout ratio (%)
Dividend payout ratio (including share dividend) (%)
Price to earnings multiple (times)
Price to book multiple (times)

8 3.222 12.0 87.056 19.3 18.3^ Capital Adequacy Ratios Common Equity Tier I (“CET I”) capital ratio Tier I capital ratio Total capital ratio CET I capital (RM’Million) Tier I capital (RM’Million) Tier II capital (RM’Million) Total capital (RM’Million) 9.936 4.953 193 16.5% 11.166 25.125 5.9 113.2 N/A 15.2 1.8 2.015 9.996 296 17.five-year group financial summary PUBLIC BANK BERHAD 11.5 14.6 N/A 13.9 22.7 126.6 16.1 94. of employees Gross loan per employee (RM’000) Deposits per employee (RM’000) Profit before tax per employee (RM’000) 17.527 22.7 3.6 1.2 16.0 3.3 15.8 32.768 286 17.7 3.8 16.8 87.079 6.4 120.1 0.1 1.507 N/A 11.2 3.4 Asset Quality Ratios Net loan to deposit ratio Gross impaired loans ratio Loan loss coverage MARKET SHARE (%) Domestic market share Loans.1 24.3 26.861 26.8 0.8 3.341 7. 2 5 ANNUAL REPORT 2013 Year Ended 31 December .9 16.4 27.2 15.625 11. # Restated due to retrospective application of MFRS 119.369 9.511 10.148 11.6 17.512 5.373 N/A 11.1 14.4 14. advances & financing Deposits from customers Core customer deposits 1 Excluding negotiable instruments of deposit and money market deposits which are on-lent to interbank.6 87. Based on equity attributable to equity holders of the Bank.5 0.169 8.1 16. adjusted for dividend declared subsequent to year end.1 30.1 1.9 16.537 N/A 11.443 279 17.2 29.340 13.6 2.9 31.183 235 17.4 16.992 N/A 10.4 14.1 1.9 15.9 2. only relevant balance sheet items have been restated to position as at 1 January 2012. For FYE2011.4 1. ^ Restated due to the adoption of FRS 139.8% CUSTOMER DEPOSITS GROSS LOANS 2013 2012# 2011# 2010 2009 FINANCIAL RATIOS (%) Profitability Ratios Net interest margin on average interest bearing assets 1 Net return on equity 2 Return on average assets Return on average risk-weighted assets Cost/income ratio 2.2 26.013 10.8 30.458 28.3 11.3 14.096 18.3 15.2 79.7 N/A 20.3 14.8 2.5 87.221 PRODUCTIVITY RATIOS No.7 15.7 118.6 N/A 18.924 12.

87 60 19.8* 2011 5 26.28 RM 13.1 3.3 0 10 116.048.000 30 4.000 11.67 Billion 13.0 Sen 105.2 2009 11.7 3.30 RM’Billion 20 16.064.0 0 2013 Year 2009 2010 2011 2012 68.000 2009 2010 2011 2012 Sen 120 60 100 50 80 40 60 30 40 20 2009 2010 2011 2012 Cash 20 0 2009 2010 Local 2011 2012 0 2013 Year 57.3* 52.02 Share Price 52.000 15 2.4 24.1* 0 2013 Year 26.1 Sen 87.20 RM68.1 3.00 Market Capitalisation 13.30 ANNUAL REPORT 2013 0 10 2.684.6 Sen 109.40 80 16.52 5 47.96 10 2013 Year Share 39.0 2010 45.1 20 2013 Year 16.4% RM’Million Percentage (%) 5.3 1.PUBLIC BANK BERHAD SUMMARY OF FIVE-YEAR GROUP GROWTH Net Profit Attributable To Equity Holders Net Return On Equity RM4.54 15 19.517.000 25 20 3.2 116.07 40 45.3 Earnings Per Share 22.8 2012 27.2 Dividend Per Share 73.064.3 2010 4.0 2011 48.67 2012 50.826.38 RM19.5 2009 41.26 6 2013 Year Foreign Public Bank’s Ranking by Market Capitalisation on Bursa Malaysia Securities Berhad Year Ranking * Restated due to retrospective application of MFRS 119 2013 2012 2011 2010 2009 2nd 2nd 5th 4th 5th .7 Million 22.40 13.

0 94.2 150 14.87 2013 Year 225.69 2009 221.5 80 0.1 Loan Loss Coverage 1.78 2010 50 170.14 100 14.2 140 1.87 197.6 300 250 200 2009 2010 2011 2012 2013 Customer Deposits RM221.3% RM’Billion Percentage (%) 350 16 14 12 10 8 6 4 2 0 2011 2012 2013 Year 14.54 0 137. Advances and Financing 0 PUBLIC BANK BERHAD Total Assets 2009 2010 2011 2012 2013 Year Year .8 113.2 120.87 Billion RM’Billion RM’Billion 250 300 200 250 200 150 150 100 0 250.7% 1.SUMMARY OF FIVE-YEAR GROUP GROWTH Total Capital Ratio RM305.7 118.73 2010 14.82* 2009 7 15.4 0.73 Billion 14.99 50 217.0 100 0.2 20 2009 2010 2011 2012 2013 Year Restated due to retrospective application of MFRS 119 0 118.18 156.4 40 0.77* 0 226.7 Percentage (%) 0.04 2012 200.6* 250.4 Gross Impaired Loans Ratio * Year ANNUAL REPORT 2013 Gross Loans.8 120 1.3 305.7* 274.9 0.61 100 50 2009 2010 2011 2012 2013 60 0.89 177.37 2011 176.6 126.5% 0.18 Billion RM250.3 Percentage (%) 1.

3% Hire purchase 61.0% Corporate lending 11.PUBLIC BANK BERHAD SEGMENTAL ANALYSIS 2012 ANNUAL REPORT 2013 8 2012 2012 Operating Revenue Operating Revenue Domestic 16.3% Hire purchase 48.3% Investment banking 6.0% Retail operations 6.6% Other countries 0.3% 2013 2013 2013 .4% Corporate lending 7.2% Corporate lending 20.9% Corporate lending 11.1% Other countries 0.4% Corporate lending 7.5% Others Domestic 15.3% Retail operations 7.3% Cambodia 1.1% Fund management 0.6% Other countries 0.7% Hire purchase 51.0% Fund management (0.9% Treasury and capital market operations 1.2%) Others Overseas Hong Kong SAR 3.1% Others Domestic 12.5% Cambodia 2.6% Cambodia 1.2% Other countries 0.0% Cambodia 1.1% Other countries 0.7% Cambodia 1.1% Others Overseas Hong Kong SAR 4.9% Retail operations 6.0% Hire purchase 48.2% Hire purchase 52.0% Treasury and capital market operations 0.1% Fund management 0.7% Fund management 2.2% Retail operations 6.6% Cambodia 2.0% Retail operations 7.2% Overseas Hong Kong SAR 4.1% Treasury and capital market operations 0.2% Retail operations 7.9% Total Assets Total Assets Domestic 12.5%) Others Domestic 9.2% Investment banking 0.3% Corporate lending 21.6% Overseas Hong Kong SAR 3.2% Fund management 2.9% Investment banking 8.9% Investment banking 7.2% Other countries 0.9% Treasury and capital market operations 1.3% Investment banking 6.5% Profit Before Tax Profit Before Tax Domestic 13.3% Overseas Hong Kong SAR 5.3% Investment banking 0.4% Fund management (0.5% Others Overseas Hong Kong SAR 5.9% Treasury and capital market operations 1.5% Treasury and capital market operations 1.2% Hire purchase 59.

Variance Contribution 2012 RM'000 RM'000 % % Net interest income Net income from Islamic Banking Business Other operating income 5.ANALYSIS OF THE INCOME STATEMENT PUBLIC BANK BERHAD ANALYSIS OF THE FINANCIAL STATEMENTS Net income The Public Bank Group’s net income registered a growth of 5.4% in 2013 as a result of intense market competition.0 Net interest income Net interest income remained as the Public Bank Group’s primary source of income as it contributed 68.1 million in 2013.570. Net interest margin on interest-bearing assets declined by 15 basis points to 2.0% and other operating income by 6.570.000 4.000 2.0 (0.893 (6.0% or RM315.3% to RM8.974.8) 6.254.000 2.254.645 843.2%.345 6.298 315.000 3. The growth was mainly contributed by increase in net interest income by 6.16 billion in 2013 from RM7.158.0 1.8% was mainly due to net interest margin compression in 2013.000 7.5% 3.4 Net income 8.136 1.3 100.3 21.709 411.643 5.0 2011 2012 2013 0.3% of the Group’s total net income in 2013.3% 6.57 billion in 2013 due to strong loans and customer deposits growth but was offset by lower net interest margin.317 7.608 5.75 billion in 2012. 9 ANNUAL REPORT 2013 2013 RM'000 . Net interest income increased by 6.746.2 68.0 8.750.7% 3.6 5.0 4.766 1.648. The decrease in net income by 0.3 10.000 Net interest income Net int margin (exclude funds from MMD and NIDs issued) Year Net int margin Net income from Islamic banking business The Public Bank Group’s net income from Islamic banking business remained stable at RM837.1% 2.630) 102.000 3.5 2.9 5.0 2.9% 2.9 million to RM5. Net Interest Income and Margins RM’Million Percentage (%) 4.000 1.538 837.4% 5.

275.643 1.5% Income from fund management activities 23.0 million in 2013.7 million or 3.2% to RM407.0 million or 9.896 3.844 225.426) (1.165.544 98.744 4.0% in 2012.3% Net commission.0 17.313 110.3 1.022 394.4) 232.032 9.261) (1.6% 9.345 1.428 80. Net commission. Variance 2013 RM'000 2012 RM'000 RM'000 % 1.750.PUBLIC BANK BERHAD ANALYSIS OF THE FINANCIAL STATEMENTS ANNUAL REPORT 2013 10 Other operating income Other operating income continued to expand by RM102. The higher income was a result of growth in net asset value of unit trust funds under management by 14.684 75. services charges and fees 7.399 3.8 Net gains and losses on financial instruments 166. Net gains and losses on financial instruments decreased by RM3.2 Net fee and commission income of which: Net commission.315 312.053 656.4%.298 102.9) Other income of which: Profits from foreign exchange business 308.5% Other fee and commission income 4.9% Net fee and commission income 37.6% of the Group’s total other operating income in 2013 as compared to 19.1 million to the Group’s total other operating income in 2013. service charges and fees rose by RM12. service charges and fees Net brokerage and commissions Income from fund management activities Total other operating income Other Operating Income Contribution 2013 17.750.2% to RM1. Net brokerage and commissions from stock broking activities contributed RM80.275.5% to RM62.509 557.445 7.6 million as compared to the previous corresponding financial year.3 million or 6.9% to RM167.345 6.244 (3.6% Net brokerage and commissions Net gains and losses on financial instruments Other income The increase of net fee and commission income by RM110.4 407. Other income accounted for 17.4% to RM1.741 (4. .126 12. This was mainly due to growth in net fee and commission income by 9.50 billion in 2013.3 million or 1.3 million was mainly attributed to higher income from the Public Bank Group’s fund management activities.2 6.983 170.648.4 million in 2013.5% 72.

503. PUBLIC BANK BERHAD Other operating expenses Total Other Operating Expenses Year 1.4 million in 2013.6% or RM86.ANALYSIS OF THE FINANCIAL STATEMENTS The other operating expenses of the Public Bank Group reported an increase of 3.000 Marketing expenses 2.924 as at the end of 2013.6 million as a result of annual salary increments and increased staff strength to support business expansion. In 2013.0 143. Marketing expenses decreased by 3.4 145.744. personnel cost grew by 4.0% or RM1.7% of the total other operating expenses of the Group.6 0 500 Personnel cost 1.500 11 152.9 466. accounting for 5.744.6 million whilst administration and general expenses increased by 1.7 million to RM466.9% and 5.6% Establishment cost Marketing expenses Administration and general expenses 69.6 453.0 2.000 Establishment cost 1.8% or RM12.6% of total other operating expenses of the Group.6% to RM1.1 2013 1. mainly due to higher personnel cost.6 million in 2013.8% 5.625 as at the end of 2012 to 17.0 million to RM2. ANNUAL REPORT 2013 2012 .0% or RM4.8% respectively of the Group’s total operating expenses. The increase was primarily due to opening of new branches and expansion of existing branches.668. This is reflected by the increase in employees of the Group from 17.6 million in 2013.500 RM’Million Administration and general expenses Other Operating Expenses Contribution 2013 5.9% Personnel cost 18.7% Personnel cost accounted for 69. Establishment cost rose by 2. Establishment cost accounted for 18.6 147.

3 million from RM1.2 2013 201.1 million as compared to impairment loss of RM6. Tax expenses and zakat The Public Bank Group’s tax expense was RM1.0 million in 2013.6 million in 2012 due to lower impairment loss on foreclosed properties and equity securities in 2013. advances and financing grew from RM132.0 million in 2012.8 million to RM201.2% or RM26.204.0 150.3 50 100 150 Domestic 200 250 300 350 RM’Million Overseas Allowance for impairment on loans.3 million in 2013 mainly due to loans growth in the Group’s Cambodian operations. Writeback of impairment loss A writeback of impairment loss was reported in 2013 at RM0. lower than Malaysia‘s statutory tax rate of 25% mainly due to certain income not subject to tax and the effects of lower tax rates in jurisdictions outside Malaysia.0 million in 2012 to RM150. Overseas allowance for impairment on loans. .3 million in 2013. The Group’s effective tax rate was 22.178. mainly due to higher collective assessment allowance particularly in respect of the hire purchase lending portfolio. an increase of 2. advances and financing increased by 36. Advances and Financing Year 2012 147.0 0 132.7% in 2013.5% or RM53. advances and financing Domestic allowance for impairment on loans.PUBLIC BANK BERHAD ANALYSIS OF THE FINANCIAL STATEMENTS ANNUAL REPORT 2013 12 Allowance for Impairment on Loans.

812 17.1 21.0) Total Liabilities 284.ANALYSIS OF THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD ANALYSIS OF THE STATEMENT OF FINANCIAL POSITION 2013 RM’Million 2012# RM’Million Assets Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Financial investments available-for-sale Financial investments held-to-maturity Loans.109 225.725 274.444 1. Cash and balances with banks Cash and balances with banks stood at RM22.159 16.2% higher at RM305.8% as compared to 71.725 274.542 15.5% during the year.258 196.9% and higher cash and bank balances.787 6.106 28.3% in the previous year.824 30.44 billion or 18.2 Total Liabilities and Equity # % Restated due to retrospective application of MFRS 119 Total assets The Public Bank Group’s total assets increased by RM30.0 (4. net loans.201 6.4 24.9 4.416 6.873 16. 13 ANNUAL REPORT 2013 Total Equity Variance RM’Million .794 219.5 17.925 6.619 7.5 25.528 256.479 13.2 305. increased by RM1.370 7.901 11.824 30.327 423 (1. advances and financing remained as the largest component of the Group’s total assets at 71.159) 11.114 3. The proportion of interest-bearing assets remained high at 93.9 Total Assets 305.38 billion mainly due to higher Malaysian Government Securities purchased under resale agreements with Bank Negara Malaysia.831 3.364 1. The increase was mainly contributed by strong loan growth of 11.176 10.080 9. an increase of RM3.3%.197 18.537 18.947 8. As at the end of December 2013.268 25.422 11.042 12.5 11.718 2.617 17. advances and financing Statutory deposits with Central Banks Other assets 22.9 19.636 8. as an alternative avenue for the placement of liquid funds.8) 2.138 423 18.576 23.7 6. The excess liquidity in the Group was mainly held in short-term money market placements.901 11.052 5.3 (14.73 billion as at 31 December 2013.849 9.90 billion or 11. Reverse repurchase agreements The reverse repurchase agreements.2 Liabilities Deposits from customers Deposits from banks Debt securities issued and other borrowed funds Other liabilities 250.383 (805) 418 1.08 billion as at 31 December 2013.

Deposits from banks As part of the Group’s funding and gapping activities. in replacement for the redemption of RM1.4 billion subordinated notes issued in prior years.4 billion Senior Medium Term Notes and RM1. which was mainly due to the strong growth in core customer deposits.06 billion registered during the year. Innovative Tier I Capital Securities. 42. with the impaired loan ratio remaining at 0.7% as at end of 2013.0 billion Basel III – Compliant Tier II Subordinated Medium Term Notes Programme.8 billion during the year. Senior Medium Term Notes and other borrowings.5% to RM250. In tandem with the loan growth. The Group’s banking book positions are classified under its financial investments available-for-sale and financial investments held-to-maturity portfolios. Loans. The Group’s equity had remained strong at RM21. mainly due to the decrease in bills and acceptances payable by RM1.83 billion or 11. The Group’s focus has remained on the retail sector with extension of credit mainly to residential properties.36 billion or 11.7% and 18. outpacing the domestic banking industry’s loan growth of 10.16 billion. mainly from an increase in customer deposits and deposits from banks by RM25. The Group’s loan to deposit ratio remained healthy at 87. During the year. 6. Holdings of trading book positions are classified under financial assets held-for-trading. despite the payment of dividends amounting to RM1.6%.PUBLIC BANK BERHAD ANALYSIS OF THE FINANCIAL STATEMENTS ANNUAL REPORT 2013 14 Financial investments Deposits from customers The Group’s financial investments portfolio are mainly held for yield and liquidity purposes.4% of the Group’s total financial investments decreased by RM0. which grew by 16.4 billion. Despite the consistent double digit growth in its loan portfolio year after year.20 billion.0%.2% respectively. Other liabilities Other liabilities decreased by RM1. which was mainly due to strong net profits of RM4.82 billion in 2013. deposits from banks increased by RM3.42 billion in 2013.18 billion. Besides funding the expansion of its balance sheet and diversifying its funding base. the market share had grown to 16. these funds have also strengthened the Group’s capital base and improving its return on equity.95 billion in nominal value of subordinated notes under its RM10.83 billion and RM3. . due to higher interbank borrowings. advances and financing The Group was able to maintain its strong growth momentum by expanding its loan base by RM23. The Group’s trading book position which accounted for 38.33 billion respectively. mainly due to the decrease in holdings of government-related securities partially offset by increase in holdings of money market instruments. translating into a higher market share of 17.42 billion as at end of 2013.5% which was mainly attributable to the increased holdings of government-related securities and non-money market instruments. the Group issued RM0.9% to RM219.54 billion or 24. Domestic core customer deposits registered a stronger growth rate.33 billion to RM16. As a result. the asset quality has not been compromised. Non-innovative Tier I Stapled Securities.9% as at December 2013.4% as at December 2013.9% and 19.87 billion.5%.0%.48 billion. the Group’s deposits from customers grew by RM25. As at 31 December 2013. This was supported by its domestic loan which recorded a stronger growth at 12. purchase of passenger vehicles and small and medium enterprises. Financial investments available-for-sale increased marginally by RM0. whereas financial investments held-to-maturity increased by RM1. Debt securities issued and other borrowed funds The Group’s debt instruments consist of Subordinated Notes.9% of the Group’s total financial investments were held in financial investments available-for-sale and financial investments held-to-maturity respectively. Total liabilities and equity The Public Bank Group’s total liabilities grew by RM28.

the Directors have: applied the appropriate and relevant accounting policies on a consistent basis. 1965 in Malaysia and the Listing Requirements of Bursa Malaysia Securities Berhad. PUBLIC BANK BERHAD STATEMENT OF RESPONSIBILITY BY DIRECTORS The Directors are also responsible for ensuring that the annual audited financial statements of the Group and the Bank are prepared with reasonable accuracy from the accounting records of the Group and the Bank so as to give a true and fair view of the financial position of the Group and the Bank as of 31 December 2013 and of their financial performance and cash flows for the year then ended.In respect of the preparation of the annual audited financial statements The Directors are responsible for ensuring that the annual audited financial statements of the Group and the Bank are drawn up in accordance with the requirements of the Malaysian Financial Reporting Standards (“MFRSs”). and c. the provisions of the Companies Act. made judgments and estimates that are reasonable and prudent. prepared the audited financial statements on a going concern basis. The Directors also have a general responsibility to take reasonable steps to safeguard the assets of the Group and the Bank to prevent and detect fraud and other irregularities. b. International Financial Reporting Standards. In preparing the annual audited financial statements. ANNUAL REPORT 2013 a. 15 .

Basis of Preparation and Accounting Policies 3. Financial Investments Held-To-Maturity 9. Interest Income 17 26 26 27 29 31 32 33 35 37 40 40 40 68 69 69 70 75 76 78 88 89 90 96 98 100 101 105 107 108 109 109 109 119 121 130 130 130 131 135 136 31. 34. 53. 43. Deposits from Banks 20. Other Reserves 29. Derivative Financial Assets/Liabilities 7. Intangible Assets 18. Financial Investments Available-For-Sale 8. Other Liabilities 24. 39. Financial Assets Held-For-Trading 6. Provision for Tax Expense and Zakat 26. 56. 37. 52. 41. 44. 49. Deferred Tax 13. 50. 57. 47. 36. Deposits from Customers 19. Principal Activities and General Information 2. Property and Equipment 17. Advances and Financing 10. 45. 32. 42. Investment in Associated Companies 15. 55. Advances and Financing (Writeback of Impairment)/Impairment on Other Assets Tax Expense and Zakat Earnings Per Share Dividends Related Party Transactions Credit Transactions and Exposures with Connected Parties Financial Risk Management Fair Value Measurements Offsetting of Financial Assets and Financial Liabilities Operating Leases Capital and Other Commitments Commitments and Contingencies Capital Adequacy Capital Management Segment Information Changes in Accounting Policies Rating Statement Significant Events Subsequent Events Islamic Banking Business Realised and Unrealised Profits 136 137 138 139 140 142 145 145 146 148 148 149 157 158 205 218 222 223 224 225 231 232 238 242 242 242 243 257 .FINANCIAL STATEMENTS Directors’ Report Statement by Directors Statutory Declaration Independent Auditors’ Report Statements of Financial Position Statements of Profit or Loss Statements of Profit or Loss and Other Comprehensive Income Consolidated Statement of Changes in Equity Statement of Changes in Equity Statements of Cash Flows Notes to the Financial Statements 1. Debt Securities Issued and Other Borrowed Funds 23. Cash and Balances with Banks 4. 58. Interest Expense Net Fee and Commission Income and Expense Net Gains and Losses on Financial Instruments Other Operating Income Other Operating Expenses Directors’ Remuneration Allowance for Impairment on Loans. 54. Share Capital 27. Other Assets 11. 33. 48. Employee Benefits 25. Investment in Subsidiary Companies 14. Bills and Acceptances Payable 21. 51. Statutory Deposits with Central Banks 12. Treasury Shares 28. Recourse Obligations on Loans and Financing Sold to Cagamas 22. 40. 46. 38. Loans. Reverse Repurchase Agreements 5. Investment Properties 16. 35. Retained Profits 30.

309.984 (1.105. PUBLIC BANK BERHAD DIRECTORS’ REPORT PRINCIPAL ACTIVITIES The Bank is principally engaged in all aspects of commercial banking and the provision of related financial services.105.705.050.517) Profit for the year 4.115 – Profit for the year 4.642 3.705.130 ordinary shares of RM1.959 3.821. paid on 5 March 2013 In respect of financial year ended 31 December 2013: First interim single tier dividend of 22.342) 4.for the financial year ended 31 December 2013 The Directors have pleasure in presenting to the members their report together with the audited financial statements of the Group and of the Bank for the financial year ended 31 December 2013. 17 There have been no significant changes to these principal activities during the financial year.705.0% on 3.632 (941.683 40. paid on 20 August 2013 1.0% on 3.642 3. Group RM’000 Bank RM’000 Profit before tax expense and zakat Tax expense and zakat 5.115 Attributable to: DIVIDENDS The amount of dividends paid by the Bank since 31 December 2012 were as follows: RM’000 In respect of financial year ended 31 December 2012: Second interim single tier dividend of 30. The principal activities of the subsidiary and associated companies are as disclosed in Notes 13 and 14 to the financial statements respectively.115 Equity holders of the Bank Non-controlling interests 4.502.105 ANNUAL REPORT 2013 FINANCIAL RESULTS .502.646.467 1.638 770.00 each.125.130 ordinary shares of RM1.125.00 each.204.064.

539 in respect of the current financial year.00 each. issued and paid-up capital of the Bank during the financial year. PROVISIONS AND ALLOWANCES There were no material transfers to or from reserves or provisions or allowances during the year other than those disclosed in Note 9. Note 10 and Note 28 to the financial statements. This is computed based on the issued and paid-up capital as at 31 December 2013. At the date of this report. CURRENT ASSETS Before the statements of profit or loss and statements of financial position of the Group and the Bank were made out. and satisfied themselves that all known bad debts and financing had been written off and adequate allowance had been made for doubtful debts and financing. As at 31 December 2013. SHARE BUY-BACK The Bank did not make any purchase of its own shares and none of the treasury shares held were resold or cancelled during the financial year.) Subsequent to the financial year end. inadequate to any substantial extent. or the amount of the allowance for doubtful debts and financing in the financial statements of the Group and the Bank. .PUBLIC BANK BERHAD DIRECTORS’ REPORT DIVIDENDS (CONT’D. the Bank held 29.800. which were unlikely to be realised in the ordinary course of business at their values as shown in the accounting records of the Group and the Bank have been written down to an amount which they might be expected to realise. The financial statements for the current financial year do not reflect these dividends.502.531. ANNUAL REPORT 2013 18 The Directors do not propose any final dividend for the financial year ended 31 December 2013.0%.130 ordinary shares of RM1. with the total amounting to approximately RM1. to be paid and distributed to shareholders whose names appear in the Record of Depositors at the close of business on 20 February 2014. Upon declaration. BAD AND DOUBTFUL DEBTS AND FINANCING Before the statements of profit or loss and statements of financial position of the Group and the Bank were made out.834 PBB Shares. on 5 February 2014. the Directors took reasonable steps to ascertain that actions had been taken in relation to the writing off of bad debts and financing and the making of allowance for doubtful debts and financing. Such treasury shares are held at a carrying amount of RM215. the Directors are not aware of any circumstances which would render the amount written off for bad debts and financing.925. the Directors declared a second interim single tier dividend of 30. other than debts and financing.989. the Directors took reasonable steps to ensure that current assets.704 Public Bank Berhad (“PBB”) Shares as treasury shares out of its total issued and paid-up share capital of 3. Further information is disclosed in Note 27 to the financial statements.571. this dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 December 2014. excluding treasury shares held by the Bank. ISSUE OF SHARES There were no changes to the authorised.050. of 3.125.637. RESERVES.

or (b) any contingent liability in respect of the Group or the Bank that has arisen since the end of the financial year other than those incurred in the ordinary course of business. ANNUAL REPORT 2013 At the date of this report. There has not arisen in the interval between the end of the financial year and the date of this report any item. the Directors are not aware of any circumstances. transaction or event of a material and unusual nature.) At the date of this report. SIGNIFICANT EVENTS DURING THE YEAR The significant events during the financial year are as disclosed in Note 55 to the financial statements. CHANGE OF CIRCUMSTANCES At the date of this report. SUBSEQUENT EVENTS There were no material events subsequent to the reporting date that require disclosure or adjustments to the financial statements. within the period of twelve months after the end of the financial year which. there does not exist: . which would render any amount stated in the financial statements misleading. No contingent liability or other liability of the Group and the Bank has become enforceable. 19 CONTINGENT AND OTHER LIABILITIES (a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the liabilities of any other person.DIRECTORS’ REPORT PUBLIC BANK BERHAD CURRENT ASSETS (CONT’D. not otherwise dealt with in this report or the financial statements of the Group and the Bank. in the opinion of the Directors. will or may substantially affect the ability of the Group or the Bank to meet their obligations as and when they fall due. VALUATION METHODS At the date of this report. transaction or event of a material and unusual nature likely. to affect substantially the results of the operations of the Group and the Bank for the current financial year in which this report is made. the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets and liabilities in the financial statements of the Group and the Bank misleading or inappropriate. ITEMS OF UNUSUAL NATURE The results of the operations of the Group and the Bank during the financial year were not. in the opinion of the Directors. the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and the Bank misleading. substantially affected by any item. in the opinion of the Directors. or is likely to become enforceable.

342 5.2013 Direct interests: Tan Sri Dato’ Sri Dr.1.000 82. Omar 22. 1965 at the forthcoming Annual General Meeting and offer themselves for re-appointment in accordance with Section 129 of the Companies Act.802 7. being eligible.898. Dato’ Sri Lee Kong Lam and Lai Wan retire pursuant to Section 129 of the Companies Act. the interests of the Directors in office at the end of the financial year in shares of the Bank.951 380. Teh Hong Piow Tan Sri Datuk Seri Utama Thong Yaw Hong Tan Sri Dato’ Sri Tay Ah Lek Dato’ Sri Lee Kong Lam Dato’ Yeoh Chin Kee Dato’ Haji Abdul Aziz bin Dato’ Dr.000 482.342 5. and in shares and in options of its subsidiary company during the financial year were as follows: Shares Held in the Bank Number of Ordinary Shares of RM1.2013 Acquired Disposed 31. Dato’ Yeoh Chin Kee who retires pursuant to Section 129 of the Companies Act. Omar Tang Wing Chew Lai Wan Lai Wai Keen Quah Poh Keat (resigned on 1 October 2013) In accordance with Article 111 of the Bank’s Articles of Association. offers himself for re-election. Tan Sri Datuk Seri Utama Thong Yaw Hong. 1965 to hold office until the conclusion of the next Annual General Meeting of the Bank.037 – – – – – – – – – – – (400.12. Teh Hong Piow.00 Each Balance at Balance at 1.633.951 380.633.866 100. Teh Hong Piow Tan Sri Datuk Seri Utama Thong Yaw Hong Tan Sri Dato’ Sri Tay Ah Lek Dato’ Sri Lee Kong Lam Dato’ Yeoh Chin Kee Dato’ Haji Abdul Aziz bin Dato’ Dr.PUBLIC BANK BERHAD DIRECTORS’ REPORT DIRECTORS OF THE BANK The Directors who served since the date of the last report are: ANNUAL REPORT 2013 20 Tan Sri Dato’ Sri Dr. Tan Sri Dato’ Sri Tay Ah Lek.464.037 . Tang Wing Chew retires by rotation at the forthcoming Annual General Meeting and.898. Tan Sri Dato’ Sri Dr. DIRECTORS’ INTERESTS According to the Register of Directors’ Shareholdings. 1965.802 7.000) 22. will not be seeking re-appoinment at the forthcoming Annual General Meeting and therefore shall retire at the conclusion of the said Annual General Meeting.866 100.464.

2013 Acquired Disposed 31.300. and pursuant to Section 6A(4)(c) of the Companies Act.2013 Direct interests: Tan Sri Dato’ Sri Tay Ah Lek 350.315 434.785 354.957 16.) Number of Ordinary Shares of RM1. Teh Hong Piow.2013 Acquired Disposed 31.959 3.835.DIRECTORS’ REPORT PUBLIC BANK BERHAD DIRECTORS’ INTERESTS (CONT’D.959 – Shares Held in a Subsidiary Company – Shares Held in Public Financial Holdings Limited (“PFHL”) Number of Ordinary Shares of HKD0.00 Each Balance at Balance at 1.261 857.1.) Shares Held in the Bank (Cont’d.12.000 Other than as disclosed above.261 857.2013 6. by virtue of his total direct and indirect interests of 843.230.1. 1965.007 – – – – – – – – – – – (3.10 Each Balance at Balance at 1.000 – – – 1.315 434.785 354. Tan Sri Dato’ Sri Dr.063 shares in the Bank. none of the Directors in office at the end of the financial year had any interest in shares in the Bank or its related corporations during the financial year.230. 21 ANNUAL REPORT 2013 Tan Sri Dato’ Sri Dr.2013 Granted Exercised Lapsed Balance at 31.12.835.35 1.12. is deemed interested in the shares in all of the Bank’s subsidiary and associated companies to the extent that the Bank has interests.000 – – 350.000 Share Options Held in a Subsidiary Company – Share Options Held under the PFHL Employees’ Share Option Scheme (“PFHL Share Options”) Number of PFHL Share Options Tan Sri Dato’ Sri Tay Ah Lek Option Price HKD Balance at 1.007) 820.1. Teh Hong Piow Tan Sri Datuk Seri Utama Thong Yaw Hong Tan Sri Dato’ Sri Tay Ah Lek Dato’ Sri Lee Kong Lam Lai Wan Lai Wai Keen .957 16.2013 Indirect interests: 820.

passenger vehicle hire purchase financing increasing by 6. During the year.9%. or with a company in which he has substantial financial interest except for those transactions arising in the ordinary course of business as disclosed in Note 42(a) to the financial statements. the Group’s total loans outstanding increased by 11. The members of the Remuneration Committee comprising of Non-Executive Directors of the Bank are: Tan Sri Datuk Seri Utama Thong Yaw Hong (Independent) Dato’ Sri Lee Kong Lam (Non-Independent) (appointed on 9 December 2013) Dato’ Yeoh Chin Kee (Non-Independent) Dato’ Haji Abdul Aziz bin Dato’ Dr. high asset quality and ample liquidity. underpinned by strong capitalisation.2%. Deputy Chief Executive Officer and key Senior Management Officers whereupon recommendations are made to the Board of Directors for approval. the Malaysian banking sector continued to be sound and stable. no Director of the Bank has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full time employee of the Bank as disclosed in Note 36 to the financial statements) by reason of a contract made by the Bank or a related corporation with the Director or with a firm of which he is a member. no arrangements subsisted to which the Bank or its subsidiary companies is a party with the object of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures of the Bank or any other body corporate. backed by its prudent credit policy. The operating environment remained supportive of the banking business. Chief Executive Officer. with home mortgages increasing by 16. REMUNERATION COMMITTEE The Remuneration Committee carries out the annual review of the overall remuneration policy for Directors. driven mainly by domestic demand. the Malaysian economy remained resilient in 2013. As at the end of 2013. strong credit culture and strong risk management practices. The Public Bank Group continued to sustain its strong asset quality. the Public Bank Group continued to achieve strong performance in its lending and deposit-taking business.7%.9% and loans to small and medium enterprises (“SMEs”) increasing by 19. the gross impaired loans ratio remained low at 0.0%.8%. purchase of passenger vehicle and lending to small and mid-market commercial enterprises. In 2013. Omar (Non-Independent) Tang Wing Chew (Independent) Lai Wan (Independent) (appointed on 5 January 2014) Lai Wai Keen (Independent) (appointed on 5 January 2014) Quah Poh Keat (Independent) (resigned on 1 October 2013) BUSINESS REVIEW 2013 Despite the challenging global economic conditions.PUBLIC BANK BERHAD DIRECTORS’ REPORT DIRECTORS’ BENEFITS During and at the end of the financial year. ANNUAL REPORT 2013 22 Since the end of the previous financial year. During the year. which was significantly lower than the banking industry’s ratio of 1. . Lending to the retail sector remained the main focus of the Group with extension of credit mainly to residential mortgages. other than the PFHL Share Options.

the Public Bank Group continued to intensify its effort to grow fee-based income from unit trust. while growth in most Asian economies will remain at a healthy pace. PB Super FD Rates and PB Golden Fortune 2. the Public Bank Group accelerated its efforts to attract deposits through its strong deposit franchise coupled with attractive deposit rates and deposit campaigns. mainly attributed to steady inflow of fixed deposits. enhancement of the market place. Net asset value of funds under its management increased by 14.5 billion. the Group continued to undertake Corporate Social Responsibility programmes in nation building. Today. 8. As at the end of 2013. ECONOMIC OUTLOOK AND PROSPECTS FOR 2014 The global economy is expected to strengthen moderately in 2014.5%. In 2013. there remains downside risks to global growth. manufacturing and construction sectors. As at the end of 2013. During the year. the Group achieved strong deposit growth of 11.5% during the year to RM62. In line with Bank Negara Malaysia’s objective to migrate from paper-based payments to electronic payments. Shenyang and Taipei. Capital spending in export oriented-industries is also expected to increase as the global economy improves. The Group also continued to invest in multiple delivery channels and its strong sales and marketing force to drive business growth. Public Bank’s wholly-owned subsidiary. with strong performance in the services. Under the strategic partnership with AIA Group. low-cost savings and current accounts. card business. the Group has implemented various initiatives to improve its e-banking platform to enhance customers’ banking experience. Growth in major advanced economies is likely to gain traction. 7 branches in Vietnam. However.2% as at the end of 2013. promotion of the work place. 23 ANNUAL REPORT 2013 During the year. growth is likely to be broad-based.5%. 2 branches in Sri Lanka and 3 representative offices in Shanghai. retained its market leadership in the private unit trust industry. 25 branches in Cambodia. which grew by 13. The Malaysian economic growth is expected to sustain in 2014. 3 branches in China. In its fund management business. community and health care support and environmental conservation.DIRECTORS’ REPORT PUBLIC BANK BERHAD BUSINESS REVIEW 2013 (CONT’D. Furthermore.1% respectively.) To grow its deposit-taking business. bancassurance products. Public Mutual successfully launched four unit trust funds in 2013 with total of funds under its management reaching 104 as at the end of 2013. the Public Bank Group further expanded its domestic branch network to 258 branches. including fiscal uncertainty in the US and unresolved balance sheet problem in the euro area. but it is expected to remain manageable. Private investments are expected to remain resilient as the implementation of Economic Transformation Programme continues. Favourable labour market and wage increases will continue to support consumption. with overall market share of 41.8% and 17. education. Public Bank unveiled two regular premium investment-linked bancassurance products known as empower Plan and empower Edu Plan. with 83 branches in Hong Kong. a new insurance product. The Public Bank Group remains committed to expand its overseas business. PB FD Fortune. underpinned by sustained domestic demand led by private sector activities and a recovery in the external sector.7%. The Group continued to lead the Malaysian banking industry in terms of cost efficiency with its lower cost-to-income ratio of 30. persistent high unemployment and public debt remain a concern to the economic outlook. These two products offer a combination of protection and investment elements to suit the different lifestyle needs of its customers.7%. the Group’s overseas operations comprise 124 branches. trade finance and remittance business. On the supply side. 4 branches in Laos. The expected reduction of subsidies by the Government is likely to contribute to a rise in inflation. . the Group’s loan-to-deposit ratio remained healthy at 87. In addition. underpinned by its superior fund performance. The Public Bank Group’s bancassurance business continued to expand during the year. Public Mutual. the PB Care PA Plan was introduced through the telemarketing channel. namely PB Golden Fortune. strong distribution capabilities and strong branding. to better serve its large customer base of individuals and business enterprises.

prohibiting features of Developer Interest Bearing Scheme and raising the Real Property Gains Tax. targeting fee income from unit trust. While the eventual tapering of asset purchase programme by the US is likely to raise the risk of capital outflows. large sales and marketing staff force.0% in 2013. The Group will further tap on the continuing expansion of the economy and increasing affluence of customers to grow its fee-based income. The Public Bank Group will continue to focus on organic growth strategies to grow its retail loans and customer deposits. bancassurance. The lending business will continue to be supported by growth in home mortgages. the Government introduced a set of measures to further promote healthy and sustainable household and property sectors. On fiscal policy. the Group will place more emphasis on delivering high standard of customer service. Malaysia’s strong external position and sound financial system will help the country to navigate the volatility. including its extensive branch network. including the introduction of Goods and Services Tax in April 2015 and subsidy rationalisation. ANNUAL REPORT 2013 24 BUSINESS OUTLOOK FOR 2014 Outlook for the Malaysian economy is expected to remain stable in 2014. foreign-exchange related transactions and transactional banking services. accommodative monetary environment and higher income growth. These measures include setting the maximum tenure for personal financing and loan for purchase of properties. These prudential measures address the risk from excessive household indebtedness among the lower-income segments. the Malaysian banking industry is expected to remain resilient due to its strong capitalisation and asset quality. such as internet banking and self-service machines to further expand its business.PUBLIC BANK BERHAD DIRECTORS’ REPORT ECONOMIC OUTLOOK AND PROSPECTS FOR 2014 (CONT’D. The Public Bank Group will continue to enhance its multi-channel banking. To sustain long-term business growth. the Group continues to see growth opportunities in the lending business. the Government has taken important steps to strengthen fiscal management. In addition. For its funding side. as well as promote cross-selling activities to further expand its market share. . Based on the healthy pace of economic growth. sustained profitability. Bank Negara Malaysia is expected to keep interest rates accommodative to support growth. The Group will also continue to assess and enhance its capability to manage new regulatory changes while maintaining the viability of its business. The Group will further drive new product innovation. The Group will also continue to make further progress to grow its overseas business and tap on growth opportunities in the region. In 2013. The Public Bank Group will continue to expand the scale and scope of its fee-based activities. sound risk management and prudent credit policies. enhance service delivery and loan turnaround time. and healthy liquidity profile. with private sector-led domestic demand being the anchor of growth.) On monetary policy. hence preserve stability in the financial system.5% of GDP in 2014 from 4. Net interest margin is likely to remain compressed due to intense competition in the banking sector. vehicle financing and lending to SMEs. The Government targets to reduce the fiscal deficit to 3. Human capital and talent development will continue to be a major focus of the Group. the Group will continue to promote core customer deposits to maintain efficient funding cost as well as to retain a stable and healthy liquidity position. To meet customer’s various investment appetites. as well as multiple electronic and self-service channels. while ensuring price stability. the Public Bank Group will continue to adhere to strong corporate governance practices. Amidst the positive economic outlook. the Group will offer a wider range of financial product offerings. The Public Bank Group will continue to implement its prudent credit appraisal and approval process as well as stringent underwriting standards. and will help to ensure a healthy and sustainable credit market.

KPMG. Signed in accordance with a resolution of the Directors: TAN SRI DATO’ SRI DR. TEH HONG PIOW Director Kuala Lumpur Date: 5 February 2014 ANNUAL REPORT 2013 TAN SRI DATUK SERI UTAMA THONG YAW HONG Director 25 . have indicated their willingness to accept re-appointment.DIRECTORS’ REPORT PUBLIC BANK BERHAD AUDITORS The retiring auditors. Messrs.

Subscribed and solemnly declared by the abovenamed YIK SOOK LING at KUALA LUMPUR in WILAYAH PERSEKUTUAN this 5 February 2014 BEFORE ME: Commissioner for Oaths Kuala Lumpur . correct and I make this solemn declaration conscientiously believing the same to be true. TEH HONG PIOW Director TAN SRI DATUK SERI UTAMA THONG YAW HONG Director Kuala Lumpur Date: 5 February 2014 STATUTORY DECLARATION I. issued by the Malaysian Institute of Accountants. TEH HONG PIOW and TAN SRI DATUK SERI UTAMA THONG YAW HONG. TAN SRI DATO’ SRI DR. are to the best of my knowledge and belief. International Financial Reporting Standards and the requirements of the Companies Act. the financial statements set out on pages 29 to 256 are properly drawn up in accordance with Malaysian Financial Reporting Standards. do hereby state that. The information set out in Note 58 to the financial statements on pages 257 to 258 have been compiled in accordance with the Guidance on Special Matter No. YIK SOOK LING. in the opinion of the Directors. do solemnly and sincerely declare that the financial statements set out on pages 29 to 258. ANNUAL REPORT 2013 Signed in accordance with a resolution of the Directors: TAN SRI DATO’ SRI DR. being two of the Directors of PUBLIC BANK BERHAD. being the officer primarily responsible for the financial management of PUBLIC BANK BERHAD. 1. Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements. and by virtue of the provisions of the Statutory Declarations Act. 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Bank as at 31 December 2013 and of their financial performance and cash flows for the year then ended.PUBLIC BANK BERHAD 26 STATEMENT BY DIRECTORS We. 1960.

In making those risk assessments. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. and a summary of significant accounting policies and other explanatory information. whether due to fraud or error. 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement. which are indicated in Note 13 to the financial statements. profit or loss and other comprehensive income. including the assessment of risks of material misstatement of the financial statements.to the members of Public Bank Berhad REPORT ON THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD INDEPENDENT AUDITORS’ REPORT We have audited the financial statements of Public Bank Berhad. changes in equity and cash flows of the Group and of the Bank for the year then ended. (b) We have considered the accounts and the auditors’ reports of all the subsidiary companies of which we have not acted as auditors. and the statements of profit or loss. as set out on pages 29 to 256. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act. International Financial Reporting Standards and the requirements of the Companies Act. we also report the following: (a) In our opinion. Our responsibility is to express an opinion on these financial statements based on our audit. but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. the accounting and other records and the registers required by the Act to be kept by the Bank and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. as well as evaluating the overall presentation of the financial statements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 1965 in Malaysia. 1965 in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. we consider internal control relevant to the Bank’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. which comprise the statements of financial position as at 31 December 2013 of the Group and of the Bank. whether due to fraud or error. The procedures selected depend on our judgment. the financial statements give a true and fair view of the financial position of the Group and of the Bank as at 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards. ANNUAL REPORT 2013 Auditors’ Responsibility 27 . International Financial Reporting Standards and the requirements of the Companies Act. Opinion In our opinion. We conducted our audit in accordance with approved standards on auditing in Malaysia. Directors’ Responsibility for the Financial Statements The Directors of the Bank are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards.

1. in all material respects. 28 ANNUAL REPORT 2013 OTHER REPORTING RESPONSIBILITIES Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. in accordance with the Guidance on Special Matter No. 1965 in Malaysia and for no other purpose.) (c) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Bank’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. In our opinion. The information set out in Note 58 to the financial statements on pages 257 to 258 has been compiled by the Group and the Bank as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards. issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. OTHER MATTERS This report is made solely to the members of the Bank. in accordance with Section 174 of the Companies Act. Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements. KPMG Firm Number: AF 0758 Chartered Accountants Petaling Jaya Date: 5 February 2014 KHAW HOCK HOE Approval Number: 2229/04/14(J) Chartered Accountant . We do not assume responsibility to any other person for the content of this report. We have extended our audit procedures to report on the process of compilation of such information. as a body.PUBLIC BANK BERHAD INDEPENDENT AUDITORS’ REPORT REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS (CONT’D. (d) The audit reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act. the information has been properly compiled.

738.789 236.515 181.581 121.885 97.393 305.806.783 9.495 1.201.210 87.679.309.560.854 252.396 274.738 9.656.213 – 4.787 4.832 70.968 206.244 4.003.926.076 21 6 500.750 11.153 13.972 4.963 365.080.095.189 16.778 3.611 10.729 15.578.581 121.635.380 234.811.789 190.946.as at 31 December 2013 Group Bank Note 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 31 December 2012 2013 RM’000 RM’000 (Restated) 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 22.444 14.325 12.533 1.836 1.508.346 695.821 200.793 2.354 17.349 8.205. advances and financing Other assets Statutory deposits with Central Banks Deferred tax assets Investment in subsidiary companies Investment in associated companies Investment properties Property and equipment Intangible assets .325 – 607.749 2.692 159.525 15.384 211.528.942 2.439 228.754 1.436.833 3.934 695.075 191.886 1.095.081.426 350.592 16.439 16.105.493 210.760 11.825 4.255 10.119.422.370.618.435.871.325 – 657.591 362.699 6.946 – 4.287.750.633.825 493.573.918 18 19 20 250.539.509.341.317.952.506 16.823.512 7.681.768.724 – 429.309.565.391 1.433 7.725.406.088.302.800 182.888 522.965.093 – 155.849.998 5.042.573 2.793.732 2.551 219.409.465 17.771 196.257.852 16.120 6.923.627.924.551 492.404.098.777 2.498 2.940 1.670.536 14.385.857 143.048 1.325 22 23 25 12 10.249 740.200 256.853 3.638.968.845.951 8.124.603 2.873.986.597.617.415.310 5.843 7.941 7.564 11.314 162.912 18.688.230 PUBLIC BANK BERHAD STATEMENTS OF FINANCIAL POSITION ASSETS TOTAL ASSETS LIABILITIES Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liabilities Provision for tax expense and zakat Deferred tax liabilities TOTAL LIABILITIES 29 ANNUAL REPORT 2013 Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Loans.496 233.283 72.121 – 158.599.924.620.443 225.244 777.287.229 95.048.132.801 46.051.158.325 – 568.719.654 234.807 80.969 15.841 284.349 2.855 563.393 10.541.635 5.227 – 151.313 3.073.608 2.233 175.365 – 4.867 5.772.990 10.335 201.405 85.457.997 70.344 15.347 18.086 8.206 63.906.661 9.839.416 585.417 9.135 370.044 364.384.020.393 11.971 50.050 121.088 55.408.629.787.787.793 9.717.369.017.011 334.476 12.997 2.588 13.262.958 250.263.590 501.496.434 2.221.175.124 695.575.

PUBLIC BANK BERHAD

STATEMENTS OF
FINANCIAL POSITION

Group

Bank

31 December
2013
RM’000

31 December
2012
RM’000
(Restated)

3,531,926
17,107,240
(215,572)

3,531,926
14,702,086
(215,572)

3,531,926
12,496,636
(215,572)

Equity attributable to equity
holders of the Bank
Non-controlling interests

20,423,594
773,602

18,018,440
699,864

TOTAL EQUITY

21,197,196

Note

1 January 31 December
2012
2013
RM’000
RM’000
(Restated)

31 December
2012
RM’000
(Restated)

1 January
2012
RM’000
(Restated)

3,531,926
15,505,701
(215,572)

3,531,926
13,578,539
(215,572)

3,531,926
11,528,334
(215,572)

15,812,990
697,484

18,822,055

16,894,893

14,844,688

18,718,304

16,510,474

18,822,055

16,894,893

14,844,688

305,725,396

274,823,958

250,772,854

252,839,439

228,575,968

206,768,918

87,986,206

79,457,595

70,847,182

83,587,446

75,691,031

66,266,801

5.83

5.15

4.52

5.37

4.82

4.24

EQUITY

ANNUAL REPORT 2013

30

Share capital
Reserves
Treasury shares

26
27

TOTAL LIABILITIES AND EQUITY

COMMITMENTS AND CONTINGENCIES

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

49

The accompanying notes form an integral part of the financial statements

for the year ended 31 December 2013

Group

Bank

2013
RM’000

2012
RM’000
(Restated)

2013
RM’000

2(v)(x)

15,264,300

14,058,097

11,503,573

10,630,272

Interest income
Interest expense

30
31

11,366,092
(5,795,554)

10,404,241
(5,149,596)

10,368,420
(5,568,826)

9,465,598
(4,917,078)

Net interest income
Net income from Islamic banking business

57

5,570,538
837,136

5,254,645
843,766

4,799,594

4,548,520

32
33
34

6,407,674
1,275,345
166,983
308,315

6,098,411
1,165,313
170,244
312,741

4,799,594
520,243
162,861
975,058

4,548,520
490,025
168,210
1,155,109

Net income
Other operating expenses

35

8,158,317
(2,503,636)

7,746,709
(2,417,590)

6,457,756
(1,710,684)

6,361,864
(1,651,270)

Operating profit
Allowance for impairment on loans, advances and financing
Writeback of impairment/(Impairment) on other assets

37
38

5,654,681
(351,252)
149

5,329,119
(279,244)
(6,626)

4,747,072
(100,605)
165

4,710,594
(77,007)
(6,601)

Operating revenue

Net fee and commission income
Net gains and losses on financial instruments
Other operating income

2012
RM’000
(Restated)

5,303,578

5,043,249

4,646,632

4,626,986

Share of profit after tax of equity
accounted associated companies

6,406

3,985

Profit before tax expense and zakat
Tax expense and zakat

5,309,984
(1,204,342)

5,047,234
(1,177,992)

4,646,632
(941,517)

4,626,986
(919,487)

4,105,642

3,869,242

3,705,115

3,707,499

Equity holders of the Bank
Non-controlling interests

4,064,683
40,959

3,826,754
42,488

3,705,115

3,707,499

Profit for the year

4,105,642

3,869,242

3,705,115

3,707,499

116.1

109.3

39

Profit for the year
Attributable to:

Earnings per RM1.00 share:
– basic/diluted (sen)

40

The accompanying notes form an integral part of the financial statements

31

ANNUAL REPORT 2013

Note

PUBLIC BANK BERHAD

STATEMENTS OF
PROFIT OR LOSS

PUBLIC BANK BERHAD

STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2013

Group
Note

Profit for the year

ANNUAL REPORT 2013

32

2013
RM’000

Bank
2012
RM’000
(Restated)

2013
RM’000

2012
RM’000
(Restated)

4,105,642

3,869,242

3,705,115

3,707,499

28

172,234

35,376

167,547

34,163

28

296,193
(209,365)

(134,122)
109,601



28

10,936

50,899

11,226

31,000

Other comprehensive income/(loss):
Items that will not be reclassified to profit or loss:
Defined benefit reserves:
– Gain on remeasurements of defined benefit plans
Items that may be reclassified to profit or loss:
Foreign currency translation reserves:
– Currency translation differences in respect of
– Foreign operations
– Net investment hedge
Revaluation reserves:
– Net change in revaluation of financial investments
available-for-sale
– Share of (loss)/gain of equity accounted
associated companies
Hedging reserves:
– Net change in cash flow hedges

28

(449)

159

28

(12,256)

(11,764)

(121,237)

(33,528)

85,059

14,773

(110,011)

(2,528)

(43,058)
(3,078)
3,063

(8,844)
(8,406)
2,941

(41,887)
(2,806)
30,309

(8,541)
(7,750)
8,382

(43,073)

(14,309)

(14,384)

(7,909)

214,220

35,840

43,152

23,726

Total comprehensive income for the year

4,319,862

3,905,082

3,748,267

3,731,225

Total comprehensive income for the year attributable to:
– Equity holders of the Bank
– Non-controlling interests

4,226,259
93,603

3,886,470
18,612

3,748,267

3,731,225

4,319,862

3,905,082

3,748,267

3,731,225

Income tax relating to components of other comprehensive
income/(loss):
– Defined benefit reserves
– Revaluation reserves
– Hedging reserves

28
28
28

Other comprehensive income for the year, net of tax

The accompanying notes form an integral part of the financial statements

for the year ended 31 December 2013

2013
Group
At 1 January 2013
– as previously stated
– effects of adoption of MFRS 119

<-------------------------------- Attributable to Equity Holders of the Bank -------------------------------->
Non-distributable Reserves
Distributable Reserves
Total
Share
Share
Other
Retained
Treasury Shareholders’
Note
Capital
Premium
Reserves
Profits
Shares
Equity
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000

Noncontrolling
Interests
RM’000

Total
Equity
RM’000

1,073,310

4,100,612
253,255

9,453,647
(178,738)

(215,572)

17,943,923
74,517

699,864

18,643,787
74,517

3,531,926

1,073,310

4,353,867

9,274,909

(215,572)

18,018,440

699,864

18,718,304

Profit for the year
Other comprehensive income for the year




161,576

4,064,683


4,064,683
161,576

40,959
52,644*

4,105,642
214,220

Total comprehensive income for the year

161,576

4,064,683

4,226,259

93,603

4,319,862





10,081
241
1,103

(10,081)
(241)
(1,103)











(503)

503
(1,821,105)



(1,821,105)


(19,865)


(1,840,970)

10,922

(1,832,027)

(1,821,105)

(19,865)

(1,840,970)

3,531,926

1,073,310

4,526,365

11,507,565

(215,572)

20,423,594

773,602

21,197,196

Note 28

Note 29

Note 27

At 1 January 2013, as restated

Transactions with owners/other equity
movements:
Transfer to statutory reserves
Transfer to regulatory reserves
Transfer to general reserves
Transfer from Profit Equalisation Reserve
of Islamic banking institution
Dividends paid

At 31 December 2013

Note 26

* Represent non-controlling interests’ share of currency translation differences in respect of foreign operations.

33

ANNUAL REPORT 2013

3,531,926

53

PUBLIC BANK BERHAD

CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

PUBLIC BANK BERHAD

CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY

2012
Group

34

At 1 January 2012
– as previously stated
– effects of adoption of MFRS 119

Noncontrolling
Interests
RM’000

Total
Equity
RM’000

3,531,926

1,073,310

4,056,014
226,723

7,276,808
(136,219)

(215,572)

15,722,486
90,504

697,484

16,419,970
90,504

3,531,926

1,073,310

4,282,737

7,140,589

(215,572)

15,812,990

697,484

16,510,474

Profit for the year (restated)
Other comprehensive income/(loss)
for the year

3,826,754

3,826,754

42,488

3,869,242

59,716

59,716

Total comprehensive income for the year

59,716

3,826,754

3,886,470

18,612

3,905,082





9,741
252
918

(9,741)
(252)
(918)











503

(503)
(1,681,020)



(1,681,020)


(16,232)


(1,697,252)

11,414

(1,692,434)

(1,681,020)

(16,232)

(1,697,252)

3,531,926

1,073,310

4,353,867

9,274,909

(215,572)

18,018,440

699,864

18,718,304

Note 28

Note 29

Note 27

At 1 January 2012, as restated
ANNUAL REPORT 2013

<-------------------------------- Attributable to Equity Holders of the Bank -------------------------------->
Non-distributable Reserves
Distributable Reserves
Total
Share
Share
Other
Retained
Treasury Shareholders’
Note
Capital
Premium
Reserves
Profits
Shares
Equity
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000

Transactions with owners/other
equity movements:
Transfer to statutory reserves
Transfer to regulatory reserves
Transfer to general reserves
Transfer to Profit Equalisation Reserve
of Islamic banking institution
Dividends paid

At 31 December 2012

53

Note 26

* Represent non-controlling interests’ share of currency translation differences in respect of foreign operations.

The accompanying notes form an integral part of the financial statements

(23,876)*

35,840

for the year ended 31 December 2013

2013
Bank
At 1 January 2013
– as previously stated
– effects of adoption of MFRS 119

<--------------------------------- Attributable to Equity Holders of the Bank --------------------------------->
Non-distributable Reserves
Distributable Reserves
Total
Share
Share
Other
Retained
Treasury
Note
Capital
Premium
Reserves
Profits
Shares
Equity
RM’000
RM'000
RM’000
RM’000
RM’000
RM’000

1,073,310

3,514,328
244,569

8,918,940
(172,608)

(215,572)

16,822,932
71,961

3,531,926

1,073,310

3,758,897

8,746,332

(215,572)

16,894,893

Profit for the year
Other comprehensive income for the year




43,152

3,705,115


3,705,115
43,152

Total comprehensive income for the year

43,152

3,705,115

3,748,267



1,103

(1,103)
(1,821,105)



(1,821,105)

1,103

(1,822,208)

(1,821,105)

3,531,926

1,073,310

3,803,152

10,629,239

(215,572)

18,822,055

Note 28

Note 29

Note 27

At 1 January 2013, as restated

Transactions with owners/other
equity movements:
Transfer to general reserves
Dividends paid

At 31 December 2013

41

Note 26

35

ANNUAL REPORT 2013

3,531,926

53

PUBLIC BANK BERHAD

STATEMENT OF
CHANGES IN EQUITY

499 – – – 3.852.938) – (1.731.707.400 3.572) 14.499 – 3.253 6.757.PUBLIC BANK BERHAD STATEMENT OF CHANGES IN EQUITY 2012 Bank 36 At 1 January 2012 – as previously stated – effects of adoption of MFRS 119 <--------------------------------.547) (215.771 (215.306 218.926 1.310 3.020) 3.310 3.531.073.020) – – 918 (1.720.288 87.531.707.726 3.726 Total comprehensive income for the year – – 23.020) – – – (1.225 – – – – 918 – (918) (1.734.893 Note 28 Note 29 Note 27 53 ANNUAL REPORT 2013 At 1 January 2012.894.073.310 – 3.926 1.681.531.681.681.515.726 3.499 23.572) – 14.681.926 – 1.947 6. as restated Transactions with owners/other equity movements: Transfer to general reserves Dividends paid At 31 December 2012 41 Note 26 The accompanying notes form an integral part of the financial statements .746.332 (215.318 (131.572) 16.758.073.707.688 Profit for the year (restated) Other comprehensive income for the year – – – – – 23.Attributable to Equity Holders of the Bank ---------------------------------> Non-distributable Reserves Distributable Reserves Total Share Share Other Retained Treasury Note Capital Premium Reserves Profits Shares Equity RM’000 RM'000 RM’000 RM’000 RM’000 RM’000 3.844.897 8.

460) 490 – – (165) 3.694 (579) (2.238 (11.877) 3.224 4.678) 73.036 (3.682 49.646.783) 1.for the year ended 31 December 2013 Group 2013 RM’000 Bank 2012 RM’000 (Restated) 2013 RM’000 PUBLIC BANK BERHAD STATEMENTS OF CASH FLOWS 2012 RM’000 (Restated) CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax expense and zakat 5.047.080) (4.492 – (140.678 265 (151.002) 5.657) – 566.626.974 497 (145.239) (2.008 ANNUAL REPORT 2013 Share of profit after tax of equity accounted associated companies Depreciation of property and equipment Net (gain)/loss on disposal of property and equipment Net gain on disposal of foreclosed properties Gain on liquidation of a subsidiary company Allowance for impaired loans and financing Net gain arising from disposal of financial investments available-for-sale Net loss/(gain) arising from disposal of trading derivatives Amortisation of cost and accretion of discount relating to debt securities issued Unrealised loss on revaluation of financial assets held-for-trading Unrealised gain on revaluation of trading derivatives (Gain)/loss representing ineffective portions of hedging derivatives Pension costs – defined benefit plan Transfer to Profit Equalisation Reserve Dividends from financial investments available-for-sale Dividends from subsidiary companies Dividends from associated companies Property and equipment written off Gain on revaluation of investment properties Impairment loss on financial investments available-for-sale Impairment (writeback)/loss on foreclosed properties .533 3.830 – 135.082 (23.864 (7.985) 167.330 (3.629) (772) (12.533 3.960) – – 527 (2.406) 161.984 5.986 37 Adjustments for: Operating profit before working capital changes (6.188 (500) (2.889 5.253 446 (7.222) 1.515 425 (7.629) (772) 2.556.938) – 184.243 (12.074 9.020 3.657) (114) 228.569) (2.632 4.938) – 474.002) 5.037 3.085 47.802) (753.068 5.312 (5.864 (7.703) 76.586) (6.234 4.947.064 – 127.547) – (149) 3.287) (853.733) 1.093 2.064 – 3.033) – – 1.020 3.984.074 9.249 (12.163.309.973 – (146.

046 (241.006.108 46.140 24.074 45.037.386.626) 262.977.460 – 145.635 .514.733) 955.341.624 (1.777 (2.641 – 4.015) (1. advances and financing Derivative financial assets Other assets Statutory deposits with Central Banks (97.893) (189.) (Increase)/Decrease in operating assets: ANNUAL REPORT 2013 38 Placements with banks maturing after one month Reverse repurchase agreements Financial assets held-for-trading Loans.912) 631 38.505.522 Cash generated from operations Income tax expense and zakat paid 7.881 (2.033 (88.940.792 (263.475.405 (1.966) 6.304 1.702.493) 289.925 1.943.463) 795.126.419) 953.794 (175.458 (3.093.994) (1.770 140.157) 4.322.296) 204.223.670 146.405) 77.304.113) 28.572 (2.021) 3.463 (1.662) – 13.467 3.616 (10.571) 1.195.137.250) – 6.116 (181.792 (198.830.128.202.675.727.384 2.672.150) 611 37.805) (19.148 2.511 (1.486 489.523 (1.625) (19.571) 1.277) 1.631) (175.953 2.000) 4.485) 97.688) 1.783 820.934 (23.460 713.308.177) (1.680 (817.343) 952.270 (1.781.329.000) 6.847 (147.587.326.749 (5.650 20.087.783 – 151.689 (89.850 22.378) (1.435) (396.287 Net cash (used in)/generated from investing activities (1.120.383.442.640) (20.259.360) (827.776) 28.707 362.PUBLIC BANK BERHAD STATEMENTS OF CASH FLOWS Group 2013 RM’000 Bank 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D.183.963.957.239 896.558) 3.474 1.848) Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Other liabilities 25.864 3.719 (993.753 Increase/(Decrease) in operating liabilities: Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Proceeds from disposal of property and equipment Proceeds from disposal of foreclosed properties Net (purchase)/sale of financial investments Additional investment in a subsidiary company Dividends received from associated companies Dividends received from subsidiary companies Dividends received from financial investments available-for-sale (128.445) – (25.

238.825) (873.223 16.990.951 (1.416 10.835.520) (1.386.416 10.772 11.111.238.347.173) (1.750.386.466 16.417 (1.944.710 Note: Cash and balances with banks (Note 3) Less: Balances with banks with maturity more than one month 22.103.441.105) – 2.133) Cash and cash equivalents at end of year 20.020) – – (1.183.420) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Exchange differences on translation of opening balances 3.086 (1.400) Net cash used in financing activities (1.915 (1.000) (30.400.865) 2.670) 11.915 (1.570.263.179) 12.263.105) (19.772 11.800.347.244 16.020) (16.183.821.843 (1.080.151) 1.363.126.985 404.190) (2.400) – (1.821.400.835.679 (139.681.710 – 2.635.147.772 243.681.835.575) (2.194) 18.710 The accompanying notes form an integral part of the financial statements 39 ANNUAL REPORT 2013 Net repayment of borrowings Dividends paid to equity holders of the Bank Dividends paid to non-controlling interests Net proceeds from issuance of debt securities Redemption of debt securities .968 8.232) – (1.294.238.223 16.742 – CASH AND CASH EQUIVALENTS AT END OF YEAR 20.000) – (1.679.706 10.STATEMENTS OF CASH FLOWS 2013 RM’000 PUBLIC BANK BERHAD Group Bank 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) CASH FLOWS FROM FINANCING ACTIVITIES (401.897.

Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10. ANNUAL REPORT 2013 40 The Bank is a public limited liability company. stock-broking. The registered office of the Bank is located at 27th Floor. investment banking. and is listed on the Main Market of Bursa Malaysia Securities Berhad. Jalan Ampang. incorporated and domiciled in Malaysia. There have been no significant changes to these principal activities during the financial year. BASIS OF PREPARATION AND ACCOUNTING POLICIES The accounting policies adopted by the Group and the Bank are consistent with those adopted in the previous years except for the adoption of the following Malaysian Financial Reporting Standards (“MFRS”). 50450 Kuala Lumpur. Amendments to MFRSs and IC Interpretation Adopted by the Group and the Bank The following MFRSs. 146. Amendments to MFRSs and IC Interpretations: (i) MFRSs. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION The Group is principally engaged in all aspects of commercial banking. financing and Islamic banking business. MFRS 11 and MFRS 12) The adoption of IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine does not have any impact on the Group and the Bank as it is not relevant to the business of the Group and the Bank. management of unit trust funds and sale of trust units. Amendments to MFRSs and IC Interpretation have been adopted by the Group and the Bank during the current year: – MFRS 10 Consolidated Financial Statements – MFRS 11 Joint Arrangements – MFRS 12 Disclosure of Interests in Other Entities – MFRS 13 Fair Value Measurement – MFRS 119 Employee Benefits (as amended by IASB in June 2011) – MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) – MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) – MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) – MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) – IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine – Government Loans (Amendments to MFRS 1) – Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) – Consolidated Financial Statements. . and investment holding. The Bank is principally engaged in all aspects of commercial banking and the provision of related financial services.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS – 31 DECEMBER 2013 1. Menara Public Bank. 2. The adoption of Government Loans (Amendments to MFRS 1) has no impact to the Group and the Bank as the Group and the Bank do not hold any government grants or receive any government assistance. provision of related financial services. The financial statements were approved and authorised for issue by the Board of Directors on 5 February 2014. underwriting of general insurance.

hence did not have any financial impact on the financial statements of the Group and the Bank. revenue and expenses.Special Purpose Entities. (b) MFRS 10 Consolidated Financial Statements – MFRS 10 supersedes MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation . The three elements to the definition of control in MFRS 10 are: (i) Power by investor over an investee. (ii) Exposure. to variable returns from investor’s involvement with the investee. The corridor approach for accounting for unrecognised actuarial gains in prior years is discontinued.) The effects of the adoption of other applicable MFRSs and amendments to MFRSs above are summarised below: (a) MFRS 119 Employee Benefits (as amended by IASB in June 2011) – The adoption of the revised MFRS 119 has affected the accounting treatment of certain items such as the timing of the recognition of actuarial gains and losses arising from defined benefit plans and the presentation of changes in defined benefit liability or asset. liabilities. which interprets the requirements of MFRS 10 in relation to special purpose entities. ANNUAL REPORT 2013 – Past service costs. an entity accounts for its interest in a jointly controlled entity based on two types of joint arrangement: joint operations and joint ventures.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. (c) MFRS 11 Joint Arrangements – MFRS 11 supersedes MFRS 131 Interests in Joint Ventures. and (iii) Investor’s ability to affect those returns through its power over investee. whether unvested or already vested. Joint operations arise where a joint operator has rights to the assets and obligation to the arrangement and hence accounts for its interest in assets. as well as enhanced disclosures of the risks and characteristics of the Group’s defined benefit plans. Proportional consolidation of joint ventures is no longer allowed. or rights. The adoption of this revised MFRS 119 has resulted in changes to the recognition and measurement of the Group’s and the Bank’s defined benefit pension expense and termination benefits. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. and are not subsequently recycled to statement of profit or loss. Under MFRS 11. are recognised immediately in the statement of profit or loss as incurred and the annual defined benefit costs in the statement of profit or loss will include net interest expense/ income on the defined benefit asset/liability. Amendments to MFRSs and IC Interpretation Adopted by the Group and the Bank (Cont’d. The adoption of this standard did not result in any change to the consolidation of its subsidiary companies as at the end of the reporting period.) (i) PUBLIC BANK BERHAD 2. 41 . The financial effects of the adoption of MFRS 119 is disclosed in Note 53 Changes in Accounting Policies. MFRSs. The key changes include: – Actuarial gains and losses (renamed as ‘remeasurements’) are recognised immediately in other comprehensive income. MFRS 10 sets out the requirements on how to apply the control principle in the preparation of consolidated financial statements which requires analysis of all facts and circumstances as well as the application of judgement when making the control assessment. The adoption of this standard did not have any financial impact on the financial statements of the Group and the Bank as the Group does not have any interest in joint operations or joint ventures.

not an entity-specific measurement. in particular. (g) MFRS 13 Fair Value Measurement – This standard establishes a single source of guidance under MFRSs for measuring fair value. but rather provide guidance on how to measure fair value under MFRS. such investments should be accounted for either at cost. the entity shall measure the investment at fair value through profit or loss. However. upon applying MFRS 10. associated companies and unconsolidated structured entities. it shall consolidate an investee that was not previously consolidated and that control was obtained before the effective date of MFRS 3 and MFRS 127 issued by MASB in November 2011. The adoption of this standard did not have any impact on the financial statements of the Group and the Bank. The adoption of this standard did not have any financial impact on the Group and the Bank as the requirements affect presentation only. or in accordance with MFRS 9. MFRS 127 was reissued to cover only the requirements relating to the accounting for investments in subsidiary companies. the adoption of these amendments did not have any financial impact on the Group and the Bank. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement. The adoption of these amendments did not have any impact to the Group and the Bank as there were no investee that was previously not consolidated upon the application of MFRS 10. The Bank prepares separate financial statements but the adoption of this standard did not have any impact on the financial statements of the Bank as it already applies the principles under this MFRS. MFRS 128 exempts the investor from applying equity accounting in certain circumstances. . (f) MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) – MFRS 128 incorporates the requirements for accounting for joint ventures into the same accounting standard as that for accounting for investments in associated companies.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. Amendments to MFRSs and IC Interpretation Adopted by the Group and the Bank (Cont’d. Since these amendments only affect disclosures. (i) Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) – The amendments require more quantitative information to be disclosed about rights to set-off and related arrangements so as to provide users with information to evaluate the effect of netting arrangements on an entity’s financial position.) The effects of the adoption of other applicable MFRSs and amendments to MFRSs above are summarised below (Cont’d. (e) MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) – As a consequence of the issuance of MFRS 10 and MFRS 12. joint arrangements. Under MFRS 127. irrespective whether they are set off in accordance with MFRS 132.): ANNUAL REPORT 2013 42 (d) MFRS 12 Disclosure of Interests in Other Entities – MFRS 12 sets out the requirements for disclosures relating to an entity’s interests in subsidiary companies. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.e. where the investment in the associated company or joint venture is held indirectly via venture capital organisations or mutual funds and similar entities. associated companies and joint ventures in the separate financial statements of an entity. in accordance with MFRS 9. The new disclosures are required for all recognised financial instruments that are set-off in accordance with MFRS 132. and the disclosure requirements about fair value. i. MFRS 13 does not change when an entity is required to use fair value. MFRS 13 defines fair value as an exit price and emphasises the principle that fair value is a market-based measurement. (h) MFRS 3 Business Combinations (IFRS Business Combinations issued by IASB in March 2004) and MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) – These are the earlier versions of MFRS 3 and MFRS 127 for which an entity can apply if it concludes that. The adoption of this standard resulted in additional disclosures in the financial statements.) (i) MFRSs. on fair values of financial instruments but did not have any financial impact on the Group and the Bank. In such cases.

(b) Investment Entities (Amendments to MFRS 10. MFRS 12 and MFRS 127) Recoverable Amount Disclosures for Non-Financial Assets (Amendments to MFRS 136) Novation of Derivatives and Continuation of Hedge Accounting (Amendments to MFRS 139) IC Interpretation 21 Levies The main effects of the early adoption of Amendments to MFRSs and IC Interpretation above are summarised below: (a) Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) – The amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ that a right of set-off must not be contingent on a future event and must be legally enforceable for all counterparties in the normal course of business. MFRS 12 and MFRS 127) – These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under MFRS 10. The adoption of these amendments did not have any financial impact to the Group and the Bank. Consequently. ANNUAL REPORT 2013 A similar relief is also provided in MFRS 11 and MFRS 12. an entity is not required to adjust its previous accounting for its involvement with entities if the consolidation conclusion reached at the date of initial application is the same when applying MFRS 10 or the entity had disposed of its interests in investees during a comparative period. The adoption of these amendments did not have any impact on the financial results of the Group and the Bank as the current accounting practice for the Group’s offsetting arrangements fulfil the principles under the Amendments to MFRS 132. MFRSs. The amendments further clarify that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. The exception to consolidation requires all investment entity to measure its investments in subsidiary companies at fair value through profit or loss.) The effects of the adoption of other applicable MFRSs and amendments to MFRSs above are summarised below (Cont’d. MFRS 11 and MFRS 12) – These amendments provide further clarification on the date of initial application of MFRS 10. (ii) Amendments to MFRSs and IC Interpretation that were Early Adopted by the Group and the Bank The Group and the Bank have chosen to early adopt the following in the current financial year: – – – – – Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) Investment Entities (Amendments to MFRS 10.) (i) PUBLIC BANK BERHAD 2. entities would no longer be required to provide disclosures for unconsolidated structured entities in periods prior to the first annual period that MFRS 12 is applied. 43 . Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. Amendments to MFRSs and IC Interpretation Adopted by the Group and the Bank (Cont’d. Additionally. The adoption of these amendments did not have any impact on the financial results of the Group and the Bank as none of the entities in the Group qualify as an investment entity under MFRS 10.): (j) Consolidated Financial Statements.

These amendments were consequently issued to remove the unintended consequences of MFRS 13 on the disclosures required under MFRS 136. The Bank and the domestic banking subsidiary companies of the Group have adopted the Policy Documents with effect from 30 June 2013. For a levy that is triggered upon reaching a minimum threshold. these amendments also require disclosure of the recoverable amounts for the assets or CGUs for which impairment loss has been recognised or reversed during the period. as identified by the relevant legislation. including a new counter-cyclical buffer ranging from 0% to 2. These Policy Documents set minimum expectations for the application of MFRSs and aim to ensure adequate disclosures in the financial statements of banking institutions. On 28 June 2013. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. The disclosure requirements were aligned with the original intention to require the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less costs of disposal. the minimum capital adequacy ratios are progressively increased from 1 January 2013 to 1 January 2019. the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. MFRS 136 was amended which resulted in the unintended requirement to disclose the recoverable amount for each cash-generating unit (“CGU”) for which the carrying amount of goodwill or intangible assets with indefinite useful lives allocated to that unit is significant in comparison with the entity’s total carrying amount of goodwill or intangible assets with indefinite useful lives. This Framework outlines the general requirements on regulatory capital adequacy ratios. the Group and the Bank adopted the BNM’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) (“the Framework”) issued on 28 November 2012.) (ii) Amendments to MFRSs and IC Interpretation that were Early Adopted by the Group and the Bank (Cont’d. occurs. (e) IC Interpretation 21 Levies – IC Interpretation 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment. there is no impact on the financial results of the Group and the Bank. The Framework has been developed based on internationally agreed standards on capital adequacy promulgated by the Basel Committee on Banking Supervision. The adoption of these amendments did not affect the Group as the recoverable amounts of the Group’s CGUs are based on value in use under MFRS 136. The adoption of this interpretation did not have any impact on the financial statements of the Group and the Bank as it is not relevant to the business of the Group and the Bank.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. In addition. .5%. Additional capital requirements. (d) Novation of Derivatives and Continuation of Hedge Accounting (Amendments to MFRS 139) – These amendments provide an exception for the discontinuation of hedge accounting when novation of a derivative designated as hedging instrument meets certain criteria. the components of eligible regulatory capital as well as the levels of those ratios at which banking institutions are required to operate. (iii) Bank Negara Malaysia (“BNM”) Guidelines With effect from 1 January 2013. The adoption of these amendments did not have any impact on the financial results of the Group and the Bank as the Group and the Bank have not novated its derivatives.5% will be established at a later stage.) (c) ANNUAL REPORT 2013 44 Recoverable Amount Disclosures for Non-Financial Assets (Amendments to MFRS 136) – When MFRS 13 was issued. and includes a phased introduction of a new capital conservation buffer of 2. Since the adoption of the Policy Documents only affect certain disclosures in the financial statements. Under the Framework. BNM issued policy documents on Financial Reporting and Financial Reporting for Islamic Banking Institutions (“Policy Documents”) to replace the Guidelines on Financial Reporting for Banking Institutions and Guidelines on Financial Reporting for Islamic Banking Institutions (BNM/GP8-i) respectively.

ANNUAL REPORT 2013 A brief description of the significant new MFRSs and Amendments to MFRSs that have been issued is set out below: 45 .) PUBLIC BANK BERHAD 2. The amendments to MFRS 7 require additional disclosures on transition from MFRS 139 Financial Instruments: Recognition and Measurement to MFRS 9. MFRS 9 introduces significant changes in the way the Group accounts for financial instruments. This issuance of MFRS 9 contains the accounting policy changes under the first phase of the IAS 39 replacement project. (iv) MFRSs and Amendments to MFRSs that have been Issued but Not Yet Effective to the Group and the Bank The following MFRSs and Amendments to MFRSs have been issued by the MASB but are not yet effective to the Group and the Bank: Effective for annual periods commencing on or after 1 January 2015 – MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) – MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) – Mandatory Effective Date of MFRS 9 and Transition Disclosures (Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009). changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income. the financial effects of its adoption are still being assessed by the Group. depending on the business model under which these assets are acquired. which are generally similar to the requirements of the original IAS 39. MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7) (a) (i) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) – The IASB intends to replace IAS 39 with IFRS 9. and specifies how an entity should classify and measure financial assets. (b) Mandatory Effective Date of MFRS 9 and Transition Disclosures (Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009). This section of the standard specifies the requirements for the classification and measurement of financial liabilities. Due to the complexity of this standard and its proposed changes. This standard requires all financial assets to be classified based on an entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Subsequent to initial recognition. this standard requires that for financial liabilities designated at fair value through profit or loss. Financial assets are to be initially measured at fair value. However. whereas the remaining amount of the change in fair value will be presented in the statement of profit or loss. (ii) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) – This issuance of MFRS 9 represents the second part of the first phase of IASB’s IAS 39 replacement project. MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7) – These amendments require entities to apply MFRS 9 for annual periods beginning on or after 1 January 2015 instead of on or after 1 January 2013. MFRS 9 is the IFRS 9 equivalent standard in Malaysia. The amendments also provide relief from the requirement to restate comparative financial statements for the effect of applying MFRS 9 which was originally only available to companies that choose to apply MFRS 9 prior to 2012.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. these will be measured at either fair value or amortised cost.

liabilities. unless otherwise stated. In the preparation of the financial statements. The Group will assess the effect of the adoption of these standards. International Financial Reporting Standards and the requirements of the Companies Act. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.) (iv) MFRSs and Amendments to MFRSs that have been Issued but Not Yet Effective to the Group and the Bank (Cont’d.) Future Developments The IASB plans to release the second and third phase of IFRS 9 in the near future which will address the impairment of financial assets measured at amortised cost and hedge accounting. The proposed changes are expected to change the way the Group accounts for financial instruments particularly on the Group’s accounting policy on allowance for loans. Insurance Contracts and Revenue Recognition. The key changes proposed relate to: 46 (i) ANNUAL REPORT 2013 (ii) Impairment – a prescribed amount of expected losses will be reflected in impairment allowances for financial assets measured at amortised cost. Islamic banking business refers generally to the acceptance of deposits and granting of financing under the principles of Shariah. The financial statements incorporate all activities relating to the Islamic banking business which have been undertaken by the Group. recognised financial assets and liabilities designated as hedged items in qualifying fair value hedge relationships which are adjusted for changes in fair value attributable to the risk being hedged and investment properties. management is required to make judgements. Revisions to accounting estimates are recognised in the financial statements in the period in which the estimate is revised and in any future periods affected. income and expenses. as disclosed in the notes to the financial statements) and are in accordance with Malaysian Financial Reporting Standards. estimates and assumptions that affect the application of accounting policies and the reported amounts of assets. to determine the financial effects upon adoption of these standards. the IASB plans to issue new standards on Leases. Actual results may differ from these estimates. advances and financing.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. In addition to the above. (v) Summary of Significant Accounting Policies (a) Basis of Accounting The financial statements of the Group and the Bank have been prepared on the historical cost basis (except for the following assets and liabilities which are stated at fair value: financial assets held-for-trading. derivative financial instruments. Hedge accounting – hedge accounting will be more principle-based and more aligned to financial risk management. financial investments available-for-sale. when issued. Estimates and underlying assumptions are reviewed on an ongoing basis. The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (RM’000). . 1965 in Malaysia.

discount rates and the growth rates used. advances and financing (“loan(s)”) which are individually assessed. incorporating the present value of estimated future cash flows expected to arise from the respective CGU’s ongoing operations. and reflect management’s view of future performance. volatilities and prepayment and default rates. etc). judgement is required where market observable data are not available. Management judgement is required to evaluate the duration and extent by which the fair value of these equity investments is below their cost. (v) Impairment of other assets – The assessment of impairment of properties held under property and equipment (Note 16) requires management judgement in the assessment of whether negative fluctuations in values of similar properties in the same location represent an indication of impairment in the value of the individual properties. exchange rates. In estimating these cash flows. Whilst the Group and the Bank generally use widely recognised valuation models with market observable inputs.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. including the use of mathematical models. including assumptions about interest rate yield curves. 47 ANNUAL REPORT 2013 (ii) Fair value estimation of financial instruments – For financial instruments measured at fair value. judgements are made about the realisable value of collateral pledged and the borrower’s financial position. uncertainty and critical judgements used in applying accounting policies that have significant effect in determining the amounts recognised in the financial statements include the following: (i) Impairment losses on loans. The measurement of the recoverable amount of CGUs are determined based on the value-in-use method. For loans of the Bank and its banking subsidiary companies which are collectively assessed.) Significant areas of estimation. GDP growth rates. (iii) Impairment of goodwill and intangible assets (Note 17) – The Group and the Bank perform an annual assessment of the carrying value of its goodwill and intangible assets against the recoverable amount of the cash-generating units (“CGUs”) to which the goodwill and intangible assets have been allocated. management considers the historical price movements of the individual equity investment. The estimation of pre-tax cash flows is sensitive to the periods for which the forecasts are available and to assumptions regarding the long-term sustainable cash flows. Such judgement normally incorporate assumptions that other market participants would use in their valuations. unemployment rates. as well as that of the benchmark indicators of the market in which the equity is listed. credit concentration and economic data (eg. hence resulting in changes to impairment losses recognised. etc) in order to arrive at impairment levels appropriate to the portfolio. Management judgement is used in the determination of the assumptions made. where the fair values cannot be derived from active markets. credit quality. default rates. In making this judgement. (iv) Impairment of financial investments available-for-sale (Note 7) – For equity investments classified as available-forsale. . judgement by management is required in the estimation of the amount and timing of future cash flows in the determination of impairment losses. judgements are made based on loan portfolio data (eg. (v) Summary of Significant Accounting Policies (Cont’d. particularly the cash flow projections. advances and financing (Note 9) – For impaired loans. impairment is recognised when there has been a significant or prolonged decline in the fair value below the investment’s cost. these fair values are determined using a variety of valuation techniques. These estimations are based on assumptions and the actual results may differ from these. recovery rates.) (a) Basis of Accounting (Cont’d.) PUBLIC BANK BERHAD 2.

) (vi) Valuation of investment properties (Note 15) – The measurement of the fair values for investment properties performed by management are determined with reference to quotations of market value provided by independent professional valuers. ANNUAL REPORT 2013 48 (viii) Deferred tax assets (Note 12) – Deferred tax assets are recognised for all unutilised tax losses to the extent that it is probable that future taxable profit will be available against which the tax losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised. to variable returns from the involvement with the investee.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. (b) Basis of Consolidation (i) Subsidiary Companies The consolidated financial statements include the financial statements of the Bank and its subsidiary companies made up to the end of the financial year. The levels of future contributions to the plan which are used to assess this limit is subject to some uncertainty due to other assumptions made regarding fund membership levels and future salary increases. and – has the ability to affect those returns through its power over investee. The amount of defined benefit asset recognised in the statement of financial position is limited to the present value of economic benefits in the form of refunds or reductions in future contributions to the fund. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. (vii) Income taxes (Note 39) – The Group and the Bank are subject to income taxes in many jurisdictions. such estimates are subject to significant uncertainty.) (v) Summary of Significant Accounting Policies (Cont’d. The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of these elements of control listed above. The actuarial valuation involves making assumptions regarding the discount rate. Liabilities for taxation are recognised based on estimates of whether taxes will be payable.) (a) Basis of Accounting (Cont’d. Where the final liability for taxation assessed by the Inland Revenue Board is different from the amounts that were initially recorded. Due to the long term nature of the defined benefit plan. future salary increases and attrition rates. . Significant management judgement is required in estimating the provision for income taxes. – is exposed. (ix) Defined Benefit Plan (Note 24) – The defined benefit obligation is determined based on an actuarial valuation. Control is achieved when the Group: – has power over the investee. based upon the likely timing and level of future taxable profits together with future tax planning strategies. where appropriate. or has rights. these differences will affect the income tax expense and deferred tax provisions in the period in which the estimate is revised or when the final tax liability is established. The estimation process may involve seeking the advise of experts. as there may be differing interpretations of tax law for which the final outcome will not be established until a later date.

) (b) Basis of Consolidation (Cont’d. or does not have. control exists when the Group directly and indirectly holds the majority of the voting rights and has the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. potential voting rights are considered in the assessment of control when such rights are presently exercisable whilst such rights are considered now only when they are substantive. to the Group.) When the Group has less than a majority of the voting rights but has rights that are sufficient to give it the practical ability to direct the relevant activities unilaterally. The acquisition method of accounting is used to account for the purchase of subsidiary companies. For each business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed are initially measured at fair value as at acquisition date. the Group will elect to measure the amount of non-controlling interest either at fair value or at the non-controlling interest’s proportionate share of the subsidiary company’s identifiable net assets. and any additional facts and circumstances that indicate that the Group has. Goodwill is measured as the excess of consideration transferred. including voting patterns at previous shareholders’ meetings. including: the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders. The Group also did not consider de facto power in its previous assessment of control. rights arising from other contractual arrangements. and ceases from the date that control ceases. as well as any contingent consideration given. any non-controlling interest and the acquisitiondate fair value of any previously-held equity interest in the subsidiary company over the fair value of the Group’s share of the identifiable net assets acquired. The consideration transferred for the acquisition of a subsidiary company is measured at the fair value of the assets given. In the previous financial years. any non-controlling interest and the acquisition-date fair value of any previously-held equity interest (ie. In the event that the fair value of the Group’s share of identifiable net assets acquired exceeds the amount of consideration transferred. Non-controlling interests are presented separately in the consolidated statement of profit or loss and within equity in the consolidated statement of financial position. previously.) PUBLIC BANK BERHAD 2. the current ability to direct the relevant activities at the time that decisions need to be made. the equity instruments issued and liabilities incurred or assumed at the date of exchange. Subsidiary companies are consolidated from the date on which the Group controls. Noncontrolling interests represent the portion of profit or loss and net assets of subsidiary companies not attributable. other vote holders or other parties.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. 49 ANNUAL REPORT 2013 – – – – . potential voting rights held by the Group.) (i) Subsidiary Companies (Cont’d. The accounting policy on goodwill is set out in Note 2(v)(l)(i). the Group considers all facts and circumstances in assessing whether or not the voting rights give it power. a bargain purchase). separately from equity holders of the Bank. (v) Summary of Significant Accounting Policies (Cont’d. the entire resulting gain is recognised in the statement of profit or loss of the Group. directly or indirectly. The financial results of the subsidiary companies are included in the consolidated financial statements from the date that control is obtained until the date that the Group loses control. In addition. Acquisition-related costs are expensed off in the statement of profit or loss as incurred.

) (i) Subsidiary Companies (Cont’d. investments in subsidiary companies are stated at cost less impairment losses. The difference between the fair value of consideration received and the amounts derecognised and the remaining fair value of the investment is recognised as a gain or loss on disposal in the consolidated statement of profit or loss.) (v) Summary of Significant Accounting Policies (Cont’d.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. On disposal of such investments. In the Bank’s separate financial statements. if any.) In a business combination achieved in stages. 50 ANNUAL REPORT 2013 In preparing the consolidated financial statements. the Group does not recognise further losses. and non-controlling interests are derecognised at their carrying value on the date that control is lost. If the Group loses control of a subsidiary company. The non-controlling interest’s portion of total comprehensive income is attributed to non-controlling interest. even if this results in the non-controlling interest having a deficit balance. if any. the difference between the net disposal proceeds and the net carrying value of the investment is recognised as gain or loss on disposal in the Bank’s statement of profit or loss. Consistent accounting policies are applied by the subsidiary companies for transactions and events in similar circumstances. determined on an individual basis. Investments in associated companies are accounted for in the Group’s consolidated financial statements using the equity method. Changes in the Group’s ownership interest in a subsidiary company which does not result in a loss of control are treated as transactions between equity holders and are reported in equity. This initial carrying amount is increased or decreased to recognise the Group’s share of post-acquisition net results and other changes to comprehensive income of the associated company less impairment loss. (ii) Associated Companies Associated companies are those entities in which the Group has significant influence. The Group’s investment in associated companies is initially recognised in the consolidated statement of financial position at cost. .) (b) Basis of Consolidation (Cont’d. When the Group’s share of losses in an associated company equals or exceeds its interest in the associated company. unless it has incurred legal or constructive obligations or made payments on behalf of the associated company. intragroup transactions and balances and intragroup gains on transactions between group companies are eliminated in full. Intragroup losses are also eliminated unless the transaction provides evidence of impairment of the relevant asset. Any remaining investment in the entity is recognised at fair value. the assets and liabilities of the subsidiary company. including any goodwill. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but not control or joint control of those policies. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. Consistent accounting policies are applied for transactions and events in similar circumstances. The Group’s share of results of the associated company is recognised in the statement of profit or loss from the date that significant influence commences until the date that significant influence ceases. the previously held equity interest is remeasured at the acquisitiondate fair value with the resulting gain or loss recognised in the statement of profit or loss.

(ii) Foreign Currency Transactions and Balances In preparing the financial statements of the individual entities. the difference between the net disposal proceeds and their carrying amounts is recognised in the statement of profit or loss. (iii) Net Investment in Foreign Operations Exchange differences arising from monetary items that form part of the Bank’s net investment in foreign operations and that are denominated in the functional currency of the Bank or the foreign operations are recognised in the statement of profit or loss of the Bank. All gains or losses on disposal of associated companies are recognised in the statement of profit or loss. The financial statements of the Group and the Bank are presented in Ringgit Malaysia (RM). transactions in currencies other than each entity’s functional currency. In the Bank’s separate financial statements.) Goodwill. Any exchange component of a gain or loss on a non-monetary item is recognised directly in the statement of profit or loss if the gain or loss on the fair value of the non-monetary item is recognised in the statement of profit or loss. foreign currencies. ie. Any exchange component of a gain or loss on a nonmonetary item is recognised directly in other comprehensive income if the gain or loss on the fair value of the nonmonetary item is recognised directly in other comprehensive income. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate prevailing at the date of the initial transaction. ANNUAL REPORT 2013 The gain or loss on disposal of an associated company is the difference between the net disposal proceeds and the Group’s share of its net assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the associated company being disposed. if any. which is the Bank’s functional currency. Non-monetary items measured at fair value in a foreign currency are translated at exchange rates at the date when the fair value is determined. relating to an associated company is included in the carrying amount of the investment. On disposal of such investments. 51 . ie. Monetary assets and liabilities denominated in foreign currencies are translated at the closing exchange rate ruling at the reporting date. Any excess of the Group’s share of the fair value of the associated company’s net identifiable assets and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the results of the associated company in the period in which the investment is acquired. In the Group financial statements. are translated into the functional currency at exchange rates prevailing at the dates of the transactions. the functional currency. if any.) PUBLIC BANK BERHAD 2.) (ii) Associated Companies (Cont’d. such exchange differences are recognised initially in other comprehensive income and will be reclassified to the statement of profit or loss only upon disposal of the net investment. (v) Summary of Significant Accounting Policies (Cont’d. determined on an individual basis. Exchange differences arising on the settlement of monetary items or on translating monetary items at reporting date are recognised in the statement of profit or loss.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. the investment in associated companies is stated at cost less impairment losses. (c) Foreign Currency (i) Functional and Presentation Currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates.) (b) Basis of Consolidation (Cont’d.

Financial assets are classified as held-for-trading if they are acquired principally for the purpose of selling or repurchasing it in the near term. whose functional currencies are not the presentation currency or the currency of a hyperinflationary economy. and short-term deposits maturing within one (1) month. ANNUAL REPORT 2013 52 The closing rates used in the translation of foreign currency monetary assets and liabilities and the financial statements of foreign operations are as follows: 1 USD 1 HKD (d) 2013 2012 RM3. (1) Financial Instruments at Fair Value through Profit or Loss Financial assets classified in this category consist of financial assets held-for-trading. All resulting exchange differences are recognised in equity through other comprehensive income as a foreign currency translation reserve and are subsequently reclassified to statement of profit or loss upon disposal of the foreign operation. Regular way purchases and sales of financial assets held-for-trading are recognised at settlement date. loans and receivables. Interest income is recognised as “Interest income” in the statement of profit or loss. .4225 RM3. Management determines the classification of financial instruments at initial recognition.3945 Cash and Cash Equivalents Cash and cash equivalents consist of cash and bank balances with banks and other financial institutions. Derivative financial instruments not designated in an effective hedge transaction are also classified in this category.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2.2801 RM0. at which time the accumulated translation differences are taken to the statement of profit or loss.) (c) Foreign Currency (Cont’d. financial investments held-to-maturity and financial investments available-for-sale. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.0580 RM0. (e) Financial Assets and Liabilities (i) Initial Recognition and Subsequent Measurement Financial instruments are classified in the following categories – financial instruments at fair value through profit or loss. Financial instruments included in this category are recognised initially at fair value and transaction costs are taken directly to the statement of profit or loss.) (v) Summary of Significant Accounting Policies (Cont’d. Exchange differences arising from foreign currency borrowings designated as hedges of a net investment in a foreign operation are recognised in the foreign currency translation reserve in equity through other comprehensive income until the disposal of the net investment. are translated into the presentation currency at average exchange rates for the year and at the closing exchange rate as at reporting date respectively. Gains and losses from changes in fair value and dividend income are included directly in “Net gains and losses on financial instruments” in the statement of profit or loss.) (iv) Consolidation of Financial Statements of Foreign Operations The results and financial position of the Group’s foreign operations and its subsidiary companies incorporated in the Federal Territory of Labuan.

) (2) Loans and Receivables (3) Financial Investments Held-to-Maturity Financial investments held-to-maturity are non-derivative financial assets with fixed or determinable payments that management has the intention and ability to hold to maturity. If an investment available-for-sale is determined to be impaired. advances and financing is recorded on settlement date. advances and financing”. (4) Financial Investments Available-for-Sale Financial investments available-for-sale are non-derivative financial assets that are designated as available-forsale and are not categorised into any of the other categories above. Impairment losses. are recognised in the statement of profit or loss as “Impairment on other assets”. advances and financing.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. the entire category would be tainted and be reclassified to available-for-sale. Interest on investments held-to-maturity is included in “Interest income” in the statement of profit or loss. if any. except for impairment losses and foreign exchange gains and losses. including direct and incremental transaction costs. Interest income on financial investments available-for-sale is included in “Interest income” and dividend income is recognised in “Net gains and losses on financial instruments” in the statement of profit or loss. Financial assets classified in this category include cash and balances with banks. the cumulative gain or loss previously recognised in other comprehensive income is reclassified to the statement of profit or loss. . Regular way purchases and sales of financial investments held-to-maturity are recognised at settlement date. Likewise. Regular way recognition of loans. Furthermore. Impairment losses on loans.) (i) Initial Recognition and Subsequent Measurement (Cont’d. Gains and losses arising from changes in fair value are recognised in the other comprehensive income. reverse repurchase agreements and loans.) PUBLIC BANK BERHAD 2. Interest income on loans and receivables is recognised in “Interest income” in the statement of profit or loss. the Group and the Bank would be prohibited from classifying any financial assets as held-tomaturity for the following two years. which may be sold in response to liquidity needs or changes in market conditions. and subsequently measured at amortised cost using the effective interest method. These financial assets are initially recognised at fair value including direct and incremental transaction costs. the cumulative fair value gain or loss recognised in other comprehensive income is also transferred to the statement of profit or loss.) (e) Financial Assets and Liabilities (Cont’d. when all the conditions under the loan contract have been fulfilled. which are recognised in the statement of profit or loss. advances and financing are recognised in the statement of profit or loss as “Allowance for impairment on loans. upon disposal of investments available-for-sale. If the Group or the Bank were to sell or reclassify more than an insignificant amount of financial investments held-to-maturity before maturity. These financial assets are initially recognised at fair value. Regular way purchases and sales of financial investments available-for-sale are recognised at settlement date. and subsequently measured at amortised cost using the effective interest method. (v) Summary of Significant Accounting Policies (Cont’d. and subsequently measured at fair value. 53 ANNUAL REPORT 2013 Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial investments available-for-sale include financial assets that are intended to be held for an indefinite period of time. These financial assets are initially recognised at fair value including direct and incremental transaction costs.

54 (5) Financial Liabilities ANNUAL REPORT 2013 Financial liabilities are initially recognised at the fair value of consideration received less directly attributable transaction costs. Any fair value gains or losses previously recognised in the statement of profit or loss is not reversed. Financial liabilities measured at amortised cost include deposits from customers. whereby the fair value becomes the new cost or amortised cost. These investments are assessed for impairment at each reporting date. Subsequent to initial recognition. (iii) Reclassification of Financial Assets The Group and the Bank may choose to reclassify non-derivative assets out from the held-for-trading category.) Investments in unquoted equity instruments which are classified as available-for-sale and whose fair value cannot be reliably measured are measured at cost. where the financial assets are no longer held for the purpose of selling or repurchasing in the short term. The Group and the Bank do not have any non-derivative financial liabilities designated at fair value through profit or loss. and the carrying value of these financial liabilities have been adjusted for changes in fair value related to the hedged exposure. .) (i) Initial Recognition and Subsequent Measurement (Cont’d. (ii) Derecognition Financial assets are derecognised when the contractual rights to receive the cash flows from these assets have ceased to exist or when the rights to receive further cash flows from the assets have been transferred to a third party and substantially all the risks and rewards of ownership of the assets are also transferred. financial liabilities are measured at amortised cost. Certain debt securities issued by the Group and the Bank have been designated in effective hedges of interest rate risk. During the reporting period.) (4) Financial Investments Available-for-Sale (Cont’d. Collateral furnished by the Group and the Bank under repurchase agreements are not derecognised as the Group and the Bank retain substantially all the risks and rewards on the basis of the pre-determined repurchase price. Reclassifications are made at fair value as at the reclassification date. the Group and the Bank have not made any such reclassifications of financial assets. and hence the criteria for derecognition are not met. Financial liabilities are derecognised when they are redeemed or extinguished. as applicable. In addition.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. the Group and the Bank may also choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group and the Bank have the intention and ability to hold the financial asset for the foreseeable future or until maturity. deposits from banks and debt securities issued and other borrowed funds. in rare circumstances. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.) (e) Financial Assets and Liabilities (Cont’d.) (v) Summary of Significant Accounting Policies (Cont’d.

and assessed for impairment at each reporting date. A hedge is deemed as highly effective if the cumulative changes in the fair value or cash flows attributable to the hedged risk are expected to offset in a range of 80% to 125% during the period for which the hedge is designated. cash flow or net investment hedge accounting. or to realise the asset and to settle the liability simultaneously.e. Derivatives which are not designated in an effective hedge transaction are classified as held-for-trading. the related assets and liabilities are presented on a gross basis in the statement of financial position. This is not generally the case for financial instruments with master netting agreements and therefore. terminated or exercised or if the hedge no longer meets the criteria for hedge accounting or is revoked. At initial recognition. Derivatives are classified as financial assets when their fair values are positive and financial liabilities when their fair values are negative.) PUBLIC BANK BERHAD 2. (f) Derivative Financial Instruments and Hedge Accounting Derivative financial instruments are initially recognised at fair value and are subsequently remeasured at fair value. the fair value of the consideration given or received. 55 Investments in unquoted equity instruments whose fair value cannot be reliably measured are measured at cost. ANNUAL REPORT 2013 (v) . the Group and the Bank formally documents the relationship between the hedged item and the hedging instruments. At inception of the hedge relationship.) (e) Financial Assets and Liabilities (Cont’d.) (iv) Determination of Fair Value All financial instruments are recognised initially at fair value. Hedges are expected to be highly effective in offsetting the designated risk in the hedged item. (v) Summary of Significant Accounting Policies (Cont’d. i. is sold.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. and are assessed at inception of the hedge relationship and on an ongoing basis to ensure that they remain highly effective throughout the hedge period. with changes in fair value recognised in “Net gains and losses on financial instruments” in the statement of profit or loss. the fair value of financial instruments measured at fair value are measured in accordance with the valuation methodologies as set out in Note 45. Offsetting of Financial Instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis. Subsequent to initial recognition. including the nature of the risk. The Group and the Bank will discontinue hedge accounting if the hedging instrument expires. the fair value of a financial instrument is the transaction price. the objective and strategy for undertaking the hedge and the method that will be used to assess the effectiveness of the hedge relationship. For derivative transactions which meet the specific criteria for hedge accounting. the Group applies either fair value.

56 ANNUAL REPORT 2013 Fair Value Hedge If the hedging instrument is sold. the difference between the carrying value of the hedged item on termination and the face value is amortised to the statement of profit or loss over the remaining period to maturity using the effective interest rate.) (f) Derivative Financial Instruments and Hedge Accounting (Cont’d. exercised or where the hedge no longer meets the criteria for hedge accounting. any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the statement of profit or loss. the cumulative value of any such gains or losses recognised in equity is transferred to the statement of profit or loss. and could affect profit or loss. On disposal of the foreign operation. . Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised directly in the foreign currency translation reserve in equity via other comprehensive income while any gain or loss relating to the ineffective portion is recognised directly in the statement of profit or loss. terminated. the effective portion of the gain or loss on the hedging instrument is recognised in equity via other comprehensive income. When a hedging instrument expires or is sold. terminated or exercised or where the hedge no longer meets the criteria for hedge accounting. changes in the fair value of the hedging instrument are recognised in the statement of profit or loss.) (i) Fair value hedges are hedges against exposure to changes in the fair value of a recognised asset or liability. or an unrecognised firm commitment that is attributable to a particular risk. The gain or loss relating to the ineffective portion is recognised immediately in the statement of profit or loss. (iii) Net Investment Hedge Net investment hedges are hedges against the exposure to exchange rate fluctuations on the net assets of the Group’s foreign operations and are accounted for similarly to cash flow hedges. For designated and qualifying cash flow hedges. When a forecast transaction is no longer expected to occur. the cumulative gain or loss that was reported in equity is immediately transferred to the statement of profit or loss as hedge ineffectiveness. together with any changes in the fair value of the hedged item that are attributable to the hedged risk. the hedge relationship is terminated. Amounts accumulated in equity are recycled to the statement of profit or loss in the periods when the hedged forecast cash flows affect the statement of profit or loss. The net result is reported as hedge ineffectiveness under “Net gains and losses on financial instruments” in the statement of profit or loss. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. the gain or loss previously recognised in other comprehensive income is adjusted to the initial cost of the asset or liability.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. For hedged items recorded at amortised cost. (ii) Cash Flow Hedge Cash flow hedges are hedges of the exposure to variability in future cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profit or loss.) (v) Summary of Significant Accounting Policies (Cont’d. For designated and qualifying fair value hedges. If the hedged forecast transaction results in the recognition of a non-financial asset or liability.

and any adverse news or developments affecting the local economic conditions or business environment which will adversely affect the repayment capacity of the borrower.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. the loan is then included in a group of loans with similar credit risk characteristics and collectively assessed for impairment. If it is determined that no objective evidence of impairment exists for an individually assessed loan. or collectively for loans which are not individually significant. a breach of contract. the loan exhibits indications of significant credit weaknesses. the loan will continue to be classified as impaired until repayments based on the revised and/or restructured terms have been observed continuously for a period of six (6) months. Where the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contract. Advances and Financing (1) (2) (3) principal or interest or both are past due for three (3) months or more. where applicable. such as a default or delinquency in interest or principal payments. concerns over the viability of the obligor’s business operations and its capacity to trade successfully out of financial difficulties and to generate sufficient cash flows to service its debt obligations. A loan or a group of loans is impaired and impairment losses are recognised only if there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (ie. with changes in fair value recognised in the statement of profit or loss.) (g) Embedded Derivatives Some hybrid financial instruments contain both an embedded derivative and a non-derivative component. advances and financing (“loan(s)”) of the Group and the Bank are classified as impaired when they fulfill any of the following criteria: . a high probability of bankruptcy or other financial reorganisation of the obligor. an “incurred loss event”) and that loss event has an impact on the estimated future cash flows of the loan or group of loans that can be reliably estimated. the Group and the Bank assess at each reporting date whether there is any objective evidence that a loan or a group of loans is impaired. or where an impaired loan has been rescheduled or restructured. where a loan is in arrears for less than three (3) months. ANNUAL REPORT 2013 Loans.) PUBLIC BANK BERHAD 2. (v) Summary of Significant Accounting Policies (Cont’d. and the host contract itself is not carried at fair value through profit or loss. For the determination of impairment on loans. (h) Impairment of Financial Assets (i) 57 Loans. the embedded derivative is bifurcated and separately accounted for at fair value. The criteria that the Group and the Bank use to determine that there is objective evidence of an impairment include: (1) (2) (3) (4) (5) any significant financial difficulty of the obligor. The Group and the Bank first assess individually whether objective evidence of impairment exists for loans which are individually significant. Loans that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in collective assessment for impairment.

) (i) Loans. Management monitors the renegotiated loan to ensure that all the revised terms are met and that the repayments are made promptly for a continuous period. . Where a loan shows evidence of significant credit weaknesses. Where a loan is uncollectible. impairment is assessed based on the same criteria as other financial investments available-forsale. the impairment loss is reversed through the statement of profit or loss.) (h) Impairment of Financial Assets (Cont’d. In the case of quoted equity investments. whether or not foreclosure is probable. the cumulative loss (measured as the difference between the acquisition cost and the current fair value.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. These loans continue to be subjected to individual or collective impairment assessment. ANNUAL REPORT 2013 58 Collective assessment of loans is performed via grouping of loans on the basis of similar credit risk characteristics. This may involve an extension of the payment arrangements via rescheduling or the renegotiation of new loan terms and conditions via restructuring. the amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. a significant or prolonged decline in the fair value of the security below its cost is also considered in determining whether objective evidence of impairment exists. (ii) Financial Investments Available-for-Sale The Group and the Bank assess at each reporting date whether there is objective evidence that a financial investment classified as available-for-sale is impaired. the amount of loss is measured as the difference between the loan’s carrying amount and the present value of the estimated future cash flows. Where such evidence exists. For debt instruments. less any impairment loss previously recognised) is removed from equity and recognised in the statement of profit or loss. it is written off against the related allowance for loan impairment. the borrower must adhere to the revised and/or restructured repayment terms for a continuous period of six (6) months before the loan is classified as non-impaired. For unquoted equity investments which are measured at cost. Where appropriate. Subsequent recoveries of the amounts previously written off are recognised in the statement of profit or loss. The carrying amount of the loan is reduced through the use of an allowance account and the amount of loss is recognised in the statement of profit or loss. Future cash flows of each of these groups of loans are estimated on the basis of historical loss experience for such assets and discounted to present value. if there is a subsequent increase in the fair value of the debt instrument that can be objectively related to a credit event occurring after the impairment loss was recognised.) (v) Summary of Significant Accounting Policies (Cont’d. Collective assessment impairment allowance is made on any shortfall in these discounted cash flows against the carrying value of the group of loans. Advances and Financing (Cont’d. Impairment losses recognised in the statement of profit or loss on equity instruments are not reversed through the statement of profit or loss. Where an impaired loan is renegotiated. the calculation of the present value of estimated future cash flows of a collateralised loan reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral. the Group and the Bank may seek to renegotiate the loan rather than to take possession of collateral.) If there is objective evidence that an impairment loss has been incurred. Such loans are written off after the necessary procedures have been completed and the amount of the loss has been determined. Where impairment losses have been previously recognised in the statement of profit or loss. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.

If. The Group has adopted the fair value method in measuring investment properties. Upon disposal of the investment property. 59 ANNUAL REPORT 2013 Where there is objective evidence of impairment. Investment properties are measured initially at its cost. The fair values are based on market values. all properties are measured at fair value. Subsequent to initial recognition. including transaction cost. any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity as a revaluation reserve. Any gain or loss on the retirement or disposal of an investment property is recognised in the statement of profit or loss. Fair values of investment properties are determined with reference to quotations of market value provided by independent professional valuers. Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. with any changes recognised in the statement of profit or loss. the impairment loss is reversed through the statement of profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Properties that are occupied by companies in the Group for conduct of business operations are accounted for as owner-occupied rather than as investment properties upon consolidation. If a fair value gain reverses a previously recognised impairment loss. being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction. less any impairment loss previously recognised. .) (h) Impairment of Financial Assets (Cont’d.) PUBLIC BANK BERHAD 2. in a subsequent period. any surplus previously recorded in revaluation reserve is transferred to retained earnings. an impairment loss is recognised as the difference between the acquisition cost and the present value of the estimated future cash flows. (v) Summary of Significant Accounting Policies (Cont’d. In accordance with MFRS 140. investment properties can be measured using either the cost or fair value method.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.) (iii) Financial Investments Held-to-Maturity The Group and the Bank assess at each reporting date whether objective evidence of impairment of financial investments held-to-maturity exists as a result of one or more loss events and that loss event has an impact on the estimated future cash flows of the financial investment or group of financial investments that can be reliably estimated. the gain is recognised in the statement of profit or loss. When an item of property and equipment is transferred to investment property following a change in its use. the amount of the impairment loss decrease and the decrease can be objectively related to an event occurring after the impairment loss was recognised. (i) Investment Properties Investment properties are properties which are held to earn rental income or for capital appreciation or both.

When significant parts of an item of property and equipment have different useful lives.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. Depreciation is provided at rates which write off the cost or valuation of the asset over the term of the relevant lease or.) (v) Summary of Significant Accounting Policies (Cont’d. All other leases in which the Group is a lessee are classified as operating leases. (i) 60 Finance Lease ANNUAL REPORT 2013 Upon initial recognition. . when it is practicable to determine. the life of the asset. where it is likely that the Group will obtain ownership of the asset. All other repairs and maintenance are charged to the statement of profit or loss when they are incurred. When an operating lease is terminated before the lease period has expired. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. any payment required to be made to the lessor by way of penalty is recognised in the statement of profit or loss in the period the termination takes place. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset. Subsequent to initial recognition. otherwise the Group’s incremental borrowing rate is used. as appropriate. they are accounted for as separate items (major components) of property and equipment. The carrying amount of replaced parts are derecognised. property and equipment other than freehold land are stated at cost less accumulated depreciation and accumulated impairment losses. Freehold land is stated at cost. (ii) Operating Lease All assets under operating leases are not recognised on the statement of financial position. the discount factor used is the interest rate implicit in the lease. the leased asset and the corresponding lease obligations are measured at an amount equal to the lower of the fair value of the leased asset at the beginning of the lease term and the present value of the minimum lease payments. if any. In calculating the present value of the minimum lease payments. (k) Property and Equipment and Depreciation All items of property and equipment are initially recorded at cost. the asset is accounted for in accordance with the accounting policy applicable to property and equipment. only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to initial recognition. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(v)(n). All lease rentals payable are accounted for on a straight-line basis over the lease term and are charged to the statement of profit or loss. Finance charges implicit in the lease payments are charged to the statement of profit or loss over the period of the lease so as to produce an approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period.) (j) Assets Acquired Under Lease Leases in which the Group is a lessee and assumes substantially all the risks and rewards of ownership are classified as finance leases.

including attributable goodwill. or more frequently if events or changes in circumstances indicate that it might be impaired.3% 20. any non-controlling interest and the acquisitiondate fair value of any previously-held equity interest over the fair value of the Group’s share of the identifiable net assets acquired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. the entire resulting gain is recognised immediately in the statement of profit or loss. (l) Goodwill and Intangible Assets (i) Goodwill Goodwill is measured as the excess of consideration transferred. The carrying amount of goodwill is assessed annually for impairment. furniture and fittings Computer equipment and software Motor vehicles . 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.0% – 33. Each CGU represents the lowest level at which the goodwill is monitored for internal management purposes and is not larger than an operating segment in accordance with MFRS 8 Operating Segments. goodwill is allocated to cash-generating units (“CGU”) which are expected to benefit from the synergies of the business combination. Where the fair value of the Group’s share of identifiable net assets acquired exceed the amount of consideration transferred. any non-controlling interest and the acquisition-date fair value of any previously-held equity interest. Goodwill is stated at cost less any accumulated impairment losses.) Freehold land with an indefinite useful life and work-in-progress which are not yet available for use are not depreciated. by comparing the recoverable amount from the CGU against the carrying amount of its net assets. the property is remeasured to fair value and reclassified as investment property. 61 ANNUAL REPORT 2013 Leasehold land Buildings Renovations Office equipment.0% Over the term of the leases ranging from 2 – 7 years 10. For the purpose of impairment assessment. Depreciation of other property and equipment is provided on a straight line basis calculated to write off the cost of each asset to its residual value over the term of its estimated useful lives at the following principal annual rates: Over the remaining leasehold period 2. When the use of a property changes from owner-occupied to investment property.) (k) Property and Equipment and Depreciation (Cont’d. An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. The difference between the net disposal proceeds.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. if any.0% The residual values. (v) Summary of Significant Accounting Policies (Cont’d.) PUBLIC BANK BERHAD 2.3% 20.0% – 33. and the net carrying amount is recognised in the statement of profit or loss. useful lives and depreciation method are reviewed at each financial year end to ensure that the amount.

Following initial recognition. are assessed for impairment annually. provided that this amount does not exceed the carrying value that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised for the asset in prior years.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. which is the higher of the fair value less costs to sell and the value-in-use. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. (n) Impairment of Non-Financial Assets Non-financial assets other than goodwill. The amortisation period and amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. such as property and equipment. Intangible assets with an indefinite useful life are reviewed annually to determine whether the indefinite useful life assumption continues to be supportable. Intangible assets are recognised only when the identifiability and economic benefit probability criterion are met. Intangible assets with an indefinite useful life are not amortised but are reviewed annually for impairment or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The impairment loss is recognised in the statement of profit or loss. Impairment of goodwill is discussed under the accounting policy on goodwill in Note 2(v)(l)(i). Where such indications exist. the carrying amount of the asset is written down to its recoverable amount. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. .) (ii) ANNUAL REPORT 2013 62 Intangible Assets Intangible assets acquired separately are measured at cost on initial recognition. investments in subsidiary and associated companies and foreclosed properties.) (l) Goodwill and Intangible Assets (Cont’d. Intangible assets with a finite useful life will be amortised on a straight line basis over the estimated useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. and is reversed only if there is a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.) (v) Summary of Significant Accounting Policies (Cont’d. (m) Foreclosed Properties Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at the lower of cost and fair value. The carrying amount of an asset is increased to its revised recoverable amount. intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.

Unearned premium reserves (“UPR”) represent the unexpired risks at the end of the financial year. Provision is also made for the cost of claims together with related expenses incurred but not reported at reporting date using a mathematical method of estimation determined by the management on a case by case basis. reflecting the transaction’s economic substance as a collateralised loan by the Group and the Bank. (q) General Insurance General insurance underwriting results are determined after taking into account reinsurances. The difference between the purchase and resale prices is recognised in ‘interest income’ in the statement of profit or loss and is accrued over the life of the agreement using the effective interest method. 63 . reflecting the transaction’s economic substance as a collateralised loan given to the Group and the Bank.) (o) Repurchase and Reverse Repurchase Agreements Securities purchased under resale agreements (ie. repurchase agreements) at a specified future date are not derecognised from the statement of financial position as the Group and the Bank retain substantially all the risks and rewards of ownership. is recognised in ‘reverse repurchase agreements’ in the statement of financial position. The eventual distribution of PER as profit distributable to the IAH is treated as an outflow of funds due to the settlement of the obligation to the IAH. ANNUAL REPORT 2013 Securities sold under repurchase agreements (ie. including accrued interest as a liability. The consideration received is recognised as an asset with the corresponding obligation. including accrued interest. The difference between the sale and the repurchase prices is recognised in ‘interest expense’ in the statement of profit or loss and is accrued over the life of the agreement using the effective interest method. The consideration paid. (r) Profit Equalisation Reserve (“PER”) PER is the amount appropriated out of the total Islamic banking gross income in order to maintain a certain level of return to Investment Account Holders (“IAH”) which is as stipulated by Bank Negara Malaysia’s Guidelines on Profit Equalisation Reserve. The PER of the Group is classified as a separate reserve in equity and subsequent apportionments to and distributions from retained profits are treated as a transfer between reserves. A fixed percentage method or time apportionment method is used in determining the UPR at reporting date. net commissions and net claims incurred. The amount appropriated is shared by the IAH and the Group. The PER of the IAH is classified as a liability and is recognised at cost. (p) Bills and Acceptances Payable Bills and acceptances payable represent the Bank’s own bills and acceptances rediscounted and outstanding in the market. with subsequent apportionments being recognised in the statement of profit or loss. (v) Summary of Significant Accounting Policies (Cont’d.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. reverse repurchase agreements) at a specified future date are not recognised in the statement of financial position. unearned premium reserves.) PUBLIC BANK BERHAD 2. Provision is made for outstanding claims based on the estimated costs of all claims together with related expenses less reinsurance recoveries in respect of claims notified but not settled at reporting date.

it is the Group’s policy to hedge the fixed interest rate risk on these debt securities. and apply fair value hedge accounting. This debt security is classified as a liability in the statement of financial position as there is a contractual obligation to deliver cash or other financial instruments to its holders in the form of regular interest payments. Should such treasury shares be reissued by re-sale in the open market. Provisions are reviewed at each reporting date and if it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where treasury shares are distributed as share dividends. (t) Debt Securities Issued Debt securities issued are classified as financial liabilities or equity in accordance with the substance of the contractual terms of the instruments. The Group has also issued Non-Innovative Tier I stapled securities which are potentially perpetual debt instruments. instead of being carried at amortised cost. re-issuance or cancellation of the treasury shares. (u) Share Capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. (v) Treasury Shares When the Bank re-acquires its own equity shares. When hedge accounting is applied to fixed-rate debt instruments. ANNUAL REPORT 2013 64 Where the effect of the value of money is material. Subsequent to initial recognition. subject to the occurrence of certain events. The Group’s debt securities issued consist mainly of subordinated notes. Costs directly attributable to the issuance of new equity shares are taken to equity as a deduction from the proceeds. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. Shares re-acquired are held as treasury shares and presented as a deduction from equity. it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation and the amount can be reliably estimated.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. is recognised in equity. the cost of the treasury shares are applied in the reduction of the share premium reserve or distributable retained profits or both. These debt securities are classified as liabilities in the statement of financial position as there is a contractual obligation by the Group to make cash payments of either principal or interest or both to holders of the debt securities and that the Group is contractually obliged to settle the financial instrument in cash or another financial instrument. the provision is reversed. including directly attributable costs.) (v) Summary of Significant Accounting Policies (Cont’d. where appropriate. the carrying values of the debt securities are adjusted for changes in fair value related to the hedged exposure. Innovative Tier I capital securities and borrowings. the difference between the sales consideration and the carrying amount are shown as a movement in equity.) (s) Provisions A provision is recognised when there is a present legal or constructive obligation where as a result of past events. the amount of the consideration paid. No gain or loss is recognised in the statement of profit or loss on the sale. . Generally. provisions are discounted using a current pre-tax rate that reflects. potentially extending into the indefinite future. debt securities issued are recognised at amortised cost. as appropriate. the risks specific to the liability.

general insurance. commissions earned and other income derived from commercial banking operations. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. The calculation takes into account all contractual terms of the financial instrument (for example. ANNUAL REPORT 2013 (x) Operating Revenue 65 . or the amount cannot be estimated reliably. unless the probability of outflow of economic benefits is remote. For impaired financial assets where the value of the financial asset has been written down as a result of an impairment loss. interest/financing income continues to be recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. management of unit trust funds and sale of trust units but excluding all related companies transactions. the obligation is disclosed as a contingent liability. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. interest and financing income and expense are recognised under “Interest income”. whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. to the net carrying amount of the financial asset or liability. financing and other Islamic banking activities. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable. stock-broking. (y) Interest and Financing Income and Expense For all financial instruments measured at amortised cost and interest/profit-bearing financial assets classified as held-fortrading and available-for-sale. Possible obligations. but not virtually certain. prepayment options) but does not consider future credit losses. The effective interest method is a method of calculating the amortised cost of a financial asset or liability and of allocating the interest/financing income or expense over the relevant period. (v) Summary of Significant Accounting Policies (Cont’d.) PUBLIC BANK BERHAD 2. Operating revenue of the Bank comprises gross interest income. as well as premiums or discounts are also considered.) (w) Contingent Liabilities and Contingent Assets Where it is not probable that an outflow of economic benefits will be required. where appropriate. “Interest expense” and “Net income from Islamic banking business” respectively in the statement of profit or loss using the effective interest method. Operating revenue of the Group comprises all types of revenue derived from commercial banking. investment banking. Significant fees and transaction costs integral to the effective interest rate.

Past service costs. the Employees’ Provident Fund (“EPF”). such as corporate advisory services. Overseas subsidiary companies make contributions to their respective countries’ statutory pension schemes. the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest). (aa) Dividend Income Dividend income is recognised when the right to receive payment is established. The Group recognises the changes in the net defined benefit obligation which includes current service costs. are accrued over the period. salaries. Fee income from the provision of transaction services. Remeasurement. are recognised upon completion of the underlying transaction. bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. (iii) Defined Benefit Plan The Bank and certain subsidiary companies contribute to a fully funded defined benefit plan approved by the Inland Revenue Board known as the Public Bank Group Officers’ Retirement Benefits Fund (the “Fund”) for its eligible employees. The amount recognised in the statement of financial position represents the actual deficit or surplus in the Fund. such as asset management and loan arrangement and management. Fees that are linked to the performance of a certain activity or service. past service costs and net interest expense or income under “Personnel costs” in the statement of profit or loss. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. (ii) Defined Contribution Plan As required by law.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2. companies in Malaysia make contributions to the state pension scheme. such as funds remittances and stock-broking. are recognised immediately in defined benefit reserve via other comprehensive income and are not subsequently recycled to the statement of profit or loss. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from or reductions in future contributions to the Fund. Net interest cost is calculated by applying the discount rate to the net defined benefit asset or liability. . Such income are generally recognised on an accrual basis when the services have been provided. (ab) Employee Benefits (i) Short-Term Employee Benefits Wages. The benefit is calculated using the Projected Unit Credit Method in order to determine its present value. comprising actuarial gains and losses. are recognised immediately in the statement of profit or loss as incurred.) (v) Summary of Significant Accounting Policies (Cont’d. ANNUAL REPORT 2013 66 Fees earned for the provision of services over a period of time. and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Such contributions are recognised as an expense in the statement of profit or loss as incurred.) (z) Fee and Commission Income The Group and the Bank earn fee and commission income from a diverse range of services provided to its customers. are recognised upon completion of the performance criteria. whether unvested or already vested. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increases their entitlement to future compensated absences. The obligations under the Fund are determined based on actuarial valuation where the amount of benefit that employees have earned in return for their service in the current and prior years are estimated.

The total amount to be recognised as compensation expense is determined by reference to the fair value of the share option at the date of the grant and the number of share options to be vested by the vesting date taking into account. rather than through sale. Deferred tax is not provided for goodwill not deductible for tax purposes and the initial recognition of assets and liabilities that at the time of transaction. For investment properties which are carried at fair value.) (iv) Share-based Compensation Benefits The Group operates a share-based compensation scheme which allows the eligible directors and employees of Public Financial Holdings Limited (“PFHL”) and its subsidiary companies to acquire shares in PFHL. using tax rates enacted or substantively enacted at the reporting date. the amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities. In all other cases. Deferred tax assets and liabilities are not discounted. if any. 67 ANNUAL REPORT 2013 Where the Group pays for services of its employees using share options. the Group revises its estimate of the number of share options that are expected to vest by the vesting date. (ac) Tax Expense Tax expense comprises current and deferred tax. In such cases. with a corresponding increase in equity. . the amount of deferred tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the reporting date unless the property is depreciable and is held with the objective to consume substantially all of the economic benefits embodied in the property over time. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse. Any revision of this estimate is included in the statement of profit or loss and a corresponding adjustment to equity over the remaining vesting period. In principle. using tax rates enacted or substantially enacted at the reporting date. the fair value of the transaction is recognised as an expense in the statement of profit or loss over the vesting periods of the grants. Deferred tax relating to fair value remeasurement of financial investments available-for-sale and cash flow hedges. Current tax is the expected tax payable on the taxable income for the year. (v) Summary of Significant Accounting Policies (Cont’d. the market vesting conditions upon which the options were granted but excluding the impact of any non-market vesting conditions. Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to set off under the same taxable entity and taxation authority. Tax expense is calculated on the basis of the applicable tax law in the respective jurisdiction and is recognised as an expense in the statement of profit or loss except to the extent that it relates to items that are charged or credited in other comprehensive income or directly to equity.NOTES TO THE FINANCIAL STATEMENTS BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D. tax expense is charged or credited to other comprehensive income or to equity. and is subsequently recognised in the statement of profit or loss when the deferred fair value gain or loss is recognised in the statement of profit or loss. based on the laws that have been enacted or substantively enacted at the reporting date. affects neither accounting nor taxable profit. Deferred tax is recognised using the liability method. which are recognised in other comprehensive income. deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences and unutilised tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unutilised tax losses can be utilised. on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.) (ab) Employee Benefits (Cont’d. is also charged or credited directly to other comprehensive income.) PUBLIC BANK BERHAD 2. and any adjustment to tax payable in respect of prior years. At the reporting date.

988 1.080.258 10. Operating segments are distinguishable components of the Group that engage in business activities from which it may earn revenues and incur expenses.) (ad) Dividends Dividends declared on ordinary shares are accounted for as an appropriation of retained profits in the period in which they are approved. An operating segment is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.417 18.667. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONT’D.850.441.194 14.535. All transactions between operating segments are conducted based on mutually agreed allocation bases.800.167 11.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 2.613.443 22.310 1. Income and expenses directly associated with each segment are included in determining business segment performance.086 11.670 8. and for which discrete financial information is available. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period net of treasury shares.) (v) Summary of Significant Accounting Policies (Cont’d.496.789 16.338.679.214.363.297.897.595 1. with intrasegment revenue and costs being eliminated.400 17. 3.784 1.569.628 2.571. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. (ae) Earnings Per Share 68 ANNUAL REPORT 2013 The Group presents basic and diluted (where applicable) earnings per share (“EPS”) data for its ordinary shares.133 19.843 .179 9. including revenues and expenses that relate to transactions with any of the Group’s other components. CASH AND BALANCES WITH BANKS Group Cash and bank balances Money market deposit placements: – maturing within one month – maturing after one month Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 2.828 1. (af) Segment Reporting Segment reporting in the financial statements are presented on the same basis as it is used by management internally for evaluating operating segment performance and in deciding how to allocate resources to operating segments.635.588 1.510.108. No adjustment is made for anti-dilutive potential ordinary shares.951 12.750.

000) respectively.158.588 7.873.963 16.756.929 11.583.153 5.309.346 – 68.286 141.346 – 68.426 13.460 – 879 – 879 405.523 1.977.000) and RM8.547 10.617.523 1.535.811. 69 .489 573.599.016 8.158.106.310.135 13.362 193.640 3.347 15.537.736 – 223.362 193.371.352 3. FINANCIAL ASSETS HELD-FOR-TRADING Group Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 – 223.521 49.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 4.237 – 1.502.379.468 405.221 12.173.044 At fair value Government securities and treasury bills: Malaysian Government Treasury Bills Malaysian Government Securities Malaysian Government Investment Certificates Bank Negara Malaysia Monetary Notes Bank Negara Malaysia Bills Money market instruments: Negotiable instruments of deposit Non-money market instruments: Equity securities – Quoted shares in Malaysia Debt securities – Unquoted private debt securities ANNUAL REPORT 2013 The fair value of securities accepted as collateral under reverse repurchase agreements that the Group and the Bank are permitted to sell or repledge in the absence of default by their owners was RM9.638.000 (31 December 2012 – RM8.969 8.309.953 4.572 4. REVERSE REPURCHASE AGREEMENTS Group Malaysian Government Securities Foreign government treasury bills Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 9.541.352 1.986.286 141.956 332.309.274.771 49.079 1.390 2.237 13.213.343 149.489 574.634.016 7.822.394 803.906. of which none (31 December 2012 – none) have been resold.666.000 (31 December 2012 – RM7.506 8.836.835 332.394 802.424.410 96 8.715.057 96 9.

022 10.725 156.182 11 7.690 63. The notional amounts of these derivative financial instruments refer to the underlying contract value on which changes in the value of the derivatives are measured.594 12. The Group and the Bank may also take conservative positions.775 169.000 38.322 1.033.590 27.872 143. with the expectation to make arbitrage gains from favourable movements in prices or rates via its trading derivatives.100 – 35.876 11.583 73.659 – 6. interest rates and equity prices) of the underlying instruments.177.952.154 – 1. DERIVATIVE FINANCIAL ASSETS/LIABILITIES Derivative financial instruments are off-balance sheet financial instruments whose values change in response to changes in prices or rates (such as foreign exchange rates.301 370. The notional amounts indicate the volume of transactions outstanding at the financial year end but are not indicative of either the market risk or credit risk inherent in the derivative contracts.771 261.565 – 450.220 69.360.089 16.354 334.507.266 11 1.291 183.564 .486 10. These instruments further allow the Group and the Bank to transfer. The risks associated with the use of derivative financial instruments.513.228 365.280 342.044.937 181.209.710 15.392 12.006.081 112 12.116 8.179.518.376.065 – 191. within certain pre-set limits.021 27.890 1 1 206 1 – 17.906 65.616 – 126.132.694 133.225 57.774 29.180 321.669 2. 31 December 2013 Group At fair value Trading derivatives: Foreign exchange contracts – Currency forwards – Currency swaps – Currency options Interest rate related contracts – Interest rate swaps Equity related contracts – Options purchased Precious metal contracts – Forwards Hedging derivatives: Fair value hedge Interest rate related contracts – Interest rate swaps Cash flow hedge Foreign exchange contracts – Cross currency interest rate swaps Interest rate related contracts – Interest rate swaps Total Contract/ Notional Amount RM’000 31 December 2012 Fair Value Assets Liabilities RM’000 RM’000 Contract/ Notional Amount RM’000 Fair Value Assets Liabilities RM’000 RM’000 1.803. Derivative financial instruments that are entered into for hedging purposes but which do not meet the hedge effectiveness criteria or which relate to customers’ transactions are classified as trading derivatives.464 10. as well as management’s policy for controlling these risks are set out in Note 44 to the financial statements.845.465 233.790 8.000 21.000 48 208 – – – 52.757 – 3.879. modify or reduce its foreign exchange and interest rate risks via designated hedge relationships. ANNUAL REPORT 2013 70 The table below shows the Group’s and the Bank’s derivative financial instruments measured at their fair values together with their corresponding contract/notional amounts as at the reporting date.551 854 3.993 2.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 6.198 15.

360 52.331 4.089 16.747.486 10.) 31 December 2013 Contract/ Notional Bank Hedging derivatives: Fair value hedge Interest rate related contracts – Interest rate swaps Cash flow hedge Foreign exchange contracts – Cross currency interest rate swaps Interest rate related contracts – Interest rate swaps Total Fair Value Assets RM’000 Liabilities RM’000 Amount RM’000 Fair Value Assets RM’000 Liabilities RM’000 71 1.556.120 27.196.038 2.285 10.322 1.766 350.377 143.344 210.780 145.132.814 11.687 155.044.005.758 11. The fair value at inception of options contracts purchased represents the consideration paid for these contracts.663 30.956 13.495 28.721 15. ANNUAL REPORT 2013 At fair value Trading derivatives: Foreign exchange contracts – Currency forwards – Currency swaps – Currency options Interest rate related contracts – Interest rate swaps Equity related contracts – Options purchased Precious metal contracts – Forwards Amount RM’000 31 December 2012 Contract/ Notional .376.175 57.457 8.595 – 6.154 – 1.729 429.348 – 1.251 117. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.895 11 7.000 24.677.752.065 – 191.041 11 990.521.687 – 3.890 1 1 206 1 – 17.594 12.873 65.324 183.968.084 10.097 7.760 With the exception of options contracts.100 – 35.471 355. the fair values of derivative financial instruments are normally zero or negligible at inception. The subsequent change in fair value is either favourable or unfavourable as a result of fluctuations in the underlying market interest rates and/or foreign exchange rates relative to the terms of the respective contracts.102 336.564 65.000 15.681 48 832 18.669 3. with subsequent changes in the fair value dependent on the movements in the value of the underlying asset and/or index.616 – 126.694 94.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 6.832.737 16.179.562 – 469.086 15.258 73.222 364.658.220 47.002 321.076.442 167.

as described in Note 2(v)(f). the Group and the Bank continually monitor and assess the credit standing of these counterparties.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 6. The seller receives a premium from the purchaser in consideration of risk. either to buy (a call option) or sell (a put option) at or by a set date during a set period. Forwards are customised contracts transacted in the over-the-counter market.129) The gains and losses on the ineffective portions of the Group’s and the Bank’s fair value hedges are recognised immediately in the statement of profit or loss under “Net gains and losses on financial instruments”.341 (3. This credit risk represents the potential cost to replace the derivative contracts if counterparties fail to fulfill their obligation. . Options may be either exchange-traded or negotiated between the purchaser and the seller in the over-the-counter market. ANNUAL REPORT 2013 Options Options are contractual agreements under which the seller grants the purchaser the right. but not the obligation. the Group and the Bank have positions in the following types of derivative financial instruments: Forwards Forwards are contractual agreements to buy or sell a specified financial instrument at a specific price and date in the future. 72 Swaps Swaps are contractual agreements between two parties to exchange exposures in foreign currency or interest rates.519) 130.665 (33) 1. a specific amount of an underlying asset at a predetermined price.209) 7. Over-the-counter derivatives may expose the Group and the Bank to the risks associated with the absence of an exchange to close out an open position.501) 112.) As at 31 December 2013.625 – (8.726) 2.096) 29 (128. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.131 (1. The financial instruments hedged for interest rate risk include the Bank’s debt securities issued and financial investments available-for-sale. The Group and the Bank primarily use interest rate swaps as hedges of interest rate risk.080 – 2.106 (1. the accounting treatment of these derivatives will depend on the nature of the instrument hedged and the type of hedge transaction. These hedge transactions include: Fair Value Hedges The Group and the Bank use fair value hedges to protect against changes in the fair value of fixed-rate long-term financial instruments due to movements in market interest rates. Where derivatives of the Group and the Bank have been designated for the purpose of hedging and meet the hedge effectiveness criteria. The net gains and losses arising from fair value hedges during the year are as follows: Group (Loss)/gain on hedging instruments Gain/(loss) on the hedged items attributable to the hedged risk Exchange differences Ineffectiveness charged to the statement of profit or loss (Note 33) Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 (110. To control the level of credit risk.

514 1.872) (116. Set out below is a schedule indicating as at the financial year end.825 (2.616 10. the periods when the hedged cash flows are expected to occur and when they are expected to impact the statement of profit or loss: 73 3–5 years RM'000 Over 5 years RM'000 2013 Cash inflows/(outflows) on assets Cash inflows/(outflows) on liabilities 1.198 25.) Cash Flow Hedges The Group and the Bank principally use interest/profit rate swaps to protect against exposures to variability in future cash flows on non-trading financial assets and liabilities which bear interest/profit at variable rates.600 (64.187 (23.781) 3.745 35.663) 2012 Cash inflows/(outflows) on assets Cash inflows/(outflows) on liabilities Net cash inflows/(outflows) ANNUAL REPORT 2013 Within 1 year RM'000 Group 1–3 years RM'000 .105) 2.962 3.202 519 66.185 9.408 51.642 24.351) (106.604 65.560 60 35.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 6.089 35.616 3–5 years RM'000 Over 5 years RM'000 2012 Cash inflows on assets Cash inflows/(outflows) on liabilities Net cash inflows/(outflows) Within 1 year RM'000 Bank 1–3 years RM'000 2013 Cash inflows/(outflows) on assets Cash inflows/(outflows) on liabilities 9.523) (109.572 9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.582) – 2.540 – (64.576) 9.731 (140.838 3.781) – 3.400 67.663) – 19.927 (64.708) (43.344 (112.514 Net cash inflows/(outflows) 26.479) (106.255) (43.544 62.576) – Net cash inflows/(outflows) 34.836 16.453 (67.

000 (2012 – gain of RM44.106.255 2. ANNUAL REPORT 2013 74 The gains and losses on the ineffective portions of such derivatives are recognised immediately in the statement of profit or loss under “Net gains and losses on financial instruments”.729 180.) There were no cash flow hedges that were discontinued as a result of the hedged cash flows no longer expected to occur.715. The financial instruments designated as net investment hedges are as follows: Group Long-term borrowings Short-term interbank borrowings 31 December 2013 RM'000 31 December 2012 RM'000 193.000).912.422 2. a net gain of RM1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 6. a gain of RM572.) Cash Flow Hedges (Cont’d.504 3. During the financial year. Hedge of Net Investment in Foreign Operations The Group’s statement of financial position is affected by gains and losses as a result of the translation of net assets of its subsidiary companies denominated in currencies other than its functional currency.083. During the financial year. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.526 2.895. The Group hedges its exposures to foreign exchange risk via the designation of certain long-term borrowings and short-term interbank borrowing funding pools.000) was recognised by the Group and the Bank in the statement of profit or loss.000 (2012 – gain of RM962. . The net gain on cash flow hedges reclassified from equity to the statement of profit or loss is recognised in “Net gains and losses on financial instruments”.000 (2012 – net gain of RM16.000) (Note 33) was recognised by the Group and the Bank.926 The gains and losses on the ineffective portions that was recognised in the statement of profit or loss under “Other operating income” during the financial year arising from hedges of net investment in foreign operations was a loss of RM964.

386.133.078.356 3.554.239 10.984 108.117 6.844 – 4.341.135 75 ANNUAL REPORT 2013 At fair value Government securities and treasury bills: Malaysian Government Treasury Bills Malaysian Government Securities Malaysian Government Investment Certificates Bank Negara Malaysia Monetary Notes Bank .512 17.265 26.107.672 198.210 10.514.538.256.572 17.916 491.897 110.604.471 4.383 4.003 8.265 26.034 7.562 4.201.341.298 6.845 7.239 1.124.962.133 1.224 2.903 4. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE Group Money market instruments: Negotiable instruments of deposit Non-money market instruments: Equity securities# – Quoted shares and convertible loan stocks in Malaysia – Quoted shares and convertible loan stocks outside Malaysia – Unquoted shares Debt securities – Unquoted private debt securities Unit trust funds # Stated at cost.493 7.665 4.135 6.634 10.867 15.389.669.162 7.355 1.844 – 198.140.618.285 36.790 975.356 1.244 6.386.620.703.106.607.785 11.249 36.068.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 7.313.355 836.614 2.017 845.105.604.916 491.409.017 845.014. net of impairment loss amounting to 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 1.875 1.120 15.785 – 106.210 – 104.790 975.879 5.725 9.095 4.

) A reconciliation of accumulated impairment loss by class of financial instrument is as follows: Group Non-money market instruments: Equity securities At 1 January Impairment made during the year (Note 38) Amount written off ANNUAL REPORT 2013 76 At 31 December 8.514 2.472.819 111.135 – (19.875) 26.771 5.307 – – 1.617.016.870) 35.190.739.787.544 5. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE (CONT’D.135 – (19.194 756.257.235.717.800 4.139.670 1.201 1.951 90.606.437.807 – 2.637 2.793.265 26.980 149.287 1.725 – – 1.059 629.598 1.119.115 3.285 – 4.933 1.425 635.135 6.477 3.509.777 89.596 3.870) 29.807 130.533 (12.318 3.184 727.890.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 7.093.436 642.010 732.205.138 5.089.314 .265 26.533 (6.742 279.399.437 1.827 1.058 2.513) 6.551 6.528.500 2.992 (107) (155) (107) (155) 7.092 1. Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 26.135 FINANCIAL INVESTMENTS HELD-TO-MATURITY Group At amortised cost Government securities and treasury bills: Malaysian Government Treasury Bills Malaysian Government Securities Malaysian Government Investment Certificates Foreign government treasury bills Other foreign government securities Money market instruments: Negotiable instruments of deposit Bankers’ acceptances and Islamic accepted bills Non-money market instruments: Debt securities – Cagamas bonds – Unquoted private debt securities Accumulated impairment losses Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 19.472.069 197.886.170.184 58.223.059 144.872 – 1.869 1.161 299.739.895 1.961 1.

941 1.082 – 1.170.315.359.821 775.604 755.720.001.102 (947) At 31 December 107 155 77 ANNUAL REPORT 2013 Maturity within one year More than one year to three years More than three years to five years More than five years Bank .489.495.943 1.279 512.296 – 1.885.233 5.512.924 1.744.077 111.147.744.234 526.097.784 634.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 8.016 – 1.923 1.280 279.731 1.622.916 5.849 526.742 2.101.492 299.198 197.054.570.) The maturity structure of government securities and treasury bills and money market instruments held is as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 3.924 267.420 1.386 2. FINANCIAL INVESTMENTS HELD-TO-MATURITY (CONT’D.338.849 1.179 58.085 813.298 3.906.185 1.204.432 – 1.233.953 1.179 727.027.815 1.879 – 1.786 89.927 4.027 – A reconciliation of accumulated impairment loss by class of financial instrument is as follows: Group and Bank 2013 RM’000 2012 RM’000 Non-money Market Instruments: Debt Securities At 1 January Amount written off 155 (48) 1.477 The indicative market value of government securities and treasury bills and money market instruments is as follows: Group Malaysian Government Treasury Bills Malaysian Government Securities Malaysian Government Investment Certificates Foreign government treasury bills Other foreign government securities Negotiable instruments of deposit Bankers’ acceptances and Islamic accepted bills Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 19.375 – 1.474.234.740.636 2.751 6.

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

9.

LOANS, ADVANCES AND FINANCING
Group

ANNUAL REPORT 2013

78

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

9,694,121

9,528,841

8,319,983

8,291,756

69,371,088
1,782,419
44,923,671
83,603,166
1,623,283
132,233
318,642
4,146,270
4,247,740
1,333,170

59,867,383
1,974,334
42,021,461
73,633,407
1,604,211
130,609
324,142
4,020,397
3,464,140
1,214,239

60,472,169
1,071,646
31,906,568
70,256,580
1,613,033
112,310
262,301
4,013,598
4,273,079
1,254,160

52,536,395
881,720
30,138,506
61,665,524
1,594,106
97,980
278,177
4,007,132
3,505,412
1,141,458

Gross loans, advances and financing
Less: Allowance for impaired loans and financing
– collective assessment allowance
– individual assessment allowance

221,175,803

197,783,164

183,555,427

164,138,166

Net loans, advances and financing

219,415,793

At amortised cost
Overdrafts
Term loans/financing
– Housing loans/financing
– Syndicated term loans/financing
– Hire purchase receivables
– Other term loans/financing
Credit card receivables
Bills receivables
Trust receipts
Claims on customers under acceptance credits#
Revolving credits
Staff loans*

(1,592,085)
(167,925)

(1,529,566)
(201,995)
196,051,603

(1,071,089)
(79,765)
182,404,573

(1,059,484)
(110,074)
162,968,608

#

Included in claims on customers under acceptance credits of the Group and the Bank are bankers’ acceptance rediscounted of
RM974,991,000 (31 December 2012 – RM2,306,869,000) and RM974,121,000 (31 December 2012 – RM2,305,913,000)
respectively.

*

Included in staff loans of the Group and the Bank are loans to directors of subsidiary companies amounting to RM3,499,000
(31 December 2012 – RM3,785,000) and RM3,092,000 (31 December 2012 – RM3,313,000) respectively.

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

9.

LOANS, ADVANCES AND FINANCING (CONT’D.)
Gross loans, advances and financing presented by class of financial instruments are as follows:
Group

Corporate loans/financing

*

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

69,371,088
44,923,671
1,623,283
74,634,000

59,867,383
42,021,461
1,604,211
66,421,547

60,472,169
31,906,568
1,613,033
64,745,015

52,536,395
30,138,506
1,594,106
57,307,670

190,552,042
30,623,761

169,914,602
27,868,562

158,736,785
24,818,642

141,576,677
22,561,489

221,175,803

197,783,164

183,555,427

164,138,166

Included in retail loans/financing are loans/financing granted to individual borrowers and mid-market commercial enterprises.

^ Included in other loans/financing are term loans, trade financing, overdrafts and revolving credits.
The maturity structure of gross loans, advances and financing by residual contractual maturity is as follows:
Group

Maturity within one year
More than one year to three years
More than three years to five years
More than five years

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

29,512,905
21,787,337
21,614,004
148,261,557

26,478,852
22,671,399
18,899,528
129,733,385

24,665,072
17,348,887
16,869,100
124,672,368

22,175,219
18,602,463
14,547,090
108,813,394

221,175,803

197,783,164

183,555,427

164,138,166

79

ANNUAL REPORT 2013

Retail loans/financing*
– Housing loans/financing
– Hire purchase
– Credit cards
– Other loans/financing^

Bank

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

9.

LOANS, ADVANCES AND FINANCING (CONT’D.)
Gross loans, advances and financing analysed by type of customer are as follows:
Group

ANNUAL REPORT 2013

80
Banking institutions
Non-bank financial institutions
– Stock-broking companies
– Others
Business enterprises
– Small and medium enterprises
– Others
Government and statutory bodies
Individuals
Other entities
Foreign entities

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

219,841

572,034

32,806

397,658

10,415
5,867,394

14,202
5,676,475

10,415
5,796,575

14,202
5,434,225

46,466,558
24,774,604
328,984
141,050,941
43,708
2,413,358

38,966,081
24,147,664
341,178
126,071,304
42,618
1,951,608

41,907,628
19,839,602
9,205
113,628,081
41,090
2,290,025

35,195,448
19,727,188
19,300
101,473,775
39,740
1,836,630

221,175,803

197,783,164

183,555,427

164,138,166

Gross loans, advances and financing analysed by geographical distribution are as follows:
Group

Malaysia
Hong Kong SAR and the People's Republic of China
Cambodia
Other countries

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

206,634,918
11,573,237
2,430,458
537,190

184,541,775
10,778,263
2,077,097
386,029

183,018,237


537,190

163,752,137


386,029

221,175,803

197,783,164

183,555,427

164,138,166

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

9.

LOANS, ADVANCES AND FINANCING (CONT’D.)
Gross loans, advances and financing analysed by interest rate/rate of return sensitivity are as follows:
Group
31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

760,224
43,231,795
15,294,702

1,200,815
40,487,636
15,447,863

100,506
31,896,405
8,200,180

461,400
30,128,935
8,170,545

131,488,842
20,029,781
10,370,459

113,302,637
17,881,772
9,462,441

123,273,711
19,323,512
761,113

107,615,616
17,123,260
638,410

221,175,803

197,783,164

183,555,427

164,138,166

Gross loans, advances and financing analysed by economic purpose are as follows:
Group

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

4,023,503
45,158,466
126,004,256

4,126,999
42,238,571
108,286,165

3,861,298
32,139,612
111,871,882

4,050,091
30,344,330
96,520,395

(of which: – residential
– non-residential)

70,928,295
55,075,961

61,130,701
47,155,464

62,005,417
49,866,465

53,826,198
42,694,197

Purchase of fixed assets (excluding landed properties)
Personal use
Credit card
Purchase of consumer durables
Construction
Mergers and acquisitions
Working capital
Other purpose

242,072
9,090,491
1,623,283
16,855
2,903,437
208,454
28,219,556
3,685,430

298,551
9,318,142
1,604,211
16,746
2,493,576
220,006
25,325,719
3,854,478

212,738
4,527,048
1,613,033
13,619
2,268,033
208,454
23,401,960
3,437,750

258,721
4,270,035
1,594,106
13,103
1,911,728
220,006
21,365,295
3,590,356

221,175,803

197,783,164

183,555,427

164,138,166

Purchase of securities
Purchase of transport vehicles
Purchase of landed properties

81

ANNUAL REPORT 2013

Fixed rate
– Housing loans/financing
– Hire purchase receivables
– Other fixed rate loans/financing
Variable rate
– Base lending rate plus
– Cost plus
– Other variable rates

Bank

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

9.

LOANS, ADVANCES AND FINANCING (CONT’D.)
Gross loans, advances and financing analysed by sectors are as follows:
Group

ANNUAL REPORT 2013

82
Agriculture, hunting, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas and water
Construction
Wholesale & retail trade and restaurants & hotels
Transport, storage and communication
Finance, insurance and business services
Real estate
Community, social and personal services
Households
Others

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

2,847,443
199,457
8,891,271
54,698
6,597,972
19,372,207
3,395,952
12,214,958
21,064,548
4,319,749
141,214,063
1,003,485

2,690,193
158,556
8,149,499
38,083
6,039,106
17,304,919
3,182,098
11,325,402
17,850,585
3,947,054
126,342,848
754,821

2,471,313
167,811
7,885,681
21,429
5,580,719
17,702,488
2,577,828
10,838,160
17,867,116
3,886,443
114,444,907
111,532

2,422,271
138,374
7,316,331
14,898
5,174,150
15,819,202
2,434,007
10,077,315
14,926,521
3,542,013
102,115,314
157,770

221,175,803

197,783,164

183,555,427

164,138,166

Movements in impaired loans, advances and financing (“impaired loans/financing”) are as follows:
Group

Bank

2013
RM’000

2012
RM’000

2013
RM’000

2012
RM’000

At 1 January
Impaired during the year
Reclassified as non-impaired
Recoveries
Amount written off
Loans/financing converted to foreclosed properties/investments
Exchange differences

1,374,086
2,939,301
(1,976,588)
(299,343)
(555,058)
(10,981)
13,362

1,529,657
2,575,901
(1,924,842)
(299,087)
(475,296)
(24,759)
(7,488)

1,014,660
2,125,565
(1,576,211)
(169,777)
(247,931)
(10,721)
152

1,150,234
1,881,155
(1,571,125)
(234,953)
(185,974)
(24,502)
(175)

At 31 December

1,484,779

1,374,086

1,135,737

1,014,660

0.67%

0.69%

0.62%

0.62%

Gross impaired loans as % of gross loans,
advances and financing

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

9.

LOANS, ADVANCES AND FINANCING (CONT’D.)
Impaired loans/financing analysed by geographical distribution are as follows:
Group
31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

1,364,302
74,329
44,108
2,040

1,212,622
96,054
63,105
2,305

1,133,697


2,040

1,012,355


2,305

1,484,779

1,374,086

1,135,737

1,014,660

Impaired loans/financing analysed by economic purpose are as follows:
Group

Bank

31 December
2013
RM’000

31 December
2012
RM’000

31 December
2013
RM’000

31 December
2012
RM’000

Purchase of securities
Purchase of transport vehicles
Purchase of landed properties

3,466
357,474
676,066

5,852
263,313
591,758

3,462
256,600
608,140

5,848
189,226
497,871

(of which: – residential
– non-residential)

526,930
149,136

420,286
171,472

468,751
139,389

371,040
126,831

Purchase of fixed assets (excluding landed properties)
Personal use
Credit card
Purchase of consumer durables
Construction
Working capital
Other purpose

6,003
169,312
23,161
82
11,469
223,163
14,583

6,168
165,205
23,421
377
14,109
283,886
19,997

5,977
48,542
23,084
4
8,855
166,649
14,424

6,049
47,086
23,309
309
13,369
211,641
19,952

1,484,779

1,374,086

1,135,737

1,014,660

83

ANNUAL REPORT 2013

Malaysia
Hong Kong SAR and the People's Republic of China
Cambodia
Other countries

Bank

566 16.571 880 1.427 1.484.566 . hunting.193 (35.688 16.493 18.529.029 1.155 56.Retail Loans/Financing ------------------------> Housing Other Loans/ Hire Credit Loans/ Financing Financing Purchase Cards RM’000 RM’000 RM’000 RM’000 Corporate Loans/ Financing RM’000 Total RM’000 515.219 23.167 24.416 1.388 15. insurance and business services Real estate Community.179) 7 40.980 622.397) – (479) 279.603 (69.996) (1.715 20.258 (23.205 68.551 41.892 529.813 86.712 1.462 47.286 (38.998 (52.796 425. storage and communication Finance.697) 2.118 768.331 21. LOANS.044 29.199 (243.058 11. ADVANCES AND FINANCING (CONT’D.890) (25) 160.779 1.529.478) (1) 54.336 117.113 54. social and personal services Households Others A reconciliation of the allowance for impaired loans/financing by class of financial instrument is as follows: Group Collective Assessment Allowance 2013 At 1 January 2013 Allowance made during the year (Note 37) Amount written off Exchange differences At 31 December 2013 2012 At 1 January 2012 Allowance made/(written back) during the year (Note 37) Amount written off Exchange differences At 31 December 2012 <-----------------------.483 110. gas and water Construction Wholesale & retail trade and restaurants & hotels Transport.135.496.441) 42 240.712 1.954 21. forestry and fishing Mining and quarrying Manufacturing Electricity.125 16.375 58.155 56.544 1.342 871 4.050.422 97 117.559 437 98.125 16.681) 515.660 Agriculture.365 – 467 340.959 44.592.540 (136.646 – 37.632 2.) Impaired loans/financing analysed by sectors are as follows: Group ANNUAL REPORT 2013 84 Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 16.086 1.834 495.166) (2.737 1.314 1.188 130.147 (131.186 30.495 (36.453 396.772 132 130.289 (280.805) (1.811 15.739 1.597 59.604) 2.085 510.823) (10) 37.064 514.778 515.778 515.128 59.217 61.781 489.374.128 2.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 9.796 425.908 61.588 1.907 – 66.692 1.014.287) 4 41.458 20.778 19.091 867.600 106.

076 16.059.002 (38.888 1.212 21.039 15.484 ANNUAL REPORT 2013 2013 At 1 January 2013 Allowance made during the year (Note 37) Amount written off Exchange differences <-------------------------------.222 1.325) – 37.826 (21.758) 397 435.888 1.279 (38.574) (273) 462.708 209.716 247.611 291.478) – 13.362 (89.966 (208.076) (273) (255) – – 187.480 265.334 – – 219.522 42.020 (19.547 (33.605) – 40.028 253.193 41.071.193 41.804 (98.484 5.030) – 171. LOANS.143 1.275 18.836) 397 1.038.) A reconciliation of the allowance for impaired loans/financing by class of financial instrument is as follows (Cont’d.128 364. ADVANCES AND FINANCING (CONT’D.716 247.611 291.119 (165.076 16.): Bank Collective Assessment Allowance At 31 December 2013 2012 At 1 January 2012 Allowance made/(written back) during the year (Note 37) Amount written off Exchange differences At 31 December 2012 Corporate Loans RM’000 Total RM’000 85 462.089 462.756 43.287) – 1.Retail Loans --------------------------------> Housing Hire Credit Other Loans Purchase Cards Loans RM’000 RM’000 RM’000 RM’000 .166 (35.695) – 115.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 9.059.

344 – 132.986 109.452) 13.002 – 205.747 95 327 – 238.664) 194.104 201.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 9.104 201. ADVANCES AND FINANCING (CONT’D.576 167.300) – (1) – (59) – – (1.083 1.547) (21.026 5.482 – 110.469) (17.164) – 8 (96) 98 – – (253.133 (274.700 55.404) (4.068) – (207.119) (231.219 – 125.930) (52.566) (1.219 – 125.865 548 1.047) (17.404) (5.637 167 1.608 75.629) (3.266 246.) A reconciliation of the allowance for impaired loans/financing by class of financial instrument is as follows (Cont’d.714 242.919 – (77) – (34.995 .146 245 225.995 95 261 – 225.454) 14.979 (12.911 – (66) – (13.925 1.196 548 1.906) 1.362) 64 1.398 (20.Retail Loans/Financing ------------------------> Housing Other Loans/ Hire Credit Loans/ Financing Purchase Cards Financing RM’000 RM’000 RM’000 RM’000 Corporate Loans/ Financing RM’000 Total RM’000 64 1.775 3.079 – 240.406) – (896) (1.608 75. LOANS.054) (1.): Group Individual Assessment Allowance ANNUAL REPORT 2013 86 2013 At 1 January 2013 Net allowance made during the year (Note 37) Allowance made during the year Amount written back in respect of recoveries Amount written off Exchange differences At 31 December 2013 2012 At 1 January 2012 Net allowance made during the year (Note 37) Allowance made during the year Amount written back in respect of recoveries Amount written off Amount transferred to allowance for impairment loss on foreclosed properties Exchange differences At 31 December 2012 <-----------------------.783 245.

080 – – 56.864 Allowance made during the year Amount written back in respect of recoveries – – – 14.948 41.817 79.043) (1.122 110.122 110.404) – – – 48.173) At 31 December 2013 – – – 37.074 2012 At 1 January 2012 Net allowance made during the year (Note 37) Allowance made during the year Amount written back in respect of recoveries Amount written off Amount transferred to allowance for impairment loss on foreclosed properties At 31 December 2012 87 ANNUAL REPORT 2013 2013 At 1 January 2013 Net allowance made during the year (Note 37) Housing Loans RM’000 .NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 9.976 18.404) – (1.357 507 8.074 – – – 8.748 486 – – 11.469) (9.830 (15.566) – – (17.478) Amount written off – – – (19.744 27.952 61.173 – – – (12.): <-----------------------------– Retail Loans ------------------------------–> Bank Individual Assessment Allowance Hire Purchase RM’000 Credit Cards RM’000 Other Loans RM’000 Corporate Loans RM’000 Total RM’000 – – – 48.113) (17.107 77.253) (20.561 134.581) (1.186) (2.342 – – – (6.366 3.952 61.930) (30.) A reconciliation of the allowance for impaired loans/financing by class of financial instrument is as follows (Cont’d.870) 486 – – 23. ADVANCES AND FINANCING (CONT’D.400) – – – (1. LOANS.009) (3.943 2.812) (39.361) (19.765 1.

972 2.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 10.056 204.409.971 236.652 42.280 1.824 1.119.152 2.712 44.827 39.857 230.075 87.130 264.998 2.338.522 45.571 32.647 162.410.651 286.984 111.079 82.987 213.156.402 52.635 34.650 1.560 1.615 45.635 206.293 43.234 397.717 1.749 192.673 1.165.231.656 45.494 .093 260.539.696 99.306 55. deposits and prepayments Employee benefits (Note 24(a)) Foreclosed properties # Amount due from subsidiary companies ^^ Dividend receivable from subsidiary companies (Note 42(b)) # Stated net of accumulated allowance for impairment loss amounting to 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 175.141 1.061 106.942 1.283.995 20.879 469.277 67.982 37.374 1.251 80.089 2.310 2.381 109.221.787 33.339 22.384 2.462 173.652 97.536 294. deposits and prepayments Manager’s stocks** Amount due from trust funds ^ Employee benefits (Note 24(a)) Foreclosed properties # Taxi licenses Outstanding contracts on clients’ accounts @## # Stated net of accumulated allowance for impairment loss amounting to @ Stated net of accumulated allowance for bad and doubtful debts amounting to 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 242.237 2. OTHER ASSETS Group 31 December 2013 RM’000 ANNUAL REPORT 2013 88 Deferred handling fees* Interest/Income receivable Other receivables.891 199.248 429.098.829 42.083 Bank 31 December 2013 RM’000 Deferred handling fees* Interest/Income receivable Other receivables.529 1.339 57.205.734 69.699 2.

** Manager’s stocks represent trust units held by the fund management subsidiary company.738. 89 Group Statutory deposits with Bank Negara Malaysia* Statutory deposits with the National Bank of Cambodia # Other statutory deposits Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 6. ANNUAL REPORT 2013 11.380 – 28. STATUTORY DEPOSITS WITH CENTRAL BANKS .902 28. the amounts of which are determined as set percentages of Cambodian Public Bank Plc’s issued share capital and deposits from customers.206 5. (ii) Campu Lonpac Insurance Plc and are maintained in compliance with Article 53 of the Royale Government’s Sub-Decree on Insurance dated 22 October 2001 and Article 1 of the Ministry of Economy and Finance’s Circular No. non-interest bearing and are repayable on demand. 009 SECC/09 dated 18 November 2009 on Licensing of Securities Firms and Securities Representatives issued by the Securities and Exchange Commission of Cambodia.300 419.536.833 6. 2009.565. # These statutory deposits are maintained with the National Bank of Cambodia (“NBC”) in respect of: (i) Cambodian Public Bank Plc and are maintained in compliance with Article 5 of NBC Prakas No. 009 SHV dated 9 December 2009. It also includes management fee receivable from trust funds. B7-012-140. and (iii) Campu Securities Plc and this represents the non-interest bearing deposit specifically earmarked for Campu Securities Plc in compliance with the Law on the Issuance and Trading of Non-Government Securities and is determined in Article 17 of the Prakas No. The amount of the Statutory Reserve Requirement is determined based on a set percentage of total eligible liabilities.924.213 * The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 26(2)(c) of the Central Bank of Malaysia Act.833 5. the amounts are determined as a set percentage of the issued share capital of Campu Lonpac Insurance Plc. ^^ These balances are unsecured. ## This balance represents outstanding purchase contracts in respect of the stock-broking business of the investment banking subsidiary company entered into on behalf of clients where settlements have yet to be made by clients.496 5. OTHER ASSETS (CONT’D.381.832 5.946 4.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 10.036 29. The trade settlement is 3 market days according to the Bursa Malaysia Securities Berhad’s trading rules.496 4.471 376. B7-01-136 and Prakas No.) * This represents the unamortised balance of handling fees paid to motor vehicle dealers for hire purchase loans/financing.450 – 29.476. ^ This balance refers to amount due from trust funds managed by the fund management subsidiary company in respect of cancellation and creation of trust units.709.787.

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

12. DEFERRED TAX
Group

ANNUAL REPORT 2013

90

At 1 January
– as previously stated
– effects of adoption of MFRS 119

Bank

2013
RM’000

2012
RM’000
(Restated)

2013
RM’000

2012
RM’000
(Restated)

15,316
(24,839)

(9,532)
(30,168)

(32,003)
(23,987)

(51,708)
(29,133)

At 1 January, as restated
Recognised in the statement of profit or loss (net) (Note 39)
– relating to origination and reversal of temporary differences
– (under)/over provision of net deferred tax liabilities
Recognised in equity (net) (Note 28)
Exchange differences

(9,523)

(39,700)

(55,990)

(80,841)

30,032
(3,294)
(43,073)
318

34,454
9,990
(14,309)
42

22,793
(3,157)
(14,384)

31,768
992
(7,909)

At 31 December

(25,540)

(9,523)

(50,738)

(55,990)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current
tax liabilities and when the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown
on the statement of financial position after appropriate offsetting are as follows:
Group

Deferred tax assets, net
Deferred tax liabilities, net

31 December
2013
RM’000

31 December
2012
RM’000
(Restated)

1 January
2012
RM’000
(Restated)

70,121
(95,661)

63,227
(72,750)

46,093
(85,793)

(25,540)

(9,523)

(39,700)

Bank
31 December
2013
RM’000

Deferred tax liabilities, net

(50,738)

31 December
2012
RM’000
(Restated)

1 January
2012
RM’000
(Restated)

(55,990)

(80,841)

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

12. DEFERRED TAX (CONT’D.)
Deferred tax assets and liabilities prior to offsetting are summarised as follows:
Group
31 December
2012
RM’000
(Restated)

1 January
2012
RM’000
(Restated)

143,899
(169,439)

106,249
(115,772)

88,442
(128,142)

(25,540)

(9,523)

(39,700)

Bank

Deferred tax assets
Deferred tax liabilities

31 December
2013
RM’000

31 December
2012
RM’000
(Restated)

1 January
2012
RM’000
(Restated)

73,242
(123,980)

42,461
(98,451)

32,690
(113,531)

(50,738)

(55,990)

(80,841)

91

ANNUAL REPORT 2013

Deferred tax assets
Deferred tax liabilities

31 December
2013
RM’000

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

12. DEFERRED TAX (CONT’D.)
The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as follows:
Allowance
for Impaired
Loans
RM’000

Tax
Losses
RM’000

Other
Temporary
Differences
RM’000

Total
RM’000

8,550

118

57,451
22,323

66,119
22,323

8,550

118

79,774

88,442

978
5,146

(349)

(68)


(3)

17,229
(5,073)
(48)
(5)

18,139
73
(48)
(357)

At 31 December 2012
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– over provision
Recognised in equity
Exchange differences

14,325

47

91,877

106,249

(2,441)


926

(48)


1

14,455
(2,570)
27,259
68

11,966
(2,570)
27,259
995

At 31 December 2013

12,810

Deferred tax assets of the Group

ANNUAL REPORT 2013

92

At 1 January 2012
– as previously stated
– effects of adoption of MFRS 119
At 1 January 2012, as restated
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– under/(over) provision
Recognised in equity
Exchange differences

131,089

143,899

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

12. DEFERRED TAX (CONT’D.)
The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as follows
(Cont’d.):

Other
Temporary
Differences
RM’000

Total
RM’000

At 1 January 2012
– as previously stated
– effects of adoption of MFRS 119

484
52,491

75,245

(78)

75,651
52,491

52,975

75,245

(78)

128,142

(12,459)

8,844

(3,819)
(9,951)

(399)

(37)
34
5,417

(16,315)
(9,917)
14,261
(399)

At 1 January 2012, as restated
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– (over)/under provision
Recognised in equity
Exchange differences
At 31 December 2012
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– under provision
Recognised in equity
Exchange differences

49,360

61,076

5,336

115,772

(19,251)
199
43,058

1,121
474

677

64
51
27,274

(18,066)
724
70,332
677

At 31 December 2013

73,366

63,348

32,725

169,439

93

ANNUAL REPORT 2013

Deferred tax liabilities of the Group

Defined
Benefit
Assets
RM’000

Excess of
Capital
Allowances
Over
Depreciation
RM’000

PUBLIC BANK BERHAD

NOTES TO THE
FINANCIAL STATEMENTS

12. DEFERRED TAX (CONT’D.)
The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as follows (Cont’d.):

Deferred tax assets of the Bank

ANNUAL REPORT 2013

94

At 1 January 2012
– as previously stated
– effects of adoption of MFRS 119
At 1 January 2012, as restated
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– over provision
Recognised in equity

Other
Temporary
Differences
RM’000

Total
RM’000

10,367
22,323

10,367
22,323

32,690

32,690

14,120
(4,981)
632

14,120
(4,981)
632

At 31 December 2012
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– over provision
Recognised in equity

42,461

42,461

5,849
(2,571)
27,503

5,849
(2,571)
27,503

At 31 December 2013

73,242

73,242

NOTES TO THE
FINANCIAL STATEMENTS
PUBLIC BANK BERHAD

12. DEFERRED TAX (CONT’D.)
The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as follows (Cont’d.):

Other
Temporary
Differences
RM’000

Total
RM’000

At 1 January 2012
– as previously stated
– effects of adoption of MFRS 119


51,456

62,475

(400)

62,075
51,456

51,456

62,475

(400)

113,531

(12,010)

8,541

(5,638)
(5,976)


3

(17,648)
(5,973)
8,541

At 1 January 2012, as restated
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– (over)/under provision
Recognised in equity
At 31 December 2012
Recognised in the statement of profit or loss (Note 39)
– relating to origination and reversal of temporary differences
– under provision
Recognised in equity

47,987

50,861

(397)

98,451

(18,381)

41,887

1,437
523


63

(16,944)
586
41,887

At 31 December 2013

71,493

52,821

(334)

123,980

Deferred tax assets have not been recognised in respect of the following items as it is not probable that the respective subsidiary
companies will generate sufficient future taxable profits available against which these can be utilised:
Group

Unutilised tax losses
Unutilised capital allowances

31 December
2013
RM’000

31 December
2012
RM’000

1 January
2012
RM’000

15,123
23,093

14,137
23,093

14,911
24,674

Subject to the agreement by the relevant tax authorities, the Group has unabsorbed tax losses and unabsorbed capital allowances
carried forward of RM15,123,000 (31 December 2012 – RM14,421,000; 1 January 2012 – RM15,627,000) and RM23,093,000 (31
December 2012 – RM23,093,000; 1 January 2012 – RM24,674,000) respectively which give rise to the recognised and unrecognised
deferred tax assets in respect of the above unutilised tax losses and unutilised capital allowances.

95

ANNUAL REPORT 2013

Deferred tax liabilities of the Bank

Defined
Benefit
Assets
RM’000

Excess of
Capital
Allowances
Over
Depreciation
RM’000

0 100. Bhd.169 2.629 1.0 100.111 (6.0 100.897 Details of the subsidiary companies are as follows: Effective Interest Name Principal Activities 31 December 2013 % 31 December 2012 % Local subsidiary companies Public Islamic Bank Berhad Islamic banking 100.160. Bhd. Property holding 100. .358.+ Public Mutual Berhad+ Public Holdings Sdn.0 Sale of trust units and management of unit trusts 100. Bhd. Offshore trust company 100.0 PB Properties Sdn. Leasing and factoring 100. Bhd.0 100.436. INVESTMENT IN SUBSIDIARY COMPANIES 31 December 2013 Market Cost Value RM’000 RM’000 Bank ANNUAL REPORT 2013 96 31 December 2012 Market Cost Value RM’000 RM’000 At cost: Quoted shares outside Malaysia – Quoted shares in Hong Kong SAR 1.169 Less: Accumulated impairment losses 4.+ Nominee services 100. Investment holding 100.0 Public Nominees (Asing) Sdn.050 4.0 100.0 Public Consolidated Holdings Sdn.436.672. Bhd.263.747 272.0 100.116 272.0 PB Venture Capital Sdn.325.0 PB International Factoring Sdn. Dormant – 100. Offshore banking 100.195 1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 13. Nominee services 100.0 PBFIN Berhad Dormant 100.0 Public Nominees (Tempatan) Sdn.0 100.270.0 100.480 (430) 4.0 Public Leasing & Factoring Sdn.0 PB Trust (L) Ltd. Bhd.0 Public Investment Bank Berhad+ Investment banking 100.195 Unquoted shares – In Malaysia – Outside Malaysia 2.672. Bhd. Bhd.0 100.0 100.530) 4.0 Public Invest Nominees (Asing) Sdn.0 100.0 Public Invest Nominees (Tempatan) Sdn. Bhd.0 100.0 100.0 100.581 1. Nominee services 100.492.0 Investment holding 100.+ Nominee services 100.0 Public Bank (L) Ltd.0 Dormant 100. Bhd.0 100.

2 Investment holding 73.2 Public Realty Limited+ Dormant 73.0 Investment and property holding 73.0 Campu Lonpac Insurance Plc++ General insurance 55. All the local subsidiary companies are incorporated in Malaysia.2 73. ++ Subsidiary company audited by KPMG Cambodia.2 Deposit-taking and finance 73.2 73.) Limited which is incorporated in the British Virgin Islands. Limited+ Trading of taxi cabs and taxi licences.0 55.0 100.2 Public Investments Limited+ Dormant 73.2 Principal Activities Overseas subsidiary companies Cambodian Public Bank Plc++ Public Financial Holdings Limited+* Public Bank (Hong Kong) Limited+ Public Finance Limited+ Public Financial Limited+ Public Securities Limited+ Banking 73.V. and Winton (B.2 73.I.0 Campu Securities Plc++ Securities dealing and underwriting 100.2 73.2 73.2 73. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D.2 Public Futures Limited+ Dormant 73.2 Investment holding 73.2 Public Bank (Nominees) Limited+ Nominee services 73. Cambodian Public Bank Plc.2 73. 97 ANNUAL REPORT 2013 31 December 2013 % Name .V.2 73. All the overseas subsidiary companies are incorporated in Hong Kong SAR except for Public Financial Holdings Limited which is incorporated in Bermuda.2 73. Campu Securities Plc and Campu Lonpac Insurance Plc which are incorporated in Cambodia.2 73.2 Public Securities (Nominees) Limited+ Nominee services Public Financial Securities Limited+ Stock and share broking 73.2 Stock and share broking 73.2 Winton Motors.2 73.I.2 73.2 73.) Details of the subsidiary companies are as follows (Cont’d.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 13.2 73.2 73.2 Public Credit Limited+ Dormant 73.2 73.0 100.2 73.2 Winton (B. + Subsidiary companies not audited by KPMG.) Limited+ Winton Holdings (Hong Kong) Limited+ Dormant * Shares quoted on The Stock Exchange of Hong Kong Limited.2 Winton Financial Limited+ Provision of financing 73.2 73.): Effective Interest 31 December 2012 % Banking 100. and leasing of taxis 73.2 73.2 Public Pacific Securities Limited+ Dormant 73.

325 158.) Significant events affecting the Group’s subsidiary companies during the year are as follows: (a) Increase in Paid-up Share Capital of Public Islamic Bank Berhad During the financial year.365 17. ANNUAL REPORT 2013 98 (b) Member’s Voluntary Winding-up of PB Properties Sdn.845 121.210 Represented by: Group's share of net assets . Generally.520 141.000 ordinary shares of RM1.325 121. 1965.325 – 121. INVESTMENT IN ASSOCIATED COMPANIES Group Unquoted shares. financial performance and cash flows of the Group. unless approval is obtained from non-controlling shareholders. On 16 December 2013.885 151. non-controlling shareholders hold protective rights restricting the Bank’s ability to use the assets of the subsidiary companies and settle the liabilities of the Group..PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 13. The Group’s subsidiary companies which have non-controlling interests are not material individually or in aggregate to the financial position.000. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D. 14. commenced Member’s Voluntary Winding-up pursuant to Section 254(1)(b) of the Companies Act.325 – 158. a dormant wholly-owned subsidiary of the Bank. at cost Share of post-acquisition reserves Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 141.00 per ordinary share for a total consideration of RM175. the Bank subscribed to 7. The winding-up proceedings have no material effect on the earnings and net assets of the Group for the financial year ended 31 December 2013.885 151. PB Properties Sdn. There are no significant restrictions on the ability of the subsidiary companies to transfer funds to the Group in the form of cash dividends or repayment of loans and advances.000.00 each issued by Public Islamic Bank Berhad at an issue price of RM25. Bhd.210 121. for all subsidiary companies which are not wholly-owned by the Bank.365 9. Bhd.000.

The Group’s associated companies are not material individually or in aggregate to the financial position.629 1. financial performance and cash flows of the Group. INVESTMENT IN ASSOCIATED COMPANIES (CONT’D.594 8.214 186. Ltd. Property holding Cambodia 49.0 40.207.524 Details of the associated companies. all of which are unquoted.324 980. are as follows: Effective Interest 31 December 2013 % 31 December 2012 % Name Principal Activities Place of Incorporation PB Trustee Services Berhad Trustee services Malaysia 40.0 40. 99 ANNUAL REPORT 2013 Total assets Total liabilities Operating revenue Profit after tax Total comprehensive income 31 December 2013 RM’000 .0 CPB Properties Co.304.0 AIA PUBLIC Takaful Berhad (formerly known as ING PUBLIC Takaful Ehsan Berhad) Family takaful Malaysia 40.0 There are no significant restrictions on the ability of the associated companies to transfer funds to the Group in the form of cash dividends.550.127 6.0 VID Public Bank Banking Socialist Republic of Vietnam 50.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 14.721 7.0 50.785 1.328 192..817 6.0 49.) The summarised financial information of associated companies is as follows: Group 31 December 2012 RM’000 1.

547.000) has been recognised in the statement of profit or loss during the financial year.000 (2012 – RM23.886 Included in the above are: Group Short-term leasehold land and building Long-term leasehold land and building 31 December 2013 RM’000 31 December 2012 RM’000 95.950 97.000 85. INVESTMENT PROPERTIES Group Note ANNUAL REPORT 2013 100 At valuation At 1 January Transfer to owner-occupied property – Property and equipment Fair value adjustment arising from revaluation Exchange differences 16 34 At 31 December 31 December 2013 RM’000 31 December 2012 RM’000 87.000) (Note 34) during the year. The investment properties in Hong Kong SAR amounting to RM95.877. The investment properties in Malaysia amounting to RM2.391. a firm of independent professionally qualified valuers.877 (2. from which the Group earned rental income of RM6.391 2. The increase in the fair values of RM2.754 – 2.000) have been determined with reference to quotations of market value provided by an independent professional valuer. The investment properties held by the Group are let under operating leases to third parties.490.936.000.547 6.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 15. .781) 23. No investment properties were pledged as security for banking facilities at the reporting date.950.000 (31 December 2012 – RM1.886 70. on an open market value based on their existing use.000 (31 December 2012 – RM85.886 The Group’s investment properties are stated at fair value and are situated in Malaysia and Hong Kong SAR.391 87. The Group has assessed that the highest and best use of its properties do not differ from their existing use.000) have been revalued by CS Surveyors Limited.936 1.068.964) 97.000 (2012 – RM5.958 (3.391 87.

720 (16.781) 11.940 – – – – 11.110 13.134 183.090 28.985) 1.026 3.347 557.099 1.380 1.735) (1) (2.596 1.885 60.671 – – – 1.444 176.221 174.468 175.658 933.Carrying amounts At 31 December 2013 Accumulated impairment loss At 1 January/ 31 December 2013 At 31 December 2013 Accumulated depreciation At 1 January 2013 Depreciation charge for the year Disposals Reclassification Write-offs Exchange differences At 31 December 2013 Cost At 1 January 2013 Additions Disposals Reclassification Write-offs Exchange differences Group 2013 35 35 35 Note 175.706 575.211 226.091 (2.031 (110) 1 (6) 273 16.658 128.912 (19.820 2.097) – (11.325 171.228) – (12.188 (19.042) – (7.637 (2.957) 856 408.979 – 153.124 – 433.262 33 9.822 24.436 – 28.035 – – – – 8.385 Long term leasehold land RM’000 381.783 974.309 16.959 746.473 Buildings RM’000 85.234 161.341 Renovations RM’000 124.006) 36.757 – 244.626 16.731 – – – – 105.661 (276) (11.330 2.030 515 – – – 381 8.556 582.452 – 6.744.263 3.572 (16.479) 10.058.400 Office equipment.978 10.923.601 30.444 – – – – – Freehold land RM’000 95.422 22.223) 4.980 Work-inprogress RM’000 Motor vehicles RM’000 Computer equipment & software RM’000 ANNUAL REPORT 2013 Short term leasehold land RM’000 1.110 123 – – – 7.889 330.691 22.302.058) – (8.994 Total RM’000 PUBLIC BANK BERHAD 16.154 680 (113) – (2) 391 23. PROPERTY AND EQUIPMENT NOTES TO THE FINANCIAL STATEMENTS 101 .383 311.997 11.702 – – – 1.064 – – – – – – – 176. furniture & fittings RM’000 82.794) 3.725 534.458 (210) – (722) 2.145 (2.510 94.585 820.422 – – – – – – – – 105.726 13.256 116.603.327 124.002 190.637) (796) 3.

993) 2.779) (18.603 – – (5.544 (2.093) Office equipment.040) 933.518 2.552 10.357 (1.781 – (13.603.771 – Buildings RM’000 No land and buildings of the Group were pledged as security for banking facilities at the reporting date.889 213.574) (377) 534. Carrying amounts At 31 December 2012 Accumulated impairment loss At 1 January/31 December 2012 – At 31 December 2012 176.253 (15.494 13.818) 576.691 – – – – 44. PROPERTY AND EQUIPMENT (CONT’D.885 – 2 (9.708 – 24.609 – – – (800) 116.327 22.444 – – – – – – – – 35 15 Note Freehold land RM’000 Accumulated depreciation At 1 January 2012 Depreciation charge for the year 35 Disposals Reclassification Write-offs 35 Exchange differences At 31 December 2012 Cost At 1 January 2012 Additions Disposals Transfer from investment properties Reclassification Write-offs Exchange differences Group 2012 Long term leasehold land RM’000 84.913) 900.979 1.529 38.295) Computer equipment & software RM’000 8.134 7.064 91.773 33 8.638 28.182 – – 163.891 – 13.026 1.201 – 226.375 – 746.201) (126) 22.035 – – – (4.238 30.958) (2.697) (5.606 – – – (544) 575.658 3.154 – – (2.512 (1.292 167.810) 2 (8.147) 120.426 14.201) (232) 23. furniture & fittings RM’000 187.699 15.) ANNUAL REPORT 2013 82.533 11.006) 2.309.094) – (2.962 – 408.331 147.179 2.659 (878) Renovations RM’000 125.816) – (12.615) 173.923.293 103.104) Motor vehicles RM’000 102 Short term leasehold land RM’000 16.110 178 – – (3.347 383.510 665.380 1.402 59.940 3.688 (17.444 – – – – 176.822.837 (1.556 162.309 – 9.263 13.647 (13.691 – – – – – – – – 82.937 (2.617) (701) 514.952 – – 389.002 175.370) Total RM’000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .175.847 2.469.034) 150 (1.166 (878) (152) (1) (945) 311.986 (11.099 1.803 505 – – – (174) 171.090 – (9.567) 292.921) (2.359) (3) (1.162 – Work-inprogress RM’000 1.

786) 382 881.092 – – – – – – 35 35 35 Note At 31 December 2013 Accumulated depreciation At 1 January 2013 Depreciation charge for the year Disposals Reclassification Write-offs Exchange differences At 31 December 2013 Cost At 1 January 2013 Additions Disposals Reclassification Write-offs Exchange differences Bank 2013 Freehold land RM’000 5 53 51 2 – – – – 58 58 – – – – – 167.781 89.069 (11.467 (2.906) – (11.985) 102 Office equipment.579 299.103) 11.256.089) (1) (2.087 751.766 25.216 456 (113) – (2) 50 15.874) – (11.614 182.042 – – – – – Buildings RM’000 71.674 241.087 685.516 568.261 94.864.862 1.178) 466 Computer equipment & software RM’000 Total RM’000 1.325 9.029 1.) NOTES TO THE FINANCIAL STATEMENTS 103 .689) – (8.927.636 320.961) 1.092 Carrying amounts At 31 December 2013 – – – – – – 81. furniture & fittings RM’000 ANNUAL REPORT 2013 Long term leasehold land RM’000 130.957) 60 434.607 8.215 414.637 (2.359.956 4.694 (13.800 (2.346 Motor vehicles RM’000 15.208 (110) 1 (6) 34 10.828 23.096 85.549 5.097 13.060 173.217 50.550 88.637) (796) 411 Renovations RM’000 113.042 262.651 PUBLIC BANK BERHAD 16.829 2.674) – (7.092 81.383 (1) – (722) 75 253.81.869 (1) (11.150 (13.616 127.471) 551 1.358 (11. PROPERTY AND EQUIPMENT (CONT’D.232 – – – – 262.174 850.

223 (6.415) (1.216 16.422) 9.103) – (2.529 – (1) (51) 241.255.516) (99) Office equipment.121 685.800.093) (2.319) (8.177 89.097 395.550 1.939 (1.480 94.864.451) (1.700) (588) 850.092 Carrying amounts At 31 December 2012 – – – – – 81.387 8.002 (1.326) – (13.092 – – – – – – 35 35 35 Note At 31 December 2012 Accumulated depreciation At 1 January 2012 Depreciation charge for the year Disposals Write-offs Exchange differences At 31 December 2012 Cost At 1 January 2012 Additions Disposals Reclassification Write-offs Exchange differences Bank 2012 Long term leasehold land RM’000 104 Freehold land RM’000 16.143.493 89.827) (12.801) – (9.317 5.000 (31 December 2012 – RM66.954 50.193 2. Included in property and equipment of the Group and the Bank are computer equipment and software under finance lease which will expire in one year with a carrying amount of RM24.973 12.590 (1.485) (72) 414.848 9. PROPERTY AND EQUIPMENT (CONT’D.616 1.232 – – – 262.515 (8.201) (27) 15.002) (3) (204) Renovations RM’000 114.042 – – – – – Buildings RM’000 68.331 299.277 (10.211 1.) ANNUAL REPORT 2013 NOTES TO THE FINANCIAL STATEMENTS .256.503 173. furniture & fittings RM’000 165.7 51 49 2 – – – 58 58 – – – – – 172.325 163.217 817.731) (764) Computer equipment & software RM’000 6.159 (1.148 24. 81. No land and buildings of the Bank were pledged as security for banking facilities at the reporting date.000).092 81.075.387 (1.549 84.127) Total RM’000 PUBLIC BANK BERHAD Details of the terms and conditions of the finance lease arrangement are disclosed in Note 23.766 278.201) (60) Motor vehicles RM’000 607.559 (7.828 226.387) (738) 1.042 262.053 135.865 24.829 10.934 1.096 606.172 – (9.

899.953 9.8 5.472 – – 2. as follows: As at 31 December 2013 Cash-generating unit: Hire purchase financing East Malaysia operations (in respect of business acquired from the former Hock Hua Bank) Hong Kong operations Fund management Investment banking Group RM’000 Bank RM’000 Discount rate % Nominal growth rate beyond initial cash flow projections % 395.347 695.420 1.953 395.6 5.555 54.472 20 26.938.393 – At 31 December 1.8 7.912 695.994 (39.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 17.393 695.977.119) 695.003.8 9.6 299.545 1.661 19.482 (10) – – – – At 31 December 26.440 – – – 8.003. INTANGIBLE ASSETS Group Bank 2012 RM’000 2013 RM’000 2012 RM’000 Goodwill At 1 January Exchange differences 1.234.6 2.875 695.8 5.0 8.899.912 1. which are either operating segments or at a level not larger than an operating segment.393 Intangible Assets At 1 January Exchange differences 26.8 5.393 Total carrying amounts of goodwill and intangible assets Impairment Assessment on Goodwill and Intangible Assets For purposes of impairment assessment.926.875 77.393 695.440 1.393 – 695.6 4.393 105 ANNUAL REPORT 2013 2013 RM’000 .303 299. goodwill and intangible assets have been allocated to the Group’s cash-generating units (“CGU”).492 26.

7 5.953 10.7 1. The key assumptions for the computation of value-in-use include the discount rates and growth rates applied. at the date of assessment of the respective CGU. INTANGIBLE ASSETS (CONT’D.7 5.5 10. Based on this review.393 Goodwill is allocated to the Group’s CGUs expected to benefit from the synergies of the acquisitions.1 9. where applicable. The value-in-use calculations apply a discounted cash flow model using cash flow projections based on financial forecasts approved by management. Impairment is recognised in the statement of profit or loss when the carrying amount of the CGUs exceeds their recoverable amounts.555 54.096 19. by discounting the estimated cash flows from their CGUs.926.5 5.5 5. there is no evidence of impairment on the Group’s and the Bank’s goodwill and intangible assets.157.) Impairment Assessment on Goodwill and Intangible Assets (Cont’d.440 1. the recoverable amount of the CGUs are based on their value-in-use.953 395.303 299.7 299. Discount rates used are based on the pretax weighted average cost of capital plus an appropriate risk premium. Cash flow projections are based on five (5) years financial budgets approved by management. The forecast period is based on the Group’s long-term perspective with respect to the operation of these units.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 17.347 695.440 – – – 9. . The intangible assets consist mainly of a share-broking licence and stock exchange trading rights which are deemed to have indefinite useful lives as there are no expiry dates. Impairment is recognised in the statement of profit or loss when the carrying amount of a CGU exceeds its recoverable amount. The recoverable amount of the intangible assets have been assessed using the value-in-use method. For annual impairment assessment purposes. Management believes that any reasonably possible change in the key assumptions would not cause the carrying amount of the goodwill and intangible assets to exceed the recoverable amount of the CGU.) ANNUAL REPORT 2013 106 As at 31 December 2012 Cash-generating unit: Hire purchase financing East Malaysia operations (in respect of business acquired from the former Hock Hua Bank) Hong Kong operations Fund management Investment banking Group RM’000 Bank RM’000 Discount rate % Nominal growth rate beyond initial cash flow projections % 395.4 5. Cash flows beyond the fifth (5) year are extrapolated to fifty (50) years using a nominal long-term growth rate which does not exceed the average of the last twenty (20) years’ inflation-adjusted Gross Domestic Product growth rates of the respective countries where the CGUs operate.5 7.

341.603 33.442 20.492.688. DEPOSITS FROM CUSTOMERS Group 31 December 2013 RM’000 Wholesale deposits: – Negotiable instruments of deposit – Money market deposits Other deposits 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 107 38.535.620 46.816.675.012. negotiable instruments of deposit and money market deposits are as follows: Group Due within six months More than six months to one year More than one year to three years More than three years to five years Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 162.530.297 128.620.382. This guarantee excludes money market deposits and negotiable instruments of deposits. inclusive of Islamic deposits.873.923 367.257.362 16.398 47.541 23.340.626 3.081.981.286 32.493 120.771.813 187.316 107.501.757 42.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 18.029.881.341 28.713.931 110.377 5.643.233 49. advances and financing.223.621 177.637 159.054 168.444 Deposits from customers of the Bank and its wholly-owned Islamic banking subsidiary company.931.137 651.861.871.534 14.419.230.202.745 16. Public Islamic Bank Berhad are insured by Perbadanan Insurans Deposit Malaysia (“PIDM”).930 ANNUAL REPORT 2013 At amortised cost Core deposits: – Demand deposits – Savings deposits – Fixed deposits Bank .387.593.745 25.592 181.158.406 186. savings accounts and fixed deposits.952 93. up to a maximum limit of RM250.282 1.112 41.964 306. Included in deposits from customers of the Group and the Bank are deposits of RM2.345 113.000) respectively held as collateral for loans.688.585 201.586 24.843.023.034.000 (31 December 2012 – RM2.000 per depositor per PIDM member bank.120 42. The deposit insurance covers all Ringgit Malaysia and foreign currency deposits held under current accounts.847 167.817 250.768 47.000 (31 December 2012 – RM1.590 137.002 18.800 190.659 139.778 7.106. The maturity structure of fixed deposits.042.000) and RM1.420 42.876.080.726.824.325 201.036.639.461 136.613 122.345.859.632.761 3.991.700 90.189 225.349.732.360 150.072.411 121.370 1.878 151.

562 1.446 3.858.063.042.087 2.977. DEPOSITS FROM BANKS Group At amortised cost Licensed banks Licensed Islamic banks Licensed investment banks Bank Negara Malaysia Other financial institutions Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 4.313 16.617.655.836 12.080.089 34.912 1.893.980.881 3.346 234.465 2.181 48.592 181.423.048 14.840.175.041.164.217 102.959.468 713.861 5.165 5.914.433.435.778 .154.843.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 18.645 4.428.494.444. DEPOSITS FROM CUSTOMERS (CONT’D.923.195 2.881 3.393.234.236.473.412 50.239.573.865 7.616.682 2.268 3.490 64.124 88.427 77.635 162.121 3.610.647 3.602.377 808.839 52.408.695.861 2.444 19.849.984 62.495 16.255 5.189 225.871.438 1.935 111.885 250.119 97.532.008.512 6.921.141 1.) The deposits are sourced from the following types of customers: Group ANNUAL REPORT 2013 108 Federal and state governments Local government and statutory authorities Business enterprises Individuals Foreign customers Others Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 1.008.451.688.168.325 201.600 1.873.590 1.602.670.822 35.167.244 2.506 2.850 3.

955.432.844 2. RECOURSE OBLIGATIONS ON LOANS AND FINANCING SOLD TO CAGAMAS This represents the proceeds received from housing loans (including Islamic financing) sold directly to Cagamas Berhad with recourse to the Bank and its wholly-owned subsidiary company. These financial liabilities are stated at amortised cost.188. 21.432.942 10.188.906.942 ANNUAL REPORT 2013 22.259 9.957.853 9.906.937. Public Islamic Bank Berhad.081.434 9.844 2. the Bank and its subsidiary company undertake to administer the loans on behalf of Cagamas Berhad and to buy-back any loans which are regarded as defective based on prudential criteria set by Cagamas Berhad. Under this agreement.922 1.957.081.765 2.007 5.825 9.918 1. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS 109 .116.937.942 9.434 9. modified for change in value as a result of fair value hedges Senior Medium Term Notes Subordinated notes Innovative Tier I capital securities Non-Innovative Tier I stapled securities (b) (c) (d) (e) 399.434 9.661 – 4. BILLS AND ACCEPTANCES PAYABLE Bills and acceptances payable represents the Bank’s own bills and acceptances rediscounted and outstanding in the market. These financial liabilities are stated at amortised cost.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 20.946.955. Group 31 December 2013 Note RM’000 Bank 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 At amortised cost Borrowings (a) 463.911 – – At amortised cost.391 864.765 2.259 399.661 – 4.918 1.906.116.369.007 5.081.922 1.

0 billion Senior MTNs Programme: RM400 million Senior MTNs due in 2018 31 December 2013 RM’000 31 December 2012 RM’000 399. The Senior MTNs may be issued in series and each issuance shall have a tenure of more than one (1) year as may be determined by the Bank.20%). . payable semi-annually in arrears. The tenor of the Senior MTNs Programme will be up to twenty (20) years from the date of first issuance.911 – – The unsecured term loans are denominated in Hong Kong Dollars. the Bank has issued a total of RM400 million in nominal value of Senior MTNs with a tenor of 5 years with interest ranging from 3.50% (31 December 2012 – HIBOR plus 0. provided that the Senior MTNs shall mature on or prior to the expiry of the Senior MTNs Programme.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 22. The Senior MTNs constitute direct unsecured liabilities of the Bank.0 billion in nominal value. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D.65% to 3. During the year.65% to 1.65% to 1.) (a) Borrowings Group ANNUAL REPORT 2013 110 Unsecured: Term loans Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 463. the Bank obtained the approval from the Securities Commission for the establishment of a Senior Medium Term Notes Programme (“Senior MTNs Programme”) to issue Senior MTNs of up to RM5.007 – On 5 April 2013.391 864. Each issuance will bear interest at a rate to be determined prior to the issuance.67% per annum. (b) Senior Medium Term Notes (“Senior MTNs”) Group and Bank Issued under the RM5. except for those liabilities preferred by law. The loans are repayable within one year and bear interest at HIBOR plus 0. and rank at least pari passu with all other present and future unsecured liabilities of the Banks.

0 billion Basel III – Compliant Tier II Subordinated Medium Term Notes Programme: First tranche: RM1.351 67.28% Subordinated Notes due in 2022.60% Subordinated Notes due in 2019.237 12. callable in 2018 Second tranche: RM450 million 4.73% Subordinated Notes due in 2018. callable in 2018 Realised/unrealised fair value loss arising from fair value hedge 31 December 2012 RM’000 111 (i)(a) – 1.966 199.926 (i)(c) 222.400 million 4. callable with step-up in 2014 Third tranche: RM223 million 4.207 2.000 million 4. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. callable with step-up in 2014 Fifth tranche: RM3.000 million 4.990 49.958 222.) (c) Subordinated Notes Group and Bank Note Issued under the RM10.824 (i)(b) 199.420. callable with step-up in 2013 Second tranche: RM200 million 4.913 (i)(d) 49.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 22. callable in 2017 31 December 2013 RM’000 .918 ANNUAL REPORT 2013 Issued under the RM5. callable in 2018 Third tranche: RM500 million 4.980 (i)(e) 2. callable with step-up in 2014 Fourth tranche: RM50 million 4.000 – (ii)(c) 500.870.73% Subordinated Notes due in 2023.922 4.77% Subordinated Notes due in 2023.937.567 5.116 – (ii)(b) 450.432.685 4.998.708 (ii)(a) 999.399.997.60% Subordinated Notes due in 2019.60% Subordinated Notes due in 2019.80% Subordinated Notes due in 2023.0 billion Subordinated Medium Term Note Programme: First tranche: RM1.000 – 5.

The interest is payable semi-annually in arrears on 10 June and 10 December each year commencing 10 June 2010. The Notes bear interest at the rate of 4.60% per annum from (and including) 10 December 2014 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier).73% per annum from (and including) 16 May 2013 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). at the rate of 5. the Bank issued the third tranche of RM223 million in aggregate principal amount of Subordinated Notes due in 2019 callable with step-up in 2014.60% per annum from (and including) 10 December 2009 to (but excluding) 10 December 2014 and thereafter.60% per annum from (and including) 31 December 2014 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). (c) On 10 December 2009. subject to the prior consent of BNM. with the maturity for each issuance to range between ten (10) to fifteen (15) years.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 22. the Bank issued the second tranche of RM200 million in aggregate principal amount of Subordinated Notes due in 2019 callable with step-up in 2014.73% per annum from (and including) 16 May 2008 to (but excluding) 16 May 2013 and thereafter. the Bank issued the first tranche of RM1. The interest is payable semi-annually in arrears on 30 June and 31 December each year commencing 30 June 2010.60% per annum from (and including) 6 November 2009 to (but excluding) 6 November 2014 and thereafter. (b) On 6 November 2009. The tenor of the MTN Programme will be up to fifteen (15) years.0 billion in aggregate principal value of Subordinated Notes. at the option of the Bank in the event of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the Notes will no longer qualify as Tier II Capital for the purposes of BNM’s capital adequacy requirements or on the first call date or at any subsequent interest payment date thereafter at their principal amount plus accrued interest (if applicable). . DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. at the rate of 5.60% per annum from (and including) 31 December 2009 to (but excluding) 31 December 2014 and thereafter. The Bank has issued the following tranches of Subordinated Notes under the MTN Programme: (a) On 16 May 2008.) (c) Subordinated Notes (Cont’d. The Notes bear interest at the rate of 4. These Notes were fully redeemed on 16 May 2013 together with accrued interest. The Subordinated Notes to be issued under the MTN Programme shall be issued at par. The Notes bear interest at the rate of 4.) (i) ANNUAL REPORT 2013 112 On 13 March 2008.60% per annum from (and including) 6 November 2014 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). Each issuance will bear interest at a rate to be determined prior to the issuance. (d) On 31 December 2009. The Notes bear interest at the rate of 4. at the rate of 5. The interest is payable semi-annually in arrears on 6 May and 6 November each year commencing 6 May 2010. the Bank obtained approval from Bank Negara Malaysia (“BNM”) for a Subordinated Medium Term Note Programme (“the MTN Programme”) for the issuance of up to RM5. The interest is payable semi-annually in arrears on 16 May and 16 November each year commencing 16 November 2008. The Notes will. the Bank issued the fourth tranche of RM50 million in aggregate principal amount of Subordinated Notes due in 2019 callable with step-up in 2014. and callable from five (5) years prior to the relevant maturity date of each issuance. be redeemable in whole but not in part.400 million in aggregate principal amount of Subordinated Notes due in 2018 callable with step-up in 2013. at the rate of 5. payable semiannually in arrears.

be redeemable in whole but not in part. and callable not earlier than five (5) years prior to the relevant maturity date of each issuance. payable semi-annually in arrears. are capable of being converted into equity or written off at that time. to provide a capital injection or equivalent support to the Bank. 113 . with the tenure for each issuance not less than five (5) years from the issue date. nor would it trigger any cross-default under the Notes. subject to the prior consent of BNM. to establish a Basel III-Compliant Tier ll Subordinated Medium Term Notes Programme (“the Basel III – Compliant MTNs Programme”) of up to RM10.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 22. irrevocably (without the need for the consent of the holders of such Notes) to effect either a write-off in whole or in part of the outstanding principal and accrued and unpaid interest in respect of such Notes.) (c) Subordinated Notes (Cont’d.28% per annum from (and including) 3 August 2011 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). Upon the occurrence of a Non-Viability Event above. together with the conversion or write off of any other Tier ll capital instruments and Tier l capital instruments which. The Trigger Event would be the earlier of: (a) The notification by BNM and PIDM to the Bank in writing that they are of the view that the principal or partial write off of the Notes. without which the Bank would cease to be viable. PIDM or any other federal or state government in Malaysia. ANNUAL REPORT 2013 The Bank obtained approval from BNM and the Securities Commission vide their letters dated 14 June 2013 and 10 July 2013 respectively. To the extent relevant in the event that such Notes are written-off.000 million in aggregate principal amount of Subordinated Notes due in 2022 callable in 2017. Each issuance will bear interest at a rate to be determined prior to the issuance. any written-off amount shall be irrevocably lost and holders of such Notes will cease to have any claims for any principal amount and accrued but unpaid interest which has been subject to write-off. Non Viability Loss Absorption In the event of an occurrence of a Non-Viability Event as determined by BNM and the Perbadanan Insurans Deposit Malaysia (“PIDM”). Such write off shall not constitute an event of default or enforcement event. The Notes bear interest at the rate of 4. The tenor of the Basel III – Compliant MTNs Programme will be up to thirty (30) years. at the option of the Bank in the event of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the Notes will no longer fully qualify as Tier II Capital for the purposes of BNM’s capital adequacy requirements or on the first call date or at any subsequent interest payment date thereafter at their nominal amount. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. the Bank issued the fifth tranche of RM3. the Bank shall first convert or write off the relevant Tier I instruments. is an essential requirement to prevent the Bank from becoming non-viable. the Bank may be required. pursuant to their terms or by operation of law. The interest is payable semi-annually in arrears on 3 February and 3 August each year commencing 3 February 2012. to be followed by the write off or conversion of the relevant Tier II instruments on a pari passu basis.) (i) (ii) (e) On 3 August 2011. The interest rate on these Notes will remain unchanged throughout the tenure of the Notes. A Non-Viability Event shall be deemed to have occurred on the day on which the Bank received the notification from BNM. and (b) The public announcement by BNM and PIDM that a decision has been made by BNM.0 billion in Nominal value. The Notes will.

the Bank issued the third tranche of RM500 million in aggregate nominal amount of Subordinated Notes due in 2023 callable in 2018. The interest is payable semi-annually in arrears on 15 May and 15 November each year commencing 15 May 2014. The Bank does not restate the value of its Subordinated Notes as a result of changes in its own credit risk. In line with the transitional arrangements under the BNM’s Capital Adequacy Framework (Capital Components) dated 28 November 2012 for the purpose of determining the capital adequacy ratios of the Group and the Bank. The interest is payable semi-annually in arrears on 28 April and 28 October each year commencing 28 April 2014. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D.000 million in aggregate nominal amount of Subordinated Notes due in 2023 callable in 2018. The interest rate on these Notes will remain unchanged throughout the tenure of the Notes. The Notes bear interest at the rate of 4. The interest is payable semi-annually in arrears on 25 March and 25 September each year commencing 25 March 2014.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 22.80% per annum from (and including) 25 September 2013 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). the Bank issued the first tranche of RM1.73% per annum from (and including) 15 November 2013 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). in accordance with the terms and conditions of the Subordinated Notes. other than the Innovative Tier I Capital Securities and the Non-Innovative Tier I Stapled Securities. . (c) On 15 November 2013. The Bank has entered into interest rate swap contracts as fair value hedges of its Subordinated Notes in order to minimise its exposure to interest rate volatility.77% per annum from (and including) 28 October 2013 to (but excluding) the date of early redemption in full of such Notes or the maturity date of the Notes (whichever is earlier). resulting in a change in the value of the Subordinated Notes. The Notes bear interest at the rate of 4.) (c) Subordinated Notes (Cont’d. The Notes bear interest at the rate of 4. ANNUAL REPORT 2013 114 The above Subordinated Notes constitute unsecured liabilities of the Bank. which are subordinated to the Subordinated Notes. The interest rate on these Notes will remain unchanged throughout the tenure of the Notes.) The Bank has issued the following tranches of Subordinated Notes under the Basel III – Compliant MTNs Programme: (a) On 25 September 2013. The Subordinated Notes issued after 31 December 2012 which are Basel III – Compliant are fully qualified as Tier II Capital. The interest rate on these Notes will remain unchanged throughout the tenure of the Notes. the Bank issued the second tranche of RM450 million in aggregate nominal amount of Subordinated Notes due in 2023 callable in 2018. Subordinated Notes issued prior to 31 December 2012 will qualify as Tier II Capital but are subject to a gradual phase-out treatment with effective from 1 January 2013. and are subordinated in right of payment upon the occurrence of any winding up proceeding to the prior payment in full of all deposit liabilities and all other liabilities of the Bank. (b) On 28 October 2013.

955.30% above the London Interbank Offered Rate for three-month US Dollar deposits.456 1.0 percent of the principal amount of the USD IT-I Securities. The interest is payable semi-annually in arrears on 22 February and 22 August each year commencing on 22 February 2007 to 22 August 2016.84% per annum from (and including) 22 August 2006 to (but excluding) 22 August 2016 and thereafter. at its option. callable with step-up in 2016 31 December 2012 RM’000 . callable with step-up in 2016 RM1. the Bank issued USD200 million in aggregate principal amount of Innovative Tier I Capital Securities (“the USD IT-I Securities”) due in 2036 and callable with step-up in 2016.765 On 22 August 2006.199. with any subsequent deferral in excess of this limit subject to the prior approval of BNM.448 1.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 22.200 million 5. 22 May. at the option of the Bank in the event of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the USD IT-I Securities will no longer qualify as Tier I Capital for the purposes of BNM’s capital adequacy requirement or on 22 August 2016 or on any subsequent interest payment date thereafter at their principal amount plus accrued interest (if applicable). The Bank may. at the interest rate per annum of 2.10% Innovative Tier I Capital Securities due in 2036. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. defer the payment of interest up to a limit of 50 per cent of the aggregate principal of the USD IT-I Securities.957.587 611.84% Innovative Tier I Capital Securities due in 2036.273 1. The USD IT-I Securities were issued at a price of 100.043 102.810. The USD IT-I Securities bear interest at the rate of 6.801 1. 22 August and 22 November of each year. ANNUAL REPORT 2013 USD200 million 6.317 145. If the Bank has not made a payment of interest.844 1.044 (ii) 1. The USD IT-I Securities will. it shall not pay any dividend to its ordinary shareholders and/or any interest on any security or instrument ranking junior to the USD IT-I Securities. subject to the prior consent of BNM. and thereafter quarterly in arrears on 22 February. be redeemable in whole but not in part. whether deferred or not.855.) (d) Innovative Tier I Capital Securities Group and Bank 31 December 2013 Note RM’000 Realised/unrealised fair value loss arising from fair value hedge (i) 115 (i) 655.199.

50% Stapled Securities callable in 2019 Second tranche: RM888 million 7. subject to the prior consent of BNM.760 2.116. with any subsequent deferral in excess of this limit subject to the prior approval of BNM. the Bank issued RM1.82% above the three-month Kuala Lumpur Interbank Offered Rate. and are subordinated in right of payment upon occurrence of any winding up proceeding to the prior payment in full of all deposit liabilities and all other liabilities including the Subordinated Notes of the Bank in accordance with the terms and conditions of the Innovative Tier I Capital Securities. at its option. defer the payment of interest up to a limit of 50 per cent of the aggregate principal of the RM IT-I Securities. it shall not pay any dividend to its ordinary shareholders and/or any interest on any security or instrument ranking junior to the RM IT-I Securities.901 32.10% per annum from (and including) 22 December 2006 to (but excluding) 22 December 2016 and thereafter. The Bank does not restate the value of its Innovative Tier I Capital Securities as a result of changes in its own credit risk.146 105.113 2. and thereafter quarterly in arrears on 22 March.901 1. The Innovative Tier I Capital Securities above are unsecured liabilities of the Bank and rank pari passu among themselves and equally with the Non-Innovative Tier I Stapled Securities. 22 September and 22 December of each year. The RM IT-I Securities will. The interest is payable semi-annually in arrears on 22 June and 22 December each year commencing on 22 June 2007 to 22 December 2016.20% Stapled Securities callable in 2019 Unrealised fair value loss arising from fair value hedge (i) 1. the Innovative Tier I Capital Securities issued prior to 31 December 2012 will qualify as Tier I Capital but are subject to a gradual phase-out treatment with effective from 1 January 2013. be redeemable in whole but not in part.195.0 percent of the principal amount of the RM IT-I Securities.083. at the option of the Bank in the event of certain changes affecting taxation in Malaysia or if there is a more than insubstantial risk that the RM IT-I Securities will no longer qualify as Tier I Capital for the purposes of BNM’s capital adequacy requirement or on 22 December 2016 or on any interest payment date thereafter at their principal amount plus accrued interest (if applicable).200 million in aggregate principal amount of Innovative Tier I Capital Securities (“the RM IT-I Securities”) due in 2036 and callable with step-up in 2016.) (d) Innovative Tier I Capital Securities (Cont’d.661 2.146 (ii) 888. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D.200 million 7.000 888. 22 June. The Bank has entered into interest rate swap contracts as fair value hedges of its Innovative Tier I Capital Securities in order to minimise its exposure to interest rate volatility.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 22. The Bank may.000 2.0 billion Non-Innovative Tier I Stapled Securities Programme: First tranche: RM1. In line with the transitional arrangements under the BNM’s Capital Adequacy Framework (Capital Components) for the purpose of determining the capital adequacy ratios of the Group and the Bank. whether deferred or not. at the interest rate per annum of 1.195.259 . The RM IT-I Securities were issued at a price of 100. If the Bank has not made a payment of interest. resulting in a change in the value of the capital securities.) (ii) ANNUAL REPORT 2013 116 On 22 December 2006. The RM IT-I Securities bear interest at the rate of 5.083. (e) Non-Innovative Tier I Stapled Securities Group and Bank 31 December 2013 Note RM’000 31 December 2012 RM’000 Issued under the RM5.188.

comprising the following securities: (a) Non-Cumulative Perpetual Capital Securities (“NCPCS”) issued by the Bank. 117 The NCPCS are stapled to an equivalent amount in nominal value of the Sub-Notes. the tenor of the NCPCS will be perpetual. the NCPCS will also accrue interest at a rate of 7. the Bank and PBFIN issued the second tranche of RM888 million in nominal value of Stapled Securities. subject to fulfilling the following redemption conditions: (i) the Bank is solvent at the time of redemption and immediately thereafter. a wholly-owned subsidiary company of the Bank. The first optional redemption date of the NCPCS will be on 13 November 2019. The Bank and PBFIN have issued the following tranches of Stapled Securities under the NIT-I Programme: (i) On 5 June 2009. and (b) Subordinated Notes (“Sub-Notes”) issued by PBFIN. The Sub-Notes bear interest at a rate of 7.50% per annum.20% per annum.) On 16 March 2009. payable semi-annually. the NCPCS will also accrue interest at a rate of 7. ANNUAL REPORT 2013 Under the NIT-I Programme. whilst the Sub-Notes are due on 5 June 2059. The first optional redemption date of the NCPCS will be on 5 June 2019. Should an assignment event occur. (ii) the Bank is not in breach of BNM’s minimum capital adequacy ratio requirements. The Sub-Notes will bear interest at a rate which is the same rate as the distribution of the NCPCS together with which the Sub-Notes are stapled. payable semiannually. the Stapled Securities are effectively issued by the Bank and PBFIN at a predetermined fixed interest rate. Should an assignment event occur. The Stapled Securities were issued at par. and (iii) the Bank has obtained written approval from BNM prior to the redemption. whilst the Sub-Notes have a maturity of fifty (50) years. with the first optional redemption date to be on a date falling no earlier than the fifth (5th) anniversary of the first issue date. redeem the NCPCS in whole but not in part. . The Sub-Notes bear interest at a rate of 7. obtained approval from BNM for a Non-Innovative Tier I Stapled Securities (“Stapled Securities”) Programme (“the NIT-I Programme”) for the issuance of up to RM5. (ii) On 13 November 2009.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 22. The NCPCS will not be subject to the payment of any distribution until the occurrence of an assignment event. whilst the Sub-Notes are due on 13 November 2059. on a date falling no earlier than the fifth (5th) anniversary of the first issue date or on any distribution payment date thereafter. the Bank and PBFIN Berhad (“PBFIN”). Therefore. upon which distribution will be accrued at a fixed interest rate to be determined prior to each issuance of NCPCS.50% per annum.200 million in nominal value of Stapled Securities.0 billion in nominal value of Stapled Securities. payable semi-annually in arrears.20% per annum. at its option. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. The Stapled Securities were issued at par. the Bank and PBFIN issued the first tranche of RM1.) (e) Non-Innovative Tier I Stapled Securities (Cont’d. The other salient features of the NIT-I Programme are as follows: The Bank may.

.) (e) Non-Innovative Tier I Stapled Securities (Cont’d. a wholly-owned subsidiary company of the Bank. whereby there is a more than an insubstantial risk that. or (viii) the occurrence of the optional redemption date.200 million and USD200 million Innovative Tier I Capital Securities and with the most junior class of preference shares (if any).) The NCPCS will cease to be stapled to the Sub-Notes only upon the occurrence of an assignment event. but in priority to the rights and claims of holders of ordinary shares of PBFIN. as a result of changes in the applicable tax regulations. or (ii) BNM determines that an assignment event should occur. or (iii) the redemption of the NCPCS pursuant to: (a) a tax redemption. The Sub-Notes will be subordinated in right of payment upon the occurrence of any winding up proceeding of PBFIN to the prior payment in full of all liabilities of PBFIN except to those liabilities which rank equal with or junior to the Sub-Notes. The NCPCS qualify as Non-Innovative Tier I Capital Instruments. directly or indirectly. The NCPCS are direct and unsecured obligations of the Bank. with the existing RM1. In line with the transitional arrangements of the BNM’s Capital Adequacy Framework (Capital Components) for the purpose of determining the capital adequacy ratios of the Group and the Bank. The Sub-Notes rank pari passu and without preference among themselves and with the most junior class of preference shares (if any) of PBFIN. The Bank will not be able to pay any dividends to its shareholders or make any interest payments on any securities ranking pari passu with or junior to the NCPCS or acquire any of its ordinary shares or redeem any securities ranking pari passu with or junior to the NCPCS (collectively referred to as the “Dividend and Capital Stopper”) if. ownership of the Sub-Notes will be assigned to the Bank pursuant to a note assignment agreement entered into between the Bank and investors of the Stapled Securities on the date of the issue of the Stapled Securities. the NCPCS issued prior to 31 December 2012 will qualify as Tier I capital but are subject to a gradual phase-out treatment with effective from 1 January 2013. The Sub-Notes constitute direct and unsecured obligations of PBFIN. the Bank and/or PBFIN would become obliged to pay additional amounts or will no longer be able to obtain tax deductions for interest payments on the Sub-Notes or the inter-company loan between the Bank and PBFIN. or (vi) the commencement of winding up proceeding in respect of the Bank or PBFIN. the Bank does not pay a distribution on the NCPCS on its due date for payment. The Dividend and Capital Stopper will only cease to be effective upon the resumption of payments of distribution on the NCPCS for a continuous period of one (1) year. or (ix) PBFIN ceases to be. or (b) a regulatory redemption. The NCPCS are subordinated in right of payment upon the occurrence of any winding up proceeding to the prior payment in full of all deposit liabilities and all other liabilities of the Bank including the Subordinated Notes of the Bank. (iv) the deferral of any interest on the Sub-Notes. An assignment event means the occurrence of any of the following events: ANNUAL REPORT 2013 118 (i) the Bank elects that an assignment event occurs. or (c) redemption of the NCPCS on the optional redemption date. These investors will then hold only the NCPCS. or (vii) the appointment of an administrator in connection with the restructuring of the Bank or PBFIN. Once unstapled. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. but in priority to the rights and claims of holders of ordinary shares of the Bank. following the occurrence of an assignment event. or (v) the Bank is in breach of BNM’s minimum capital adequacy ratio requirements. The NCPCS rank pari passu and without preference among themselves.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 22. whereby the NCPCS no longer qualify as Non-Innovative Tier I Capital of the Bank for the purposes of BNM’s capital adequacy ratio requirements.

461 15.102.195 12.139 748.560.244 Bank 31 December 2013 RM’000 Interest/Income payable Other payables and accruals Finance lease liabilities** Dividend payable to shareholders Amount due to subsidiary companies @ 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 1.442 2.457.) The Group has entered into interest rate swap contracts as fair value hedges of its Stapled Securities in order to minimise its exposure to interest rate volatility.798 – 93. resulting in a change in the value of the capital securities.534 118.779 2.778 – 26.803.249 3.099 1.839 46.120.186.484 1.351.373 2. OTHER LIABILITIES 119 Group Interest/Income payable Other payables and accruals Amount due to trust funds* Unprocessed sales and/or redemptions # Profit Equalisation Reserve of the investment account holder Finance lease liabilities** Outstanding contracts on clients’ accounts^ Dividend payable to shareholders 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 1.855 * This balance refers to amount due to trust funds managed by the fund management subsidiary company in respect of cancellation and creation of trust units.) (e) Non-Innovative Tier I Stapled Securities (Cont’d. DEBT SECURITIES ISSUED AND OTHER BORROWED FUNDS (CONT’D. 23.464 16.200 935.218.656 127.779 249.020.578.723 199.877 26.670. ANNUAL REPORT 2013 31 December 2013 RM’000 .605 65.845.143 4.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 22.505 265 60.466 60.013 50.416 3. # The unprocessed sales and/or redemptions are in respect of the fund management activities of a subsidiary company.896 866.888 2.739 2.591 2.125 15.561 93.009.209 1.170 2.164 1.484 255.523 1.723 2.565.595.866 4.933 17.233 66. The Bank does not restate the value of its Non-Innovative Tier I Capital Securities as a result of changes in its own credit risk.

162 60.) ** Finance lease liabilities of the Group and the Bank are payable as follows: 31 December 2013 Present Value Future of Finance Minimum Future Lease Lease Finance Liabilities Charges Payments RM’000 RM’000 RM’000 120 ANNUAL REPORT 2013 Less than one year 26.239 26. There are no restrictive covenants imposed by the lease agreement and no arrangements have been entered into for contingent rental payments. OTHER LIABILITIES (CONT’D. the Bank has the option to acquire the assets at a nominal price deemed to be a bargain purchase option.723 The Bank leases computer equipment and software under finance lease (Note 16). ^ These balances relate to contracts entered by the stock-broking business of the investment banking subsidiary company on behalf of clients where settlements are yet to be made and amount due to Bursa Malaysia Securities Clearing Sdn. At the end of the lease term. non-interest bearing and have no fixed terms of repayment.953 469 26.953 1.693 469 34.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 23. @ These balances are unsecured. . The trade settlement is three (3) market days according to Bursa Malaysia Securities Berhad’s trading rules.885 2.484 31 December 2012 Present Value Future of Finance Minimum Future Lease Lease Finance Liabilities Payments Charges RM’000 RM’000 RM’000 Less than one year Between one and three years 35.932 26.484 62. Bhd.

should there be a significant fall in value of the asset portfolio of the plan. However. Market risk arises from investments delivering an inadequate return.534 199.709 120. The defined benefit plan exposes the Group and the Bank to actuarial risks such as market (investment) risk. changes in interest rate would affect the cost of borrowings as well as valuation of plan obligations. salary risk arises from higher than expected salary increase leading to higher plan obligations.527 116. as restated Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 99. Bhd.381 192.061 ANNUAL REPORT 2013 The defined benefit plan is a tax exempt fund. from 55 years to anytime prior to 60 years was introduced. and an optional retirement age. eligible employees are entitled to one month of the final or last drawn salary for each completed year of service with the Group upon attainment of retirement age.251 206. 20% to 25% of government securities and 45% to 60% in a combination of equities. interest rate risk and salary risk. the plan is in surplus of RM294. The investments of the plan comply with the requirement of the income tax ruling for tax exempt funds that 80% of the plan assets (gross) are invested in specified assets with at least 20% of plan assets (gross) in government issued securities.000 and no contributions are required to be made to the plan in the forthcoming financial year by the Group and the Bank. The latest actuarial valuation for funding purposes was made as at 31 December 2012 by Actuarial Partners Consulting Sdn. The strategic investment policy of the defined benefit plan can be summarised as plan asset mix based on 20% to 30% of investment properties. fully funded by the Bank and certain subsidiary companies which are participating companies of the plan.948 89.303 95.723 99. Employees are not required to contribute to the plan. Effective from 1 July 2013. Under the Fund. The deed of variation to effect these changes is pending the approval of the Inland Revenue Board. the retirement benefit will be computed based on the scale rate stipulated in the rules of the Fund. unit trusts and cash. Compliance with investment policies are reported quarterly to the Board of Trustees. There are three (3) trustees currently.079 213.339. As at 31 December 2013.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 24. The assets of the Fund are held separately from the assets of the Group and the Bank and are administered by a board of trustees. an actuarial valuation will be conducted to re-assess the funding requirement. the normal retirement age was raised from 55 years to 60 years in accordance with Malaysia’s Minimum Retirement Age Act 2012.672 96. EMPLOYEE BENEFITS (a) Defined Benefit Plan The Bank and certain subsidiary companies contribute to a defined benefit plan known as the Public Bank Group Officers’ Retirement Benefits Fund (“the Fund”) for its eligible employees. 121 .356 92. For employees who leave before the attainment of the normal retirement age or the optional retirement age. A reconciliation of the opening balance of net assets is as follows: Group At 1 January – as previously stated – effects of adoption of MFRS 119 At 1 January. one (1) of whom is a member of the Board of Directors of the Bank and the remaining two (2) trustees are members of senior management of the Bank. The funding requirements are based on a separate actuarial valuation for funding purposes for which the assumptions may differ from the assumptions as set out below.

016.379) 988.529) 679.381 Bank Present value of funded obligations Fair value of plan assets Net assets (Note 10) 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) (702.318) 825.590 286. EMPLOYEE BENEFITS (CONT’D.079 213.506 (626.685 (604.061 .251 206.) The amounts recognised in the statements of financial position are determined as follows: Group ANNUAL REPORT 2013 122 Present value of funded obligations Fair value of plan assets Net assets (Note 10) 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) (722.729 294.086 (473.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 24.) (a) Defined Benefit Plan (Cont’d.339 199.835) 797.397 (490.306 192.167) 1.348) 703.

835 473.835 Obligation at 1 January – as previously stated – effects of adoption of MFRS 119 123 ANNUAL REPORT 2013 2013 RM’000 .167 626.) (a) Defined Benefit Plan (Cont’d.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 24. EMPLOYEE BENEFITS (CONT’D.913) 32.973 473. as restated Recognised in the statement of profit or loss – current service cost – interest cost – past service cost – allocation adjustment Benefits paid – the Fund Remeasurements recognised in other comprehensive income – effects of changes in demographic assumptions – effects of changes in financial assumptions 626.258) 31.091 – (32.070 31.689 29.794 103.336 41.529 46.646 28.708 30.529 – Obligation at 1 January.086 – (23.612 43.862 99.348 604.960 4.680) – – 33.318 702.318 490.322 (23.125 – (33.841) 45.596 – – 32.770 29.) Movements in the present value of funded obligations are as follows: Group Bank 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) 522.101 Obligation at 31 December 722.450 39.348 – 504.459 42.340 32.379 604.524 490.

603 643.268 (6.) Movements in the fair value of plan assets are as follows: Group ANNUAL REPORT 2013 124 Fair value at 1 January Recognised in the statement of profit or loss – interest income – allocation adjustment Benefits paid – the Fund Remeasurements recognised in other comprehensive income – return on plan assets (excluding amounts included in interest income) Fair value at 31 December Bank 2013 RM’000 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) 825.723 1.191) (1.267 417.258) 41.086 The fair value of plan assets constitutes the following: Group Deposit placements and cash Government Securities Quoted equity securities Unit trust funds Properties Plan assets (gross) Other assets/(liabilities) (net) Borrowings Bank 31 December 2013 Note RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 100.086.226) 2.236 766.007 428.487 (3.781 11 504.016.496 471.044.695 (23.376) (1.397 703.584 167.431 317.488 333.021) (1.900 485.844.999 (3.562) 1.894 411.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 24.122.141) (i) (ii) (iii) 1.949 788.925 – (33.234 112.615 5.) (a) Defined Benefit Plan (Cont’d.361 306.909.506 825.794 426.685 797.086 679.788 – (23.086 .729 797.313) 1.073 11 522.091.160 97.260) (1.506 825.397 988.081.841) 41.016.678 621.680) 172.543 2.913) 42.685 797.590 42. EMPLOYEE BENEFITS (CONT’D.145.547 108.453 – (32.010 (6.081 342.397 988.

895 152.233 14.894 125 ANNUAL REPORT 2013 31 December 2013 RM’000 Financial institutions* Insurance companies Property companies Commercial/trading companies Others * Bank .431 766.343 48.628.990 91.162 162.412 95.870 15.005 53.754 49.377 497 120 788.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 24.835 90.722 151.357 14.496 306.456 54. EMPLOYEE BENEFITS (CONT’D.946 14.584 61.081 643.900 317.) (i) Quoted equity securities analysed by sectors are as follows: Group 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 512.935 107.000 (31 December 2012 – RM427.385 59.982 146.524 176.423 342.568 181.942 630 124 429.245. Unit trust funds analysed by type of funds are as follows: Group Equity funds Bond funds Balanced funds Dividend funds Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 110.794 333.) (a) Defined Benefit Plan (Cont’d.361 (ii) Included in the fair value of equity securities of the Fund are ordinary shares of the Bank with a fair value of RM510.159 157.396 612 121 414.144 158.486 515 124 498.817 92.000).488 621.

375 28.770 29.5% of the total rental income from properties.781 411.450 (41.750 970 380.492 47.973 .160 471.400 16. EMPLOYEE BENEFITS (CONT’D.689 (41.646 28.886 903 485.291 943 367.340 32.086 – 32.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 24.091 – Amount included under “personnel costs” (Note 35(a)) 76.) (a) Defined Benefit Plan (Cont’d.708 (42.453) 29. The amounts recognised under other operating expenses in the statement of profit or loss are as follows: Group Bank 2013 RM’000 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) Current service cost Interest cost Interest income Past service cost Allocation adjustment 46.) (iii) Properties analysed by type of properties are as follows*: Group ANNUAL REPORT 2013 126 Terraced shop offices Stratified office lots Commercial buildings Residential buildings * Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 438.678 73.400 16. Certain floors in the commercial buildings and terrace shop offices are tenanted by external parties of which they contributed about 2.622 16.125 – 45.953 28.328 27.336 (42.426 15.925 27.070 31.788) 41.974 49.960 (1.543 All the properties held as plan assets of the Group and the Bank are occupied by the Bank and certain subsidiary companies of the Group.450 935 426.925) 30.615) 39.373) 31.073 426.

the weighted average duration of the defined benefit obligation was 9.584 41.) Actual return on plan assets are as follows: Group Bank 2012 RM’000 2013 RM’000 2012 RM’000 Interest income on plan assets Remeasurements on plan assets 42.547 41.176 (i) Actuarial Assumptions Principal actuarial assumptions used at the reporting date (expressed as weighted averages): Group and Bank Discount rate Expected rate of salary increases 31 December 2013 31 December 2012 1 January 2012 5.00% 5.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 24.) (a) Defined Benefit Plan (Cont’d. EMPLOYEE BENEFITS (CONT’D.022 155.162 150. 127 ANNUAL REPORT 2013 2013 RM’000 . The expected rate of salary increases takes into account the increases in salaries from factors such as inflation.0 years. As at 31 December 2012.00% 6.509 209.788 172.25% 7.234 42.25% 7.00% The discount rate used in the actuarial assumptions is based on a blend of yields of long term high quality corporate bonds.723 Actual return on plan assets 215. The principal actuarial assumptions are based on the latest actuarial valuation performed as of 31 December 2012.25% 7.615 167. productivity and promotions.453 108.925 112.

.765) The sensitivity analysis presented above may not be representative of the actual change in the present value of funded obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. (b) Equity Compensation Benefits Public Financial Holdings Limited Group Employees’ Share Option Scheme On 18 May 2005. EMPLOYEE BENEFITS (CONT’D.10 each of PFHL shall be determined by the directors at their discretion based on the higher of the closing price of the ordinary shares of PFHL on the Hong Kong Stock Exchange (“HKSE”) at the offer date and the average closing price of the ordinary shares of PFHL on the HKSE for five (5) business days immediately preceding the offer date and the nominal value of an ordinary share of PFHL. The salient features of the PFHL ESOS are as follows: (i) Eligible participants of the PFHL ESOS include directors and employees working under “continuous contracts” for the purposes of the Hong Kong Employment Ordinance. (iii) The option exercise price for each ordinary share of HKD0.1%) of the ordinary shares of PFHL in issue and have an aggregate value based on the closing price of the ordinary shares of PFHL at the date of each grant. any individual director or employee’s maximum entitlement shall not exceed one percent (1%) of the ordinary shares of PFHL in issue in the 12 months period up to (and including) the date of the grant.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 24. Any substantial shareholder or independent non-executive director’s maximum entitlement shall not exceed one tenth percent (0. In addition.) (ii) Sensitivity Analysis The effect of changes in the principal actuarial assumptions on the present value of funded obligations as at 31 December 2013 are as follows: 31 December 2013 Sensitivity +1% -1% RM'000 RM'000 ANNUAL REPORT 2013 128 (Decrease)/increase of present value of funded obligations: – Discount rate – Expected salary (69. and (iv) The Group is not legally bound or obliged to repurchase or settle the options in cash. an offer of options under the Public Financial Holdings Limited Group Employees’ Share Option Scheme (“PFHL ESOS”) was made to eligible participants to subscribe for 66.) (a) Defined Benefit Plan (Cont’d.960 86. in excess of HKD5 million in the 12 months period up to (and including) the date of grant. The expiry date of granting of share options under the PFHL ESOS was 27 February 2012 with the exercise period of ten (10) years from the grant date.000 ordinary shares of Public Financial Holdings Limited (“PFHL”).526.368) 92. (ii) The total number of shares to be issued under the PFHL ESOS shall not exceed in aggregate thirty percent (30%) of the issued and paid-up share capital of PFHL at any point of time during the tenure of the PFHL ESOS.310 (76.

129 ANNUAL REPORT 2013 Number of share options ’000 Weighted average exercise price HKD .44 years (31 December 2012 – 2.375 6.35 6.35 Options exercisable at end of financial year 24.Nil).35 24. There were no new PFHL ESOS granted during the financial year (2012 .35 At 31 December 24.35 25. the recognition and measurement principles in MFRS 2 have not been applied.44 years).375 (1.28 Details of PFHL ESOS outstanding as at the end of the financial year are as follows: Grant Date Exercise Period 18 May 2005 10 June 2005 to 9 June 2015 Exercise Price Number of share options outstanding ’000 HKD6.038) 6.83 3.35 6.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 24. All share options issued have been vested prior to 1 January 2006 and.) A summary of the movements in the number of PFHL ESOS and the weighted average exercise prices are as follows: 2013 2012 Number of share options ’000 Weighted average exercise price HKD At 1 January Lapsed 25. as allowed by the transitional provisions in MFRS 2 Share-based Payments.365 6.010) 6.365 6.35 Weighted average share price during the financial year 3.35 25.413 (1. EMPLOYEE BENEFITS (CONT’D.) (b) Equity Compensation Benefits (Cont’d.375 6.35 26.365 The weighted average remaining contractual maturity of the PFHL ESOS outstanding as at the end of the financial year was 1.

None of the treasury shares held were resold or cancelled during the financial year.00 each 3.000 Issued and fully paid: Ordinary shares of RM1. 29.088 26.229 740.283 362.502. 1965.704) PBB Shares are held as treasury shares by the Bank. dividends and participation in other distribution. Treasury shares have no rights to voting. the number of outstanding PBB Shares in issue after the set-off is therefore 3.531.531.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 25.130 (31 December 2012 – 3.000 10. SHARE CAPITAL Number of Ordinary Shares of RM1.531.00 Each Amount 31 December 2013 ’000 31 December 2012 ’000 31 December 2013 RM’000 31 December 2012 RM’000 Authorised: Ordinary shares of RM1.000.800.800.130) ordinary shares of RM1.502. .531.971 – 522.901 328 739.834) issued and paid-up PBB Shares as at 31 December 2013.00 each.971 522.125.925.926 3. PROVISION FOR TAX EXPENSE AND ZAKAT Group ANNUAL REPORT 2013 130 Tax expense Zakat Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 584.926 3.000. As at 31 December 2013.926 3.834 (31 December 2012 – 3.125.000.000.000 10. There were no shares bought back by the Bank during the year (31 December 2012 – Nil).531.00 each 10.925. The PBB Shares bought back in the previous years are held as treasury shares in accordance with Section 67A Subsection 3(A)(b) of the Companies Act.000 10.926 Group and Bank 27.088 – 585.704 (31 December 2012 – 29. Of the total 3.954 329 362. TREASURY SHARES The amount relates to the acquisition cost of treasury shares.531.

058) – – – – – – – – – 253.353.484) Hedging Reserves RM’000 21.365) (84.484) – (6.442 – – 3. OTHER RESERVES NOTES TO THE FINANCIAL STATEMENTS 131 .176 172.549 (209.487 (12.431 – 129.612 Total RM’000 PUBLIC BANK BERHAD 28.860.487 (12.073) (12.576 172.063 (12.365) 4.173) 10.442 3.409 – (3.677) – (9.847 Capital Reserves RM’000 Other comprehensive income/(loss) Gain on remeasurements of defined benefit plans (Note 24 (a)) Deferred tax (Note 12) Net change in cash flow hedges: – Net unrealised loss – Net realised gain reclassified to the statement of profit or loss Net change in revaluation of financial investments available-for-sale: – Net unrealised gain – Net gain on disposal reclassified to the statement of profit or loss (Note 33) At 1 January 2013.489 – – – 14.193) – 3.847 60.197 – 14.234 (43.664 – 128.256) (1.448) – 34.234 (43.256) (1.867 253.100. as restated Net currency translation differences: – Currency translation differences in respect of – foreign operations – net investment hedge At 1 January 2013 – as previously stated – effects of adoption of MFRS 119 (Note 53) Group Statutory Reserves RM’000 (50.489 34.083) (11.442 3.316 – – – – – – – – – – Profit Equalisation Reserves RM’000 General Reserves RM’000 Regulatory Reserves RM’000 ANNUAL REPORT 2013 Foreign Currency Translation Reserves RM’000 4.184 243.173) – – – – – – (6.255 253.255 – Defined Benefit Reserves RM’000 503 – 503 – – – – – – – – – – – – (503) – 128.632) – (84.197 Revaluation Reserves RM’000 382.075 – 127.860.184 243.922 161.365 10.767 127.664 – – – – – – – – – – – – 1.002) 22.– – 60.549 (209.606 – 7.075 – – 241 127.078) – – – 10.870.002) 22.083) (11.255 4.526.103 129.081 Transferred from/(to) retained profits – – – – – – – – – – – – – – – – – – – – – – 60.928 At 31 December 2013 – 10.184 – – – – – – – – 34.632) (15.

376 (8.629) 55.106 60.632) – (645) – – – – – – – – – (645) (110.309) (11.664 918 – – – – – – – – – – – – – 127.246) 109.) ANNUAL REPORT 2013 503 503 – – – – – – – – – – – – – – – – Profit Equalisation Reserves RM’000 4.847 9.353.442 – – 3.723 4.746 General Reserves RM’000 132 Statutory Reserves RM’000 28.442 – – – – – – – – – – – – – – – – – – – – – – – – – – 60.442 3.154 – – – (28.197 – 42.844) – – – – – – – – – – 226.414 59.723 – Defined Benefit Reserves RM’000 127.823 – 126.987) – (83.533 (7. as restated Net currency translation differences: – Currency translation differences in respect of – foreign operations – net investment hedge At 1 January 2012 – as previously stated – effects of adoption of MFRS 119 (Note 53) Group 3.716 35.737 226.748) 51.106 Capital Reserves RM’000 (84.823) – 2.748) – – – – – – – 2.058 3. OTHER RESERVES (CONT’D.255 – 26.455) Revaluation Reserves RM’000 253.941 (11.533 (7.339 – 2.339 Hedging Reserves RM’000 14.652 – (8.406) – – – 51.014 Total RM’000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .764) (16) (11.629) 55.154 (645) (110.601 (83.860.282.075 252 – – – – – – – – – – – – – 126.723 226.056.At 31 December 2012 Transferred from retained profits Other comprehensive (loss)/income Gain on remeasurements of defined benefit plans (Note 24 (a)) Deferred tax (Note 12) Net change in cash flow hedges: – Net unrealised loss – Net realised gain reclassified to the statement of profit or loss Net change in revaluation of financial investments available-for-sale: – Net unrealised gain – Net gain on disposal reclassified to the statement of profit or loss (Note 33) – Impairment loss recognised in the statement of profit or loss (Note 38) At 1 January 2012.484) – (8.741 – 60.246) 109.601 4.532 35.851.376 (14.746 – 127.851.987) Foreign Currency Translation Reserves RM’000 (6.823 Regulatory Reserves RM’000 128.058 3.455) – (28.764) (16) (11.867 11.

152 Net change in cash flow hedges: – Net unrealised loss – Net realised gain reclassified to the statement of profit or loss Gain on remeasurements of defined benefit plans (Note 24 (a)) Deferred tax (Note 12) At 31 December 2013 133 ANNUAL REPORT 2013 At 1 January 2013.807) Revaluation Reserves RM’000 Defined Benefit Reserves RM’000 General Reserves RM’000 Total RM’000 3. OTHER RESERVES (CONT’D.002) – – (12.420 125.103 1.569 1.535 – 1.897 – – 23.514.237) – – – (121.531.569 – 244.803.531.531.807) 3.926 (113.229 2.226 – – 11.237) – – – 30.547 (41.674 3.887) – – 167.154) – (1.083) – – – (1.806) 167.660 – 43.674 3.535 244.309 – (2.152 Transferred from retained profits – – – – 1.547 (14.955 370.228 – – (12.777 3.226 – (120.926 (22.569 3.926 Hedging Reserves RM’000 (22. as restated Statutory Reserves RM’000 .154) – – – (120.228 – – 23.) Bank At 1 January 2013 – as previously stated – effects of adoption of MFRS 119 (Note 53) Net change in revaluation of financial investments available-for-sale: – Net unrealised gain – Net gain on disposal reclassified to the statement of profit or loss (Note 33) 3.103 3.002) – – 11.083) – (121.384) Other comprehensive (loss)/income – (90.928) 8.758.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 28.328 – – – 244.735) 11.

512) – – – (33.926 (22.947 3.512) – (16) – – – (16) – (33.926 2.531.533 – – 31. as restated Net change in revaluation of financial investments available-for-sale: – Net unrealised gain – Net gain on disposal reclassified to the statement of profit or loss (Note 33) – Impairment loss recognised in the statement of profit or loss (Note 38) Net change in cash flow hedges: – Net unrealised loss – Net realised gain reclassified to the statement of profit or loss Gain on remeasurements of defined benefit plans (Note 24 (a)) Deferred tax (Note 12) At 31 December 2012 .535 244.807) 3.528) – – – 8.674 3.339 (19.253 – – 35.897 Bank ANNUAL REPORT 2013 134 At 1 January 2012 – as previously stated – effects of adoption of MFRS 119 (Note 53) At 1 January 2012.531. OTHER RESERVES (CONT’D.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 28.306 – – – 218.515.622 – 23.531.758.926 2.163 (8.250 25.533 – – 3.569 1.541) – – 34.726 Transferred from retained profits – – – – 918 918 3.146) 23.629) – – (7.734.715) 218.750) 34.947 756 3.) Statutory Reserves RM’000 Hedging Reserves RM’000 Revaluation Reserves RM’000 Defined Benefit Reserves RM’000 General Reserves RM’000 Total RM’000 3.000 – (33.163 (7.096 – – 35.382 – (7.096 – – (7.909) Other comprehensive (loss)/income – (25.339 (19.000 – – 31.629) – – 3.947 – 218.528) – – – (33.715) – 756 3.

The reserve is held as a buffer to absorb potential credit losses in excess of the requirements of accounting standards. Under the single tier system. With the implementation of the single tier system. The Bank had elected for the irrevocable option to disregard the remaining available Section 108 balance of RM63. 2007. until 31 December 2013. With such election. The foreign currency translation reserves comprise all foreign exchange differences arising from the translation of the financial statements of foreign subsidiary companies and the subsidiary companies incorporated in the Federal Territory of Labuan. Pursuant to the Finance Act. The tax at shareholders’ level took into account the tax imputed at the company’s level through tax credits. companies with a credit balance in the Section 108 account are allowed either to elect for an irrevocable option to switch over to the single tier system or to continue using the available credit balance as at 31 December 2007 after adjusting for any tax deductions for the purpose of dividend distribution.) The statutory reserves of the Group and the Bank are maintained in compliance with Section 47(2)(f) of the Financial Services Act 2013 and Section 57(2)(f) of the Islamic Financial Services Act 2013 and are not distributable as cash dividends. B7-011-001 issued by the National Bank of Cambodia respectively.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 28. the single tier system was introduced and took effect from the year of assessment 2008. The general reserves of the Group and the Bank represent non-distributable profit reserves maintained in compliance with the requirements of the guidelines of the Central Bank of Sri Lanka and Prakas B7-010-182 and Circular No. the Bank has switched over to the Single Tier System and is therefore allowed to distribute only Single Tier dividend henceforth. The revaluation reserves are in respect of unrealised fair value gains and losses on financial investments available-for-sale. OTHER RESERVES (CONT’D. The capital reserves of the Group arose mainly from the capitalisation of retained profits that resulted from bonus issues by subsidiary companies and the restructuring exercise involving certain subsidiary companies undertaken by the Group in previous years. after offsetting the impact of related fair value hedges. tax on a company’s profit is a final tax and dividend distributed to shareholders will be exempted from tax. RETAINED PROFITS Prior to the year of assessment 2008. The regulatory reserves maintained by the Group’s banking subsidiary companies in Hong Kong SAR are in line with the requirements of the Hong Kong Monetary Authority.000 on 23 February 2011. The defined benefit reserves are in respect of remeasurements of the net defined benefit assets/liabilities. company income tax was based on the full imputation system where tax on dividend was imposed at both the company’s and shareholders’ level. after offsetting the impact of the effective portion of net investment hedges. ANNUAL REPORT 2013 The hedging reserves are in respect of the effective portion of unrealised fair value gains and losses on cash flow hedging instruments.899. The Profit Equalisation Reserves (“PER”) of the Group are maintained in compliance with the requirements of the revised PER Guidelines issued by Bank Negara Malaysia. 135 . 29.

613 284.404.465.241 10.696 426.917.420 9.316.508. INTEREST INCOME Group ANNUAL REPORT 2013 136 Loans and advances Balances with banks Financial investments available-for-sale Financial investments held-to-maturity Others Financial assets held-for-trading Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 9.319 4.554 5.498 4.680 8.391 291.092 10.696 187.336 9.060 334.161 6.649 262.000) respectively.322 360 392.596 5. 31.901 5.662 174.856.989 9.166 312.248.000 (2012 – RM49.158 660. INTEREST EXPENSE Group Deposits from banks Deposits from customers Loans sold to Cagamas Debt securities issued and other borrowed funds Others Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 340.992.862 138.506 23 381.015.439 704.067.826 4.251 4.869 10.149.024 8.085.990 138.829.645 112.568.372 411.513 380.795.149 322.143.230 360 379.596.523.598 Included in interest income on loans and advances for the current year is interest accrued on impaired loans of the Group and the Bank of RM53.980.431 352.881.366.061.429 10.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 30.078 .757.660 10.000) and RM49.363 401.008 8.538 23 368.836 211.368.075 238.789 5.287 112.931 5.791 9.585 249.085 11.301 385.000 (2012 – RM52.

933) (224.936 260.344) (260.801 80.253 391.431 725.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 32.410 1.743 1.653 30.074) – (11.019 270.165.725.974) (313.719 203.368 (253.657 780.908.443 609.574 3.342 451.599 14.451 58.896 352.868 60.517 15.275.700 – – – 39.509 49.325 57.639 32.511 313.384 – – – 30.290) (17.053 38.188) (235.416) (227.025 Fee and commission income: Fee and commission expense: Loan-related fees Unit trust agency fees Other fee and commission expense Net fee and commission income 1.307 29. NET FEE AND COMMISSION INCOME AND EXPENSE Group Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 389.343) 520.400 61.345 1.255) – (10.445 704.199 271.507 4.313 137 ANNUAL REPORT 2013 Commissions Service charges and fees Guarantee fees Processing fees Commitment fees Unit trust management fees Fee on sale of trust units Net brokerage and commissions from stock-broking activities Other fee and commission income .112) (19.588 33.065) (560.243 490.359) (362.269) (633.258) (249.183 205.302 75.

726) 44 2.861 168.002 140.562 38 (3.148 38 (3.864) 12.994 6.839 12 (9.569 772 3.682) 2.244 162.002 145. NET GAINS AND LOSSES ON FINANCIAL INSTRUMENTS Group ANNUAL REPORT 2013 138 Net gain/(loss) arising on financial assets held-for-trading: – net gain on disposal – gross dividend income – unrealised revaluation loss Net (loss)/gain arising on trading derivatives: – net (loss)/gain on disposal – unrealised revaluation gain Net gain arising on financial investments available-for-sale: – net gain on disposal (Note 28) – gross dividend income Gain/(loss) representing ineffective portions of hedging derivatives: – fair value hedge (Note 6) – cash flow hedge (Note 6) Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 9.802 7.131 572 (1.662 152.210 .703 (1.705 3.033 12.874 (5.629 151.983 170.239 772 5.733 5.629 146.238) 12.312) 613 9.106 572 (1.129) 44 2.916 2.085) 166.864) 11.375 6.330) 10.004 8.804 153.222 (5.678 (1.505 12.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 33.962 158.287 157.235 12 (9.270 1.243) 12.960 7.

109 Gross dividend income from: Associated companies Subsidiary companies: – quoted outside Malaysia – unquoted in Malaysia Foreign exchange profit Rental income from: – investment properties (Note 15) – other properties Net gain/(loss) on disposal of property and equipment Net gain on disposal of foreclosed properties Gain on revaluation of investment properties (Note 15) Others ANNUAL REPORT 2013 Other income: 139 .844 225.547 5.307 (425) 7.938 – 48. OTHER OPERATING INCOME Group Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 – – 6.046 857.246 308.315 312.981 500 2.155.490 14.365 25.657 – – 11.657 2.741 215.058 1.043 808.068 14.705 45.559 579 2.938 23.783 – – – – 53.445 163.045 36.852 252.881 699.863 232.012 297.741 975.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 34.037 – – 760.661 6.460 4.392 (446) 7.877 – 11.718 36.765 308.315 312.

347.997 64.153 43.803 21.073 14.188 93.443 68.404.503.744.289 84.934 1.811 103.343 372. allowances and bonuses – Pension costs – Others Establishment costs – Depreciation – Rental – Insurance – Water and electricity – General repairs and maintenance – Information technology expenses – Others Marketing expenses – Advertisement and publicity – Others Administration and general expenses – Communication expenses – Legal and professional fees – Others Shared service cost charged to Public Islamic Bank Berhad Total other operating expenses Bank 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) 1.645 24.416 16.843 118.052.359 63.936 30.558 27.651.608 1.336 38.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 35.074 144. OTHER OPERATING EXPENSES Group 2013 RM’000 ANNUAL REPORT 2013 140 Personnel costs – Salaries.833 32.639 1.842 14.674 74.908 63.399 62.899 43.631 180.521 27.337.656 453.143 466.166 66.044 26.590 1.550 39.897 208.253 84.301 38.352 77.654 61.636 2.688) 2.398 107.338 – – (241.896 44.417.605 105.668 123.388.450 201.845 232.641 33.095 1.710.962 20.054 1.109 74.684 1.806 44.411 161.893 25.328 33.761 1.875 167.668.293 43.233 127.530 72.129 32.673 30.657 15.724 43.486 135.475 37.934 377.148 147.969 1.088.138 94.905 33.694 87.676 38.974 143.270 .174) (221.515 81.398 151.227 34.

492 490 87.580 (2012 – 14.130 155.694 1. OTHER OPERATING EXPENSES (CONT’D.253 1.188 3.974 527 93.) (a) Included in other operating expenses are the following statutory disclosures: Group 2013 RM’000 * 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) 141 3.000 (2012 – RM39.082 84.232 327 74 127.803 152. (b) Employees The number of persons employed by the Group and the Bank (excluding Directors) as at the end of the financial year was 17.683 41 44.430) respectively.553.000) and RM13. ANNUAL REPORT 2013 Auditors’ remuneration*: – statutory audit fees – audit related services – other services Depreciation of property and equipment (Note 16) Direct operating expenses of investment properties that: – generated rental income Directors’ remuneration (Note 36) Pension costs – defined contribution plan – defined benefit plan (Note 24(a)) Property and equipment written off (Note 16) Rental of premises Bank .NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 35.000 (2012 – RM1.416 132.657 Included in the auditors’ remuneration of the Group are fees paid to accounting firms other than the Bank’s auditors for statutory audit fees.694 76. RM14.000). RM345.000 (2012 – RM163.000) and RM51.064 81.000).000) respectively.000 (2012 – RM211. validation review based on agreed-upon procedures and review of statement of internal control.000 (2012 – RM14.000) respectively.129 548 480 167.000 (2012 – RM11.661 – 40.267 752 167 161.678 1.665.973 1. audit related services and other services of RM202.165 49. Audit related services included half year limited review.838 47.515 41 51. Included in the auditors’ remuneration of the Bank are fees paid in relation to the Bank’s overseas branches for statutory audit fees.193 282 408 135. audit related services and other services amounting to RM1.625) and 14.906 73.924 (2012 – 17.962 134.244 – 34.

PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 36. .000 72 1.860 16.943 9.047 17.244 34. including meeting allowances Bonuses Benefits-in-kind Non-Executive Directors: Fees Other remuneration Benefits-in-kind Past Director: Other remuneration Directors of subsidiary companies: Executive Directors: Fees Salary and other remuneration.037 6.000 72 430 6.000).326 7.552. including benefits-in-kind. DIRECTORS’ REMUNERATION Group ANNUAL REPORT 2013 142 Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 1.457 33 24.142.225 45.049 16.199 21.847 438 317 3.783 9.234 – 9 – 9 350 3.439 20.306 33 2.707 75 20. including meeting allowances Bonuses Benefits-in-kind Non-Executive Directors: Fees Other remuneration Included in the remuneration of the Executive Directors is the remuneration attributable to the Chief Executive Officer of the Bank.381 402 – – – – – – – – 7.348 34.114 32 3.996 19.307 – – 523 179 488 172 – – – – 702 660 – – Grand total 52.525 11.402 2.250 32 1.299 17.238 Total (excluding benefits-in-kind) (Note 35) 51.995 4. during the financial year amounting to RM11.293 20.707 75 452 7.744 15.649 11.000 (2012 – RM9.017 19.683 44.171 40.271 6.130 Directors of the Bank: Executive Directors: Fees Salary and other remuneration.661 40.207 2.

# Total Directors’ remuneration Non-Executive Directors: Tan Sri Dato’ Sri Dr.647 19.486 24.788 11.2.936 1.542 103 633 961 873 621 392 378 20.907 19.151 11.954 1.128 320 320 20 236 236 177 236 236 236 452 4. * This represents the remuneration paid to this Director until his resignation on 1 October 2013.047 11.443 104 32 32 – – – – – – – – 72 37 35 Benefitsin-kind RM’000 79 45 124 48 195 37 123 189 135 123 8 5 863 987 512 362 874 645 563 33 126 336 437 116 15 6 2.340 1.) NOTES TO THE FINANCIAL STATEMENTS 143 .425 22.575 4.250 17.314 Group Total RM’000 PUBLIC BANK BERHAD ANNUAL REPORT 2013 This represents the remuneration paid to this Director from 1 January 2013 as an Executive Director until his redesignation as Non-Independent Non-Executive Director on 28 November 2013.128 – – – – – – – – – 236 216 2. ^ This represents the remuneration paid to this Director subsequent to his redesignation as Non-Independent Non-Executive Director.243 784 33 384 436 301 382 369 367 21.299 40.049 18.000 6.277 3.439 18.000 – – – – – – – – – – 11.733 8. DIRECTORS’ REMUNERATION (CONT’D. Teh Hong Piow Tan Sri Datuk Seri Utama Thong Yaw Hong Dato’ Sri Lee Kong Lam^ Dato’ Yeoh Chin Kee Dato’ Haji Abdul Aziz bin Dato’ Dr.891 464 13 148 200 124 146 133 131 3.469 2.348 Bank Total RM’000 Remuneration Received from Subsidiary Companies Other Fees Emoluments RM’000 RM’000 44.397 1. Omar Quah Poh Keat* Tang Wing Chew Lai Wan Lai Wai Keen Executive Directors: Tan Sri Dato’ Sri Tay Ah Lek Dato’ Sri Lee Kong Lam# 2013 Salary RM’000 Remuneration Received from the Bank Other Fees Bonus Emoluments RM’000 RM’000 RM’000 The total remuneration (including benefits-in-kind) of the Directors of the Bank are as follows: 36.017 – 4.142 7.

) ANNUAL REPORT 2013 38.704 9.744 – 3.199 15.162 1.732 – – – – – – – – 215 215 2.572 4.514 763 349 429 384 346 238 211 16.174 1.552 7.009 849 50 195 123 189 169 123 – – 160 79 81 Remuneration Received from Subsidiary Companies Other Fees Emoluments RM’000 RM’000 144 Remuneration Received from the Bank Other Salary Fees Bonus Emoluments RM’000 RM’000 RM’000 RM’000 The total remuneration (including benefits-in-kind) of the Directors of the Bank are as follows (Cont’d.443 Bank Total RM’000 2.116 598 525 126 319 433 115 – – 841 477 364 1. Teh Hong Piow Tan Sri Datuk Seri Utama Thong Yaw Hong Dato’ Yeoh Chin Kee Dato’ Haji Abdul Aziz bin Dato’ Dr.191 473 134 214 169 131 77 68 3.995 9.957 2.108 7.Total Directors’ remuneration Non-Executive Directors: Tan Sri Dato’ Sri Dr.135 18.457 14. Omar Quah Poh Keat Tang Wing Chew Lai Wan Lai Wai Keen Executive Directors: Tan Sri Dato’ Sri Tay Ah Lek Dato’ Sri Lee Kong Lam 2012 2.707 – – – – – – – – – 9.): 36.483 598 937 986 584 238 211 17.051 1.888 Group Total RM’000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS . DIRECTORS’ REMUNERATION (CONT’D.508 15.732 290 290 215 215 215 215 161 143 430 3.996 10.195 20.229 17.696 1.707 5.234 14.355 108 33 33 – – – – – – – 75 41 34 Benefitsin-kind RM’000 34.028 1.

279 1.547 171.603 1.747 194.362 37.495 240.186) (2) 644 (215.007 38.397) 5.804 40.258 160. ADVANCES AND FINANCING Group Individual assessment allowance (Note 9) – Retail loans/financing – housing loans/financing – hire purchase – other loans/financing – Corporate loans/financing Bad debts recovered from stock-broking activities Impaired loans and financing written off Impaired loans and financing recovered 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 340.998 (2.664) – – 8. (WRITEBACK OF IMPAIRMENT)/IMPAIRMENT ON OTHER ASSETS Group Financial investments available-for-sale – Non-money market instruments – equity securities (Note 7 and 28) Foreclosed properties Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 – (149) 3.244 100.357 507 486 – 11.199 219.830 (15.605 77.334 21. ALLOWANCE FOR IMPAIRMENT ON LOANS.147 37.002 1.193 54.966 187.119 16.779) – 692 (107.426) (39) 871 (195.826 115.002 205.626 (165) 6.020 (255) 225.540 40.601 145 ANNUAL REPORT 2013 Allowance for impaired loans and financing: Collective assessment allowance (Note 9) – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Bank .NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 37.652) – 554 (128.864 (2.934) 351.533 3.870) 95 261 225.252 279.286 41.289 279.865 8.365 29.979 (12.093 – (165) 3.146 245 548 1.068 (149) 6.166 13.533 3.

391) (978) 68 (3.233.381) (5.214) 60 6.332 (4.849) – – (5.032) 3.774 7.121 (19.733 1.738) (44.424 1.230.487 – 1.090 (1.990) (22.437 (18.748 59.307 947.992 941.294 (34.459) (17. Group Tax savings arising from tax losses Tax savings arising from utilisation of tax losses Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 2 2 – – .768) (992) (26.662 330 941.517 – 919.177.010) (14.487 Domestic income tax is calculated at the Malaysian statutory tax rate of 25% on the estimated chargeable profit for the year. Tax in foreign jurisdictions is calculated at the rates prevailing in the respective jurisdictions.337) 420 7.568 (3.177.601 965.211.157 (31.168.204.816 1.266) – – 1.411) 1.173 3.078 264 1.251) (14.324 8.153 952.793) 3.247 2.444) (19.441 48 1.819) (12.222.794 1.983 939.309 65.636) (32.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 39. TAX EXPENSE AND ZAKAT Group 2013 RM’000 ANNUAL REPORT 2013 146 Malaysian income tax Overseas income tax (Over)/Under provision in prior years – Malaysian income tax – Overseas income tax Deferred tax expense/(income) (Note 12) – Relating to origination and reversal of temporary differences arising from: – allowance for losses on loans/financing – tax losses – excess/(shortfall) of capital allowance over depreciation – defined benefit plan – other temporary differences – under/(over) provision Tax expense Zakat Bank 2012 RM’000 (Restated) 2013 RM’000 2012 RM’000 (Restated) 1.106 961.342 1.151.454) (9.120) (30.204.853 956.638) (12. The computation of deferred tax assets and deferred tax liabilities is also based on the statutory tax rate of 25%.760) 1.517 919.

161.078 23.5) (1. TAX EXPENSE AND ZAKAT (CONT’D.156.701 377 23.715) (95.5) 1.3 1.747 (263.0 (0.147 515 Tax expense for the year 22.9) – 0.7 – 1.5 1.514 (997) 19.658 (238.309.096) 25.263 25.800 3.646.1 915.114 (27.177.743) 22.8 0.487 ANNUAL REPORT 2013 Income tax using Malaysian tax rate of 25% Effects of different tax rates in foreign jurisdictions Income not subject to tax Effects of utilisation of unrecognised benefit of tax losses Expenses not deductible for tax purposes (Loss)/gain subject to tax at Bank but eliminated at Group 147 .517 19.796 20.626.407) 19.261.) A reconciliation of income tax expense applicable to profit before tax expense at the statutory tax rate to income tax expense at the effective income tax rate of the Group and of the Bank are as follows: % 2013 RM’000 % Group Profit before tax expense 5.6 (0.986 1.4 (Over)/under provision in prior years Tax expense for the year 4.7 1.272) (102.204.984 2012 RM’000 (Restated) 5.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 39.3 – 942.496 (24.632 Income tax using Malaysian tax rate of 25% Income not subject to tax Expenses not deductible for tax purposes 25.0 (0.687 20.539) (2) 30.809 (42.684 14.662 % 2013 RM’000 % 2012 RM’000 (Restated) Bank Profit before tax expense 4.7) 0.9) – 0.327.0 (5.605) (2) 38.976 Under provision in prior years 22.0 (5.3 941.9 919.234 25.1) 0.3 – 1.8 0.203.177.3 1.047.9) (1.

105 1.826.00 each in issue during the financial year excluding the weighted average treasury shares held by the Bank.064.050. Group 2013 ANNUAL REPORT 2013 148 2012 (Restated) Bank 2013 2012 (Restated) Net profit attributable to equity holders of the Bank (RM’000) 4.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 40. Upon declaration.9 Basic earnings per share (sen) (b) Diluted Earnings Per Share The Group and the Bank have no dilution in their earnings per ordinary share as there are no dilutive potential ordinary shares. excluding treasury shares held by the Bank.502.3 105.681.0%) in respect of the financial year ended 31 December 2012 Subsequent to the financial year end.499 ’000 Number of ordinary shares at beginning/end of the year 3.539 computed based on the outstanding issued and paid-up capital.683 3.502. The Directors do not propose any final dividend in respect of the financial year ended 31 December 2013.502. with the total amounting to approximately RM1.821.125 3.8 105.467 700.638 980.0%) in respect of the financial year ended 31 December 2013 Second interim single tier dividend of 30.595 1.125. on 5 February 2014.00 each.125 3. DIVIDENDS Group and Bank 2013 RM’000 2012 RM’000 770. the dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending 31 December 2014. 41.754 3.0%.502.637. in respect of the financial year ended 31 December 2013.502.130 ordinary shares of RM1.020 Dividends recognised as distribution to ordinary equity holders of the Bank: First interim single tier dividend of 22.0% (2012 – 20.1 109. The financial statements for the current financial year do not reflect these dividends. .0% (2011 – 28.425 1.125 3. of 3.050.125 116. EARNINGS PER SHARE (a) Basic Earnings Per Share The calculation of the basic earnings per share is based on the net profit attributable to equity holders of the Bank for the financial year divided by the weighted average number of ordinary shares of RM1.707.115 3.705. the Directors declared a second interim single tier dividend of 30.

directing and controlling the activities of the Group and the Bank either directly or indirectly. (iii) Key Management Personnel Key management personnel are defined as those persons having authority and responsibility for planning. The key management personnel of the Group and the Bank includes Executive Directors and Non-Executive Directors of the Bank and certain members of senior management of the Bank and chief executive officers of major subsidiary companies of the Group. (ii) Associated Companies Associated companies are those entities in which the Group has significant influence but not control.0% (2012 – 30. All related party transactions are conducted on normal commercial terms which are not more favourable than those generally available to the public. (iv) Public Bank Group Officers’ Retirement Benefits Fund Details of the retirement benefits fund are shown in Note 24(a). the dividend declared per share for each financial year are as follows: Group and Bank Dividend per share 2013 Sen 2012 Sen Paid: First interim single tier dividend of 22.00 50. as disclosed in Note 14. RELATED PARTY TRANSACTIONS . ANNUAL REPORT 2013 42. based on the above.0%) 30.00 20.00 30.00 52.) Accordingly. DIVIDENDS (CONT’D.00 ordinary share: Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.00 149 Dividends per RM1.0%) 22. (v) Companies in Which Certain Directors Have Substantial Financial Interest These are entities in which significant voting power in such entities directly or indirectly resides with certain Directors of the Bank. The related parties of the Group and the Bank are: (i) Subsidiary Companies Details of the subsidiary companies are shown in Note 13.0% (2012 – 20.00 Declared subsequent to the financial year end: Second interim single tier dividend of 30.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 41. or if one other party controls both.

481 – – 36.782 2. advances and financing Commission income Rental income Brokerage income Others Expenditure incurred: Interest on deposits Interest on debt securities issued Rental of premises Insurance premiums Public Bank Group Officers’ Retirement Benefits Fund 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 9 – 147 4 – 1 – 147 9 – – 36.478 35.651 49.229 – – – – 160 157 39.229 143.167 600 29.) (a) The significant transactions of the Group and the Bank with its related parties are as follows: Companies in which Certain Directors have Substantial Interest Key Management Personnel* ANNUAL REPORT 2013 150 Group Income earned: Interest on loans.884 35.069 3.592 38.092 – – – 21.092 21.914 3.240 100.048 5.121 – – 25.204 36 – – 100.908 36. RELATED PARTY TRANSACTIONS (CONT’D.047 590 26.104 – 143. .PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 42.104 * Included transactions with close members of the key management personnel.696 – – – 33.650 – – 1 – 49.672 25.427 2.592 – – – 6.

137 1.047 590 21.000) and rental received from a Director of the Bank amounting to RM147.191 – – 36.230.174 80.586 91.954 2012 RM’000 69.) NOTES TO THE FINANCIAL STATEMENTS 151 .123. advances and financing Dividend income (Note 34) Shared service costs charged (Note 35) Commission income Rental income Others Bank Subsidiary Companies The significant transactions of the Group and the Bank with its related parties are as follows (Cont’d.650 – – – – – 36.460 1.080 7.688 56.129.445 3.542.000).542 – – 32.725 2.000 (2012 – RM100.): PUBLIC BANK BERHAD (a) 42.725 120.577 – – – – – 100.491 – 26.542.156.953 3.114 11 – 33.000).933 853.596 – – – – – 6.934 753.964 221.109 – – 30. Included in the significant transactions of the Group are interest on deposits paid to Directors of the Bank (including close members of their families) amounting to RM143.515 11 – 36.488 2012 RM’000 143.000 (2012 – RM147.103 1.229 – – – – 49. RELATED PARTY TRANSACTIONS (CONT’D.000 (2012 – RM100.845 86.783 2.125 5.167 600 22.000) and rental received from a Director of the Bank amounting to RM147.136 2013 RM’000 Included transactions with close members of the key management personnel. * Expenditure incurred: Interest on deposits Interest on debt securities issued Rental of premises Insurance premiums Brokerage commission Professional fees Income earned: Interest on interbank lending and money market instruments held Interest on loans.283 – – – 24.005 902 – – – – – 902 7.832 7.121 156 – – 147 – 9 – – 2013 RM’000 100.229 – – 2012 RM’000 Public Bank Group Officers’ Retirement Benefits Fund 2013 RM’000 Companies in which Certain Directors have Substantial Interest ANNUAL REPORT 2013 Included in the significant transactions of the Bank are interest on deposits paid to Directors of the Bank (including close members of their families) amounting to RM143.283 – – – – 33.262 – – 2013 RM’000 2012 RM’000 20.271 – – – – – 4.526 5.725 – 13 155 1.458 2013 RM’000 Associated Companies 115 – – – – – 115 7.517 – – – – 49.000 (2012 – RM147.510 97.073.157 36 – – – – 143. – 25.520 241.726 2.237 1.517 – 20.650 – – 24.114 – 82 1.577 148 – – 147 – 1 – – 2012 RM’000 Key Management Personnel* – 36.

946.190 – 10.749 – – – – – 1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 42.337 147.852 6.189 8.394 115. advances and financing Rental deposits Amount due to related parties Demand deposits Term deposits Debt securities issued Interbank borrowing Others Commitments and contingencies Commitments Associated Companies RM’000 Companies in which Certain Key Directors have Substantial Management Interest Personnel* RM’000 RM’000 Public Bank Group Officers’ Retirement Benefits Fund RM’000 147.292 – 295.) (b) ANNUAL REPORT 2013 152 The significant outstanding balances of the Group and the Bank with its related parties are as follows: Group 31 December 2013 Amount due from related parties Interbank lending Loans.804 38 – – – 882.149 .398 185.122.811 2.811 – – – 2.149 – – – 882.129.749 – 1.264 500 – 433 5.071 3. RELATED PARTY TRANSACTIONS (CONT’D.410 65.589 1.201 3.935.000 – – 5 – – – 33 305.

887 5.426 – 189.868 – 7.) (b) The significant outstanding balances of the Group and the Bank with its related parties are as follows (Cont’d.124 – – 385 6.474 167.362 3.914 25 – 1. RELATED PARTY TRANSACTIONS (CONT’D.068 4.640 87 – – – 926.084.944 55. advances and financing Rental deposits Companies in which Certain Key Directors have Substantial Management Interest Personnel* RM’000 RM’000 .NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 42.914 – – – 25 – – – – – 1.344 12.): Group 31 December 2012 Amount due to related parties Demand deposits Term deposits Debt securities issued Interbank borrowing Others Commitments and contingencies Commitments Associated Companies RM’000 Public Bank Group Officers’ Retirement Benefits Fund RM’000 129.078.457 129.114 – – – 926.965 3.269.000 – – 9 – – – 78 206.114 153 ANNUAL REPORT 2013 Amount due from related parties Interbank lending Loans.261.696 105.

986 1.021 – – – 882.811 – – 2.416 147.292 – 295.742.999 92.431 2.528.749 – – – 1.680 147.059 – – – – – – – – – – – – – – – – – 6.394 115.444 – – – – – – – 882.) (b) ANNUAL REPORT 2013 154 The significant outstanding balances of the Group and the Bank with its related parties are as follows (Cont’d.818 3.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 42.577 1.190 – – 9.753 299 1.811 2.147 – – 3.144.): Bank 31 December 2013 Amount due from related parties Interbank lending Loans.149 .926.192 500 – – 54 5.149 1.777 469. advances and financing Money market instruments held Dividend receivable (Note 10) Rental deposits Interest receivable Others Amount due to related parties Demand deposits Term deposits Debt securities issued Interbank borrowing Interest payable Others Commitments and contingencies Guarantees Commitments Companies in which Certain Key Directors have Substantial Management Interest Personnel* RM’000 RM’000 Public Bank Group Officers’ Retirement Benefits Fund RM’000 Subsidiary Companies RM’000 Associated Companies RM’000 1.936.000 – – – 5 – – – – 33 3.411.122.410 65.397.280.168 3.462 34.128.564 185. RELATED PARTY TRANSACTIONS (CONT’D.804 38 116.020 – 1.608.749 – 1.870 297.847.852 1.914 296.843 590 686 1.

760 276.268.426 – 189.084.244 13.659 129.479.281.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 42.000 (31 December 2012 – RM3.000) and RM3.) (b) The significant outstanding balances of the Group and the Bank with its related parties are as follows (Cont’d.527 206. 155 ANNUAL REPORT 2013 Amount due from related parties Interbank lending Loans.585.938. Included in the significant outstanding balances of the Group and the Bank are demand deposits and term deposits payable to Directors of the Bank (including close members of their families) amounting to RM3.000 – – – 9 – – – – 78 4.868 – – 7.184 84.869 129. RELATED PARTY TRANSACTIONS (CONT’D.839 375 5.534.114 953.169.903 3.266.268.266.931.): Bank 31 December 2012 Amount due to related parties Demand deposits Term deposits Debt securities issued Interbank borrowing Interest payable Others Commitments and contingencies Guarantees Commitments * Public Bank Group Officers’ Retirement Benefits Fund RM’000 Subsidiary Companies RM’000 Associated Companies RM’000 1.454 1.889 – – – – – – – 926.313 – 1.000) respectively.482.000 (31 December 2012 – RM3.068 4.167.914 25 – 1.501.807 429. advances and financing Money market instruments held Dividend receivable (Note 10) Rental deposits Interest receivable Others Companies in which Certain Key Directors have Substantial Management Interest Personnel* RM’000 RM’000 .260.263 – – – – 6.344 55.166 148.894 12.622 2.472.284 – – – 926.078.696 86.887 1.914 – – 25 – – – 1.647 34.040 87 136.395 816.782 – – – – – – – – – – – – – – – – – 5.297 – – 3.114 Included transactions with close members of the key management personnel.362 3.

146 38.131 2.928 3.619 5.484 38. including meeting allowances Benefits-in-kind Post-employment benefits Included in the total key management personnel compensation are: Group Directors’ remuneration including benefits-in-kind – Directors of the Bank Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 44. RELATED PARTY TRANSACTIONS (CONT’D.550 32.229 The movement in share options of key management personnel is as follows: PFHL ESOS At 1 January/31 December 2013 ’000 2012 ’000 3.324 134 3.140 Short-term employee benefits Fee Salary and other remuneration. .PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 42.469 2. Loans made to other key management personnel of the Group and the Bank are on similar terms and conditions generally available to other employees within the Group.508 55.966 45.327 138 3.174 45.928 The share options were granted on the same terms and conditions as those offered to other employees of the Group (Note 24(b)).549 600 4.195 40. (d) 156 Key Management Personnel Compensation The remuneration of Directors and other members of key management during the year are as follows: ANNUAL REPORT 2013 Group Bank 2013 RM’000 2012 RM’000 2013 RM’000 2012 RM’000 5.348 34.185 590 4. None of the loans granted to key management personnel (2012 – Nil) are impaired.914 47.060 39.486 38.) (c) There were no loans granted to the Directors of the Bank.

and their subsidiaries or entities controlled by them. as a director. CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES Group Outstanding credit exposures with connected parties of which: Total credit exposure which is impaired or in default Percentage of outstanding credit exposures to connected parties – as a proportion of total credit exposures – as a proportion of total capital – which is impaired or in default 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 1.208 206.73% 0.552.155.123 183. a connected party refers to any of the following: (i) Directors of the Bank and their close relatives.651 2.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 43. (ii) Controlling shareholder and his close relatives. companies or any legal entities which control.39% 0. and (vii) Subsidiary of or an entity controlled by the Bank and its connected parties.959 2.01% 0.99% 7. Credit transactions and exposures to connected parties as disclosed above includes the extension of credit facilities and/or offbalance sheet credit exposures such as guarantees. partner. (iv) Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the status of existing credit transactions.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties.00% 1. (v) Firms. either as a member of a committee or individually. Based on these guidelines.82% 0.379. or are controlled by any person listed in (i) to (iv) above. partnerships. being a member of management having authority and responsibility for planning. 157 ANNUAL REPORT 2013 Total credit exposures Bank .01% The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with para 9. directing and/or controlling the activities of the Bank.24% 10.542 2. and their close relatives. (iii) Executive officer. agent or guarantor.756.829 205.235 104 466 72 341 230. trade-related facilities and loan commitments. It also includes holdings of equities and private debt securities issued by the connected parties.76% 6.031.523 0.02% 1.273.16% 0. Due care has been taken to ensure that the credit worthiness of the connected party is not less than that normally required of other persons.46% 12. The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions no more favourable than those entered into with other counterparties with similar circumstances and credit worthiness. or in which they have an interest. and his close relatives. executive officer.692. (vi) Any person for whom the persons listed in (i) to (iv) above is a guarantor.958.

including derivatives. a Board Committee. such as trading or holding of debt securities. Other independent risk management and control units are responsible for managing the credit portfolios and ensuring the credit risk policies are implemented and complied with. credit profile of the credit portfolios and recommends necessary actions to ensure that the credit risk is well managed and within the Group’s risk appetite. guidelines and procedures. All loan applications of significant amounts are approved at Head Office or by the Credit Committee while experienced senior credit officers at branches are given authority to approve loans with lower risk exposure. which amongst others. All credit approving authorities are guided by credit policies. ANNUAL REPORT 2013 158 The Group’s financial risk management is underpinned by the Group’s risk appetite and is subject to the Board of Directors’ oversight. . Risk Governance The CRMC supports the RMC in credit risk management oversight. also expose the Group to credit risk and counterparty credit risk. Risk Management Approach The Group’s credit risk management includes the establishment of comprehensive credit risk policies. credit risk rating. mainly credit risk. The CRMC reviews the Group’s credit risk framework and policies. guidelines and procedures which are periodically reviewed to ensure their continued relevance. (a) Lending to Retail Consumers and SMEs The credit granting to retail consumers and SMEs is individually underwritten. the Credit Risk Management Committee (“CRMC”). settlement of transactions. includes the assessment of the historical repayment track record and the current repayment capacity of the customer through the use of an internal credit risk rating scoresheet. acceptable collateral and valuation. the Credit Risk Management Department has functional responsibility for credit risk management which includes formulating and reviewing group-wide credit risk policies. These activities expose the Group to a variety of financial risks. the Operational Risk Management Committee (“ORMC”) and the Internal Capital Adequacy Assessment Process (“ICAAP”) Working Group. FINANCIAL RISK MANAGEMENT Overview The Group’s business activities involve the use of financial instruments. control and monitor credit risk.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44. Within the Risk Management Division. The RMC is assisted by the specific risk oversight committees which are the Assets & Liabilities Management Committee (“ALCO”). The Credit Committee approves major credit decisions. which oversees the establishment of enterprisewide risk management policies and processes. Trading and investing the surplus funds of the Group. guidelines and procedures to manage. the Group’s exposure to credit risk is primarily from its lending and financing to retail consumers. As the Group’s primary business is in commercial banking. deposit placements. rehabilitation and restructuring of problematic and delinquent loans. Credit Risk Credit risk is the potential loss of revenue as a result of failure by the customers or counterparties to meet their contractual financial obligations. small and medium enterprises (“SMEs”) and corporate customers. guidelines and procedures which document the Group’s lending standards. The credit approving authorities are assigned discretionary powers based on their seniority and track record. market risk and liquidity and funding risk. The Board of Directors of the respective entities has the authority to reject or modify the terms and conditions of loans which have been approved by the Credit Committee. discretionary power for loans approval. through the Risk Management Committee (“RMC”). The management of credit risk starts with experienced key personnel being appointed to the Credit Committee. The credit approving authorities have the responsibility to ensure that credit risk is properly assessed and all crucial credit information of the customer is included in the customer’s loan application. and the review.

Treasury Control & Processing Department monitors counterparties’ positions and promptly follows up with the requirements to post collateral upon any excess in threshold levels. at the relevant time. Unlike on-balance sheet financial instruments. ISDA allows for the close-out netting in the event of default by a counterparty and CSA provides credit protection with the requirements to post collateral.) (b) Lending to Corporate and Institutional Customers The credit granting to corporate and institutional customers is individually underwritten and risk-rated through the use of an internal credit risk rating scoresheet. the Group establishes settlement limits through the Group’s credit approval process. The Group may also take conservative trading derivative positions. All outstanding financial derivative positions are marked-to-market on a daily basis. or customer groups. For derivative financial instruments where the PVP settlement method is not possible. the Group settles its OTC derivatives via the Payment-versus-Payment (“PVP”) settlement method to further reduce settlement risk. equity. interest rate. within certain pre-set limits. (d) 159 . FINANCIAL RISK MANAGEMENT (CONT’D. The Group will only suffer losses if the contract carries a positive economic value at time of default. ANNUAL REPORT 2013 The management of the credit risk arising from the Group’s trading or investing its surplus funds is primarily via the setting of issuers’ credit limits which are specifically approved by the relevant approving authorities. International Swaps and Derivatives Association (“ISDA”) and Credit Support Annex (“CSA”) agreements. As at the reporting date. Where possible. especially interest rate swaps and options are transacted under master agreements. option or credit derivative contract defaults prior to maturity date of the contract and the Group. the Group’s financial loss is not the entire contracted notional principal value of the derivatives. over-the-counter (“OTC”) derivative financial instruments. industry and economic factors. minimum acceptable return and the maximum tenure. commodity. Derivative financial instruments are primarily entered into for hedging purposes. with the expectation to make arbitrage gains from favourable movements in prices or rates. The CCR arising from all derivative financial instruments is managed via the establishment of credit exposure limits and daily settlement limits for each counterparty.) Risk Management Approach (Cont’d. Where possible. taking into consideration their financial and business profiles. investment in debt securities are subject to the minimum investment grade. The investment parameters are also subject to regular review.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44. In addition. or other credit support such as standby letters of credit or bank guarantees. but equivalent to the cost to replace the defaulted derivative financial instruments with another similar contract. has a claim on the counterparty. Credit officers identify and assess the credit risk of large corporate or institutional customers. collateral. (c) Credit Risk from Trading and Investment Activities Counterparty Credit Risk on Derivative Financial Instruments Counterparty credit risk (“CCR”) on derivative financial instruments is the risk that the Group’s counterparty in a foreign exchange. CDO or CLO and does not participate in any securitisation deals. the Group does not have any direct or indirect exposure to asset-backed securities. usually in the form of cash or government securities upon any excess over the threshold levels. The holdings of Collateralised Debt Obligations (“CDO”) or Collateralised Loan Obligations (“CLO”) require the specific approval of the Board of Directors.) Credit Risk (Cont’d.

) 160 Independent credit reviews are performed regularly to complement risk identification as well as to evaluate the quality of credit appraisals and the competency of credit personnel. containing information on asset quality trends across major credit portfolios. results of independent credit review. Credit Committee. A concentration of credit risk exists when a number of counterparties are engaged in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic and other conditions. CRMC and RMC. without taking into account of any collateral held or other credit enhancements. results of the credit profiling conducted. Internal risk management reports are presented to the Credit Committee. the maximum exposure to credit risk equals their carrying amount. For on-balance sheet financial assets. significant credit exposures to connected parties and credit concentration by economic sectors and by large single customers. For financial guarantees. the maximum exposure to credit risk is the maximum amount that the Group or the Bank would have to pay if the obligations for which the instruments are issued are called upon.) Credit Risk (Cont’d. ANNUAL REPORT 2013 There have been no changes to the process for managing credit risk and the methods used to measure credit risk. the maximum exposure to credit risk is the full amount of the undrawn credit granted to customers. CRMC and RMC to identify adverse credit trends. Such information allows senior management. FINANCIAL RISK MANAGEMENT (CONT’D. (i) Credit Risk Exposures and Credit Risk Concentration The following table presents the Group’s and the Bank’s maximum exposure to credit risk of on-balance sheet and off-balance sheet financial instruments. For credit commitments. . take corrective actions and formulate business strategies. By Industry Analysis The analysis of credit risk concentration presented below relates only to financial assets subject to credit risk and are based on the industry in which the counterparties are engaged (for non-individual counterparties) or the economic purpose of the credit exposure (for individuals).PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.) Risk Management Approach (Cont’d. The exposures to credit risk are presented without taking into account any collateral held or other credit enhancements.

297.063.027.722 13.596 – 1.162.106.623.109 517.793.924.285.566 – Financial Services RM’000 13.944.292.470 69.637 664.) – 3.758 – 3.596.590 46.354 22.170.894 – – – 333.583.417 9.885 – – 869.088 44.530 – 5.473.527.162 36.644 83.106.380.644 – 29.821.053 301.509 6.918.929 392.977 5.185.046 – – – – – – 45.602 1.969 Total RM’000 PUBLIC BANK BERHAD 44.777.019.533.644 11.634.342 1.090 – 216.928 39.229 9.924.394 365.718 – 14.996 10.155.634 – 308.428.640 – – – 1.162 14.680 33.448 58.318 10.187 – – – – – – – – – – – – – 36.109.080.260.399.179 – 2.170.143.881.894.628 – – 36.093 45.086 518.623.925 54.822.671 1.832 45.837 – 13.832 4.371.354 1.583.987 – 13.998 14.705 1.228.190 5. FINANCIAL RISK MANAGEMENT (CONT’D.929 405. and Business Wholesale & Construction Services Retail Trade & Real Estate RM’000 RM’000 RM’000 Credit Risk Exposures and Credit Risk Concentration (Cont’d. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Statutory deposits with Central Banks Group 31 December 2013 By Industry Analysis (Cont’d.271 – 72.710 7.371 13.360 12.969 Government and Central Banks RM’000 20.283 30.094 4.375.106.955.781 28.110 27.726.740.376.265.993 – – – Agriculture.088 – – 2.713 – – – – – – – – – – – – Other Consumer Loans RM’000 Residential Motor Vehicle Financing Mortgages RM’000 RM’000 ANNUAL REPORT 2013 Credit Risk (Cont’d.332 – 3.004 – – – – – – – – – 12.860 5.277 4.485 12.103 1.000 30.561 – – – 224.981.922 11.526 – 186 – 28.151 – 6.533.060.022.541.295.516 5.858 854.229.923.637 1.399 13.069 – 11.102 993.851 9.383 – 1.) NOTES TO THE FINANCIAL STATEMENTS 161 .371.053.640 13.070 – – 850.186.623.) Risk Management Approach (Cont’d.596 2.321 11.844 5.443.223.844 7.369 – 38.399.385.513.435.162.416 – – – – – – 41.338 – 198.) 359.283 74.822.(i) Total Credit Exposures Commitments and Contingencies Contingent liabilities Commitments On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans.195 – 22.375.407.987.645 79.761 6.634 198.541.978 3. Transport Manufacturing.696.662 – 32.401 365.157.) – – – – – – – – – – – – – 39 1.880 69.

158.211 27.797.789 – 8 – 40.547 27.042 – – – – 519.383 42.573.746.221 802.328.364.540 3.401.173 – 34.110 28.837.633 370.373.929.613 – 215.977.) Credit Risk Exposures and Credit Risk Concentration (Cont’d.974.715.052 – – – – – – – – – – – – – Residential Motor Vehicle Financing Mortgages RM'000 RM'000 162 Group 31 December 2012 By Industry Analysis (Cont’d.836.878 12.716 – 2.757.474 3.318 2.068.598 634.218 270. Transport Manufacturing.489.335 – 5.913 12.634.862 59.003 310. FINANCIAL RISK MANAGEMENT (CONT’D.666 13.598 477.995 4.305 6.868.635.895 3.525 59.660.669.465 18.058 507.352 – – – – – 822.964 – 20.606.461 1.599.366 – – – – – – 34. and Business Wholesale & Construction Services Retail Trade & Real Estate RM'000 RM'000 RM'000 73.(i) Total Credit Exposures Commitments and Contingencies Contingent liabilities Commitments On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments* Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans.079 – – – 1.234.654.785 43.426 – 1.606.489.299 56.328.787.076 48.156 51.086 508.219.388 11.140 – 2.910.826 – 27.221 164.016.993 24.380 11.505 1.277 7.311 – 11.152.428.400.337.444 10.803 – 90.465 3.985.867.506 Government and Central Banks RM'000 17.604.826 34.964 8.106.877 – – – 41.604.023 20. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Statutory deposits with Central Banks – 3.255.787.956 370.158.525.016.703 1.206 42.009.120 35.318 – 1.907.731.316 – 5.311 62.280 4.734.940 1.403.665 – 34.987 – Financial Services RM'000 10.383 – – 2.836 11.664 – 10.822.247 8.041.944.658.886 – – – 35.142 4.709 10.294 3.079 11.421.206 3.677 – 3.838.491 27.603.003 6.601.776 – 11.544.804 – – – 120.867.977.) 44.166 – – 118.068.666 9.021.832 – 835.142 – – – – – – – – – – – – – 34.) Risk Management Approach (Cont’d.) Credit Risk (Cont’d.856.562 5.730.259 29.962.140 933.446 – – – Agriculture.836.639.) ANNUAL REPORT 2013 41.207 6.211 66.856.347 – – – – – – – – – – – – Other Consumer Loans RM'000 322.977.319 – 4.240 874.506 Total RM'000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .855 10.158.855 – 90 1.951 8.

282.870.648.685 29.231 – 4.058 – 1.593 50.087 245.834.565.993 – – – Agriculture.669.437.375. Transport Manufacturing.033 24.879.033 64.545 – 209.577 – 13.613.199 27.669.946 3.127.765.509.350.918.451.145.541 73.) NOTES TO THE FINANCIAL STATEMENTS 163 .991 3.) 298.680 2.562 12.844 6.629 871.472.036 24.241.818.496 3.345 – – – – – – – – – 12.379.183.761 33.099 34.015 24.271 – 63.338 – 198.638.063 12.857 4.274.032 – – 24.855 – 186 – 9.461.673.646 – – – – – – – – – – – – – 24.680.944 10.105.229 7.390 – – – 1.054.886.565.605 – – – – – – – – – – – – Other Consumer Loans RM'000 Residential Motor Vehicle Financing Mortgages RM'000 RM'000 ANNUAL REPORT 2013 Credit Risk (Cont’d.369 5.190 12.431.676 – 12.799 60.726 – – 748.158 – – – 224.652.376 772.847.228 1.240 23.485.109 517.660.514.752 39.295 3.169 31.750.) – 3.729 12.906. FINANCIAL RISK MANAGEMENT (CONT’D.070 – – 499.528.813.489 350.398.379.745.893 – 20.454.598.687 – 1.625 – 11.547 319.724 10.300.566 – – – – – – 35.894 2.(i) Total Credit Exposures Commitments and Contingencies Contingent liabilities Commitments On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Statutory deposits with Central Banks Bank 31 December 2013 By Industry Analysis (Cont’d.088 – 19.844 4.558.019 – 5.725 – 308.878 – 3.437.725 198.534.274.541 10.613 60.635 144.360.662 – 26.638.) Risk Management Approach (Cont’d.946 33.642 5.796.128 8.078.617.869 732.206.872.136 11.086 8.595 – 1.086 518.624 7.588.496 350.729 1.472.058 1.169 – – 2.958 – Financial Services RM'000 5.588 Government and Central Banks RM'000 16.118 12.507 11.390 12.588 Total RM'000 PUBLIC BANK BERHAD 44.351.059 – 32.255.450 1.483.191 4.504.122 – – – – – – 40.869 180.919 1.741.064 – 10.036 13.514.189.617.547 332. and Business Wholesale & Construction Services Retail Trade & Real Estate RM'000 RM'000 RM'000 Credit Risk Exposures and Credit Risk Concentration (Cont’d.905 8.873 8.147 – – – 326.613.568 1.761.479 52.083 – 2.755.413 742.) – – – – – – – – – – – – – – 1.

846.804 12.229 20.672 310.630.309.982.144.964.041 – 18.460 573.677 4.836 – 2.144.822 31. Transport Manufacturing.492.729 – 5.395 30.250.670 – 1.283.679.116.536.213 32.083 23.086 508.213 2.887 2.715.052 723.338.) Credit Risk Exposures and Credit Risk Concentration (Cont’d.) Credit Risk (Cont’d.807 5.344 11.489 4.751.837 9.979 8.166 55.153 Financial Services RM'000 13.757 11.216 – – – – – – 29.618 52.476 – – – – – 479.166 – 10.309.288. Total Credit Exposures Commitments and Contingencies Contingent liabilities Commitments On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments* Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Statutory deposits with Central Banks Government and Central Banks RM'000 164 Bank 31 December 2012 By Industry Analysis (Cont’d.027.192 – 38.344 2.505 52.790 8.319 6.809 2.456.340.487 32.237 10.693.816.595 221.702 – – – 30.114 7.) ANNUAL REPORT 2013 NOTES TO THE FINANCIAL STATEMENTS .000 (31 December 2012 – RM156.440.153 Total RM'000 PUBLIC BANK BERHAD Excluding equity securities of the Group and the Bank of RM126.237 – – – 1.379.269.) 44.602.916.221.453.347 – – – – – – – – – – – – Other Consumer Loans RM'000 269.000) respectively which do not have any credit risk.(i) * – 3.166.000) and RM111.672 5.282 – – – 113.738. and Business Wholesale & Construction Services Retail Trade & Real Estate RM'000 RM'000 RM'000 65.660 – 718.605 – 8 – 19.429.931.933 10.427 47.472.775.395 – – 2.653 5.456.577.843 7.209.309.807 149.514.307.112 10.054.000 (31 December 2012 – RM141.110 – – – – – – – – – – – – – 23.738.058 507.997 – 21.360 – 10.310.235 – 1.130.840 2.335 – 4.456 21.888 2.564 – – 118.045 – 4.561.670 1.140.682.776 – 3.886.707.682 – 29.066.459 – 23.330 – – – – – – – – – – – – – Residential Motor Vehicle Financing Mortgages RM'000 RM'000 35.138.670 22.106 21.) Risk Management Approach (Cont’d.309.594.277.715.963.748 2.295 2.994 – 3.514.797.960 – 1.185 26.059 2.591 – – – Agriculture.659 12.425.997 23.886.506 1.070.307.536.468 364.118 861.877 – – – 37.901 – 10.029.472.891.214 45.334 2.679 9.257.132.646.106 57.460 – 364. FINANCIAL RISK MANAGEMENT (CONT’D.129 – 207.671 10.032 – – – – 454.019 693.275 8.540.594.277 6.289 142.660.463.772 – – 1.703.261 3.

106.844 7.974 1.363.036 13.998.138 38.796 301.283 74.374 29.634 198.103 3.929 405.952 24.828.286 116.634 198.245 259.127 1.348 72.968 – – – 230.580 – 419.408.596 2.153.640 13.088 44. FINANCIAL RISK MANAGEMENT (CONT’D.476.600 43.379.362 523.496 69.844 7.010.671 1.623.380 1.709.106 5.929 405.e.201 10.103 – – – – – – – – – 10.634.822.186. based on the geographical location where the credit risk resides) is as follows: 165 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans.456 6.743 1.953 2.936.974 666.176 374.722 99.713.098 – 937.065.672 4.924.370.916 5.394 256.484.923.185.737 4.969 1.832 278.786.169 9.470 2.255 2.417 9.907 2.977 – – – 4.170.445.848 359.637 1.106.623.560.965 134.106 846.241 33.931 – 41.640 13.394 365.843.) By Geographical Analysis The analysis of credit concentration risk of financial assets of the Group and the Bank categorised by geographical distribution (i.944.657 1.925 54.583. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Statutory deposits with Central Banks Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures Malaysia RM'000 Hong Kong & China RM'000 Cambodia RM'000 Other Countries RM'000 Total RM'000 17.186.654.223.946.245 15.300 3.464 4.080.052 58.008.371 722.053 55.120 – – – – – – – 104.106.761 6.033 70.371.413 – 736.822.673 17.613.) Risk Management Approach (Cont’d.914 3.305.448 ANNUAL REPORT 2013 Group 31 December 2013 .655.507 2.978 334.162.706 52.150 773.) (i) Credit Risk Exposures and Credit Risk Concentration (Cont’d.522 3.428 1.907 4.583.000 30.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.537.582.879.354 10.107 399.257 1.016 22.541.292.777.164 – 536.399.979 4.318 66.677.) Credit Risk (Cont’d.

757.654.220 4.767 296.308 47.221 802.101 16.) Credit Risk (Cont’d.606.594.599 3.756.973 3.011 1.977.156 .506 3.804.106.344 3.720 5.) ANNUAL REPORT 2013 166 Group 31 December 2012 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments* Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans.294 299.068.618.978 413.187 270.336.048 65.333.766 172.093 382.376.794 322.772 96 18.247.350.158.471 3.796 – 376.068.211 66.726 1.973 – – – 58.158.206 249.) Risk Management Approach (Cont’d.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.977.318 2.540 2.917 3.465 10.172.079 11.607 51.977.266 8.072.271.285 236.686.520.869 3.833 59.598 634.057.218 49.176 – – – 316 – – – – – – – 128.944.708 7.461 1.870 – 1.596 1.951 8.571 – 389.421.051 34.867.106 62.134.381.836.862 2.547 27.902 11.079 11.562 5.505 14.016.950 1.838.855 56.556 3.569.970 730.317.221 802.410 2.630.813.635.442.950 1.492 – – – – – 48 10.188 4.190 40.076 48.283 669.) (i) Credit Risk Exposures and Credit Risk Concentration (Cont’d.593 22.868.373 2.732 1.301 3.262.879.043 – 680.787.021.977.854 48.956 241. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Statutory deposits with Central Banks Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures Malaysia RM’000 Hong Kong & China RM’000 Cambodia RM’000 Other Countries RM’000 Total RM’000 14.188.303 28.003 6.288 122.532 5.956 370.383 42.836.604.022 428.281 31. FINANCIAL RISK MANAGEMENT (CONT’D.599.043 679.759 9.727 – 37.003 6.760.) By Geographical Analysis (Cont’d.319.027.

593 50.669.834.164.885.869 732.845 245.263 29.648.069.799 2.902 – 28.274.087 52.) (i) Credit Risk Exposures and Credit Risk Concentration (Cont’d.169 31.228 – – – – – – – – – 8.588 1.390 12.902 62.774.630 – 2.145.489 350.319 103.873 – – – – – – 111. FINANCIAL RISK MANAGEMENT (CONT’D.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.228 3.572 744.818.611.674 492.190 23.698.015 103.896.725 – – 3.568 1.869 732.193.725 198.192 8.274.613.272.324 1.968 31.389.613.903 298.669.479 167 ANNUAL REPORT 2013 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Statutory deposits with Central Banks Malaysia RM’000 .450 – – – – 444.547 332.534.642 5.680 294.031 504.355 1.839 – – – – – – – 13.231.996 – – – 732.) By Geographical Analysis (Cont’d.458.325.300.489 242.634.058 52.540 5.617.007.496 60.033 64.379.016 12.750.946 242.902 2.844 6.729 8.218 33.015 24.799 49.898 4.873 60.404 1.086 8.033 64.677 – – – 3.536.333 1.) Risk Management Approach (Cont’d.379.638.745.390 12.547 332.840 2.844 6.617.201 10.058 1.483.906.725 198.257 1.) Credit Risk (Cont’d.689 103.472.565.164 – 513.825 488.145.447.) Bank 31 December 2013 Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures Hong Kong & China RM’000 Cambodia RM’000 Other Countries RM’000 Total RM’000 11.232 12.795 – – – – – – – 104.437.

349.699 – – – – – 49 9.840 221.561.356 44.344 9.128.237 10.338 1.676 4.738.715.536.535 124.592 96 11.262.237 10.603.221.305 1.935 1.670 22.983 28.912.395 30.) By Geographical Analysis (cont’d.284 2.181 – – – 190 – – – – – – – 128.748 2.699 692.464 30.973 2.335.307.700 124.460 573.975 124.000 (31 December 2012 – RM141.) Credit Risk (Cont’d.748 47.514.000 (31 December 2012 – RM156.964.571 – 364.214 45.489 4.886.514.807 149.425.967 470.703.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.636 30.835 458.468 364.554.309.843 7.931.759 9.456.837 52.) ANNUAL REPORT 2013 168 Bank 31 December 2012 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments* Derivative financial assets Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments* Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Gross loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Statutory deposits with Central Banks Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures * Malaysia RM'000 Hong Kong & China RM'000 Cambodia RM'000 Other Countries RM'000 Total RM'000 9.715.830 – – – – – – – 11.259.427 Excluding equity securities of the Group and the Bank of RM126. FINANCIAL RISK MANAGEMENT (CONT’D.106 57.971 21.559 – 26.057 816.994.588 269.468 235.907.472.618 2.524.964.559 2.828.070.309.819.672 5.646.807 149.) (i) Credit Risk Exposures and Credit Risk Concentration (cont’d.672 5.309.594.463.285 – – 2.472.000) and RM111.670 1.138.) Risk Management Approach (Cont’d.595 46.679.831 7.440 – 2.506 1.460 573.809 264.833 52.420 – – – 1.709. .153 2.594.559 56.837 – – – – – – 58.942.309.380 – – – – 532.611 11.000) respectively which do not have any credit risk.816.732.106 56.385 1.213 217.611.

233.783. advances and financing which are neither past due nor impaired are identified into the following internally classified grades: – “Good Grade” refers to loans. advances and financing are analysed as follows: Group (a) 169 31 December 2013 RM'000 31 December 2012 RM'000 31 December 2013 RM'000 31 December 2012 RM'000 196.014.427 164.138. – “Satisfactory Grade” refers to loans.) Credit Risk (Cont’d.) (ii) Credit Quality of Gross Loans.164 183.803.779 174.175.605.374.889.102 23.825 21. ANNUAL REPORT 2013 Neither past due nor impaired Past due but not impaired Impaired Bank .555.288.086 164.967 17.935 18.484.803 197. advances and financing which may have been past due or impaired during the last six months or have undergone a rescheduling or restructuring exercise previously.253 1.166 Neither Past Due Nor Impaired Gross loans. FINANCIAL RISK MANAGEMENT (CONT’D. Advances and Financing Gross loans.) Risk Management Approach (Cont’d.660 221.111. advances and financing which are neither past due nor impaired in the last six months and have never undergone any rescheduling or restructuring exercise previously.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.922 1.539 1.755 1.579.130.737 145.135.

929.920 1.782.228.351. FINANCIAL RISK MANAGEMENT (CONT’D.605.161 13.317 3.544.245.958.126 325.045.394.421.516 3.812 53.478 174.427 992.469.102 158.149.) (ii) Credit Quality of Gross Loans.628.) (a) Neither Past Due Nor Impaired (Cont’d.098 29.418.333.000.387 401.356 983.309.729.288.412.716.239 27.720.623 21.) Credit Risk (Cont’d.159 60.021.792 402.632 47.087 19.000 45.375.500 25.193 4.612 53.204 22.005 41.778.201 1.711.825 48.663.473 5.122 51.989.124 24.108 58.138.975 4.262 29.705 1.573 145.552.932.008 1.316.437 4.599 3.109.390 949.288.290.484.110 4.579.537.323.193.030 27.942 16.788.038 34.) The credit quality of gross loans.394 13.867.443 4.288.578.214 31.096 50.384 61.232 180.826 2.347 15.482 1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.505.160 196.785 57.052.566.261.318 940.167 62.336.182 1.239.860.171.133 70.282 22.776 4.379.690 65. Advances and Financing (Cont’d.889.123.149.319.774 326.774 164.844 3.090 28.967 .456 20.940 24.530 2.481.059 3.341.935 132.251.942.437 151.641. advances and financing which is neither past due nor impaired is analysed as follows: 170 ANNUAL REPORT 2013 Good RM’000 Group Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing Corporate loans/financing Bank Retail loans – housing loans – hire purchase – credit cards – other loans Corporate loans 31 December 2013 Satisfactory RM’000 Total RM’000 Good RM’000 31 December 2012 Satisfactory RM’000 Total RM’000 55.) Risk Management Approach (Cont’d.931 22.130.

305.966.768 992.782 10.938.214 857.441 4.322 186. and includes loans/financing which are due one or more days after the contractual due date but less than three (3) months.) Risk Management Approach (Cont’d.250 8.793 2.138 2. FINANCIAL RISK MANAGEMENT (CONT’D.248 648.387 172.742 209.253 ANNUAL REPORT 2013 Group 1 day to < 1 month RM’000 .754.292 2.745 976. Advances and Financing (Cont’d.635 3.377.062.113. 171 An aging analysis of loans.623 3.468.922 4.017 23.753 26.636 1.989 3.478 1.324.) Credit Risk (Cont’d.841 3.276.) (b) Past Due But Not Impaired Past due but not impaired loans.362 26.153 364.606 68.768 2.716 10.111.897 12.298 21.114.493 134.507 1.662.965.493 3.051.506.761 770.300 642.377 248.209 229.899.068 2.455.349.783 1.862 34.123.290 280. advances and financing are loans/financing where the customer has failed to make a principal or interest/profit payment when contractually due.803.492.130 6.638.865.963 68.) (ii) Credit Quality of Gross Loans.172 6.662. advances and financing which are past due but not impaired is as follows: 31 December 2013 Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing Corporate loans/financing 31 December 2012 Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing Corporate loans/financing 1 month to < 2 months RM’000 2 months to < 3 months RM’000 Total RM’000 4.545 7.613 6.679 13.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.386 5.421.

909 1.158 68.) Credit Risk (Cont’d.995 648.745.138 115.509.863.808.408 68.963.786 1.791.565 3. Advances and Financing (Cont’d. FINANCIAL RISK MANAGEMENT (CONT’D.534 2.512 – 6.884 1.934.031.955 7.327.539 .280.233.) An aging analysis of loans.226 134.748 2.185 3.221.274 518.): 172 ANNUAL REPORT 2013 Bank 31 December 2013 Retail loans – housing loans – hire purchase – credit cards – other loans Corporate loans 31 December 2012 Retail loans – housing loans – hire purchase – credit cards – other loans Corporate loans 1 day to < 1 month RM’000 1 month to < 2 months RM’000 2 months to < 3 months RM’000 Total RM’000 3.282.137 18.450 118.319.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.073 10.097 – 6.755 3. advances and financing which are past due but not impaired is as follows (Cont’d.) (ii) Credit Quality of Gross Loans.166 198.790 10.325 767.348 7.) (b) Past Due But Not Impaired (Cont’d.568 1.079.215 2.478 2.708 280.819 4.451 935.108.106.312.485 2.869.779 17.501.910 284.308.720 25.344 599.196 4.242 26.046 598.) Risk Management Approach (Cont’d.876 5.312 974.746 858.536 1.876 229.082 5.898.130.187.830 185.

) (ii) Credit Quality of Gross Loans. the loan/financing exhibits indications of significant credit weaknesses. loans/financing that are considered individually significant. (iv) the viability of the customer’s business operations and its capability to trade successfully out of financial difficulties and to generate sufficient cash flow to service its debt obligations. FINANCIAL RISK MANAGEMENT (CONT’D. or In addition. advances and financing are classified as impaired when they fulfill any of the following criteria: (i) principal or interest/profit or both are past due for three (3) months or more.) (c) Impaired Loans. Advances and Financing (Cont’d.) Risk Management Approach (Cont’d. the Group assesses on a case-by-case basis at each reporting date whether there is any objective evidence that a loan/financing is impaired. (ii) where a loan/financing is in arrears for less than three (3) months. The criteria that the Group uses to determine that there is objective evidence of impairment include: (i) any significant financial difficulty of the issuer or obligor. the loan/financing will continue to be classified as impaired until repayments based on the revised and/or restructured terms have been observed continuously for a period of six (6) months. and (v) any adverse news or developments affecting the local economic conditions or business environment of the borrower which will adversely affect the repayment capacity of the borrower. 173 .NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.) Credit Risk (Cont’d. such as a default or delinquency in interest/profit or principal payments. (ii) a breach of contract. (iii) high probability of bankruptcy or other financial reorganisation of the borrower. ANNUAL REPORT 2013 (iii) where an impaired loan/financing has been rescheduled or restructured. Advances and Financing Loans.

489 – 179.014 1.654 107.) (ii) Credit Quality of Gross Loans.450 6.219 – 125.367 107. Advances and Financing RM'000 of which Individually <------------.608 75.852 1.482 – 110.470 1. FINANCIAL RISK MANAGEMENT (CONT’D.161 490.) The breakdown of the gross amount of loans. Advances and Financing (Cont’d.097 1. by class.576 6.070 23.387 243.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.433 4. along with the fair value of related collateral held by the Group and the Bank as security are as follows: Group 31 December 2013 Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing Corporate loans/financing 31 December 2012 Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing Corporate loans/financing Total Gross Impaired Loans.531 .127 1.838 67.Assessed as Impaired -------------> Gross Individually Assessed Impaired Individual Fair Loans/ Assessment Value of Financing Allowance Collateral RM'000 RM'000 RM'000 531.) Credit Risk (Cont’d.450 167 1.758 77 255.334 332.775 153.595 – 187.712 153.) Risk Management Approach (Cont’d.205 201.779 370. advances and financing individually assessed as impaired.749 167.180 23.097 1.) (c) ANNUAL REPORT 2013 174 Impaired Loans.925 254.104 4.894 422.086 431. Advances and Financing (Cont’d.070 90.484.433 64 1.374.995 283.421 531.700 55.933 – 271.

515 62.872 109.074 161.091 110.952 61.847 – – – 37.925 23. Advances and Financing (Cont’d.979 3.847 2.753 – – 134.084 322. FINANCIAL RISK MANAGEMENT (CONT’D.509 168.684 368. along with the fair value of related collateral held by the Group and the Bank as security are as follows (Cont’d.881 231.122 3.817 2. advances and financing individually assessed as impaired.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.240 – – 95.617 ANNUAL REPORT 2013 Bank Total Gross Impaired Loans and Advances RM'000 .617 88.948 41.) (c) Impaired Loans.) The breakdown of the gross amount of loans.) Risk Management Approach (Cont’d.429 63.217 79.660 237. by class.): 175 of which Individually <------------.309 343.Assessed as Impaired -------------> 31 December 2013 Retail loans – housing loans – hire purchase – credit cards – other loans Corporate loans 31 December 2012 Retail loans – housing loans – hire purchase – credit cards – other loans Corporate loans Gross Individually Assessed Impaired Loans RM'000 Individual Assessment Allowance RM'000 Fair Value of Collateral RM'000 469.737 226.979 – – – 48.502 1.547 88.765 181.240 – – 123.) (ii) Credit Quality of Gross Loans.) Credit Risk (Cont’d. Advances and Financing (Cont’d.135.753 – – 115.862 1.378 23.014.938 109.

0%) and 91. inventories.280 82. Repossessed collateral are recognised in other assets on the statements of financial position.776 26.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.366 29.9% (31 December 2012 – 90. advances and financing for the Group and the Bank as at 31 December 2013 are at 89. trade receivables or deposits The financial effect of collateral (quantification of the extent to which collateral and other credit enhancements mitigate credit risk) held for gross loans.552 26.) Risk Management Approach (Cont’d.504 52. .0%) respectively.982 80.) Credit Risk (Cont’d. Repossessed Collateral Assets obtained by taking possession of collateral held as security against loans. and held as at the end of the financial year are as follows: Group Residential properties Non-residential properties Bank 31 December 2013 RM'000 31 December 2012 RM'000 31 December 2013 RM'000 31 December 2012 RM'000 30.521 Repossessed collateral are sold as soon as practicable.672 55.676 29.430 50. advances and financing.) (iii) Collateral The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows: ANNUAL REPORT 2013 176 – – – – – for for for for for residential mortgages – charges over residential properties commercial property loans/financing – charges over the properties being financed motor vehicle financing – ownership claims over the vehicles financed share margin financing – pledges over securities from listed exchange other loans/financing – charges over business assets such as premises.306 30. FINANCIAL RISK MANAGEMENT (CONT’D.845 57. The financial effect of collateral held for other remaining on-balance sheet financial assets is not significant.6% (31 December 2012 – 92. The Group and the Bank do not occupy repossessed properties for its business use.

311.221.903 – 200.649 3.715.460 6.372 4.489 – – 332.547 – 13. FINANCIAL RISK MANAGEMENT (CONT’D.) 44.274.811 – 50.274.221.301 12.956 – 802.047 ANNUAL REPORT 2013 – – – – – – 802.847.460 6.764 – 50.817.547 7.301 13.394 – – 405.343 4.372 4.221 7.363 4.301 – – – – – – – – – – 332.862.649 3.047 10.956 – – 802.311.468 – 573.047 11.) NOTES TO THE FINANCIAL STATEMENTS 177 .Bank AAA to AAA+ to AP-1 to P-2 Unrated 7.047 11.929 9.811 – 50.564.489 – 405.489 – 405.956 – PUBLIC BANK BERHAD Group AAA to AAA+ to AP-1 to P-2 Unrated <--------------------------------------------------.903 – 200.468 – 802.394 – – – – – – – – – – – 10.836.256 – 200.) Credit Risk (Cont’d.489 – – 332.256 – 200.836.929 – – – – – 9.311.31 December 2012 ---------------------------------------------------> Non-money Market Instruments Non-money Market Instruments Money Market Instruments – Debt Securities Money Market Instruments – Debt Securities International Domestic International Domestic International Domestic International Domestic Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial Assets Held-for-trading Set out below are the credit quality of money market instruments and non-money market instruments-debt securities analysed by ratings from external credit ratings agencies: (iv) Credit Quality of Financial Investments Risk Management Approach (Cont’d.564.764 – 50.956 – – 573.211.822.817.343 4.301 12.394 – 332.221 7.847.363 4.468 – – 573.822.394 – – 405.211.31 December 2013 ---------------------------------------------------> <--------------------------------------------------.468 – – – – – – – – – – 573.311.715.862.

607.) ANNUAL REPORT 2013 NOTES TO THE FINANCIAL STATEMENTS .944 1.083.039.772 – 316.597 7.288 318.986 – – – 310.645 1.498 – 156.844 97.386 – – – 1.603 46.636 316.725 46.446.273 – 265.070 1.844 97.665 7.31 December 2012 ---------------------------------------------------> Non-money Market Instruments Non-money Market Instruments Money Market Instruments – Debt Securities Money Market Instruments – Debt Securities International Domestic International Domestic International Domestic International Domestic Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial Investments Available-for-sale Set out below are the credit quality of money market instruments and non-money market instruments-debt securities analysed by ratings from external credit ratings agencies (Cont’d.298 1.903 7.706 1.834 – 1.606 7.944 1.070 1.762.961 156.458 101.629 – 150.020 50.961 265.095 7.073 50.) 44.284 7.446.386 – – – – – – – – 198.696.039.31 December 2013 ---------------------------------------------------> <--------------------------------------------------.): (iv) Credit Quality of Financial Investments (Cont’d.772 308.636 2.288 2.381 – 260.772 – 1.020 50.458 101.879 7.) Credit Risk (Cont’d.844 – 198.178 PUBLIC BANK BERHAD Bank AAA to AAA+ to ABBB+ to BBBLower than BBBUnrated Group AAA to AAA+ to ABBB+ to BBBLower than BBBUnrated 97.388. FINANCIAL RISK MANAGEMENT (CONT’D.986 260.236.645 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 1.073 50.986 – – – 310.986 150.706 1.834 – 318.083.961 – – – 308.554.834 310.725 46.078.428 1.) Risk Management Approach (Cont’d.298 <--------------------------------------------------.274 7.290.458 101.014.386 – – – 198.844 – – – – – – 97.834 310.386 – – – 198.388.603 46.772 308.961 – – – 308.458 101.428 1.

257 ANNUAL REPORT 2013 As at the reporting date.617.869 – 1.869 – 2.1.): (iv) Credit Quality of Financial Investments (Cont’d.972 468.637 11.) 44.964 – – – 665. none of the financial investments above are past due.129.059 1.221.873 246.855 157.g.413 16.814 486.105 – – – 165.494 511.178 301.311 441.807 1.617.832 92.174 – – – – 376. FINANCIAL RISK MANAGEMENT (CONT’D.535.350.178 301.611 – 40.532 – – 1.453 98.200 634.472.016.873 246. PUBLIC BANK BERHAD The ratings shown for money market instruments (e.370.766 1.) Risk Management Approach (Cont’d.637 11.472.869 1.807 – 1.837 462.318 334.009 – 1.047 194.416 441.637 1.472.105 800.598 1.453 98.059 846.009 40.007 160.170.282 138.200 149.947 – 278.257 982 160.814 486.869 – 1.31 December 2012 ---------------------------------------------------> Non-money Market Instruments Non-money Market Instruments Money Market Instruments – Debt Securities Money Market Instruments – Debt Securities International Domestic International Domestic International Domestic International Domestic Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total Ratings Ratings Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial Investments Held-to-maturity Set out below are the credit quality of money market instruments and non-money market instruments-debt securities analysed by ratings from external credit ratings agencies (Cont’d. Bank AAA to AAUnrated Group AAA to AAA+ to AP-1 to P-2 Unrated <--------------------------------------------------.025 – – 16.495 172.413 – 1.495 149.) Credit Risk (Cont’d. The ratings shown for debt securities are based on the ratings assigned to the specific debt issuance.964 732.660 180.511 286.617.370.807 156.) NOTES TO THE FINANCIAL STATEMENTS 179 .837 138.047 194.31 December 2013 ---------------------------------------------------> <--------------------------------------------------.573 – – – 2.371 334.223.494 – 732.174 – 1.617.312 287.407 – – 511. negotiable instruments of deposit and bankers’ acceptances) are based on the ratings assigned to the respective financial institution issuing the financial instruments.407 278.122 286.472.807 – 1.

FINANCIAL RISK MANAGEMENT (CONT’D. the Group’s and the Bank’s traded market risk exposures on fixed income instruments as measured by PV01. The Group maintains its policy of prohibiting exposures in trading financial derivative positions unless with the prior specific approval of the Board of Directors. Limits and policies approved by the RMC are established and are regularly reviewed to ensure its relevance. the market risk of Islamic banking activities of the Group includes rate of return risk and displaced commercial risk (“DCR”). Changes to market risk limits must be approved by the Board of Directors. equity prices and foreign exchange rates.000) and RM226. . and recommends actions to ensure that the market risk remains within established risk tolerance level. ANNUAL REPORT 2013 180 Risk Governance The ALCO supports the RMC in market risk management oversight. The sources of IRR/RoRBB are repricing risk. Risk Management Approach The Group’s traded market risk framework comprises market risk policies and practices. The market risk limits are determined after taking into account the risk appetite and the risk-return relationship and are periodically reviewed by Risk Management Division. market risk limits and valuation methodologies. such as interest rates. The market risk of the Group is identified into traded market risk and non-traded market risk. sensitivity analysis and income scenario simulations to measure its IRR/RoRBB. In addition. the compliance officers conduct independent verification on the daily mark-to-market valuation of fixed income instruments. commodity prices. whilst balancing the cost of such hedging activities on the current revenue streams. averaged at RM276. primarily the interest rate/rate of return risk and credit spread risk. the acquisition of new financial assets and liabilities to narrow the mismatch in the interest rate/rate of return sensitive assets and liabilities and entering into derivative financial instruments which have the opposite effects.000 (2012 – RM354. The trading book positions and limits are regularly reported to the ALCO. The impact on NII/NPI and EVE is considered at all times in measuring the IRR/RoRBB. This is achieved in a variety of ways such as the offsetting of positions against each other for any matching assets and liabilities. During the financial year. procedures and limits will be documented with remedial action plans and reported to the RMC. The use of derivative financial instruments to hedge the interest rate/rate of return risk is set out in Note 6 to the financial statements. aligns market risk management with business strategies and planning. The compliance officers are deployed to conduct daily compliance checking on the treasury operations. exists in the Group’s trading book positions held for the purpose of benefiting from short-term price movements. The ALCO reviews the Group’s market risk framework and policies. Types of Market Risk (i) Traded Market Risk Traded market risk. The Group’s traded market risk for its fixed income instruments is measured by the present value of 1 basis point change (“PV01”) and controlled by daily and cumulative cut-loss limits. delegation of authority.000) respectively.) Market Risk Market risk is the risk of loss arising from movements in market variables. basis risk and optionality risk. The composition of the Group’s and the Bank’s trading portfolio is set out in Note 5 to the financial statements. foreign exchange risk and equity risk. Any instances of non-compliance with the operational processes. DCR in the Group’s Islamic banking business. In addition. These trading book positions are mainly originated by the treasury operations. Risk Management Approach The primary objective in managing the IRR/RoRBB is to manage the volatility in the Group’s net interest/profit income (“NII/ NPI”) and EVE. (ii) Non-Traded Market Risk The Group’s core non-traded market risks are interest rate/rate of return risk in the banking book.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44. yield curve risk. The Group uses various tools including repricing gap reports.000 (2012 – RM310. (a) Interest Rate/Rate of Return Risk in the Banking Book (“IRR/RoRBB”) IRR/RoRBB is the risk to the Group’s earnings and economic value of equity (“EVE”) arising from adverse movements in the interest rate/rate of return. credit spreads.

694 – 314.608 20.535.314.) 44.834.463.844 – 4.389.811.969 15.511.541.003.603 2.279.474 11.963 – 903.592 1.357 1.778.633 – – 19.898.987 1.939.503 8.853.551 – – 219.076 – – > 3 – 12 months RM’000 11.473. (i) <---------------------------------------------------------------------------.) Market Risk (Cont’d.) (a) Non-Traded Market Risk (Cont’d.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.000 – 8.737 – Up to 1 month RM’000 19.381 15.TOTAL ASSETS ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Financial investments available-for-sale Financial investments held-to-maturity Loans. advances and financing or early withdrawal of deposits.427.554.231) 13.583 2.698 – – 12.630 6.080.259.840 2.30 – 17.80 3.434 – 397.366 – – – – >3–4 years RM’000 5.215.529 ANNUAL REPORT 2013 Noninterest/ profit sensitive RM’000 7.916.811.234.722 – – 797.256 694. FINANCIAL RISK MANAGEMENT (CONT’D.851 – >1–3 months RM’000 17.289.872.576.725.175 Over 5 years RM’000 – – – 417.956 – – – >2–3 years RM’000 7.069.04 3.689.150 – – – – >4–5 years RM’000 2.567 – 2.452.927 305.618.80 2.512 – 183.168 1.) PUBLIC BANK BERHAD (ii) Types of Market Risk (Cont’d.494 159.283 182.) NOTES TO THE FINANCIAL STATEMENTS 181 .708.969 – 10.793.294.248.570 1.417 9.957 6.024 – (275.97 22.508 – 10.191 5.482 – – – >1–2 years RM’000 9.854 – 6.488 – 426.963 – 2.086 – (275.231) 16.260.091.396 13. advances and financing – non-impaired – impaired* Other non-interest/ profit sensitive balances Group 31 December 2013 1.696 419.37 Total RM’000 Trading book RM’000 Effective interest rate/rate of return % The following tables indicate the effective interest rate/rate of return at the reporting date and the Group’s and the Bank’s sensitivity to the interest rate/rate of return by time band based on the earlier of contractual repricing date and maturity date.691.788 – 809. Actual repricing dates may differ from contractual repricing dates due to prepayment of loans.068.300.203.544 – – 5.

60 2.136 44.852.573.830.76 1.528.328.613 1.546) (26.241 – – 3.836 – 1.614.918.851.602.463 1.795 – – 44.392 284.222.423.474.000 – – – – Over 5 years RM’000 182 (39.212 34.034.419.715 4.825.000 – 2.369.011 20.873.594 773.594 773.132) (653.) 10.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.159.028.035.876 54.483 1.000 2.393 250.000 500.535 – 16.795 – 473.911 20.619 72.373.851 – – – – – 463.574.247.597 10.529 2. FINANCIAL RISK MANAGEMENT (CONT’D.686.268.145.469.088.393 2.) 44.724.020 7.504 139.738 > 3 – 12 months RM’000 On-balance sheet interest/ profit sensitivity gap Off-balance sheet interest/ profit sensitivity gap (interest/profit rate swaps) 40.700) 1.24 Effective interest rate/rate of return % PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .192 – >4–5 years RM’000 12.602 16.391 – – – – 40.) Types of Market Risk (Cont’d.846) (25.898.641.088.611 – >3–4 years RM’000 2.823) 11.490 21.826) 32.556 – >1–2 years RM’000 9.918.) ANNUAL REPORT 2013 Total RM’000 5.000 – 44.396 – – 73.392 – – – 250.72 3.259 49.825 500.856.175.000 – 2.020 – 7.011 1.451 – – 2.200 73.107.449 TOTAL LIABILITIES AND EQUITY 149.(a) (3.535 – – – 73.213 67.739 365.769 – – – 298.29 3.546 11.449 35.000 3.682.) Market Risk (Cont’d.392 305.451 – 2.769 – – 365.789.) (ii) Non-Traded Market Risk (Cont’d.306) (20.321.602 39.749 >1–3 months RM’000 137.736) 60.686.724.241 – 3.916 (770.830.851 Total Liabilities Equity attributable to equity holders of the Bank Non-controlling interests LIABILITIES AND EQUITY Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Debt securities issued and other borrowed funds Other non-interest/ profit sensitive balances Group 31 December 2013 (Cont’d.443 Trading book RM’000 – – – 4.746.537 – 1.725.567 307.865.328.000.787.181 4.401.000.348 TOTAL INTEREST/ PROFIT SENSITIVITY GAP (24.650 657.825.519 422.928 357.896 10.537 – – 1.126 1.641 – >2–3 years RM’000 4.219 Noninterest/ profit sensitive RM’000 <---------------------------------------------------------------------------.613 3.736) – (39.401.865.574.737 Up to 1 month RM’000 149.350.412.189 – 16.414 – 33.356.000 – – 2.962.088.105.423.177 471.

162 270.985 – – – >3–4 years RM’000 5.93 2.189.628 1. advances and financing – non-impaired – impaired* Other non-interest/ profit sensitive balances Group 31 December 2012 (Restated) 1.437 – – – >2–3 years RM’000 6.951 8.098.392.622 7.533.402 – 9.690 17.506 16.005 – 314.877 1.124.798 – 326.62 3.872 274.438 – 274.675 – – – – >4–5 years RM’000 Noninterest/ profit sensitive RM’000 2.299 – Up to 1 month RM’000 18.112.) NOTES TO THE FINANCIAL STATEMENTS 183 .785 157.135 17.46 – 2.201. FINANCIAL RISK MANAGEMENT (CONT’D.791 8.229 – >1–3 months RM’000 14.) ANNUAL REPORT 2013 Market Risk (Cont’d.459.075.257.475) 11.113 – 4.882.145 1.502 – 1.617.608 – – 5.475) 11.) Total RM’000 18.078 (357.637.405 – 6.743 Over 5 years RM’000 – – – 421.771 196.86 2.499.494.(ii) (a) TOTAL ASSETS ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Financial investments available-for-sale Financial investments held-to-maturity Loans.627 – – 17.454 3.086 – (357.) Types of Market Risk (Cont’d.353 16.182 18.409.958 Trading book RM’000 – 849.497 – 7.722 3.666.139.742.178 – 5.874.219 158.313 – – – >1–2 years RM’000 9.216.441 137.754 – 10.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.120 6.500.309.623.816 – – 852.163.380 <---------------------------------------------------------------------------.342 1.625 – > 3 – 12 months RM’000 12.830.554.858 3.635.055 821.888.098.476 2.144.901.609.963.060 11.590.823.208.555.587 2.) Non-Traded Market Risk (Cont’d.158 – – 11.617.04 3.942.734 – 1.940.158.135 – – – – 27.17 Effective interest rate/rate of return % PUBLIC BANK BERHAD 44.

044.399.088.367.600 4.341.932 78.768 122.891.888.588.654 4.752 – – – 18.790 63.440 699.804 36.474 TOTAL INTEREST/ PROFIT SENSITIVITY GAP (33.518 1.388 63.268.018.088.853 501.879.895.864 34.820 – >2–3 years RM’000 5.846 9.811.088.757 – >4–5 years RM’000 11.580.387.302 – >1–2 years RM’000 8.946.210) 11.018.000.588.325 12.886) (17.912 1.825 >1–3 months RM’000 131.824 > 3 – 12 months RM’000 On-balance sheet interest/ profit sensitivity gap Off-balance sheet interest/ profit sensitivity gap (interest/profit rate swaps) 45.029) 1.151.911.042.864 642.404 Noninterest/ profit sensitive RM’000 184 Group 31 December 2012 (Restated) (Cont’d.502 7.364.048.670 27.260 9.824 – – – – – 864.783 – 1.381 – – 1.174.948 (909.199 – >3–4 years RM’000 2.223.978.) Non-Traded Market Risk (Cont’d.282.380.) Types of Market Risk (Cont’d.877 3.342 – 28.276.653.849.639 3.823.662 4.440 699.630) 9.149.88 3.690) 1.332.821 Total RM’000 – – – 3.864 256.603 30.174.600 – 5.388 – 17.244 – 473.) 44.190. FINANCIAL RISK MANAGEMENT (CONT’D.744 40.624 1.879.430.474 – 3.911 – – 581 468 45.639 1.118 809.244 – – 854.029) 26.313 3.942 116.783 – – 36.474 – – 3.024 1.000.151.311.576) (16.996 827.399.) ANNUAL REPORT 2013 17.000 – – – – Over 5 years RM’000 (34.223) 53.400.381 – 1.23 Effective interest rate/rate of return % PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .430.597.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.966 18.97 3.000 500.000 (28.623.526.745 97.000 – 264.66 1.105.496 225.597.320.60 2.582 62.223) – (34.) <---------------------------------------------------------------------------.574.) Market Risk (Cont’d.056 309.958 18.752 – – 97.596.000.380 2.742.714 72.640 1.000 1.217.003 1.452.744 TOTAL LIABILITIES AND EQUITY 131.000 – 2.824 Total Liabilities Equity attributable to equity holders of the Bank Non-controlling interests LIABILITIES AND EQUITY Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Debt securities issued and other borrowed funds Other non-interest/ profit sensitive balances Up to 1 month RM’000 10.000 444 33.790 – – 63.115 (718.000 – – 2.552.(ii) (a) (4.574.158 854.716.790 – – – – – Trading book RM’000 – – – 274.

) NOTES TO THE FINANCIAL STATEMENTS 185 .262 – 297.258 3.380.019.04 3.481 849.638.439 14.067.770 – 649.122 – – 49.) ANNUAL REPORT 2013 Market Risk (Cont’d.) 5.867 – 183.276.355 – – – >1–2 years RM’000 7.086 – (15.377 6.419.352.73 12.058 – – 16.963.684 252.843 Over 5 years RM’000 – – – 308.(ii) (a) TOTAL ASSETS ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Financial investments available-for-sale Financial investments held-to-maturity Loans and advances – non-impaired – impaired* Other non-interest sensitive balances Bank 31 December 2013 266.543 2.033.20 – 15.839.693 – 326.254 <---------------------------------------------------------------------------.507 – – – – >4–5 years RM’000 Noninterest sensitive RM’000 1.117) 13.088.78 3.073 – 292.986.134.899 141.918.750.841 20.724 – – 9.193.210.859.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.426 – – 13.82 2.737 – Up to 1 month RM’000 13.967 694.147.086 8.196 – – > 3 – 12 months RM’000 8.688.025 – 4.169.433.161.535. FINANCIAL RISK MANAGEMENT (CONT’D.851 – >1–3 months RM’000 9.690 – (15.587 2.988 – 985.535.155 – 7.649.986.800 – – 182.420.719 1.283 155.580 – 3.636 2.117) 14.714 153.) Non-Traded Market Risk (Cont’d.588 13.787.850.693 – 5.) Types of Market Risk (Cont’d.474 6.426 – 2.204 1.099 5.213.048.834.332 – – – – >3–4 years RM’000 3.098 – 7.389.38 Total RM’000 Effective interest rate % Trading book RM’000 PUBLIC BANK BERHAD 44.684.286.248.124.956 – – – >2–3 years RM’000 5.894 6.829 – – 4.564 1.257 5.

621 – 2.000 7.117.615.319 332.871.906.731.088.880.000 981.923.000.) <---------------------------------------------------------------------------.926 – 14.000 36.037 139.758 252.187 67.048 – 1.610.254 3.743 – 229.200.923.627.230 471.350.438 18.088.743 – – 162.364.000 2.088.515 Trading book RM’000 – – 4.880.088.621 – 2.000 – – – Over 5 years RM’000 (32.926 – – – 73.434 18.819 46.000 – 2.019) 31.174 – 473.034.(ii) (a) TOTAL INTEREST SENSITIVITY GAP 33.394 Noninterest sensitive RM’000 186 Bank 31 December 2013 (Cont’d.391) (15.020 5.020 5.607) (23.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.203.662.074.095.959 750.822 3.265.037 54.998) (24.822 1.910 36.150 TOTAL LIABILITIES AND EQUITY 122.556 – >1–2 years RM’000 6.646 109.654 Total Liabilities Equity attributable to equity holders of the Bank LIABILITIES AND EQUITY Deposits from customers Deposits from banks Bills and acceptances payable Debt securities issued and other borrowed funds Other non-interest sensitive balances Up to 1 month RM’000 7.802 – >4–5 years RM’000 10.095.139 (541.111.302.698 – 1.758 234.086.758 – – 201.384 73. FINANCIAL RISK MANAGEMENT (CONT’D.925 3.91 1.) 44.579 480.841) (5.795 9.000 1.737 >1–3 months RM’000 122.131.611 – >3–4 years RM’000 1.286.015 1.995 1.880 21.595) – (32.687 12.295.556.414 29.654 On-balance sheet interest sensitivity gap Off-balance sheet interest sensitivity gap (interest rate swaps) – – – – – – 31.000 1.216) 8.915.552.610.749 653.595) 52.698 – 1.688.046.) Types of Market Risk (Cont’d.556 119.368.592 – 16.789 487.) ANNUAL REPORT 2013 Total RM’000 3.383 3.915.355 229.946.839.76 3.074.641 – >2–3 years RM’000 3.398.528.592 72.000 – 2.017.131.055 33.439 – 73.188.822.709.356.203 – 3.409 33.150 27.174 – 36.302.822.24 Effective interest rate % PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .745.) Non-Traded Market Risk (Cont’d.474.43 2.254 2.856.027.822) (21.885.738 > 3 – 12 months RM’000 (518.) Market Risk (Cont’d.055 14.959 2.398.203 – 3.

656 1.289 1.889.500.497.898) 12.) Total RM’000 11.735 – 5.098.933 – 4.561.792 7. FINANCIAL RISK MANAGEMENT (CONT’D.920.028 – 274.968 Trading book RM’000 – – 13.33 – 3.622 7.219 – 3.151 – 297.940.940.667.608 – 5.764 – – 9.424 589.909 – – 13.380 – – – >1–2 years RM’000 6.313 – – 7.244 4.153 13.599.) ANNUAL REPORT 2013 Market Risk (Cont’d.564 13.626.558 – 1.112.506 (154.227.66 2.89 2.) Types of Market Risk (Cont’d.110.309.400 – – 4.(ii) (a) TOTAL ASSETS ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Financial investments available-for-sale Financial investments held-to-maturity Loans and advances – non-impaired – impaired* Other non-interest sensitive balances Bank 31 December 2012 (Restated) 401.309.039.447.740.611.229 – >1–3 months RM’000 8.862.) Non-Traded Market Risk (Cont’d.353 <---------------------------------------------------------------------------.785 136.985 – – – >3–4 years RM’000 3.123.114.198 18.Non-trading book ----------------------------------------------------------------------------> Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.741.18 Effective interest rate % PUBLIC BANK BERHAD 44.594 – 6.243.599.006.67 3.044 – – – – 27.499.442.913.044 15.509.843 7.751 5.590.160 – – – >2–3 years RM’000 4.675 – – – – >4–5 years RM’000 Noninterest sensitive RM’000 1.762 228.625 – > 3 – 12 months RM’000 9.326 – 326.620.299 – Up to 1 month RM’000 14.877 1.314 163.353 1.050 123.721.549 1.571.04 3.559 – 7.898) 12.679.795 3.640.133 1.059.703 – 3.310 2.862.258 3.) NOTES TO THE FINANCIAL STATEMENTS 187 .086 – (154.335 Over 5 years RM’000 – – – 310.575.441.457 – 398.

380.847.575.288.897.429.210.268.820 – >2–3 years RM’000 3.433 867.827.) 44.028.190 – 473.811.188) – (27.716 62.028.450) (14.000 (29.893 29.000 – 2.480 95.255 – 95.275.253.132.206.075 3.782 Total Liabilities Equity attributable to equity holders of the Bank LIABILITIES AND EQUITY Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans sold to Cagamas Debt securities issued and other borrowed funds Other non-interest sensitive balances Up to 1 month RM’000 <---------------------------------------------------------------------------.074.515 – 1.367.751.877.353 2.257 3.188) 46.81 1.45 2.511 – 13.571 1.938.888 116.846) 29.755 TOTAL LIABILITIES AND EQUITY 107.640 29.515 – 1.968 16.81 3.081.199 – >3–4 years RM’000 1.946 1.509.076 > 3 – 12 months RM’000 7.449 431.552.418.257 1.509 3.894.000.088.561.) ANNUAL REPORT 2013 13.877.692 Total RM’000 – – 4.483.511 65.446 – 3.446 – 3.600 2.846) (6.190 – 690.493 181.778 3.689 72.302.765.755 32.180) 8.629 309.069 >1–3 months RM’000 107.825.) Market Risk (Cont’d.255 – – – 16.311.417.404 690.779 Noninterest sensitive RM’000 This is arrived at after deducting collective assessment allowance and individual assessment allowance from the outstanding gross impaired loans.211 242. advances and financing.288.942 1.553.224 (802.996.000 – 2.688.Non-trading book ----------------------------------------------------------------------------> 188 Bank 31 December 2012 (Restated) (Cont’d.000 444 27.097 – – – – – Trading book RM’000 – – – 228.402. TOTAL INTEREST SENSITIVITY GAP On-balance sheet interest sensitivity gap Off-balance sheet interest sensitivity gap (interest rate swaps) 37.000 5. FINANCIAL RISK MANAGEMENT (CONT’D.435 78.894.400.534.444 14.684.097 65.000 – – – – Over 5 years RM’000 (27.812 8.(ii) * 29.768 97.405 – 1.910 (504.) Non-Traded Market Risk (Cont’d.757 – >4–5 years RM’000 9.408.243.897 1.347.570) 6.010.561.23 Effective interest rate % PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .018 1.088.681.600 – 3.490) (23.353 3.302 – >1–2 years RM’000 5.630 3.664.893 211.000 – 1.088.423.431 826.21 4.342 – 24.074.782 – – – – – – 581 468 37.405 – 29.097 – 65.000 647.200.960) (15.509.939 58.) Types of Market Risk (Cont’d.523 16.938.954.418 1.000 – 100.) (a) Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.726 9.

032 161. the downward rate shock applied is restricted to the prevailing interest rate/rate of return. The repricing profile of loans/financing that does not have maturity is based on the earliest possible repricing dates.022) 932.639) The reported amounts do not take into account actions that would be taken by treasury operations or business units to mitigate the impact of this interest rate/rate of return risk.) (ii) Non-Traded Market Risk (Cont’d.636) 760.) (ii) Interest Rate/Rate of Return Risk Sensitivity Analysis The following tables present the projected Group’s and Bank’s sensitivity to a 100 basis point parallel rate movement across all maturities applied on the Group’s and Bank’s interest rate/rate of return sensitivity gap as at the reporting date.) Types of Market Risk (Cont’d.807) 914. therefore. treasury operations seek to proactively change the interest rate/rate of return risk profile to minimise losses and maximise net revenue. The projection assumes that the interest rate/rate of return of all maturities move by the same amount and.846 (561. The impact on the NII/NPI is measured on a monthly basis and the impact on the EVE is on a quarterly basis.) (a) Interest Rate/Rate of Return Risk in the Banking Book (Cont’d. loans/financing prepayments are generally estimated based on past statistics and trends.923) 718.989 140. Where possible and material. both of which are reported to the ALCO and the RMC.750 (460.105 95. Actual dates may differ from contractual dates owing to prepayments. 2012 -100 bps +100 bps <--------------------------. The projection also assumes constant statements of financial position and that all positions run to maturity. ANNUAL REPORT 2013 2013 -100 bps +100 bps 189 . FINANCIAL RISK MANAGEMENT (CONT’D. does not reflect the potential impact on the NII/NPI and EVE of some rates changing while others remain unchanged.718 65.000) (152.(Decrease)/Increase ---------------------------> RM’000 RM’000 RM’000 RM’000 Group Impact on NII/NPI Impact on EVE (248. In reality.809 (548.948 (447.) Market Risk (Cont’d.689) (163.732) Bank Impact on NII/NPI Impact on EVE (222.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44. Where the current interest rate/rate of return is lower than 1%.

) Market Risk (Cont’d. Stress testing is performed to provide early warnings of potential losses to facilitate the proactive management of the interest rate/rate of return risk. Australian Dollars. The main foreign currencies in which the Group’s businesses are transacted in are United States Dollars and Hong Kong Dollars. . and/or (ii) to transfer PIBB’s current year profits or retained earnings to the IAH on the basis of hibah. overseas branches and associated companies. where possible. FINANCIAL RISK MANAGEMENT (CONT’D. 190 ANNUAL REPORT 2013 Interest Rate/Rate of Return Risk in the Banking Book (Cont’d. Foreign Exchange Risk Foreign exchange risk refers to the adverse impact arising from movements in exchange rates on foreign currency positions originating from treasury money market activities and from the Group’s investments and retained earnings in its subsidiary companies.) (b) Displaced Commercial Risk (“DCR”) DCR refers to the risk of Public Islamic Bank Berhad (“PIBB”) bearing the credit and market risk losses as a result of paying a return that exceeds the actual return that was supposedly to be earned by the Investment Account Holders (“IAH”) based on the contractual profit sharing ratio.) (a) (iii) Stress testing is conducted semi-annually to determine the adequacy of capital in meeting the impact of extreme interest rate/rate of return movements on the Group’s and the Bank’s statements of financial position. whose functional currencies are not in Ringgit Malaysia. Other currencies mainly include exposure to Euro. Risk Management Approach The Group manages such risk through funding in the same functional currencies.) (ii) Non-Traded Market Risk (Cont’d. which are mainly in Ringgit Malaysia. PER may be released to smoothen the rate of return. The decision to hedge the Group’s net investment in its overseas operations is based on its potential economic benefit and is periodically assessed by the ALCO. liabilities and NOP by currencies as at the reporting date. In the event that there is no PER balance to be released. The amount of PER set aside is shared by both the IAH and PIBB. New Zealand Dollars. In addition. Risk Management Approach PIBB uses the Profit Equalisation Reserve (“PER”) to manage its DCR and is governed by the Profit Equalisation Reserve Framework. Hong Kong Dollars and United States Dollars. Great Britain Pounds and Japanese Yen. PIBB does not have Profit Sharing Investment Accounts (“PSIA”) which are eligible for risk absorbent treatment.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.) Types of Market Risk (Cont’d. PIBB may employ the following techniques to ensure that the IAH receive market rate of return: (c) (i) to forgo part or all of PIBB’s share of profit as mudharib to the IAH by way of varying the percentage of profit taken as the mudharib share in order to increase the share attributed to the IAH in any particular year. (i) The following tables summarise the assets. Net Open Position (“NOP”) limit is set for overall NOP as well as NOP limits for individual currencies. PER is created by setting aside an amount out of the total gross income before distribution to the IAH and to PIBB. Sri Lanka Rupees. Chinese Renminbi.

627 6.502 1.924.553.662.885 97.602 On-Balance Sheet Open Position Off-Balance Sheet Open Position 27.675 – – 325 2.417 9.996 4.175 37.513.179.836 1.594 – NET OPEN POSITION 19.816.530.953 15.341 1.969 15.234.926.954 688 250.997 2.131 202.391 1.286 17.963 282.354 17.092 20.452 4.317 2.852 30.555 446.661.576.725 – 121.494 6.986.367.873.659) 2.399 548.416 585.020.928.851 – 22.421.) (c) Foreign Exchange Risk (Cont’d.433 20.742 9.528.999 163.811.251 1.793 2.811.825 4.529 463.572.880 305.930.369.896 23.352 994.444 (1.197 – 1.080 – 773.399 11.537.597) (8.300 57.011 334.879) 2.843 – – 1.046 1.569 814.080.233 4.396 225.380 10.142.661 248. FINANCIAL RISK MANAGEMENT (CONT’D.454 85.725.229 95.) Market Risk (Cont’d.811.046.553 9.499 15.189 16.) (ii) Non-Traded Market Risk (Cont’d.040.595 1.117.807 – – – 1.585 – 11.730 – 85.590 9.476.003.391.089.431.014.155 2.447 769.031 15.035 1.167.522 15.551 219.302.825.661 2.552 – 10.389.878 6.573.861.132 738.016 – – 11.443 500.702 13 3.) Group 31 December 2013 Malaysian Ringgit RM’000 Hong Kong United States Dollars Dollars RM’000 RM’000 Others RM’000 Total RM’000 16.874 1.450.175.845 5.891.837.484.541.193 – – 82.699 6.642.000 903.) Types of Market Risk (Cont’d.117 61.384 (1.094 (7.011 265.691 5.022 – – 500.469.580 8.554 925 – 12.937 12.168.452.618.171.539.423.310 – 258 – 69.847 (1.608.948 517.594 LIABILITIES Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liabilities Provision for tax expense and zakat Deferred tax liabilities TOTAL LIABILITIES Non-controlling interests ANNUAL REPORT 2013 ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Loans.912 TOTAL ASSETS 276.391 312.832 70.423.786.901) 494.427.512 7.121 158.718 1. advances and financing Other assets Statutory deposits with Central Banks Deferred tax assets Investment in associated companies Investment properties Property and equipment Intangible assets 191 .415.215 1.946 – 95.539 284.685.530 1.252 9.438 6.200 – 758.098.391 132.793.285) 6.857.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.963 365.

) (ii) Non-Traded Market Risk (Cont’d.135 – 9.486.120 769.460 – – 810.911 99.339.205.469 – 14.870.719.931 1.280 704.051.877 (765.038 15.578 – 197 225.559.895 96 – – 11.184 – – 125 2. advances and financing Other assets Statutory deposits with Central Banks Deferred tax assets Investment in associated companies Investment properties Property and equipment Intangible assets 13.787.122.021 (1.750 224.886 1.603 2.158.830.110.251 1.778.775 1.849.731 4.685 – – – 2.654 – 686.811.234 – 10.135 370.208.565 15.158.056 180.349.621 14.684 1.656.496 233.) Market Risk (Cont’d.304 425 3.770 8.410 16.864 On-Balance Sheet Open Position Off-Balance Sheet Open Position 23.440 – NET OPEN POSITION 17.440 LIABILITIES Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on loans and financing sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liabilities Provision for tax expense and zakat Deferred tax liabilities TOTAL LIABILITIES Non-controlling interests .313 3.737 52.227 151.206 63.648.199 9.123 18.362.314 1.767. FINANCIAL RISK MANAGEMENT (CONT’D.291.576.283 72.048.635.916 3.372.835.) Types of Market Risk (Cont’d.057 5.617.608 13.755 1.564 8.635) 1.125 (5.771 196.135 261.533.874 792.969 4.256 – 699.946.756 (1.102 – – 108.985.071) 5.936 295.471 48.865 7.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.157.358 63.758 18.062 10.443 – 85.651.513.265) (7.309.210 87.753.208.951 8.896 – 86.823.533 1.) (c) Foreign Exchange Risk (Cont’d.719.819 111.530 404.784 37.687 719.018.370) 2.926.435.347 TOTAL ASSETS 247.402.958 201.389 256.670.051 564.194) 443.) ANNUAL REPORT 2013 192 Group 31 December 2012 (Restated) Malaysian Ringgit RM’000 Hong Kong United States Dollars Dollars RM’000 RM’000 Others RM’000 Total RM’000 ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Loans.337 – 53 – 133.249 740.950 925.853 3.223 11.934.479 3.993 837.889 4.381.325 12.042.830 7.018.330 9.942 1.496 100.178 – 18.033 460.120 6.116.376.434 370.998 5.660 25.602 4.105.496 10.667 8.201.754 274.304 – 1.048.790.025.165.930.506 16.063 864.050 – 113.174 – – 501.257.096 1.775 3.617.769 1.467.821 501.981.465 17.123 2.

443 1.259 1.695) 2.536.089.346 695.515 429.263.634.500 – – – – – 444.480.035.452.887 688 – 201.851 – 12.046.016 – – 51 59.) (ii) Non-Traded Market Risk (Cont’d.676 5.310 5.741.450 2.194 – – – 1.392 – 9.095 20.923.124.289.573 2.274 1.052 20.097.449 252.616. FINANCIAL RISK MANAGEMENT (CONT’D.565.030 561.295 5.) Types of Market Risk (Cont’d.946 4.986.973 8.727 1.082 – – 82.787.777 4.315.986.822.) Market Risk (Cont’d.845.408.315 1.001 2.870.760.531 4.738 TOTAL LIABILITIES 217.616.363.859 359.199 13.809.798 18.708 2.352.499 – – 738.661.266 1.019.787 6.140 52.419 13 47.588 13.729 15.822.050 121.572 13.059 417.117 65.971 50.172 979.638.048 1.283 573.591 362.129.592 16.455 – 851.800 182.761 101.530 1.015 – – 4.384 On-Balance Sheet Open Position Off-Balance Sheet Open Position 25.055 – NET OPEN POSITION 17.017.086 8.469 (211.627.918 1.) Bank 31 December 2013 Malaysian Ringgit RM’000 Hong Kong United States Dollars Dollars RM’000 RM’000 Others RM’000 Total RM’000 10.046 9.784 11.103 18.495 9.153 (7.) (c) Foreign Exchange Risk (Cont’d.469.080.434 2.747 29.409.018 5.040 695.545 – – – 1.393 TOTAL ASSETS 243.906.524) (6.867 5.771 50.814 381.404.839.605 (2.396) 6.993 (1.426 268.308.083 – – 1.212 2.550.168.738 – 31.791) 328.672.439 Deposits from customers Deposits from banks Bills and acceptances payable Derivative financial liabilities Debt securities issued and other borrowed funds Other liabilities Provision for tax expense Deferred tax liabilities 195.325 568.270 380.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.308.131.750.808 – – 987.393 754.426 350.871.317 1.828.676.147.409.278.017 6.397 4.144 234.428.074 180.496 474.436.626.879) 2.055 LIABILITIES ANNUAL REPORT 2013 ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Loans and advances Other assets Statutory deposits with Central Banks Investment in subsidiary companies Investment in associated companies Property and equipment Intangible assets 193 .

362.408.309.738.893 LIABILITIES Deposits from customers 175.000 – – – 2.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.345 335.901 – – 1.564 10.469 7.028 160.448 186.493 4.125 – – – 3.149 – 9.462) (6.843.467 (204.692 1.837 3.509.593 4.044 255.344 15.070 Recourse obligations on loans sold to Cagamas 1.506.831.088 55.569 14.309.715.194 – – – 994.894. FINANCIAL RISK MANAGEMENT (CONT’D.599.721 228.507 5.934 695.416.) Types of Market Risk (Cont’d.) Market Risk (Cont’d.370) 2.492 (5.602 38.278 16.448 Deferred tax liabilities 55.444 14.353 16.244 787.646 211.122 966.306.075 On-Balance Sheet Open Position Off-Balance Sheet Open Position 21.047.972 4.666 – – 108.620 28.626 20.451.872.968 4.371.685.286.894.352 4.520 3.081.491 – – 800.378 Deposits from banks 8.760.968.672.368.578.844 276.760 – 144.393 TOTAL ASSETS 218.291.551.833 474.030 600.295 5.581 121.360.181 Debt securities issued and other borrowed funds 8.710 Bills and acceptances payable 3.314 162.163.709.554 (936.382 695.132.320.668.380 2.914 1.374 – 1.749.819 101.856.049) 260.393 847.213 4.549 5.) (ii) Non-Traded Market Risk (Cont’d.761 101.438 1.244 4.132.843 7.943 425 – 94.) (c) Foreign Exchange Risk (Cont’d.098.536.197.991 – – 719.493 210.531.153 13.925) 1.778 3.325 607.057 13.303.442 1.259.608 2.679.775 1.990 197.398 – – – – – 531.603) 5.756 5.051.917 2.178 – 11.893 – NET OPEN POSITION 15.579 2.) ANNUAL REPORT 2013 194 Bank 31 December 2012 (Restated) Malaysian Ringgit RM’000 Hong Kong United States Dollars Dollars RM’000 RM’000 Others RM’000 Total RM’000 ASSETS Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Loans and advances Other assets Statutory deposits with Central Banks Investment in subsidiary companies Investment in associated companies Property and equipment Intangible assets 8.990 TOTAL LIABILITIES .493 Derivative financial liabilities 116.942 2.263.888 522.044 364.123 Other liabilities 1.681.575.952 Provision for tax expense 515.862 – 197 – – 181.688.620.308.310 96 – – 49 19.929 (1.599.116.

Where possible.531 (iii) Sensitivity Analysis Considering that other risk variables remain constant.167) 583.228 953.550 434.909 1.186.311 533. The structural currency exposures of the Group as at the reporting date are as follows: 2013 United States Dollars Hong Kong Dollars Other currencies 2012 United States Dollars Hong Kong Dollars Other currencies Hedged RM’000 Unhedged RM’000 Total RM’000 1.751. the Group has designated certain funding in United States Dollars to hedge part of its Hong Kong Dollars structural currency exposure due to the pegging of Hong Kong Dollars to United States Dollars.258 +/– 29.) Types of Market Risk (Cont’d.909 3.711 ANNUAL REPORT 2013 Group 195 .861 3.753 2.163 +/– 25.961 +/– 22. FINANCIAL RISK MANAGEMENT (CONT’D.012 4.409.008 514.605.270 514.323 1.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.219) 440.698 – (679.) Market Risk (Cont’d.) (ii) Non-Traded Market Risk (Cont’d.852 434.228 3.776.043 +/– 21.632.406 2.745 –/+ 33. the Group manages such risk through funding investments in the same functional currencies. In addition.) (c) Foreign Exchange Risk (Cont’d.905.489.670 195.657.972 1.190.738 – (565.217.573 1. as part of its risk management strategy. the foreign currency revaluation sensitivity for the Group on its non-trading unhedged positions as at each reporting date is summarised below: Group United States Dollars Hong Kong Dollars Other currencies Change in Currency Rates % +/– 5 +/– 5 +/– 5 Revaluation Sensitivity 2013 RM’000 2012 RM’000 –/+ 28.) (ii) Structural foreign exchange risk represents the Group’s currency exposure in its net investments in overseas operations and capital funds/retained earnings of overseas branches.

the table below summarises the impact on the carrying amount of equity positions as at each reporting date should there be a change in equity market prices: Change in Equity Market Prices % Sensitivity of Equity RM'000 2013 +/– 20 +/– 3. FINANCIAL RISK MANAGEMENT (CONT’D. Decisions concerning such positions are made by the Share Investment Committee. Risk Governance The ALCO is the primary committee responsible for liquidity and funding risk management based on guidelines approved by the RMC.) (ii) Non-Traded Market Risk (Cont’d.) Types of Market Risk (Cont’d.336 2012 +/– 20 +/– 9.615 2013 +/– 20 +/– 957 2012 +/– 20 +/– 7.418 Group Bank Liquidity and Funding Risk Liquidity risk is the risk that the Group is unable to maintain sufficient liquid assets to meet its financial commitments and obligations when they fall due or securing the funding requirements at excessive cost.) Market Risk (Cont’d. ANNUAL REPORT 2013 Risk Management Approach The Group manages such risk via pre-approved portfolio size and cut-loss limits. Funding risk is the risk that the Group does not have sufficiently stable and diverse sources of funding or the funding structure is inefficient.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44. Considering that other risk variables remain constant.) (d) 196 Equity Risk Equity risk refers to the adverse impact arising from movements in equity prices on equity positions held by the Group and the Bank for yield purposes. Liquidity policies and frameworks are reviewed by the ALCO and approved by the RMC prior to implementation. .

The primary tools for monitoring liquidity and funding positions are the maturity mismatch analysis. It is the Group’s policy that the overseas subsidiary companies and overseas branches strive to attain a self-funding position in funding their respective operations. Overseas subsidiary companies and overseas branches are required to comply with their respective local regulatory liquidity requirements and internal liquidity and funding limits. and is measured and managed based on projected cash flows. certificate of deposits and the taking of money market deposits to meet short-term obligations and to maintain its presence in the local money markets.) Liquidity and Funding Risk (Cont’d. In addition to ensuring compliance with the New Liquidity Framework. FINANCIAL RISK MANAGEMENT (CONT’D. have traditionally in aggregate provided stable sources of funding. The contingency funding plans also set out the crisis escalation process as well as the various strategies to be employed to preserve liquidity including an orderly communication channel during a liquidity problem. . As at 31 December 2013. 197 ANNUAL REPORT 2013 The day-to-day funding management is undertaken by the treasury operations and this includes the maintenance of a portfolio of liquid assets that can be easily liquidated as protection against any unforeseen interruption to cash flows and the replenishment of funds as they matured or are borrowed by/financed to the customers.651. Similar risk management processes as practiced by Head Office are adopted by its overseas subsidiary companies and overseas branches.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44. earnings generation capacity. the Group holds a sizeable balance of government securities amounting to RM16. although payable on demand. Contingency funding plans are in place to identify early warning signals of a liquidity problem. accompanied by funding from wholesale markets. the Group maintains a liquidity compliance buffer to meet any unexpected cash outflows. The Group’s reputation. A liquidity stress test programme is in place to ensure liquidity stress tests are systematically performed by the various entities under the Group to determine the cash flows mismatches under the “Specific Institution Liquidity Problem” and “Systemic Wide Liquidity Problem” scenarios and the possible sources of funding to meet the shortfalls during a liquidity crisis. The Group’s liquidity and funding positions are supported by the Group’s significant retail deposit base.) Risk Management Approach The liquidity and funding risk management of the Group is aligned to the New Liquidity Framework issued by BNM. The Group’s retail deposit base comprises current and savings deposits which. assessment on the concentration of fundings. strong credit rating.089.9 million (31 December 2012 – RM17.4 million) or 39% (31 December 2012 – 44%) of its portfolio of securities. Liquidity and funding positions are reported to the ALCO on a monthly basis in Ringgit Malaysia and United States Dollars. financial and capital strength including offering of competitive deposit rates are core attributes to preserve depositors’ confidence and ensure liquidity. the availability of unencumbered assets and the use of market-wide information to identify possible liquidity problems. The Group accesses the wholesale markets through the issuance of debt instruments.

960 23.796 – 4.594 773.305.649 418.028.152 11.011 240.895.950. In particular.) Liquidity and Funding Risk (Cont’d.043 10.140.358.454. Group 31 December 2013 Up to 7 Days RM'000 > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 ASSETS Cash and balances with banks Reverse repurchase agreements Financial investments Derivative financial assets Loans.602 TOTAL EQUITY – – – – – 21.416.070.000 250.320 6.261.113 16.649.) (a) Maturity analysis of assets and liabilities based on remaining contractual maturity The following tables show the maturity analysis of the carrying amounts of the Group’s and the Bank’s assets and liabilities based on remaining contractual maturity.941 277.196 21.271.010 24.848.800.651 1.032) 154.578.837 TOTAL ASSETS 25.080.957 6. The total outstanding contractual amounts of these items do not represent future cash requirements since the Group and the Bank expect many of these commitments (such as direct credit substitutes) to expire or be unconditionally cancelled without being called or drawn upon.348 20.423.886) (11.686 – 33.640 – 831.160 284.133) (563.175.353 42.602 20.224.794.836 – 14.698.101 – LIABILITIES Deposits from customers Deposits from banks Recourse obligations on loans and financing sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liability balances TOTAL LIABILITIES EQUITY NET MATURITY MISMATCH .773.751.) Risk Management Approach (Cont’d.254 13.691. The contractual maturity profile often does not reflect the actual behavioural patterns.761 9.011 334.889.528.816 21.900) (59.345.793 – 158.737 730.825 6.541.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS ANNUAL REPORT 2013 198 44.873.622 500.152 100.077 4.293.065 9.457 305.709 40.638 – 18.282 244.423.391 191.321 280 – 7.433.587.872 25.197. FINANCIAL RISK MANAGEMENT (CONT’D.746.026 365.152 189.749 104.200 Equity attributable to equity holders of the Bank Non-controlling interests – – – – – – – – – – 20.399 – 25.393 25.641. the Group and the Bank have significant amounts of “core deposits” of non-bank customers which are contractually at call (included in the “Up to 7 days” time band) but which are historically a stable source of long-term funding for the Group and the Bank.165 – 709. whereas many of the contingent liabilities (such as letters of credit) are reimbursable by customers.116 8.150) (3.606.779 180.671 71.793 13.187 22.071.910.457 4.406 79.750.196 (79.473.566.396 98.043 936.189 16.111.620 11.602 37.237 165. The Group and the Bank are subject to liquidity requirements to support calls under outstanding contingent liabilities and commitments as set out in Note 49 to the financial statements.594 773.080 5.590 – 867.198 16. advances and financing Other asset balances 13.764.642 1 – – 10.959.823 29.415.697 89.747.159.156 35.417 9.771.639 4.260 24.506 19.984 11.369.184 14.480 423.181 4.387.990.702 6.855 – 1.800.274.354 219.626 30.232 2.390 500.359 1.725.077.519 19.969 41.517.434 3.197.097.

256.508 11.060 155 70.249.170 – 1.339.159.498.293.577 17.178 2.856 23.864 TOTAL EQUITY – – – – – 18.879 69.895.957.440 699.210.823.243 137.570 19.500.853 7.070 523.265.138.023.996 1.411) (1.159 4.941 19.847 256.561.774 501.958 85.026 370.849.076.084 7.108.219.313 117 5.859 14.695) (22.667.102 170.637.167 619.635.043 125 – – 10.686 13.272 3.999.158.718.003 169.335) 912.363 1.873 147.651.979 20.805.490 4.103 89.000 153.325 12. FINANCIAL RISK MANAGEMENT (CONT’D.658 274.145 1.215.958 9.489.042.787.776.050.) (a) Maturity analysis of assets and liabilities based on remaining contractual maturity (Cont’d.830.624 6.) Liquidity and Funding Risk (Cont’d.917 1.151 5.551 45.867 8.595 5.496 233.984 8.018.543 6.918 9.958 978.337.304 18.968 333 6.687.309) (49.654 EQUITY Equity attributable to equity holders of the Bank Non-controlling interests – – – – – – – – – – 18.565.188.465 196.093 348.466 18.042.923 3.951 8.320.799 – 1.771.721.532.252 1.953 64.894 87.946.965 – 1.851 16.440 699.675 3.253 112.363 134.400. advances and financing Other asset balances 11.028.074 225.830.018.750.451.358.518 17.718.995 4.172 1.304 (65.864 18.051.507 – LIABILITIES Deposits from customers Deposits from banks Recourse obligations on loans and financing sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liability balances TOTAL LIABILITIES NET MATURITY MISMATCH 199 ANNUAL REPORT 2013 Up to 7 Days RM'000 Group 31 December 2012 (Restated) .118.506 40.528.105.152.821.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.910.659 1.878 3.588 973.530 18.) Risk Management Approach (Cont’d.883 16.027.407 TOTAL ASSETS 24.395 581 18.165 40.117 9.564 – 268.664 111 396 500.879.021.603 11.) > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 ASSETS Cash and balances with banks Reverse repurchase agreements Financial investments Derivative financial assets Loans.367 351 32.226 11.242 18.531.752 481.

579 33.177.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.018 1.399 20.923.039.610 19.319 21.837.593 – 730.588 34.553.336 153.160 37.063 1.636 14.490.157 201.475 6.433.570 – 384.573 13.784 8.989 13.822.338 – – – 11.411 4.750.620 9.879.592 16.079 13.796.055 (70.886.562 27.937 137.504 23.055 18.248.643.847 4.598 14.406 24.495 – 841.249.806 83.434 4.376 1.846 2.906.497.025 – 764.462 473.043 21.750.) Liquidity and Funding Risk (Cont’d.148 7.956.698.851 9.758.113 13.733.481 15.996.855.481.479.899.364 – Bank 31 December 2013 ANNUAL REPORT 2013 200 LIABILITIES Deposits from customers Deposits from banks Derivative financial liabilities Debt securities issued and other borrowed funds Other liability balances TOTAL LIABILITIES NET MATURITY MISMATCH .190) (2.404.528 36.384 EQUITY Equity attributable to equity holders of the Bank – – – – – 18.597.389.775.505 56.645 31.725 5.049 89.033.195 – 3.370 TOTAL ASSETS 15.434 2.854 14. FINANCIAL RISK MANAGEMENT (CONT’D.900.093 350.439 81.210.729 182.756 7.363 – 129.986.716.911 10.237.506.856.017.000 171.392 3.310 165.611 338.223.822.933 16.604 234.673 25.363) 129.086 8.048 429.824 9.709.567.117 23.239) (6.685 3.) (a) Maturity analysis of assets and liabilities based on remaining contractual maturity (Cont’d.242.745.) Up to 7 Days RM'000 > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 ASSETS Cash and balances with banks Reverse repurchase agreements Financial investments Derivative financial assets Loans and advances Other asset balances 5.853 19.685.543.023 252.815 86.235 162.007.594.822.839.492) (1.976.055 18.871.737 4.) Risk Management Approach (Cont’d.055 TOTAL EQUITY – – – – – 18.822.638.052.697 12.342 18.638.013 64.700.548 9.191.816 549 – – 5.163.578 241.080) (48.

357 342.369.958 752.719 11.843 7.) (a) Maturity analysis of assets and liabilities based on remaining contractual maturity (Cont’d.) Up to 7 Days RM'000 > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 Cash and balances with banks Reverse repurchase agreements Financial investments Derivative financial assets Loans and advances Other asset balances 5.258.344.667 14.555.894.247.493 210.504.803 9.508 10.893 TOTAL EQUITY – – – – – 16.367 351 32.968.278 211.581.868.500.663.051 13.833 1.289.913 104.161 1.483.583 – 3.210) (1.410.728.814.942 3.736.942 6.133 1.625 3.961.760 – 254.086 1.913 1.509.444 14.519 4.894.042 15.335 2.689.265) (461.) Risk Management Approach (Cont’d.441.690.164) 117.797 619.658 TOTAL LIABILITIES 71.918.510 3.341 7.080 10.786.560 16.344 162.586 5.698 1.017.432 330.552 – – – 10.989.681.894. FINANCIAL RISK MANAGEMENT (CONT’D.272 310.) Liquidity and Funding Risk (Cont’d.334.230 – 1.153 33.078 181.667.679.525.893 16.688.192 7.681.443 54.608 12.423.065.046 – Bank 31 December 2012 (Restated) 201 ASSETS EQUITY NET MATURITY MISMATCH ANNUAL REPORT 2013 LIABILITIES .061.990.840) (17.309.597.921.400.764.256.594.395 6.970 3.632.602 364.229 10.187.575.778 117 5.000 156.518 5.893 (53.193.842 12.950 – – – 1.893 16.664 111 396 – 147.832 14.994.518.079 5.753 19.499 12.499.023 1.968 333 6.226.567) (44.127 61.408.893 – 1.418 TOTAL ASSETS 17.037.473 6.483 11.095.048.958 8.878 122.868.619 – 125.217 228.968 Deposits from customers Deposits from banks Recourse obligations on loans sold to Cagamas Derivative financial liabilities Debt securities issued and other borrowed funds Other liability balances 66.164.081.897 13.555 145.316 14.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.342 581 18.075 Equity attributable to equity holders of the Bank – – – – – 16.395.421 32.894.033 1.027 7.593 37.079 3.

191.675 8.845.688.702 53.659 13.272 25.871.526) – 31 December 2012 By contractual maturity By behavioural maturity* 66.538.500.689.316 14.941 16.352.384.951 423.444 Difference 53.764.900.362.335.193.296 1.316 24.901 3.818 13.049 40.606.869 32.496.185.681.420.654.444 181.871.635.) Risk Management Approach (Cont’d.331 6.592 Difference 70.432 142.592 201.789 3.687 13.316.390.) (b) Behavioural maturity of deposits from customers In practice.895 51.970 13.530.586 3.033 10.375.337.089 17.626 27.533.448) – Group Bank * The behavioural maturity is derived based on BNM New Liquidity Framework’s prescribed treatment of behavioural maturity.613) – Up to 7 Days RM’000 > 7 Days – 1 Month RM’000 >1–3 Months RM’000 >3–6 Months RM’000 > 6 – 12 Months RM’000 >1 Year RM’000 Total RM’000 31 December 2013 By contractual maturity By behavioural maturity* 81.578 161.476.280 19.156 35.325 225.177.626 9.880 181.806 13.319 63.848.592.457 22.148 2.145 56.400.456 27.) Liquidity and Funding Risk (Cont’d.379 1.483.149 (159.276.053.625 14.873.486 310.950.750.776.147.177.189 Difference 76.873.201 225.692 20.978.086.591.066) – 31 December 2012 By contractual maturity By behavioural maturity* 85.245 (153.637.900.688.746.007.282 179.083.392.976.622 55.656. short-term customer accounts and non-maturing savings and current deposits extend to a longer period than their contractual maturity.847 10.692 2.253 9.910.427 (141.475.759.325 Difference 60.487.189 250. deposits from customers behave differently from their contractual terms and typically.775.510 6.348 250.042.389 14.717 7.675 (179.253. The Group’s and the Bank’s behavioural maturity for deposits from customers are as follows: ANNUAL REPORT 2013 202 Up to 7 Days RM’000 > 7 Days – 1 Month RM’000 >1–3 Months RM’000 >3–6 Months RM’000 > 6 – 12 Months RM’000 >1 Year RM’000 Total RM’000 31 December 2013 By contractual maturity By behavioural maturity* 98.042.017.181 13.701.617.060.138 71.717 26.814. FINANCIAL RISK MANAGEMENT (CONT’D.033.702 8.050.945.104 201.878 13.119 20.868.913 6.588 153.895.075 54.685 6.546 21.894.275. .PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.528 7.008 481.328 16.077.650 64.734.

642 696.450 15.760.815 4.593.223 1. on an undiscounted basis.730.268.392 852.099.671 159.571.239.921.253.695.760 4. 203 .731 106.171.800.869.6 million).866 114.443 20.0 million (31 December 2012 – RM7.151 ANNUAL REPORT 2013 Within the “More than 1 year” maturity time band are financial liabilities with principal amount of RM9.965 175. all of which relate to Non-Innovative Tier I stapled securities.381.774. FINANCIAL RISK MANAGEMENT (CONT’D.310. The financial liabilities disclosed in the tables below will not agree to the carrying amounts reported in the statements of financial position as the amounts incorporated all contractual cash flows.616.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 44.137 46.772.687 64.073.210.956 3.195 69.204 8.294.975.183.441 490 896.) Liquidity and Funding Risk (Cont’d.190 90.993 278.752 17.) Risk Management Approach (Cont’d.934.805.633.761 463.845 160.873 437.048 3.229.104 1.872 163.646 7.920 251.034 20.610 10.795 104.454.797 24.895.606 85.177.942. relating to both principal and interest/profit payments.724 16.541.870 258.449. Subordinated notes whereby the interest payments are computed up to the first optional redemption date.809 342.582.864 40.118.311 991. The contractual maturity profile does not necessarily reflect the behavioural cash flows.092.693.304 25.784.673 16.107 79.400 4.931.137 16.353 20. Group 31 December 2013 Deposits from customers Deposits from banks Debt securities issued and other borrowed funds Other liability balances Total Liabilities 31 December 2012 Deposits from customers Deposits from banks Debt securities issued and other borrowed funds Other liability balances Total Liabilities Up to 7 Days RM'000 > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 98.893.857.955 3.372.143.053 228.137 30.952 35.812 1.456 71.680 225.528.640 18.365 1.782 4.305 288.338.084 41.046 283.024 766.104 109.947 12.565.465 17.150 8.331.119 11.) (c) Maturity analysis of financial liabilities on an undiscounted basis The following tables show the contractual undiscounted cash flows payable for financial liabilities by remaining contractual maturity.488.506 523. Innovative Tier I capital securities.789 6.469 495.623 613.948 12.

721 237.018 66.945 15.455 696.352.224 4.815 2. The operational risk management processes include establishment of system of internal controls.171.578 343.856.079.) Bank 31 December 2013 Deposits from customers Deposits from banks Debt securities issued and other borrowed funds Other liability balances Total Liabilities 31 December 2012 Deposits from customers Deposits from banks Debt securities issued and other borrowed funds Other liability balances Total Liabilities Up to 7 Days RM'000 > 7 Days – 1 Month RM'000 >1–3 Months RM'000 >3–6 Months RM'000 > 6 – 12 Months RM'000 >1 Year RM'000 Total RM'000 81.938 500 266.883 22. .293 6.088 Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes.330 252. oversight provided by the management and the Board of Directors.801.699.888 1.384 159.123 14.204.221 105.091.310 5.283.873 27.148 16.823 36. processes and systems.827 182.760 3.119 16.473. identification and assessment of operational risk inherent in new and existing products.634.382 86.326 15.352.869 8.159.043. and operational risk incident reporting and data collection.424 316.981 13. FINANCIAL RISK MANAGEMENT (CONT’D.722 21.479 12. self-compliance audit.762.488.549 56.490 10.308 32.934.127 490 862.405 16.053 187.722.919 122.361 5.268 3. regular disaster recovery and business continuity planning and simulations.398 1.759 61.708 18.991.655 213.426 11.907.108 31.659.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 44.032.223 1.965 144.440.444.) Liquidity and Funding Risk (Cont’d.084 775.164.955.750 14.697 71.810.805.275 54.762.641 10.422.557.250.154.821.938.669.312 – 778.) (c) ANNUAL REPORT 2013 204 Maturity analysis of financial liabilities on an undiscounted basis (Cont’d. and independent assessment of the adequacy and reliability of the risk management processes by the Internal Audit Division.716 – 1.781.905 109.148. procedures and limits by independent control and support units.909.406.392 3.643 16.326 37.787 83.385 3.150 202.592 8.160 14.757.530 1.845 152.432.400.003.) Risk Management Approach (Cont’d.002. people and systems or from external events. the Group places great emphasis on the importance of proper monitoring and reporting of business units’ adherence to established risk policies.475.575 65.067. To manage and mitigate operational risk.

which include the use of mathematical models. Changes in these assumptions could materially affect the fair values derived. due to the low complexity of the financial instruments held. prices) or indirectly (i. . The team within Finance Division which oversees the fair value measurements. FAIR VALUE MEASUREMENTS (a) Determination of fair value and the fair value hierarchy For financial instruments measured at fair value. 205 ANNUAL REPORT 2013 Where such quoted and observable market prices are not available. estimates of future cash flows and other factors. Valuation techniques used incorporate assumptions regarding discount rates. in particular. whether directly (i. such as discounted cash flow models and option pricing models. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date. as applicable. comparison to similar instruments for which market observable prices exist and other valuation techniques. which require minimal management judgement and estimation. The following levels of hierarchy are used for determining and disclosing the fair value of those financial instruments and non-financial assets: Level 1 – Quoted market prices: quoted prices (unadjusted) in active markets for identical instruments. MFRS 13 Fair Value Measurement requires each class of assets and liabilities measured at fair value in the statement of financial position after initial recognition to be categorised according to a hierarchy that reflects the significance of inputs used in making the measurements. For investment properties. These include listed equity securities and broker quotes on Bloomberg and Reuters. interest/profit rate yield curves. and Level 3 – Fair values derived using unobservable inputs: inputs used are not based on observable market data and the unobservable inputs may have a significant impact on the valuation of the financial instruments and non-financial assets. for the determination of fair value. if available. where available. fair values are determined using appropriate valuation techniques. Finance Division establishes the accounting policies and procedures governing valuation and is responsible for ensuring compliance with all relevant accounting standards.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.e. are used.e. reports directly to the Chief Financial Officer. Independent verification on financial instruments is performed by Compliance Division. whether the inputs used are observable or unobservable. derived from prices). Level 2 – Fair values based on observable inputs: inputs other than quoted prices included within Level 1 that are observable for the instrument. The Group and the Bank generally use widely recognised valuation techniques with market observable inputs. that would have been determined by market participants acting at arm’s length. The Group’s control framework in respect of the measurement of Level 3 fair values enables that the fair values are determined and validated by a function independent of the business unit undertaking the risks. quoted and observable market prices in an active market or dealer price quotations are used to measure fair value. the valuation is determined with reference to quotations of market value provided by independent professional valuers. including Level 3 fair values.

508.634 198.616 33.106.263 – 348.785 3.317.640 13.634 198.590 Group 31 December 2013 ANNUAL REPORT 2013 206 Financial assets Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments# Derivative financial assets Total financial assets measured at fair value .529 14.738 16.351.156.822.929 405.529 10.435 16.580 Non-financial assets Investment properties – – 97.394 – – – 1.811.685.583.963 – 15.583.354 3.106.822.811.616 365.844 3.590 – 334.929 405.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.351.) (b) Financial instruments and non-financial assets carried at fair value The following tables show the Group’s and the Bank’s financial instruments and non-financial assets which are measured at fair value at the reporting date analysed by the various levels within the fair value hierarchy: Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Total RM’000 – – – 1.391 97. FAIR VALUE MEASUREMENTS (CONT’D.394 – 15.590 – 334.734 – 17.391 Financial liabilities Derivative financial liabilities – 334.202.844 7.529 30.963 – – 3.256 – – – 10.851.351.590 Total financial liabilities measured at fair value – 334.640 13.

465 3.311 12.154 370.249.734 3.003 3.512 10.736.737 – 358.886 Financial liabilities Derivative financial liabilities – 233. FAIR VALUE MEASUREMENTS (CONT’D.288.) (b) Financial instruments and non-financial assets carried at fair value (Cont’d.977.886 87.000 (31 December 2012 – RM108.564 – 233.804.222 – – 10.564 Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments# Derivative financial assets Total financial assets measured at fair value # Excluding the carrying amount of equity securities – unquoted shares of the Group of RM110.079 11.391 30.135 – 3.225 – 17.617.154 34.080.836.068.): Group 31 December 2012 Level 2 RM'000 Level 3 RM'000 Total RM'000 207 – – 879 3.792 12.383.256 – 16.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.000) which are not carried at fair value.288.079 11.289.977.) The following tables show the Group’s and the Bank’s financial instruments and non-financial assets which are measured at fair value at the reporting date analysed by the various levels within the fair value hierarchy (Cont’d.778.092.564 – 233.564 Total financial liabilities measured at fair value – 233.221 802.956 – – – 3.024.068.003 7.616.512 13.836.337 Non-financial assets Investment properties – – 87.835 879 16.221 803. ANNUAL REPORT 2013 Financial assets Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Level 1 RM'000 .

): Level 1 RM'000 Level 2 RM'000 Level 3 RM'000 Total RM'000 – – – 1.725 198.269 26.489 – – – 1.269 12.547 332.274.885.426 – – 2.844 3.669.669.274.390 12.013 2.744 – – – 8.616 29.453.489 – 13.426 – 13.) (b) Financial instruments and non-financial assets carried at fair value (Cont’d.264.133.547 332. FAIR VALUE MEASUREMENTS (CONT’D.885.737 Financial liabilities Derivative financial liabilities – 429.885.113 16.495 Total financial liabilities measured at fair value – 429.390 12.582 – 334.269 8.313 – 15.495 – 429.495 Bank 31 December 2013 ANNUAL REPORT 2013 208 Financial assets Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Financial investments available-for-sale – Government securities and treasury bills – Money market instruments – Non-money market instruments # Derivative financial assets Total financial assets measured at fair value .355.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.) The following tables show the Group’s and the Bank’s financial instruments and non-financial assets which are measured at fair value at the reporting date analysed by the various levels within the fair value hierarchy (Cont’d.150.986.725 198.844 6.018.852 16.379.986.729 2.495 – 429.616 350.379.

000) which are not carried at fair value.) The following tables show the Group’s and the Bank’s financial instruments and non-financial assets which are measured at fair value at the reporting date analysed by the various levels within the fair value hierarchy (Cont’d.237 10.715.344 2.165.237 10.515.715.460 573.760 Total financial liabilities measured at fair value – 210.) (b) Financial instruments and non-financial assets carried at fair value (Cont’d.154 364.630 – 352.694 – 15. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the financial year (31 December 2012 – Nil).630.599.018 Financial liabilities Derivative financial liabilities – 210. The Group and the Bank recognise transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfer has occurred. FAIR VALUE MEASUREMENTS (CONT’D.460 574.835.479.514.000 (31 December 2012 – RM104.936 12.309.835.679.190 12.049 12.936 9.347 879 13.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.672 6.760 – 210.022 – – 9.): Bank 31 December 2012 Level 2 RM'000 Level 3 RM'000 Total RM'000 209 – – 879 2.598.958 2.000.672 3.614. The fair value of an asset to be transferred between levels is determined as of the date of the event or change in circumstances that caused the transfer.154 29.044 – 2.760 – 210.760 Financial investments available-for-sale – Government securities and treasury bills – Non-money market instruments# Derivative financial assets Total financial assets measured at fair value # Excluding the carrying amount of equity securities – unquoted shares of the Bank of RM106. ANNUAL REPORT 2013 Financial assets Financial assets held-for-trading – Government securities and treasury bills – Money market instruments – Non-money market instruments Level 1 RM'000 .815 26.468 – – – 2.165 – 13.285.514.836.309.

PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.244 771 5.336) 1. FAIR VALUE MEASUREMENTS (CONT’D.628 The Group’s exposure to financial instruments measured with valuation techniques using significant unobservable inputs (Level 3) comprised a small number of financial instruments which constitute an insignificant component of the Group’s and the Bank’s portfolio of financial instruments.000).015 2.154 5.) Reconciliation of movements in Level 3 financial instruments: Group and Bank ANNUAL REPORT 2013 210 Derivative Financial Assets At 1 January Gains recognised in the statement of profit or loss – realised – unrealised Sales At 31 December Total unrealised gains recognised in the statement of profit or loss reported under ‘net gains and losses on financial instruments’ relating to those assets or liabilities held at the end of the financial year 2013 RM'000 2012 RM'000 12.000 (Weighted average: RM62. which were significant inputs. The price per square meter of the properties adopted. ranged from RM10. adjustments are made where dissimilarities exist. The fair values of investment properties located in Hong Kong are determined using comparison method by reference to recent sales prices of comparable properties on a price per square meter basis.154 11.) (b) Financial instruments and non-financial assets carried at fair value (Cont’d. Hence. A reconciliation of movements in Level 3 is disclosed in Note 15 Investment Properties. changing one or more of the inputs to reasonable alternative assumptions would not change the value significantly for the financial assets in Level 3 of the fair value hierarchy.628 (2.733) 16. A significant change in the price per square meter will result in a significant change in the fair value of the investment properties in Hong Kong.616 12.027 (1.027 2. All investment properties of the Group carried at fair values were classified under Level 3.000 to RM187. . The fair values of investment properties located in Malaysia are determined using comparison method by reference to the recent sales prices of comparable properties.

044 2.082 59.411.875.510.946.736.641 68.159 1.351.213.551 41.117 1. It does not include those short term/on demand financial assets and financial liablilities where the carrying amounts are reasonable approximation of their fair values: Group 31 December 2012 Carrying Fair Amount Value RM’000 RM’000 110.509.638 1.383 108.074 1.696 1.784 27.314 44.746 59. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing 4.825 491.619.378.596 2.392.119 27.748.925 30.853 502.637 1.735.615 Financial liabilities Recourse obligations on loans and financing sold to Cagamas Debt securities issued and other borrowed funds 500.249 110.318 4.384.033.587.394.993 30.037 211 ANNUAL REPORT 2013 31 December 2013 Carrying Fair Amount Value RM’000 RM’000 .433 65.604.260 68.369.855 3.832 10.170.016.595.664.000.029 44.791 3.523 41.604.502 74.923.606.318 2.249 108.165.019.433 65.223.011 10.924 637.052 2.463 10.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.502 74.587.383 Financial assets Financial investments available-for-sale – Non-money market instruments Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments* Loans.598 634.) (c) Fair values of financial instruments not carried at fair value Set out below is the comparison of the carrying amounts and fair values of the financial instruments of the Group and the Bank which are not carried at fair value in the financial statements.825 501.496 9.780.399. FAIR VALUE MEASUREMENTS (CONT’D.763.

437.784 29.136 29.660 1. FAIR VALUE MEASUREMENTS (CONT’D.): 212 ANNUAL REPORT 2013 Bank Financial assets Financial investments available-for-sale – Non-money market instruments Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments* Loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Financial liabilities Recourse obligations on loans sold to Cagamas Debt securities issued and other borrowed funds * 31 December 2013 Carrying Fair Amount Value RM’000 RM’000 31 December 2012 Carrying Fair Amount Value RM’000 RM’000 106.519.525 22.390 57.906.837 2.899.027 152.454. .PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.293 1.493 9.807 149.311 24.417.073.311 24.081.265 1.868 723.285 104.074.434 1.901.497.594.886.390 57. It does not include those short term/on demand financial assets and financial liablilities where the carrying amounts are reasonable approximation of their fair values (Cont’d.472.733.037.542.) (c) Fair values of financial instruments not carried at fair value (Cont’d.873 3.847.325 64.000 (31 December 2012 – RM155.614 104.479 52.730.416 2.272.011.058 1.594.331 52.000) were netted off against the carrying amounts.554.617.011.126 The accumulated impairment losses of the Group and the Bank of RM107.390 1.325 64.037.041 31.197 31.285 106.493 9.447 60.434 – 10.525 22.670 1.577.603 60.577.614 3.601.) Set out below is the comparison of the carrying amounts and fair values of the financial instruments of the Group and the Bank which are not carried at fair value in the financial statements.809 – 9.474.869 732.497.088 1.942 1.458.430 1.

) (c) Fair values of financial instruments not carried at fair value (Cont’d.923.735.502 74.993 30.074 68.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.378.074 – – – – – – 1. analysed by various levels within the fair value hierarchy. advances and financing – Retail loans/financing – housing loans/financing – hire purchase <------------------------------------------------------.604.314 44. FAIR VALUE MEASUREMENTS (CONT’D.825 213 ANNUAL REPORT 2013 Financial assets Financial investments available-for-sale – Non-money market instruments# Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Loans.378.165.314 44.052 2.791 – – – – 68.463 – 491.510.923.825 491.411.463 10.213.411.000.052 2.159 1.Fair Value -------------------------------------------------------> Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 .502 74.993 30.082 1.213.791 – – – 4.082 – – – 10.) The following tables show the Group’s and the Bank’s financial instruments which are not carried at fair value at the reporting date.000.735.604.165.159 1. It does not include those short term/on demand financial assets and financial liabilities where the carrying amounts are reasonable approximation of their fair values: Group 31 December 2013 – credit cards – other loans/financing – Corporate loans/financing Financial liabilities Recourse obligations on loans and financing sold to Cagamas Debt securities issued and other borrowed funds – – – – – – – 4.510.

119 27.619.748.) (c) Fair values of financial instruments not carried at fair value (Cont’d.Fair Value -------------------------------------------------------> Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 – – – – – – – 3.832 – 502.587.664.638 1.924 637.433 65.433 65.619.037 Excluding the carrying amount of equity securities-unquoted shares of the Group of RM110.383.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.615 59.000) which are measured at cost less impairment.019.260 – – – 3.394.260 – – – – – – – – – – 59.748.924 637.249.551 41.551 41.000 (31 December 2012 – RM108. It does not include those short term/on demand financial assets and financial liabilities where the carrying amounts are reasonable approximation of their fair values (Cont’d.638 1.832 10. advances and financing – Retail loans/financing – housing loans/financing – hire purchase – credit cards – other loans/financing – Corporate loans/financing Financial liabilities Recourse obligations on loans and financing sold to Cagamas Debt securities issued and other borrowed funds # <------------------------------------------------------.763.): ANNUAL REPORT 2013 214 Group 31 December 2012 Financial assets Financial investments available-for-sale – Non-money market instruments# Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Loans.037 502.394. .) The following tables show the Group’s and the Bank’s financial instruments which are not carried at fair value at the reporting date.763. analysed by various levels within the fair value hierarchy.615 – – – 10.044 2.019.044 2.384.119 27.384. FAIR VALUE MEASUREMENTS (CONT’D.664.587.

416 – – – 3.325 64.594.311 24.868 723. analysed by various levels within the fair value hierarchy.197 31. It does not include those short term/on demand financial assets and financial liabilities where the carrying amounts are reasonable approximation of their fair values (Cont’d.730.730.601.554.434 – 10.197 31.497.331 – 10.088 1.272.037.601.331 60.594.311 24.037.497.272.088 1.): Bank 31 December 2013 Financial liabilities Debt securities issued and other borrowed funds – – – – – – – 3. FAIR VALUE MEASUREMENTS (CONT’D.) The following tables show the Group’s and the Bank’s financial instruments which are not carried at fair value at the reporting date.265 1.434 215 ANNUAL REPORT 2013 Financial assets Financial investments available-for-sale – Non-money market instruments# Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans <------------------------------------------------------.416 – – – – – – – – – – 60.265 1.554.) (c) Fair values of financial instruments not carried at fair value (Cont’d.417.325 64.417.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45.Fair Value -------------------------------------------------------> Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 .868 723.

. FAIR VALUE MEASUREMENTS (CONT’D. It does not include those short term/on demand financial assets and financial liabilities where the carrying amounts are reasonable approximation of their fair values (Cont’d.126 1.000) which are measured at cost less impairment.) (c) Fair values of financial instruments not carried at fair value (Cont’d.390 57.474.454.011.899.493 – 1.899.Fair Value -------------------------------------------------------> Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 – – – – – – – 2.493 9.011.390 1.660 1.027 152.126 Excluding the carrying amount of equity securities-unquoted shares of the Bank of RM106.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 45.000 (31 December 2012 – RM104.474.): ANNUAL REPORT 2013 216 Bank 31 December 2012 Financial assets Financial investments available-for-sale – Non-money market instruments# Financial investments held-to-maturity – Government securities and treasury bills – Money market instruments – Non-money market instruments Loans and advances – Retail loans – housing loans – hire purchase – credit cards – other loans – Corporate loans Financial liabilities Recourse obligations on loans sold to Cagamas Debt securities issued and other borrowed funds # <------------------------------------------------------.074. analysed by various levels within the fair value hierarchy.901.285.454.519.577.614.) The following tables show the Group’s and the Bank’s financial instruments which are not carried at fair value at the reporting date.519.447 – – – – – – – – – – 52.136 29.136 29.901.390 57.660 1.577.447 – – – 2.027 152.525 22.809 – – – 9.809 52.074.390 1.525 22.

net of any collective and individual assessment allowances.) The methods and assumptions used to estimate the fair values of the financial instruments not carried at fair value are as follows: (a) (b) Financial investments available-for-sale and financial investments held-to-maturity – The fair values of financial investments held-to-maturity are estimated based on broker/dealer price quotations. (d) Debt securities issued and other borrowed funds – The fair values of borrowings approximate their carrying amounts as these are variable rate borrowings. The carrying amounts of these financial instruments are deemed to approximate the fair values as their fair values cannot be reliably measured. For fixed rate loans/financing with remaining maturity of more than one year. 217 . The fair values of recourse obligations on loans and financing sold to Cagamas with remaining maturity of more than one year are estimated using discounted cash flows based on prevailing Cagamas rates with similar remaining period to maturity. being the expected recoverable amount. (c) Recourse obligations on loans and financing sold to Cagamas – The fair values of recourse obligations on loans and financing sold to Cagamas with remaining maturity of less than one (1) year are estimated to approximate their carrying amounts. advances and financing – The fair values of fixed rate loans/financing with remaining maturity of less than one year and variable rate loans/financing are estimated to approximate their carrying amounts. The fair values of debt securities issued are estimated based on quoted or observable market prices. ANNUAL REPORT 2013 Loans. The fair values of impaired loans/financing are represented by their carrying amounts.) (c) Fair values of financial instruments not carried at fair value (Cont’d. the fair values are estimated based on discounted cash flows using prevailing market rates of loans/financing of similar credit risks and maturity.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 45. FAIR VALUE MEASUREMENTS (CONT’D. Financial investments available-for-sale as disclosed above consist of only equity securities-unquoted shares which are measured at cost less impairment.

918 181.635) 264.564) (125.323 (9.819 16.316) (92.907.907.255) (21.775 1 334.323 – 9.541.616 1 (62.354 – 365.616 1 – – – – 166.187) – (81.221) (46.590 (162.061) (8.084 1 – – – 264.590 – 334.338) (40.844 .264 48.893 5.182) 155.505 70.505 70.018) – 23. enforceable master netting arrangements and similar agreements are as follows: ANNUAL REPORT 2013 218 Group 31 December 2013 Financial assets Derivative financial assets – Foreign exchange contracts – Interest rate related contracts – Equity related contracts – Precious metal contracts Reverse repurchase agreements Financial liabilities Derivative financial liabilities – Foreign exchange contracts – Interest rate related contracts – Precious metal contracts Amount Not Set-off in the Amount Statement of Financial Position Presented Cash in the Collateral Statement Values of the Received/ of Financial Financial Pledged Net Amount Position Instruments* RM’000 RM’000 RM’000 RM’000 Gross Amount Recognised as Financial Assets/ Liabilities RM’000 Gross Amount Offset in the Statement of Financial Position RM’000 166.221) 77.173) – (124.969 – 9.354 (162.309) – (16.865) (3.569 9.068 48.666.084 1 (141.737) (125.969 (9. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES Financial assets and financial liabilities subject to offsetting.182) – – 107.541.204) 9.564) (16.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 46.819 16.411 1 365.918 181.828.

799) (45.407) 75.416 8.863) (86.535 342.213) – (212.843) (21.528.470.376) 112.407) (137.707) 8.105 – – 99.154 1 – – – – 15.154 1 (6.642) (21.093) 1 370.465 (99.158.564 (99.262 233.465 – 370.376) – 24.100 (1.913) (5.291) 99.535 342.459 134.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 46.) Financial assets and financial liabilities subject to offsetting.105 (53.528.971 – 8.459 134.971 (8. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONT’D.775 12.762) (7.642) (195.381) – 8. enforceable master netting arrangements and similar agreements are as follows (cont’d.564 – 233.): Financial assets Derivative financial assets – Foreign exchange contracts – Interest rate related contracts – Equity related contracts – Precious metal contracts Reverse repurchase agreements Financial liabilities Derivative financial liabilities – Foreign exchange contracts – Interest rate related contracts Gross Amount Recognised as Financial Assets/ Liabilities RM’000 15.408 68.546 219 ANNUAL REPORT 2013 Group 31 December 2012 Amount Not Set-off in the Amount Statement of Financial Position Presented Cash in the Collateral Statement Values of the Received/ of Financial Financial Pledged Net Amount Position Instruments* RM’000 RM’000 RM’000 RM’000 Gross Amount Offset in the Statement of Financial Position RM’000 .506 – 8.284 88.158.775 12.371.866) – (264) (187.855) (195.506 (8.

187) – (81.938 1 429.182) 250.873) – (118.564) (125.519 16.255) (21.) Financial assets and financial liabilities subject to offsetting.): ANNUAL REPORT 2013 220 Bank 31 December 2013 Financial assets Derivative financial assets – Foreign exchange contracts – Interest rate related contracts – Equity related contracts – Precious metal contracts Reverse repurchase agreements Financial liabilities Derivative financial liabilities – Foreign exchange contracts – Interest rate related contracts – Precious metal contracts Amount Not Set-off in the Amount Statement of Financial Position Presented Cash in the Collateral Statement Values of the Received/ of Financial Financial Pledged Net Amount Position Instruments* RM’000 RM’000 RM’000 RM’000 Gross Amount Recognised as Financial Assets/ Liabilities RM’000 Gross Amount Offset in the Statement of Financial Position RM’000 166.593 167.285) 8.519 16.593 5.564) (16.247 1 (141.317 – 8.729 (162.221) (55.247 165.247 1 – – – 264.309) – (16.593 167.018) – 22.729 – 350.616 1 (62.588 – 8.865) (3.616 1 – – – – 166.495 (162.316) (92.756.495 – 429.939 34. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONT’D.411 1 350.944 8.061) (8.638.638.317 (8.989.588 (8.437) (125.989.919.338) (40.810 143.247 165.182) – – 106.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 46.341) 264. enforceable master netting arrangements and similar agreements are as follows (Cont’d.221) 62.749 .

309.231 65.406 111.497 (7.354 – – 99. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONT’D.153 – 7.742 Financial assets Derivative financial assets – Foreign exchange contracts – Interest rate related contracts – Equity related contracts – Precious metal contracts Reverse repurchase agreements Financial liabilities Derivative financial liabilities – Foreign exchange contracts – Interest rate related contracts * Include securities accepted as collateral.381) – 8.154 1 – – – – 15.602.760 – 210.863) (86.407) 69. enforceable master netting arrangements and similar agreements are as follows (Cont’d.) Financial assets and financial liabilities subject to offsetting.354 (53.642) (21.344 (99.642) (195.177) (195.780 12.309.673.535) – (193.382) 7.780 12.154 1 (6.): Gross Amount Recognised as Financial Assets/ Liabilities RM’000 15.376) – 24.344 – 364.282 62.407) (124.406 111.799) (45.093) 1 364.376) 89.913) (5.105 (1.153 (7.409 336.409 336. 221 ANNUAL REPORT 2013 Bank 31 December 2012 Amount Not Set-off in the Amount Statement of Financial Position Presented Cash in the Collateral Statement Values of the Received/ of Financial Financial Pledged Net Amount Position Instruments* RM’000 RM’000 RM’000 RM’000 Gross Amount Offset in the Statement of Financial Position RM’000 .866) – (264) (187.673.502.295 7.843) (21.762) (7.497 – 7.087) 99.760 (99.511 210.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 46.

) Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis.569 524 1. Total future minimum lease payments under these non-cancellable operating leases are as follows: Group Within one year Between one and five years More than five years 31 December 2013 RM’000 31 December 2012 RM’000 4. insolvency or bankruptcy. Total future minimum lease payments under these non-cancellable operating leases are as follows: Group Within one year Between one and five years More than five years Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 29.432 34. 47.658 77. Derivatives and reverse repurchase agreements included in the amount not set-off in the statement of financial position relate to transactions where: ANNUAL REPORT 2013 222 (i) the counterparty has an offsetting exposure with the Group and the Bank and a master netting or similar arrangements is in place with a right to set-off only in the event of default.774 25.321 8. or realise the asset and settle the liability simultaneously. None of the leases includes contingent rentals.287 3.741 1. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (CONT’D.042 The Group as a Lessor The Group leases out its investment properties under operating leases with the term of the leases ranging from one to five years.308 4. The leases typically run for an initial period of three years.731 3.767 18.370 439 85 – 518 524 – 59. and (ii) cash and securities are received or cash pledged in respect of the transaction described above.679 7. with an option to renew. None of the leases include contingent rentals.576 24. OPERATING LEASES The Group and the Bank as a Lessee The Group and the Bank lease a number of premises under operating leases.034 – 2.151 .PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 46.

NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 48.150 14.204 1.632 10.469 11.273 962 10.822 174.463 155.430 10.262 2.297 207.392 754 155.615 168.612 – 146.928 5.928 – – – – 146. furniture and fittings – Computer equipment and software – Motor vehicles – Additional investment in an associated company 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 403.039 – – – 1. furniture and fittings – Computer equipment and software – Motor vehicles Bank .822 – – – – 155.928 146.428 14.438 98 – – 2.837 3.309 159.635 223 ANNUAL REPORT 2013 Authorised and contracted for: – Land and buildings – Renovations – Office equipment.988 48.285 98 30.964 65 6.822 598. CAPITAL AND OTHER COMMITMENTS Group Authorised but not contracted for: – Renovations – Office equipment.397 158.181 – 423.152 12.340 2.813 6.

000 9.822.693.087 45.923 3.106.041.514 467.053 48.376.641 1.534.746 11.301 30.300.552.713.792 525.221.606 19.005 29. COMMITMENTS AND CONTINGENCIES In the normal course of business. The notional amounts of the commitments and contingencies of the Group and the Bank are as follows: Group ANNUAL REPORT 2013 224 Contingent liabilities Direct credit substitutes Transaction-related contingent items Short term self-liquidating trade-related contingencies Commitments Other commitments.150 1.770 1.631 2.981 19.684 1.890 206 1.521.625 6.376.422.823 3.595 83.799 20.222 87.587.100 16.058 908.953.652.151.513. No material losses are anticipated as a result of these transactions.955.836. .758.173.589 53.196.890 206 52.350 3.146 3.879.986.237 3.808.706. the Group and the Bank make various commitments and incur certain contingent liabilities with legal recourse to its customers.206 79.990 1.403 1.972 1.983 2.549.110 30. as required by BNM’s Risk-Weighted Capital Adequacy Framework (Basel II) – Disclosure Requirements (Pillar 3).921 – 54.031.752.044.000 1.031 Disclosure of the credit equivalent amount and risk-weighted asset amount of the commitments and contingencies above.838.595 16.068 3.247.076 2.000 1.000 9.886.691.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 49.229.089 – 73.823. is presented in the Pillar 3 disclosures section of the Annual Report.766 28.844 2.552.821 6.158.408. The commitments and contingencies are not secured against the Group’s and the Bank’s assets.175.944.425.218 50.746 11. with an original maturity of: – exceeding one year – not exceeding one year Unutilised credit card lines Forward asset purchases Derivative financial instruments Foreign exchange related contracts: – less than one year – one year to less than five years Interest rate related contracts: – less than one year – one year to less than five years – five years and above Commodity related contracts: – less than one year Equity related contracts: – less than one year – one year to less than five years Bank 31 December 2013 RM’000 31 December 2012 RM’000 31 December 2013 RM’000 31 December 2012 RM’000 1.211.386 26.162.204 341.879.176 24.587.929.553 4.838.897.925 3.919 295.446 75.100 1.501 21. such as formal standby facilities and credit lines.134 1.440 2.005 52.457.952 3.960 – 22.649.151.176.593 2.740 1.589 53.228 27.089 – 73.221 1.688.214 29.

235% 15.917% * Refers to second interim dividends declared subsequent to the financial year end.828% 14.762% N/A 10.549% 15.024% Bank 31 December 2013 31 December 2012 (Restated) 1 January 2012 (Restated) Before deducting second interim dividends* CET I capital ratio Tier I capital ratio Total capital ratio 10.396% 13.276% 11.674% N/A 11.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 50.750% 10. CAPITAL ADEQUACY (a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows: Group 31 December 2013 31 December 2012 (Restated) 1 January 2012 (Restated) 225 9.931% 13.643% After deducting second interim dividends* CET I capital ratio Tier I capital ratio Total capital ratio 10.023% 14.089% N/A 10.288% N/A 11.632% 14.833% N/A 12. ANNUAL REPORT 2013 Before deducting second interim dividends* Common equity Tier I (“CET I”) capital ratio Tier I capital ratio Total capital ratio .634% 15.459% N/A 12.625% After deducting second interim dividends* CET I capital ratio Tier I capital ratio Total capital ratio 8.534% N/A 13.055% 14.927% 13.300% 12.413% 14.529% 13.086% N/A 13.823% 14.

0 8. The capital adequacy ratios of the Group and the Bank are computed in accordance with BNM’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) issued on 28 November 2012. Public Bank (L) Ltd. as required under BNM’s Capital Adequacy Framework (Capital Components) which includes transitional arrangements for year 2013 and 2014. (ii) Standardised Approach for Market Risk. are set out as follows: Calendar Year CET I Capital Ratio % Tier I Capital Ratio % Total Capital Ratio % 2013 2014 2015 onwards* 3. The comparative capital adequacy ratios and total capital have been computed with the then prevailing BNM’s revised Risk Weighted Capital Adequacy Framework (Basel II) and have been restated for effects of the adoption of MFRS 119 Employee Benefits. (iii) Basic Indicator Approach for Operational Risk.) The capital adequacy ratios of the Group consist of capital base and risk-weighted assets derived from consolidated balances of the Bank and its subsidiary companies. which is effective from 1 January 2013.5%. Please refer to Note 53 Changes in Accounting Policies for a summary of the changes.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 50. CAPITAL ADEQUACY (CONT’D. The minimum regulatory capital adequacy ratios. .5 4. The capital adequacy ratios of the Bank consist of capital base and risk-weighted assets derived from the Bank and from its wholly-owned offshore banking subsidiary company.0 4. The total risk-weighted assets of the Group and the Bank are computed based on the following approaches: ANNUAL REPORT 2013 226 (i) Standardised Approach for Credit Risk.5 5.5 6.0 * Before including capital conservation buffer of 2.5 4.0 8.0 8. counter-cyclical buffer and any other buffers to be introduced by BNM.

257% 26.791% 21.133% 12.252% 27.468% 27.354%# 12.595%# N/A 21.584% 19.336% 31 December 2012 (Restated) Before deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio N/A 12.509% 27.751% 27.468% 28.842% N/A 16.101% N/A N/A 22.286%# N/A 19.842% N/A 16.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 50.296%# 13.423% 16.899%# 16.743% 11.962% 30.625% 25.666% N/A N/A 21.622%# N/A 21.685% N/A 27.275%# N/A 18.916% 13.135% 16.896%# 11.566% 1 January 2012 (Restated) Before deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio N/A 12.743% 12.791% 21.671% 13.): The capital adequacy ratios of the banking subsidiary companies of the Group are as follows: Public Investment Bank Berhad2 31 December 2013 Before deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio 12.916% 15.916% 15.426%# 26.584% 19.288%# 13.409% N/A N/A 19.196%# 18.685% N/A 25.989%# N/A 19.916% 13.133% 12.135% 16.884%# N/A 16.610% 30.765% N/A N/A 22.119% N/A N/A 21.831% After deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio N/A 10.423% 16.988% N/A 16.) (a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows (Cont’d. Restated for the effects of the adoption of MFRS 119. 227 ANNUAL REPORT 2013 Public Islamic Bank Berhad1 .013%# After deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio Public Finance Limited4 Cambodian Public Bank Plc5 13.135% N/A 29.257% 25.988% N/A 16.139% 26.360% 26.946% 28.139% 26.566% N/A 11.671% After deducting interim dividends*: CET l capital ratio Tier I capital ratio Total capital ratio 11.448% N/A 25.089% 27.135% N/A 26.423% N/A 26.454%# 27.423% N/A 28.831% * # Public Public Bank Bank (Hong Kong) (L) Ltd3 Limited4 Refers to interim dividends which have been declared subsequent to the financial year end. CAPITAL ADEQUACY (CONT’D.625% 25.071%# N/A 26.199% N/A N/A 19.252% 27.089% 25.

5% and 8. The minimum regulatory capital adequacy requirement for CET I capital ratio. ANNUAL REPORT 2013 228 . 4 These two subsidiary companies have adopted the Standardised Approach for Credit and Market Risk. which is based on the Basel I capital accord. the capital adequacy ratios of these two subsidiaries are computed in accordance with the provisions of the Banking (Amendment) Ordinance 2012 relating to Basel III capital standards and the amended Banking Capital Rules. CAPITAL ADEQUACY (CONT’D. With effect from 1 January 2013.0%.): 1 The risk-weighted assets of Public Islamic Bank Berhad are computed based on the Standardised Approach for Credit and Market Risk and the Basic Indicator Approach for Operational Risk.0% respectively for year 2013. B7-04-206 and B7-07-135 issued by the National Bank of Cambodia.5%. 3 The capital adequacy ratios of Public Bank (L) Ltd. The comparative capital adequacy ratios of these two subsidiary companies are based on the Basel II capital accord.0% for the Tier I capital ratio and total capital ratio respectively. which are based on the Basel II capital accord. Tier I capital ratio and total capital ratio are 3. which is effective from 1 January 2013.0% respectively for year 2013.): The capital adequacy ratios of the banking subsidiary companies of the Group are as follows (Cont’d. The minimum regulatory solvency ratio requirement is 15. 5 The amount presented here is the Solvency Ratio of Cambodian Public Bank Plc. B7-00-46. The comparative capital adequacy ratios of Public Islamic Bank Berhad are computed in accordance with the then prevailing BNM’s Capital Adequacy Framework for Islamic Banks (CAFIB).) (a) The capital adequacy ratios of the Group and the Bank as at 31 December are as follows (Cont’d. 4. This ratio is derived as Cambodian Public Bank Plc’s net worth divided by its risk-weighted assets and off-balance sheet items. for capital compliance on a standalone basis are computed in accordance with the Guidelines on Risk-weighted Capital Adequacy issued by the Labuan Financial Services Authority (Labuan FSA).PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 50. The capital adequacy ratios are computed in accordance with BNM’s Capital Adequacy Framework for Islamic Banks (Capital Components and Risk-weighted Assets) issued on 28 November 2012. The capital adequacy ratios are computed in accordance with BNM’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) issued on 28 November 2012.5%. which is effective on 1 January 2013. which is the nearest equivalent regulatory compliance ratio. The minimum regulatory capital adequacy requirements are 4. which are based on the Basel II capital accord. 2 The risk-weighted assets of Public Investment Bank Berhad are computed based on the Standardised Approach for Credit and Market Risk and the Basic Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement for CET I capital ratio. Tier I capital ratio and total capital ratio are 3. Public Bank (Hong Kong) Limited has adopted the Basic Indicator Approach for Operational Risk and Public Finance Limited has adopted the Standardised Approach for Operational Risk.0% and 8.5% and 8. This ratio is computed in accordance with Prakas B7-010-182. 4. The comparative capital adequacy ratios of Public Investment Bank Berhad are computed in accordance with the then prevailing BNM’s revised Risk-weighted Capital Adequacy Framework.

909 (215.701 18.507.860.468) 6.369 1.210 1.586 229 Components of CET I.680 1.572) 697.215 28.310 4.899.073.565 (215.627 25.042 – – (960) (46.881 20.536.424.926 1.618.) (b) The components of CET I.306 56.038.730 5.310 4.506.576 9.310 4. Tier I and Tier II capital of the Group and of the Bank are as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 3. CAPITAL ADEQUACY (CONT’D.121 – 4.864 (1.511.140.031 – – Total Tier I Capital 22.843 11.078.238 1.371 1.182.531.274.030 7.875) (64.810.093) – Total CET I Capital Innovative Tier I capital securities Non-Innovative Tier I stapled securities Qualifying CET I and additional Tier I capital instruments held by third parties 18.317 2.531.440 1.146 14.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 50.073.589 (215.457.611 26.938.527.166.833.123. net Less: Defined benefit pension fund assets .200 16.138.926 1.083.572) 699.900) – 3.351 – 6.630.340.879.402.994) (46.337 1.926 1.093 (2.218. Tier I and Tier II Capital: Tier II Capital Collective assessment allowance# Subordinated notes – meeting all relevant criteria – subject to gradual phase-out treatment Qualifying CET I and additional Tier I and Tier II capital instruments held by third parties Less: Investment in banking/insurance subsidiary companies and associated companies Less: Holdings of other financial institutions’ capital instruments Total Tier II Capital Total Capital (142.531.003.912) (70.926 7.121) (220.471.922) 3.116 3.303 2.372.073.949.388 42.834) (960) (44.572) 522.255) – ANNUAL REPORT 2013 CET I/Tier I Capital: Paid-up share capital Share premium Other reserves Retained profits Treasury shares Qualifying non-controlling interests Less: Goodwill Less: Deferred tax assets.082.706 1.870.073.484 (1.

000.264.460 1.913 1.341.440 1.) (b) The components of CET I.000) and RM446.750.): Bank 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) CET I/Tier I Capital: Paid-up share capital Share premium Other reserves Retained profits Treasury shares Less: Goodwill Less: Defined benefit pension fund assets 3.116 3.531.586.990 18.828.214.284) (46.833 625.504 (215. .073.388 Total Tier I Capital 21.197.926 1.132.296.949.870.073.399 21.073.816.138.549.146 14. 1 January 2012 – RM325.572) (695.879.000 (31 December 2012 – RM491.010 691.303 2.924.372) 3.630.481 21.315 (215. # Excludes collective assessment allowance on impaired loans restricted from Tier II capital of the Group and the Bank of RM600.258 721.393) – Total CET I Capital Innovative Tier I capital securities Non-Innovative Tier I stapled securities 18.200 16.310 3. 1 January 2012 – RM422.527 1.531.926 1.104.121 – 4.491 2.306 (4.300 230 ANNUAL REPORT 2013 Components of CET I.442.787) – (4.556 6. CAPITAL ADEQUACY (CONT’D.083.393) – 3. Tier I and Tier II capital of the Group and of the Bank are as follows (Cont’d.987.303.284) (44.795.939 20.707.000 (31 December 2012 – RM369.810.880 9. 1 January 2012 – N/A).310 3.926 1.572) (695.310 3.352.388.531.468) 1. Tier I and Tier II Capital: Tier II Capital Collective assessment allowance# Subordinated notes – meeting all relevant criteria – subject to gradual phase-out treatment Less: Investment in banking/insurance subsidiary companies and associated companies Less: Holdings of other financial institutions’ capital instruments Total Tier II Capital Total Capital In arriving at the capital base of the Group and the Bank above.467 23.896 10.142 1.834) (3.780.162.471.805.351 – 6.317 2.393) (215.741.892.299 1.833.082.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 50.000) respectively.376 (215.000.000 (31 December 2012 – N/A. the second interim dividends were not deducted. Includes the Group’s qualifying regulatory reserves for non-impaired loans which pertain to Public Bank (Hong Kong) Limited and Public Finance Limited amounting to RM132.437.948.572) (695.952.

430 123.780 1.240.677 137.356 164. 51.670.471.722 2.774.692.877 Detailed information on the risk exposures above.) (c) The breakdown of risk-weighted assets by each major risk category is as follows: Group 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 183.721 9. CAPITAL MANAGEMENT The Group actively manages its capital to support underlying risks in its business activities and to enable future business growth.579 10.497.078 199.944 163.850.279.439.093.076 13.111.978 149.099 9. The allocation of capital resources represents part of the Group’s strategic planning review and is subject to the approval of the Board of Directors.579.360.722.416 135.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 50.798 12. whilst ensuring that it complies with regulatory capital requirements.265 2.324 148.403 2.725.937 2.271. CAPITAL ADEQUACY (CONT’D.375 167.733.877. as prescribed under BNM’s Risk-Weighted Capital Adequacy Framework (Basel II) – Disclosure Requirements (Pillar 3) is presented in the Pillar 3 disclosures section of the Annual Report. 231 ANNUAL REPORT 2013 Credit risk Market risk Operational risk 31 December 2013 RM’000 .656 Bank Credit risk Market risk Operational risk 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 154.113. The Group’s capital management strategy is to continue to maximise shareholders’ value via an efficient capital structure.966.544 1.729 179.048.228.713.915.436 14.

It is prepared on the basis of the “management approach”.) The Group’s capital is managed in line with the objectives of the Group Capital Management Framework. In order to meet these objectives. trade and personal loans). CAPITAL MANAGEMENT (CONT’D. maintaining strong external credit ratings and allocation of capital across business units and subsidiary companies. The products and services offered to customers include credit facilities (mortgages. deposit collection and investment products. which requires presentation of the segments on the basis of internal reports about the components of the entity which are regularly reviewed by the chief operating decision-maker in order to allocate resources to a segment and to assess its performance. regulatory requirements and risk characteristics inherent in its business operations. remittance services. The Group’s and Bank’s regulatory capital are determined under BNM’s Capital Adequacy Framework (Capital Components and Basel II – Risk-weighted Assets) and their capital ratios have complied with the minimum requirements set under this guideline. money market operations and securities trading. geographical and regulatory environment in which it operates. the complexity of the business activities undertaken and its risk appetite. . These initiatives include issuances of capital securities. (ii) Retail Operations Retail operations focus on providing products and services to individual customers and small and medium enterprises. The key objectives under the framework include meeting regulatory capital requirements. adjustments to the amount of dividends distributed to shareholders and focus on growth in non-interest income and other less capital-intensive business activities. The Group’s operating and reportable segments are business units engaged in providing different products or services and business units operating in different geographical locations. is organised into the following key operating segments: (i) Hire Purchase The hire purchase operations focus on the provision of passenger vehicle financing to all levels of customers. regulatory minimum capital requirements and the components of capital base are disclosed in Note 50 (a) and (b). The Group’s Internal Capital Adequacy Assessment Process (“ICAAP”) assesses the Group’s internal capital requirements beyond the minimum regulatory requirements to ensure its capital commensurates with the Group’s risk profile. maintaining adequate levels and optimum mix of capital. (iv) Treasury and Capital Market Operations The treasury and capital market operations are involved in proprietary trading in treasury related products and services such as foreign exchange. SEGMENT INFORMATION The following segment information has been prepared in accordance with MFRS 8 Operating Segments. The Group’s domestic business. credit cards. 52. which defines the requirements for the disclosure of financial information of an entity’s operating segments.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS ANNUAL REPORT 2013 232 51. competitive. (iii) Corporate Lending The corporate lending operations cater to the funding needs of large corporate customers which are primarily public listed companies and their related corporations. the Management Committee (the chief operating decisionmaker) reviews the internal management reports monthly in order to assess their performance. which also includes Islamic banking business. For each operating segment. the Group actively manages its capital structure and makes adjustments to address changes in the economic environment. Information on the Group’s and Bank’s capital adequacy ratios. These businesses are managed and assessed separately as each requires a differentiated strategy focused on the specific products and services provided for the economic. optimising return to shareholders.

The services offered include structured financing. which operate on a non-profit basis. is organised into the following key operating segments (Cont’d. 233 (vi) Fund Management (vii) Others Others refer mainly to non-core operations such as property holding. The Group’s overseas business operations are organised according to the following geographical locations: (i) Hong Kong SAR This includes all business operations conducted by the Group’s subsidiary companies in Hong Kong SAR and the People’s Republic of China. which includes mainly financing. Measurement and Evaluation of Segment Performance The Management Committee evaluates operating segments’ performance on the basis of revenue. general insurance businesses and stock-broking. including retail and commercial banking and lending. (ii) Cambodia This comprises all business operations conducted by the Group’s subsidiary companies in Cambodia. Transactions between operating segments are based on mutually agreed allocation bases. ANNUAL REPORT 2013 The fund management operations consist of sale of trust units and the management of unit trust funds as conducted by the Bank’s wholly-owned subsidiary company. Lao People’s Democratic Republic and Sri Lanka. profit.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 52. stock-broking and debt restructuring advisory services. (iii) Other Countries This refers to the Group’s banking business operations in the Socialist Republic of Vietnam. Expenses directly associated with each operating segment are included in determining their respective profit. which also includes Islamic banking business. Public Mutual Berhad. deposit-taking. In addition to the operating segments. corporate advisory services.) The Group’s domestic business.): (v) Investment Banking The investment banking operations cater to the business needs of large corporate customers through the provision of financial solutions and direct lending. Funds are allocated between segments and inter-segment funding cost transfers are reflected in net interest income. There are no changes in the operating segments during the year. . the segment information disclosed also includes internal service providers (head office). cost-to-income ratio. merger and acquisition. and inter-segment eliminations. loans and deposit growth and asset quality. SEGMENT INFORMATION (CONT’D. wealth management services. Major Customers There is no single customer which contributes revenue amount greater than 10% of the Group’s revenues for the current financial year (2012 – none). stock-broking and other related financial services.

264.407.731) 80.578 149 (351.718 2.433) (12.320.595 523.972) 149 (2.643 3.500 5.212) 26.309.877) 396.189 150.351.394.817) 621.282) – (66.228 – – (4.264.294) – – (61.174 180.189) 58.254 7.872 84.694 4.722) 872.278 251.369 44.853 1.723 1.943 48.093) (1.803) 328.583 Hong Kong SAR RM’000 258 3.636.037) (205.109) (214.323 – 21.282 (66.322 1.394.566) (13.585 3.7% 5.795 – (150.830 – 761.800 3.156 352.656 29.950 22.303.317 6.850 1.5% 39.492 205.0% 119.300 (3.331 (184) (10.594 34.015) – 28.226 70.031.(61.443 – 2.191.333.366.619 64.685.077 42.184.463 12. SEGMENT INFORMATION (CONT’D.3% 28.272 13.083.371 4.9% (26.258 1.936 48.072 17.557.3% 5.349 761.850 247.772 (7.077.458 815.282) 30.019.928) 15.013 346.286.151 585.196) 7.647 148.928) – Intersegment Elimination RM’000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .673.038 2.795 286.503.100.158.795 5.756 1.063.1% 183.745 13.984 6.312 – – (1.951 138.710 10.682) (375.8% 23.481 1.678.252) (161.830 30.013 – 70.783 149 (200.820.643 (3.785) 495.780 Cambodia RM’000 Other Countries RM’000 6.016 1.1% 106.8% 53.300 Group Total RM’000 – – – – 66.025 1.170 – (15.868 201.957.148 339.875 1.804 733.4% 43.391.506) (2.) ANNUAL REPORT 2013 – 15.517) 598.636) 8.750.6% 3.304) (14.533) (16.162) 381.510) (304.741) 34.0% 29.079.793 43.679 (1.406 5.287) (24.141 Total Overseas Operations RM’000 4.956.761) (10.507 49.313.623.254 Total revenue External revenue Revenue from other segments 2013 Head Office RM’000 <–––– Overseas Operating Segments ––––> 234 <–––––––––––––––––––––––––––––– Domestic Operating Segments ––––––––––––––––––––––––––––––> Treasury and Capital Hire Retail Corporate Market Investment Fund Purchase Operations Lending Operations Banking Management Others RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 By Business Segments: 52.171 Total Domestic Operations RM’000 Reconciliation of segment profits to consolidated profits: Share of profit after tax of equity accounted associated companies Profit before tax expense and zakat Profit by segments Net income Other operating expenses of which: Depreciation (Allowance)/writeback of allowance for impairment on loans.654 – (2.901) (172.194.611 915.716) 192.074 1.599 219.384 Cost-to-income ratio 426. advances and financing Writeback of impairment on other assets 913.913 Net interest income and Islamic banking income Other income 8.927 14.034) (21.644 16.575.560 – – (4.590 245.5% 12.041 374.604 – (309) (780) (31.078 14.971 – (132.188) (2.733) (408.513 1.690 371.333.965) (136.606) (57.171 4.674 1.221 536.

739 16.525 344.913 9.663.175.6% – – – 206.5% – – – 221.5% 120.470 -4.324 56.313 0.168 11.0% Head Office RM’000 8.259.477 0.) 90.495.850.748 6.290 73.566.064.8% Intersegment Elimination RM’000 158.727 – 1.908 137.573.476 2.7% 1.8% Total Overseas Operations RM’000 PUBLIC BANK BERHAD 52.302 0.396 121.380 25.117) 302.003.477 9.019.): Group Total RM’000 1.7% 943.428.0% 74.430.4% Hong Kong SAR RM’000 Other Countries RM’000 537.251 27.037.912 305.458 17.885 1.470 – – – – 53.570 – 128.211 13. advances and financing Loan growth Impaired loans and financing Impaired loan ratio Deposits from customers Deposit growth Addition to non-current assets Segment assets 2013 (Cont’d.701 0.731.329 0.712 – 11.918 – 12.200.847 <–––– Overseas Operating Segments ––––> ANNUAL REPORT 2013 By Business Segments (Cont’d.419 352.5% 22.079.190 39.178.610 115.873.2% <–––––––––––––––––––––––––––––– Domestic Operating Segments ––––––––––––––––––––––––––––––> Treasury and Capital Hire Retail Corporate Market Investment Fund Purchase Operations Lending Operations Banking Management Others RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Total Domestic Operations RM’000 1.803 – 11.803 – 14.158 1.040.860 55.725.721 13.130 42.779 0.7% 876 807.669 3.237 7.737 – 235.0% 44.899.3% 3.342 21.321.670.955 4.288 0.214 9.484.336.8% 3.037.646 2.792 37.890 4.634.524.1% 2.540.881 319.646 769.9% 23 25.8% 14.9% – – 365.8% 43.6% 11.484 184.234.885 9.5% 4.492.661 22.4% 396.8% 14.423.248 16.4% 305.108 1.Total assets Reconciliation of segment assets to consolidated assets: Investment in associated companies Unallocated assets Intangible assets Gross loans.712 – 176.072.189 – 11.7% – 250.) NOTES TO THE FINANCIAL STATEMENTS 235 .467.364.770 -4.141.2% 2. SEGMENT INFORMATION (CONT’D.316.403 12.912 21.333 (71.7% – – – – 559 4.040 0.953 15.936 – – – – 2.095 13.083 Cambodia RM’000 2.7% 330.7% 354.

390) (14.058 12.175 44.050 882.314) – (66.249 (6.435) (291.552) (3. SEGMENT INFORMATION (CONT’D.445) (353.7% 55.828 740.190) (9.451 654.671.047.308 – (132.008.372) (51.939 24.802 978.028) (1.518 30.595 965.640) (36.058.976 2.253) (2.007.129.648.989 6.564 12.802) 7.202 1.248) (128.679 105.989 Total revenue External revenue Revenue from other segments 2012 (Restated) Head Office RM’000 <–––– Overseas Operating Segments ––––> 236 <–––––––––––––––––––––––––––––– Domestic Operating Segments ––––––––––––––––––––––––––––––> Treasury and Capital Hire Retail Corporate Market Investment Fund Purchase Operations Lending Operations Banking Management Others RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 By Business Segments (Cont’d.117 1.066 13.370 Hong Kong SAR RM’000 (3.725.380 484.726 (160) (9.411 – (1.770 11.401 1.) ANNUAL REPORT 2013 – – – – 66.029 1.136 29.764 48.479) 26.986.399 – (125.687) 2.965 2.8% 110.747.486 1.097 Group Total RM’000 PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS .097 – 14.724 – – (4.203 (7.203) (143.977 317.336) (149.437 222.278.445) 372.129 226.906 1.098.161 – – (4.9% 28.371.123 – (415) (772) (29.442) 37.2% 39.335 4.989 1.314 (66.722.572 5.1% 30.886.397) 321.224 (1.420 44.680 30.897) 522.626) (279.028) 668. advances and financing Impairment on other assets 1.4% 20.275.985 5.244) (167.298 14.969 Total Domestic Operations RM’000 Reconciliation of segment profits to consolidated profits: Share of (loss)/profit after tax of equity accounted associated companies Profit before tax expense and zakat Profit by segments Net income Other operating expenses of which: Depreciation (Allowance)/writeback of allowance for impairment on loans.709 6.1% 5.565.096 60.811) 314.372) (354.583 16.403.980 44.881 36.626 41.278.342.703) 33.9% 11.682 3.102) 803.984 Total Overseas Operations RM’000 4.590) 7.824 122.608) 74.617 1.526 34.963 208.032 4.041) (23.572 732.647 – – (890) (19.941 3.063 125.043.007.058.626) (2.498 – (5.300 – 17.257.254 352.373 Cambodia RM’000 Other Countries RM’000 7.(64.011.049.343 6.988 3.2% 25.319) – 30.417.285) 598.137) (211.922 48.680 – 740.661 3.257.626) (147.092 145.423 219.552) – Intersegment Elimination RM’000 31.443.672 322.375) 167.7% 3.195) (6.755.573) – – (66.339 Net interest income and Islamic banking income Other income 7.566 184.422 149.411 1.040 63 47.565) (11.823) (12.456.001.507 492.746.324.786 870.792 199.443 Cost-to-income ratio 372.941 (6.818 324.8% (31.): 52.234 3.881) (2.146 14.3% 109.803.314) (3.7% 181.2% 5.641 – 2.318 4.009.182 1.385 269.532 509.958 346.

440 22.): – 1.621 120.848 -12.558 10.7% – 210.216 96.299.567 6.1% 17.325 – 12.205.086 – 0.313 660.2% 313.097 7.926.184 0.157.072 1.054 0.319 1.620 Deposit growth – 14.072 769.8% Addition to non-current assets 1.310 65.7% Deposits from customers – 153.175.972 3.937 – 1.0% 2.7% – 225.5% Head Office RM’000 9.542 7.263 -5.867 162.1% 664 23.105 3.8% 4.7% Total Overseas Operations RM’000 PUBLIC BANK BERHAD 52.096 20.9% 11.713.0% 14.3% Intersegment Elimination RM’000 13.688 (64.428 – – – – 51.322 19.389 -2.651 Loan growth 9.647.193 Cambodia RM’000 2.699.004 – – 2.137 860.0% Hong Kong SAR RM’000 Other Countries RM’000 386.042.130 130.579 37.5% 321.625 14.872 <–––– Overseas Operating Segments ––––> ANNUAL REPORT 2013 By Business Segments (Cont’d.210.347 274.221.449 317. SEGMENT INFORMATION (CONT’D. advances and financing 40.) NOTES TO THE FINANCIAL STATEMENTS 237 .) – – – – 53.7% 10.238.571.7% 38.329 151.853 2012 (Restated) (Cont’d.823.212.440.3% – 147.783.300.0% 2.341.414 9.241.585.6% 0.0% 522 68.251 18.8% Impaired loans and financing 241.327 2.353 – 13.133.404.661.997.775 – 12.6% 348.518 13.8% 3.519 305.059 – – – – 1.6% <–––––––––––––––––––––––––––––– Domestic Operating Segments ––––––––––––––––––––––––––––––> Treasury and Capital Hire Retail Corporate Market Investment Fund Purchase Operations Lending Operations Banking Management Others RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Total Domestic Operations RM’000 319.0% – 184.434.085.366 18.541.210 1.077.040 0.887.680.866 23.305 0.374.268 Group Total RM’000 – 197.778.889) 271.2% 111.Total assets Reconciliation of segment assets to consolidated assets: Investment in associated companies Unallocated assets Intangible assets Gross loans.796 309.175.164 – 11.5% 4.253.0% 63.301 Impaired loan ratio 0.2% 14.891 – 1.067.622 – 0.464 1.361.029 19.954 -7.384 3.958 161.411 960 4.465 Segment assets 40.281 113.

998 2.948 – 89.585 96.721 96.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 53.467. This change in accounting policy has been accounted for retrospectively and a summary of financial impact to the Group and the Bank on initial adoption are as follows: (i) Statements of Financial Position Group 31 December 1 January 2012 2012 RM’000 RM’000 Bank 31 December 1 January 2012 2012 RM’000 RM’000 Other Assets As previously stated – Reclassification – Effects of adoption of MFRS 119 2. CHANGES IN ACCOUNTING POLICIES Effects of adopting MFRS 119 Employee Benefits (as amended by IASB in June 2011) The adoption of the revised MFRS 119 affected the accounting treatment of certain items such as the timing of the recognition of certain gains and losses arising from defined benefit plans and the presentation of changes in defined benefit liability or asset.723 3.249 3.906.672 – 96.570.328 89.251 206.672 1. whether unvested or already vested.527 116. The revised MFRS 119 has resulted in changes to the recognition and measurement of defined benefit pension expense and termination benefits.726 89.098.527 As restated 3.670.709 120.303 2.368. – Past service costs.913. Pension costs for a funded benefit plan will include net interest expense or income.457.221. and are not subsequently recycled to the statement of profit or loss. This will replace the interest cost and expected return on plan assets.919 99. The key changes to the accounting policy and financial impact to the Group and the Bank are as follows: ANNUAL REPORT 2013 238 – Actuarial gains and losses (renamed as ‘remeasurements’) are recognised immediately in other comprehensive income.723 99.061 As previously stated – Reclassification 3.560.527 116.888 2.006.709 2.948 1.254 92.119.855 Other Assets – Employee Benefits (Note 10) As previously stated – Reclassification – Effects of adoption of MFRS 119 As restated Other Liabilities .381 192.205. and to the disclosures for all employee benefits.303 95.079 213.723 99.356 2. The corridor approach for accounting for unrecognised actuarial gains in prior years is discontinued.787 – 99.635 2.008.526 99.482.303 95.244 2. are recognised immediately in the statement of profit or loss as incurred.578.709 120. calculated by applying the discount rate to the net defined benefit asset or liability.972 2.356 – 92.535 92.534 As restated 2.534 199.

303) 96.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 53.987 51.911 24.569 – 218.723) 99.709 (96. CHANGES IN ACCOUNTING POLICIES (CONT’D.318 (131.723 – 244.947 239 Other Liabilities As restated Deferred Tax Liabilities Retained Profits Other Reserves – Defined Benefit Reserves (Note 28) ANNUAL REPORT 2013 – Employee Benefits (Note 23) As previously stated – Reclassification .990 80.793 55.841 As previously stated – Effects of adoption of MFRS 119 9.738) 7.839 55.133 As restated 72.) (i) Statements of Financial Position (Cont’d.720.947 As restated 253.527 – – – – As previously stated – Effects of adoption of MFRS 119 47.) Group Bank 31 December 2012 RM’000 1 January 2012 RM’000 31 December 2012 RM’000 1 January 2012 RM’000 (99.723 244.527) 89.274.276.255 – 226.746.) Effects of adopting MFRS 119 Employee Benefits (as amended by IASB in June 2011) (Cont’d.140.608) 6.771 As previously stated Effects of adoption of MFRS 119 – 253.569 218.303 (89.647 (178.255 226.723 (92.003 23.808 (136.453.750 85.589 8.547) As restated 9.168 32.918.709) 92.852.909 7.625 30.940 (172.708 29.219) 8.332 6.

707.754 3.519) 3.) Effects of adopting MFRS 119 Employee Benefits (as amended by IASB in June 2011) (Cont’d.687) As restated 1.242 3.692) 4.681.734 (54.270 – Pension Costs (Note 35) As previously stated – Effects of adoption of MFRS 119 145.273 (42.748.360.707.192.560 (41.061) As restated 3.761 (42.596.748 As restated 2.519) 3.499 Other Operating Expenses Other Operating Expenses – Personnel Costs .174 (13.843 180.061) As restated 3.898 56.063 54.165 (14.986 Tax Expense and Zakat As previously stated – Effects of adoption of MFRS 119 1.177.417.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 53. CHANGES IN ACCOUNTING POLICIES (CONT’D.499 Profit Attributable to Equity Holders of the Bank As previously stated – Effects of adoption of MFRS 119 3.560 (41.926 (56.626.692 1.992 919.811 Profit Before Tax Expenses and Zakat As previously stated – Effects of adoption of MFRS 119 5.748.590 1.911.522 54.487 Profit for the Year As previously stated – Effects of adoption of MFRS 119 3.826.173) 933.047.) (ii) Statements of Profit or Loss 2012 ANNUAL REPORT 2013 240 Group RM’000 Bank RM’000 As previously stated – Effects of adoption of MFRS 119 2.748 As restated 201.234 4.869.151 56.692 126.103.651.748) As restated 5.869.

990 21.944 18.931 13.300 135.625 10.526.044.184 26.723.063 10.216.674 11.024 20.774.029 21.089 10.725.877 13.240.433 21. These are summarised below: As at 31 December 2012 As at 1 January 2012 As previously As previously stated As restated stated As restated 20.656 11. also had consequential effects on the comparative capital adequacy ratios.900 13.828 14.833 12.917 Before deducting second interim dividends* Tier l capital ratio (%) Total capital ratio (%) After deducting second interim dividends* Tier l capital ratio (%) Total capital ratio (%) Bank Tier l capital (RM’000) Total capital (RM’000) Risk-weighted assets (RM’000) Before deducting second interim dividends* Tier l capital ratio (%) Total capital ratio (%) After deducting second interim dividends* Tier l capital ratio (%) Total capital ratio (%) * Refers to second interim dividends declared subsequent to the financial year end.437.132.602 13.165 20.649 11.643 12.632 14.384 14. CHANGES IN ACCOUNTING POLICIES (CONT’D.371 25.627 179.593 14. ANNUAL REPORT 2013 Group Tier l capital (RM’000) Total capital (RM’000) Risk-weighted assets (RM’000) 241 .799 14.816 18.) (iii) Capital Adequacy The adjustments to the financial statements of the Group and the Bank as a result of the adoption of MFRS 119.235 15.875 12.082 163.887.416 18.371.416.865 20.867 25.303.506.823 14.) Effects of adopting MFRS 119 Employee Benefits (as amended by IASB in June 2011) (Cont’d.833 21.586 163.110 179.027.520 149.442.534 13.505 15.340.795.590 11.634 15.372.504 13.701 26.413 14.803 12.511.778 14.900 134.275 18.298.093.601 14.989 10.966. as discussed above.249.194 15.549 15.481 149.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 53.

SUBSEQUENT EVENTS There were no material events subsequent to the reporting date that require disclosure or adjustments to the financial statements. 56. RATING STATEMENT As at 31 December 2013.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 54. the Bank was accorded the following ratings: Agencies Date accorded/Reaffirmed Ratings Rating Agency Malaysia Berhad 3 3 3 3 3 3 3 3 Long-Term Rating: AAA Short-Term Rating: P1 Outlook: Stable RM5 Billion Subordinated Medium-Term Notes Programme: AA1/Stable Innovative Tier I Capital Securities: AA2/Stable Non-Cumulative Perpetual Capital Securities Programme: AA2/Stable Senior Medium-Term Notes Programme: AAA/Stable RM10 Billion Subordinated Medium-Term Notes Programme: AA1/Stable Moody’s Investors Services 20 November 2013 (Reaffirmed) ANNUAL REPORT 2013 242 September September September September September September September September 2013 2013 2013 2013 2013 2013 2013 2013 (Reaffirmed) (Reaffirmed) (Reaffirmed) (Reaffirmed) (Reaffirmed) (Reaffirmed) (Reaffirmed) (Assigned) 20 November 2013 (Reaffirmed) 20 20 20 20 Standard & Poor’s November November November November 2013 (Reaffirmed) 2013 2013 (Reaffirmed) 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) 29 November 2013 (Reaffirmed) Foreign Currency: Long-Term Deposits Rating: A3 Short-Term Deposits Rating: P-2 Local Currency: Long-Term Deposits Rating: A1 Short-Term Deposits Rating: P-1 Financial Strength: C Foreign Currency Outlook: Positive Local Currency Outlook: Stable Innovative Tier I Capital Securities: Baa2 Foreign Currency: Long-Term Rating: AShort-Term Rating: A-2 Local Currency: Long-Term Deposits Rating: A Short-Term Deposits Rating: A-1 Asean Regional Scale Rating: Long-Term Rating: axAA Short-Term Rating: axA-1 Foreign Currency Outlook: Stable Local Currency Outlook: Stable Innovative Tier I Capital Securities: BBB- 55. SIGNIFICANT EVENTS The significant events relating to changes in the composition of the Group are disclosed in Notes 13 and those relating to debt issuance and debt redemption are disclosed in Note 22. .

which is conducted by its wholly-owned subsidiary company.638.512 1.642.014.881.699 4.029.014 – 1.179.257.129 2.000 1.463 2.402 671.839 994.280 5.830.709.736 2.306 29.575 29.645 775.303.000 1.650.400.280 28.537 939.644.450 20.720 5.012 34.700 20.831 625 500.398 3.468 85.533 334 – 73.026 4. are summarised as follows: Statement of Financial Position as at 31 December 2013 Group Note 31 December 2013 RM’000 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) Cash and balances with banks Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investments held-to-maturity Financing and advances Other assets Statutory deposits with Bank Negara Malaysia Investment in an associated company Property and equipment 6.000 1.891.110 77.575 29.470 2.159 (a) Total Assets LIABILITIES AND ISLAMIC BANKING FUNDS Deposits from customers Deposits from banks Bills and acceptances payable Recourse obligations on financing sold to Cagamas Other liabilities Provision for zakat and taxation Deferred tax liabilities (b) COMMITMENTS AND CONTINGENCIES The accompanying notes form an integral part of the financial statements.777 1.330.272 – 22.752.092 1.923 – 20.111 1.854 36.591.003 108.825 500.388 2.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.288. Public Islamic Bank Berhad.306 29.897 50.867 21.472. ANNUAL REPORT 2013 ASSETS 243 .022 19.449.703.836 27.619 34.370 88.789.935 7.011 116.446 27.120 46.632 130.224.588 20.293 23.029 Total Liabilities Islamic Banking Funds 31.850 20.338 2.472.327 6.449.249. ISLAMIC BANKING BUSINESS The financial position as at 31 December 2013 and results for the financial year ended on this date under the Islamic banking business of the Group.904.744.188 6.118.910.303.817 Total Liabilities and Islamic Banking Funds 34.168.159 1.

221 119.016) Total net income Personnel expenses Other overheads and expenditures 736.387) (497) 1.441.221 119.035 (17.180) 837.364 (15. ISLAMIC BANKING BUSINESS (CONT’D.078 Profit for the year Net income from Islamic banking business as reported in the statement of profit or loss of the Group is derived as follows: Group Income derived from investment of depositors’ funds and others Income derived from investment of Islamic Banking Funds Income attributable to the depositors and others Profit Equalisation Reserve Net income from Islamic banking business reported in the statement of profit or loss of the Group The accompanying notes form an integral part of the financial statements.446.502) (247.751 (705.016) (2.766 .046 111.136 843.799 (100.156) 357.423.799 (705.051 (652.180) Total distributable income Income attributable to the depositors and others 1.916 (49.850) (232.) Statement of Profit or Loss for the financial year ended 31 December 2013 Group ANNUAL REPORT 2013 244 2013 RM’000 2012 RM’000 (Restated) Income derived from investment of depositors’ funds and others Income derived from investment of Islamic Banking Funds Allowance for impairment on financing and advances Impairment on other assets Profit Equalisation Reserve 1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.423.935) 543.387) 1.040 410.916 (652.239 (264) (115.386. 2013 2012 RM’000 RM’000 1.756) (16) (497) 1.621) Profit before zakat and taxation Zakat Taxation 473.386.046 111.623) 794.706) (25) (2.564 (330) (133.

) Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 31 December 2013 Group 2013 Profit for the year 2012 RM’000 RM’000 (Restated) 357.617 17. ISLAMIC BANKING BUSINESS (CONT’D.078 2.001 23.040 410.981 21.986) 84.764 110.823 739 1.657 428.958 441.441 108.246) (185) (360) (5.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.036 245 Other comprehensive income: Defined benefit reserves: – Gain on remeasurements of defined benefit plans Items that may be reclassified to profit or loss: Revaluation reserves: – Net change in revaluation of financial investments available-for-sale Hedging reserves: – Net change in cash flow hedges Income tax relating to components of other comprehensive income: – Defined benefit reserves – Revaluation reserves – Hedging reserves Other comprehensive income for the year. ANNUAL REPORT 2013 Items that will not be reclassified to profit or loss: .441) (28. net of tax Total comprehensive income for the year The accompanying notes form an integral part of the financial statements.207) (5.205 (706) (255) (27.020 1.

000 – – 168.500 207.834 2.591.058 2.279 1.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.446 At 31 December 2013 The accompanying notes form an integral part of the financial statements.000 – – – – (503) (313.500 – 207.000 (314.557 At 1 January 2013.836 Profit for the year Other comprehensive income for the year – – – – – – – 81.881 7.546 16.047) 200.) Statement of Changes in Islamic Banking Funds for the financial year ended 31 December 2013 <–––––––––––––––––––––––––– Non-distributable Reserves ––––––––––––––––––––––––––> ANNUAL REPORT 2013 246 Distributable Reserves Group Capital Funds RM’000 Share Premium RM’000 Statutory Reserves RM’000 Hedging Reserves RM’000 Revaluation Reserves RM’000 Defined Benefit Reserves RM’000 Profit Equalisation Reserves RM’000 Retained Profits RM’000 Total RM’000 At 1 January 2013 – as previously stated – effects of adoption of MFRS 119 193.589.546 – 16. ISLAMIC BANKING BUSINESS (CONT’D.217 1.000 168.217 1.116 – – 5.287.757.546 98.735 765 2.293 503 – 278.040 441.736) 2.040 – 357.323 2. as restated 193.117 – – 357.288.047) – 175.500 207.074 (3.657 Transactions with owners/ other equity movements: Transfer from Profit Equalisation Reserves of Islamic banking institution Issue of shares Dividends paid – 7.293 503 274.040 84.410 – 317.047) 7.617 Total comprehensive income for the year – – – 81.589.338 2.735 – 765 – 2.544) (139.217 – 1.323 – 2.117 – 357.116 5. .000 – – – – – – – – – – – – – (503) – – 503 – (314.

078 17.000 – – – – 503 (433.116.817 Profit for the year (restated) Other comprehensive income for the year – – – – – – – 16.081 554 – 410.035 4.000 – – 168.000 168.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.926 1.217 1. as restated 186.) <–––––––––––––––––––––––––– Non-distributable Reserves ––––––––––––––––––––––––––> Distributable Reserves Share Premium RM’000 Statutory Reserves RM’000 Hedging Reserves RM’000 Revaluation Reserves RM’000 Defined Benefit Reserves RM’000 Profit Equalisation Reserves RM’000 Retained Profits RM’000 Total RM’000 At 1 January 2012 – as previously stated – effects of adoptions of MFRS 119 186.288.589.017) 193.293 503 274.958 Total comprehensive income for the year – – – 16.338 2.546 16.) Statement of Changes in Islamic Banking Funds for the financial year ended 31 December 2013 (Cont’d.421.546 – – – 1.836 Transactions with owners/ other equity movements: Transfer to Profit Equalisation Reserves of Islamic banking institution Issue of shares Dividends paid At 31 December 2012 The accompanying notes form an integral part of the financial statements. 247 ANNUAL REPORT 2013 Group Capital Funds RM’000 .500 207.739 – – 300.323 – 1.628 (2.500 – 207.078 – 410.036 – 7.323 2.081 – 554 – – 410.217 – 1.500 207.118.035 – – 4.017) 7.116 5.323 1.891 At 1 January 2012.848) 2.217 1.780 2.421.520) (258.000 – – – – – – – – – – – – – 503 – – (503) – (433.000 (433.078 428. ISLAMIC BANKING BUSINESS (CONT’D.546 – 1.739 – 297.017) – 175.

370 ANNUAL REPORT 2013 248 At amortised cost Cash line Term financing – House financing – Syndicated financing – Hire purchase receivables – Other term financing Trust receipts Claims on customers under acceptance credits Revolving credit All the Group’s Islamic banking financing and advances are located in Malaysia.557.261) (639) 20. ISLAMIC BANKING BUSINESS (CONT’D.168.288 – 2.235.010 Net financing and advances 22.904.223 Gross financing and advances Less: Allowance for impaired financing and advances – collective assessment allowance – individual assessment allowance 23.110 .168.184.551.225 90.647 11.204.235 5.028 330.015 5.189.632 300.488) – (254.933 10.423.) (a) Financing and Advances (i) Net financing and advances analysed by type are as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 515.762 68.554 412.720 654 20.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.229 4.858 20. (300.723 5.

998 Gross financing and advances 23.879.204.010.723 5.858 20.656.423. ISLAMIC BANKING BUSINESS (CONT’D.858 20.123. 249 ANNUAL REPORT 2013 31 December 2013 RM’000 .) (ii) The maturity structure of gross financing and advances are as follows: Group 31 December 2012 RM’000 Maturity within one year More than one year to three years More than three years to five years More than five years 891.747 766.115 4.) (a) Financing and Advances (Cont’d.014.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.135 1.701.887 3. cash line and revolving credit.015 5.235.060 709.189.263 23.551.232.470 783.405 1.178 Corporate financing 22.168.176 3.632 11.423.421.687.204.311.010 (iii) Gross financing and advances presented by class of financial instrument are as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 Retail financing – House financing – Hire purchase – Other financing* 5.487 17.720 15.388 19.010 * Included in other financing are other term financing.554 10.

858 20.204.011.250 2.128.812 508.386.858 20.022 1.276 2.423.398 20.) (iv) Gross financing and advances analysed by contract are as follows: Group 250 ANNUAL REPORT 2013 Bai’ Bithaman Ajil-i (deferred payment sale) Ijarah Thamma Al-Bai’-i (leasing) Ijarah Muntahia Bittamlik Bai-Al-Einah-i Musharakah Mutanaqisah Murabahah Purchase Order (v) 31 December 2013 RM’000 31 December 2012 RM’000 8.841 628.739.835 11.062.500.618 57.811 1.819 242.189.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.295.168.356 45.762 23.878 45.723 – 2.) (a) Financing and Advances (Cont’d.162 2.927 321.423. ISLAMIC BANKING BUSINESS (CONT’D.076 2.010 Gross financing and advances analysed by type of customer are as follows: Group Other domestic non-bank financial institutions Domestic business enterprises – Small and medium enterprises – Others Government and statutory authorities Individuals Other domestic entities Foreign customers 31 December 2013 RM’000 31 December 2012 RM’000 70.326 3.015 112.829.204.914 319.562.880 7.103 23.275 10.010 .779 19.878 17.

168.020.056.965 1.972.204.599.039 219.456 5.453 1.503 411.189.010 Purchase of securities Purchase of transport vehicles Purchase of landed properties 251 ANNUAL REPORT 2013 Fixed rate – House financing – Hire purchase receivables – Other fixed rate financing Variable rate – BFR plus – Cost plus 31 December 2013 RM’000 . ISLAMIC BANKING BUSINESS (CONT’D.185.234.443 23.529 3.928 4.881 2.595 11.554.423.010 (vii) Gross financing and advances analysed by economic purpose are as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 4 11.755 10.339 8.423.722 (of which: – residential – non-residential) 5.968 2.724.659 755.015.405 234.563 400.204.165 3.) (a) Financing and Advances (Cont’d.187.755.858 20.115 8.732 5.338 23.723 2.236 40.504.643 39.) (vi) Gross financing and advances analysed by rate of return sensitivity are as follows: Group 31 December 2012 RM’000 595.168.515.149 3.809 4 10.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.858 20.305 679.069 26.941.015 3.757 Purchase of fixed assets (excluding landed properties) Personal use Purchase of consumer durables Construction Working capital Other purpose 13.

ISLAMIC BANKING BUSINESS (CONT’D.199) (29.886.337) (71. forestry and fishing Mining and quarrying Manufacturing Electricity.675 1.316 112.858 20.364 843.911 23.749 (332.864 208.637) (30.987 (388.) (a) Financing and Advances (Cont’d.) (viii) Gross financing and advances analysed by sector are as follows: Group ANNUAL REPORT 2013 252 Agriculture.784.167 523.204.423.301 19.382 423.074 175.265 5.855 121.893 405. storage and communication Finance.86% .90% 0.119 442.013 331.161 348.029 17. social and personal services Households Others 31 December 2013 RM’000 31 December 2012 RM’000 291.277 442. gas and water Construction Wholesale & retail trade and restaurants & hotels Transport.678) (257) 208.846) (260) 173.725) (78.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.216 451.349 433.016 213.156 19.887 1. hunting. insurance and business services Real estate Community.167 0.152 598.010 (ix) Movements in impaired financing and advances are as follows: Group At 1 January Impaired during the year Reclassified as non-impaired during the year Recoveries Amount written off Financing converted to foreclosed properties At 31 December Gross impaired financing as % of gross financing and advances 2013 RM’000 2012 RM’000 175.921 545.915 30.182 126.926 1.

insurance and business services Real estate Community.911 190 208.835 8.497 78 1.074 175.212 61. storage and communication Finance.167 Agriculture.) (x) Impaired financing and advances analysed by economic purpose are as follows: Group 31 December 2012 RM’000 Purchase of securities Purchase of transport vehicles Purchase of landed properties 4 99. social and personal services Households Others All the Group’s Islamic banking impaired financing and advances are located in Malaysia.864 25 2 35 667 783 952 6.136 159 61 40.156 4 72.867 649 – 111 164.831 1.341 Purchase of fixed assets (excluding landed properties) Personal use Purchase of consumer durables Working capital Other purpose – 44.290 705 831 309 200.074 175.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.700 (of which: – residential – non-residential) 54.597 68 480 45 208.167 (xi) Impaired financing and advances analysed by sector are as follows: Group 31 December 2013 RM’000 31 December 2012 RM’000 544 – 701 974 1. 253 ANNUAL REPORT 2013 31 December 2013 RM’000 .359 13.) (a) Financing and Advances (Cont’d. ISLAMIC BANKING BUSINESS (CONT’D.044 63. forestry and fishing Mining and quarrying Manufacturing Construction Wholesale & retail trade and restaurants & hotels Transport. hunting.321 48.

488 At 1 January 2012 Allowance made/(written back) during the year Amount written off 47.411) 68.259 165.861) (3) – 118.530 1.589 7.046 (30.) (a) Financing and Advances (Cont’d.261 11.355 267.094 (78.346 (451) Allowance made during the year Amount written back in respect of recoveries – – 256 – 256 – – (707) – (707) Amount written off – – (256) – (256) At 31 December 2012 – – 639 – 639 ANNUAL REPORT 2013 254 2013 Collective Assessment Allowance 2012 Collective Assessment Allowance 2013 Individual Assessment Allowance 2012 Individual Assessment Allowance .346 (451) – – 1. ISLAMIC BANKING BUSINESS (CONT’D.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.770 (33.261 At 1 January 2013 Amount written back in respect of recoveries – – 639 – 639 – – (639) – (639) At 31 December 2013 – – – – – At 1 January 2012 Net allowance made during the year – – – – 1.530 1.836 (37.846) At 31 December 2013 60.349 300.) (xii) A reconciliation of the allowance for impaired financing and advances are as follows: <–––––––– Retail Financing ––––––––> House Financing RM’000 Hire Purchase RM’000 Other Financing RM’000 Corporate Financing RM’000 Total RM’000 At 1 January 2013 Allowance made/(written back) during the year Amount written off 52.489 1.428 87.073 (71.352 254.903 66.715 1.165 73.476 133.973 (42.498) 12.574) 38.352 254.422) At 31 December 2012 52.195) 44.476 133.903 66.729) (3) – 65.194 (3.354 (2.317 131.

462.624.681 4.402.151.551. ISLAMIC BANKING BUSINESS (CONT’D.736 23.635.400.000 (31 December 2012 – RM41.752 94.941 522.009 3.906 3.823.205.048 28.225. 255 ANNUAL REPORT 2013 Savings deposit – Wadiah – Mudharabah 31 December 2013 RM’000 .753 2.664 10.) (b) Deposits From Customers (i) By type of deposit: Group By type of deposit Demand deposit – Wadiah – Mudharabah Term deposit – Negotiable Islamic Debt Certificate – Bai-Al-Einah – General investment account – Mudharabah – Wakalah – Special investment account – Wakalah 31 December 2012 RM’000 4.306 2.575 642.568.661 12.886.510 4.000) held as collateral for financing and advances.519.338 Included in Deposits from Customers are deposits of RM78.093 63.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 57.198 3.400 3.345 16.703.603 4.958.666.075.326.945.053.625 66.505 2.377 57.567 13.120 2.

091.703.498.703.628 16.309.545.231 706 20.) (ii) By class of financial instrument: Group 256 ANNUAL REPORT 2013 Core deposits Wholesale deposits 31 December 2013 RM’000 31 December 2012 RM’000 24.659.113.460.545 13.443 6.890 3.561 2. ISLAMIC BANKING BUSINESS (CONT’D.) (b) Deposits From Customers (Cont’d.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 57.911 395.338 (iv) The maturity structure of Islamic debt certificate and general and special investment account are as follows: Group Due within six months More than six months to one year More than one year to three years More than three years to five years 31 December 2013 RM’000 31 December 2012 RM’000 18.736 23.757 342 15.732 315.865 1.651 4.146.061 20.450.702 1.736 11.548.457 .216.454.006.823 5.742 3.940 1.448 28.338 (iii) By type of customers: Group Federal and state governments Local government and statutory authorities Business enterprises Individuals Foreign customers Others 31 December 2013 RM’000 31 December 2012 RM’000 1.084.400.675 4.456 28.112.778 1.736 23.400.224.556.968 2.211.270 5.494.319.

495 – 6.06 and 2.300. into realised and unrealised profits or losses. into realised and unrealised profits.274.676 81.634 8.175) 10.23 of Bursa Malaysia Main Market Listing Requirements.489.049 8.611 30.138.123 10. Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2. The breakdown of retained profits of the Group and the Bank as at the reporting date.635) 8.140.451.370) Total Group retained profits as per consolidated accounts 11.565 9.492.470 101. REALISED AND UNREALISED PROFITS On 25 March 2010.526 3. Bursa Malaysia further issued guidance on the disclosure and the format required.457 74.507. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period.NOTES TO THE FINANCIAL STATEMENTS PUBLIC BANK BERHAD 58.484 – 4.589 Total share of retained profits from associated companies: – Realised – Unrealised ANNUAL REPORT 2013 Group 257 . pursuant to the directive. is as follows: 31 December 2013 RM’000 Total retained profits of Public Bank Berhad and its subsidiaries: – Realised – Unrealised – in respect of deferred tax recognised in the statement of profit or loss – in respect of other items of income and expense 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 12.455.132.740 (985.433 – Less: Consolidation adjustments 12.059 12. On 20 December 2010.049.180.306.997 52.256 10.544 (1.804 75.959 (998.909 7.

116 8. Accordingly.573.109 13. 1.) The breakdown of retained profits of the Group and the Bank as at the reporting date.746.332 6.548 10. is as follows (Cont’d. The disclosure of realised and unrealised profits above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes. issued by the Malaysian Institute of Accountants on 20 December 2010.771 The determination of realised and unrealised profits is based on the Guidance on Special Matter No. the unrealised retained profits of the Group and the Bank as disclosed above exclude translation gains and losses on monetary items denominated in a currency other than the functional currency and foreign exchange contracts.378 19. .723.794 6.720. and are hence deemed as realised.429 (13.PUBLIC BANK BERHAD NOTES TO THE FINANCIAL STATEMENTS 58. pursuant to the directive. as these gains and losses are incurred in the ordinary course of business of the Group and the Bank. Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements.239 8.713.651) 10.): Bank 31 December 2013 RM’000 ANNUAL REPORT 2013 258 Total retained profits of Public Bank Berhad: – Realised – Unrealised – in respect of deferred tax recognised in the statement of profit or loss – in respect of other items of income and expense Total Bank retained profits as per accounts 31 December 2012 RM’000 (Restated) 1 January 2012 RM’000 (Restated) 10.874 38.629. into realised and unrealised profits. REALISED AND UNREALISED PROFITS (CONT’D.745 17.

The Group’s Pillar 3 Disclosure is governed by the Disclosure Policy on Basel II Risk-Weighted Capital Adequacy Framework/Capital Adequacy Framework for Islamic Banks . is based on a percentage fixed by BNM over the Group’s average gross income for a fixed number of quarterly periods. The Public Bank Group (“the Group”) adopted the Standardised Approach in determining the capital requirements for credit risk and market risk and applied the Basic Indicator Approach for operational risk of the Pillar 1 under BNM’s RWCAF. market and operational risks they assume. including specific oversight by the board of directors and senior management on internal controls and corporate governance practices. Under the Standardised Approach. the Group applied the standard risk weights prescribed by BNM to assess the capital requirements for exposures in credit risk and market risk. to ensure that banking institutions maintain adequate capital levels consistent with their risk profile and business plan at all times. www.my 259 ANNUAL REPORT 2013 (a) .Pillar 3 which sets out the minimum disclosure standards.com. the information disclosed herein is not required to be audited by external auditors.publicbank. and (c) Pillar 3 aims to harness market discipline through enhanced disclosure to supplement regulatory supervision of banking institutions through a consistent and comprehensive disclosure framework on risk management practices and capital adequacy of banking institutions that will enhance comparability amongst banking institutions. Basel II consists of 3 Pillars as follows: Pillar 1 sets out the minimum amount of regulatory capital that banking institutions must hold against credit. (b) Pillar 2 promotes the adoption of a more forward-looking approach to capital management and encourages banking institutions to develop and employ more rigorous risk management framework and techniques. The assessment of the capital required for operational risk under the Basic Indicator Approach however. The information provided herein has been reviewed and verified by the internal auditors and certified by Public Bank Berhad (“the Bank”)’s Managing Director/Chief Executive Officer. the approach in determining the appropriateness of information disclosed and the internal controls over the disclosure process which cover the verification and review of the accuracy of information disclosed.As at 31 December 2013 OVERVIEW PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE The Pillar 3 Disclosure is required under the Bank Negara Malaysia (“BNM”)’s Risk-Weighted Capital Adequacy Framework (“RWCAF”). which is the equivalent to Basel II issued by the Basel Committee on Banking Supervision and the Islamic Financial Services Board. The Pillar 3 Disclosure will be published in the Bank’s website. Under the BNM’s RWCAF.

997.356 14.721 9.579.142.436 14.722.666 Total 199.915 1.360. .430 10.234 Total 167.733.313 The Group does not have any capital requirement for Large Exposure Risk as there is no amount in excess of the lowest threshold arising from equity holdings as specified in the BNM’s RWCAF.363 137.159.497.858 228.378.348.722 2.729 15.076 Bank Credit Risk Market Risk Operational Risk 154.997.937 2. 2013 ANNUAL REPORT 2013 260 2012 RiskWeighted Assets RM’000 (Restated) Minimum Capital Requirement at 8% RM’000 (Restated) RiskWeighted Assets RM’000 Minimum Capital Requirement at 8% RM’000 Group Credit Risk Market Risk Operational Risk 183.395.978 13.416 11.579 10.818 179.115 168.915.850.788 164.228.944 14.439.113.098.324 13. The following tables present the minimum regulatory capital requirements to support the Group’s and the Bank’s risk-weighted assets.279.544 1.047 1.725.) Minimum Regulatory Capital Requirements The Group’s principal business activity is commercial banking which focuses mainly on retail banking and financing operations.977.649.198 149.265 2.471.046 818.378 793.294 137.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE OVERVIEW (CONT’D.076 13.966.677 12.713.701 206.111.

The investment in its banking associated company. Public Islamic Bank Berhad (“Public Islamic”). The Group offers Islamic banking financial services via the Bank’s wholly-owned subsidiary company. There were no capital deficiencies in any of the subsidiary companies of the Group during the financial year. that identify. is proportionately consolidated for regulatory capital purposes. Public Bank (L) Ltd. risk appetite. CAPITAL MANAGEMENT The Group’s Internal Capital Adequacy Assessment Process (“ICAAP”) is central to the Group’s capital management whereby: (i) The risk management processes are continuously reviewed and enhanced to facilitate a comprehensive risk assessment of the various types of risk that the Group may be exposed to apart from the traditional Pillar 1 credit. which is presented on a global basis. quantify the Pillar 2 risks on an ongoing basis and consider the results for capital management. objectivity and consistency in application. Information on subsidiary and associated companies of the Group is available in Notes 13 and 14 to the financial statements respectively. The Board of Directors (“Board”) maintains overall responsibility for effective oversight on ICAAP and is supported by the Risk Management Committee (“RMC”) and ICAAP Working Group as well as four ICAAP Working Support Groups. complexity of the business activities undertaken. and differs from that used for regulatory capital purposes. ANNUAL REPORT 2013 There were no significant restrictions or impediments on the transfer of funds or regulatory capital within the Group. Internal Audit Division (“IAD”) is responsible to review the processes relating to the ICAAP to ensure their integrity. The capital adequacy-related information of the Bank. The investment in the subsidiary company engaged in insurance activities is excluded from the regulatory consolidation and is deducted from the regulatory capital. and (ii) The setting aside of capital that commensurates with the Group’s risk profile. 2. the environment in which it operates as well as its 3-year business plans.PILLAR 3 DISCLOSURE SCOPE OF APPLICATION PUBLIC BANK BERHAD 1. market and operational risks. The Pillar 3 Disclosure is prepared on a consolidated basis and comprises information on the Bank and its subsidiary and associated companies. 261 . All information in the ensuing sections is based on the Group’s positions. includes its wholly-owned offshore banking subsidiary company. The basis of consolidation for financial accounting purposes is described in Note 2(v)(b) to the financial statements. assess. Certain information on capital adequacy relating to the Bank is presented on a voluntary basis to provide additional information to users. which is equity-accounted in the financial accounting consolidation. as determined under the RWCAF.

business plans. manage and control the Group’s risk taking activities.) 2. capital management and risk management processes. The key processes in setting the risk appetite are as follows: Review Strategic Objectives And Determine Risk Indicators Align Risk Profile To Business And Capital Management Plan Determine Risk Thresholds Formalise And Ratify Risk Appetite Statement The preparation of the 3-Year Mission/Key Targets is guided by the risk appetite to ensure that the risk appetite is incorporated into actionable plans and measures by the business and support units through the budget.1 Internal Capital Adequacy Assessment Process The key elements of the Group’s ICAAP are as follows: Risk Appetite ANNUAL REPORT 2013 Capital Management (a) ICAAP Risk Management 262 Stress Test Risk Appetite The Group’s risk appetite defines the amount and types of risk that the Group is able and willing to accept in pursuit of its business objectives. It also sets out the level of risk tolerance and limits to govern. CAPITAL MANAGEMENT (CONT’D. .PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 2.

In view of the environment in which the Group operates. capital adequacy and liquidity positions of the Group as well as the identification of the appropriate actions to address the adverse effects of the stress events. Some of the emerging risks considered are the hypothetical increase in the level of household debts. currency risk of emerging countries and amongst others. risk profile and complexity of the Group’s business as well as the environment in which the Group operates. (ii) To develop stress test parameters. assumptions and scenarios are duly deliberated by senior management and approved by the RMC prior to the execution of the stress test exercise. The Group’s capital levels are monitored against the trigger limits for ICT and are reported to the Board. and • Capital buffers (iii) Identified sources of internal capital available to meet the Group’s capital requirements. (ii) Internal Capital Targets (“ICT”) that factors the following: • Minimum capital as required under Basel III to meet the Group’s business plans.) PUBLIC BANK BERHAD 2. RMC and ICAAP Working Group. slowdown in the growth of China’s economy. assumptions and scenarios that are relevant and take into account the nature. (c) Stress Testing The Group’s stress testing processes are guided by the Group’s Stress Test Policy (“Stress Test Policy”).1 Internal Capital Adequacy Assessment Process (Cont’d. 2. The results of the stress test are deliberated by the ICAAP Working Group and the RMC. the stress scenarios are modeled along the events that occurred during the Asian Financial Crisis. Under ICAAP. The key focus is on the impact on profitability. the Group’s capital deficiency plan is also put in place to set out the actions required should a capital deficiency situation arise. 263 ANNUAL REPORT 2013 (i) . As part of the internal capital management process. • Material and quantifiable Pillar 2 risks where capital has not been set aside under Pillar 1. asset quality. This is supplemented by the incorporation of the risk factors experienced during 2008 Financial Crisis and the potential emerging risks which may have an impact to the Group. (v) To ensure loss outcomes are identified and that senior management are able to make informed decisions based on the stress test results. the Group has put in place the following: 3-year capital plan.) (b) Capital Management The Group’s capital management is guided by the Group’s Capital Management Framework and the Internal Capital Management Process. The objectives of the Stress Test Policy are as follows: (i) To establish a comprehensive and consistent stress test process in conducting the stress test by all entities within the Group. the stress results are factored in to determine the internal capital targets of the banking entities and the Group. In addition. whereby the Group’s capital requirements are determined by taking into account its business and strategic plans and financial budget.PILLAR 3 DISCLOSURE CAPITAL MANAGEMENT (CONT’D. • Largest decline recorded under the Scenario 1 stress test in any of the three years stress horizon. (vi) To ensure all stress test parameters. (iii) To ensure the stress test capture all material risks including emerging risks.

927% 13.288% N/A 11.833% * Refers to interim dividends declared subsequent to the financial year end. (a) Capital Adequacy Ratios for the Group and the Bank Group 2013 2012 (Restated) Bank 2013 2012 (Restated) Before deducting interim dividends:* Common equity tier I (“CET I”) capital ratio Tier I capital ratio Total capital ratio 9.055% 14.089% 10. The risk management processes are as follows: 264 ANNUAL REPORT 2013 RISK MANAGEMENT PROCESSES Risk Identification Risk Assessment and Measurement Risk Control and Mitigation Risk Monitoring Recommend Measures to Control and Mitigate Risks Monitor and Report on Progress and Compliance Integrated Across Risk or Strategy Risk Originated from Business Units Identify.750% 10.) 2.459% N/A 12. CAPITAL MANAGEMENT (CONT’D.762% N/A 10.534% After deducting interim dividends:* CET I capital ratio Tier I capital ratio Total capital ratio 8. Understand and Analyse Risk Quantify and Assess Risk Impact Balance Risk against Return 2.2 Capital Adequacy Ratios and Capital Structure The following tables present the capital adequacy ratios and the capital structure of the Group and the Bank.396% 13.828% 14.1 Internal Capital Adequacy Assessment Process (Cont’d.086% N/A 13.931% 13.300% 12. .PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 2.276% 11.529% 13. The capital adequacy ratios of the banking subsidiary companies of the Group are set out in Note 50(a) to the financial statements.) (d) Risk Management The Group’s risk management processes are guided by the Group’s Risk Management Framework which sets out the key principles on risk governance for effective risk management and outlines the Group’s objective to instil a risk awareness culture among all levels of staff to ensure that the risk management functions are carried out effectively.632% 14.413% 14.674% 10.023% 14.

457.572) 522.317 2.123.310 4.527.317 2.284) – (46. net Less: Defined benefit pension fund assets Bank .572) 699.218.780.926 1.310 4.104.310 3.536.881 20.003.351 56.442.121) (220.630.627 23.531.481 Tier II capital Collective assessment allowance and regulatory reserves# Subordinated notes – meeting all relevant criteria – subject to gradual phase-out treatment Qualifying CET I and additional Tier I and Tier II capital instruments held by third parties Less: Investment in banking/insurance subsidiary companies and associated companies Less: Holdings of other financial institutions’ capital instruments Total Tier II capital Total capital # (142.296.834) – (46.078.116 3.576 9.200 16.795.393) – – Total CET I capital Innovative Tier I capital securities Non-innovative Tier I stapled securities Qualifying CET I and additional Tier I capital instruments held by third parties 18.264.701 21.926 1.949.073.810.471.549.440 1.121 – 4.440 1. Includes the Group’s qualifying regulatory reserves for non-impaired loans which pertain to Public Bank (Hong Kong) Limited and Public Finance Limited amounting to RM132.531.399 21.949.834) 6.531.402. Please refer to Note 53 Changes in Accounting Policies as disclosed in the financial statements for a summary of the changes.531.870.121 – 4.042 – – – (960) (4.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 2.471.504 (215.073.255) Excludes collective assessment allowance on impaired loans restricted from Tier II capital of the Group and the Bank of RM600.460 1.372) 3.896 10.706 1.900) – 3.258 1.351 1.093 (2.491 28.073.) 2.310 3.162.8 million (2012: RM491.010 691.210 1.810.073.393) – (215.805.586.875) (64.630.909 (215.565 (215.892.611 26.926 1.2 Capital Adequacy Ratios and Capital Structure (Cont’d.926 1.2 million) and RM446.990 1.116 3.083.860.2 million) respectively.352. 265 ANNUAL REPORT 2013 CET I capital/Tier I capital Paid-up share capital Share premium Other reserves Retained profits Treasury shares Qualifying non-controlling interests Less: Goodwill Less: Deferred tax assets.750.924.) (b) Capital Structure Group 2013 RM’000 2012 RM’000 (Restated)* 2013 RM’000 2012 RM’000 (Restated)* 3.864 (1.376 (215.572) – (695.572) – (695.730 5.4 million (2012: N/A).912) (70.618.511.031 – – – Total Tier I capital 22.238 1.880 9.922) 3.146 18. * The comparative capital adequacy ratios and total capital have been restated for effects of the adoption of MFRS 119 Employee Benefits and are computed in accordance with BNM’s revised Risk-Weighted Capital Adequacy Framework (Basel II).879.870.038.9 million (2012: RM369. CAPITAL MANAGEMENT (CONT’D.843 11.299 1.926 1.527 1.372.787) (4.899.146 42.200 16.369 625.879.939 20.274.507.083.

PUBLIC BANK BERHAD

PILLAR 3
DISCLOSURE

2.

CAPITAL MANAGEMENT (CONT’D.)
2.2 Capital Adequacy Ratios and Capital Structure (Cont’d.)
(b)

Capital Structure (Cont’d.)
The Bank has issued various capital instruments and debt instruments which qualify as components of regulatory capital
under the BNM’s Capital Adequacy Framework (Capital Components), as summarised in the following table:

ANNUAL REPORT 2013

266

Capital Instruments

Capital Component

Main Features

(a)

Tier I Capital

Non-Innovative
Tier I stapled
securities
(“NIT-1”)




(b)

(c)

Innovative Tier I
capital securities
(“IT-1”)

Tier I Capital

Subordinated notes
(“Sub Notes”)

Tier II Capital










(d)

Basel III-Compliant
Subordinated notes
(“Basel IIICompliant Sub
Notes”)

Tier II Capital





Subordinated to all liabilities, including depositors and Sub
Notes. Rank pari passu with IT-1
Unsecured
Perpetual, with optional redemption after 10 years. No step-up
Able to defer interest but will trigger an assignment event,
resulting in unstapling of the NIT-1. Investors will end up holding
the perpetual securities
Right of Bank not to pay distribution, upon which the only
restriction is on payment of ordinary dividend to shareholders
Subordinated to all liabilities, including depositors and Sub
Notes. Rank pari passu with NIT-1
Unsecured
Optional redemption with step-up after 10 years
Option to defer interest up to 50% of aggregate principal
Principal and interest stock settlement provision
Subordinated to all liabilities, including depositors, except to IT-1
and NIT-1
Unsecured
Sub Notes issued prior to January 2011 are subject to optional
redemption with step-up
Sub Notes issued subsequent to January 2011 do not contain
step-up upon optional redemption date
No provisions for deferral of interest. Non-payment will result in
default
Subordinated to all liabilities, including depositors, except to IT-1
and NIT-1
Unsecured
Optional redemption after 5 years. No step-up
Upon occurrence of a Non-Viability Event as determined by
BNM and Malaysia Deposit Insurance Corporation, the Basel
III-Compliant Sub Notes may be subject to write-off
The write-off shall not constitute an event of default or an
enforcement event, nor would it trigger any cross-default under
the Basel III-Compliant Sub Notes

The details of the capital and debt instruments are found in Note 22 to the financial statements.
In line with the transitional arrangements under the BNM’s Capital Adequacy Framework (Capital Components) for the
purpose of determining the capital adequacy ratios of the Group and the Bank, capital and debt instruments which were
issued prior to 31 December 2012 are subject to a gradual phased-out treatment. The Basel III-Compliant Sub Notes which
were issued after 31 December 2012 are fully qualified as Tier II Capital.

PILLAR 3
DISCLOSURE
PUBLIC BANK BERHAD

3.

RISK MANAGEMENT FRAMEWORK
The key elements of the Group’s Risk Management Framework are as follows:
(a) Risk Governance
(b) Risk Appetite
(c) Risk Management Processes
(d) Risk Culture

267

ANNUAL REPORT 2013

Risk
Governance
Risk Appetite

Risk Management
Processes
Risk Culture

PUBLIC BANK BERHAD

PILLAR 3
DISCLOSURE

3.

RISK MANAGEMENT FRAMEWORK (CONT’D.)
(a) Risk Governance
The Group’s risk governance sets out the respective parties’ roles and responsibilities for the Group’s risk management and
system of internal control based on the following seven fundamental principles which outline the principal risk management
and control responsibilities:
ESTABLISH RISK APPETITE & POLICIES

Risk Management Committee
ENSURE IMPLEMENTATION OF
RISK POLICIES AND COMPLIANCE

Dedicated Risk Committees
Assets & Liabilities Management Committee
Credit Risk Management Committee
Operational Risk Management Committee
Shariah Committee
Independent Risk Management and Control Units
Banking Operations
Credit Control, Administration and Supervision
Risk Management
Compliance

IMPLEMENT AND COMPLY
WITH RISK POLICIES

AUDIT COMMITTEE

ANNUAL REPORT 2013

268

Board of Directors

Business Units
Corporate Lending
Investment Banking
Islamic Banking
Retail Banking and Financing Operations
Share Broking and Fund Management
Treasury and Capital Market Operations

Board of Directors
The Board is ultimately responsible for the adequacy and effectiveness of risk management and system of internal control.
The Board, through the RMC, maintains overall responsibility for risk oversight within the Group.
Risk Management Committee
The RMC is responsible for overall risk oversight which includes inter-alia reviewing and approving risk management policies
and limits, reviewing risk exposures and portfolio composition, and ensuring that infrastructure, resources and systems are put
in place for effective risk management oversight. The RMC assists the Board in overseeing the effectiveness of the Group’s
ICAAP and approving risk policies and framework relating to ICAAP.
Dedicated Risk Committees
The dedicated risk committees established to assist the RMC in the management of market and liquidity risk, credit risk and
operational risk are the Assets & Liabilities Management Committee (“ALCO”), the Credit Risk Management Committee
(“CRMC”) and the Operational Risk Management Committee (“ORMC”) respectively. These committees are responsible for
overseeing the development and assessing the effectiveness of risk management policies, reviewing risk exposures and
portfolio composition, and ensuring that infrastructure, resources and systems are put in place to manage and control the
Group’s risk taking activities.

PILLAR 3
DISCLOSURE

RISK MANAGEMENT FRAMEWORK (CONT’D.)

PUBLIC BANK BERHAD

3.

(a) Risk Governance (Cont’d.)
Shariah Committee
The key responsibilities of the Shariah Committee are to advise the Board on Shariah matters pertaining to the Islamic
operations and to deliberate and endorse Shariah related matters. The Shariah Committee is supported by the Shariah
compliance and research functions.

Business Units
The business units, being the first line of defense against risk, are responsible for identifying, mitigating and managing risk
within their lines of business. These units ensure that their day-to-day business activities are carried out within the established
risk policies, procedures and limits.
Audit Committee
The Audit Committee, supported by the Internal Audit Division, provides an independent assessment on the adequacy and
reliability of the risk management processes and system of internal control, and compliance with approved risk policies and
regulatory requirements.

(b) Risk Appetite
The key processes in setting the Group’s risk appetite are presented earlier in item 2.1(a) of the Pillar 3 Disclosure, and the
Risk Appetite Statement and further details of the risk appetite statement are presented in the Risk Management section of
the Annual Report 2013.

(c) Risk Management Processes
The risk management processes for the key risk areas of the Group and the various analysis of risk exposures are set out in
the ensuing sections of the Pillar 3 Disclosure.

(d) Risk Culture
The inculcation of a risk awareness culture is a key aspect of an effective enterprise-wide risk management framework and
the following are key factors of risk culture:
(i)
(ii)
(iii)
(iv)
(v)
(vi)

Strong corporate governance
Organisational structure with clearly defined roles and responsibilities
Effective communication and training
Commitment to compliance with laws, regulations and internal controls
Integrity in fiduciary responsibilities
Clear policies, procedures and guidelines

269

ANNUAL REPORT 2013

Independent Risk Management and Control Units
The independent risk management and control units provide crucial support to the dedicated risk committees. They have the
right to obtain information necessary to carry out their responsibilities and work closely among themselves to ensure the
approved risk policies are implemented and complied with. They are also responsible for the identification, measurement,
monitoring and reporting of risk exposures.

PUBLIC BANK BERHAD

PILLAR 3
DISCLOSURE

4.

CREDIT RISK
Credit risk is the potential loss of revenue as a result of failure by the customers or counterparties to meet their contractual financial
obligations. As the Group’s primary business is in commercial banking, the Group’s exposure to credit risk is primarily from its
lending and financing to retail consumers, small and medium enterprises (“SMEs”) and corporate customers. Trading and investing
the surplus funds of the Group, such as trading or holding of debt securities, deposits placement, settlement of transactions, also
expose the Group to credit risk and counterparty credit risk (“CCR”).

ANNUAL REPORT 2013

270

Minimum Regulatory Capital Requirements for Credit Risk
The following tables present the minimum regulatory capital requirements for credit risk of the Group and the Bank.

Group
Exposure Class
2013
On-Balance Sheet Exposures
Sovereigns/Central Banks
Public Sector Entities
Banks, Development Financial Institutions (“DFIs”)
and Multilateral Development Banks (“MDBs”)
Insurance Companies, Securities Firms and Fund Managers
Corporates
Regulatory Retail
Residential Mortgages
Higher Risk Assets
Other Assets
Equity Exposures
Defaulted Exposures

Off-Balance Sheet Exposures
Credit-related Exposures
Derivative Financial Instruments
Other Treasury-related Exposures
Defaulted Exposures

Total Credit Exposures

Total
Exposures
before
Credit Risk
Mitigation
RM’000

Total
Exposures
after
Credit Risk
Mitigation
RM’000

RiskWeighted
Assets
RM’000

Minimum
Capital
Requirement
at 8%
RM’000

43,868,445
710,882

34,487,789
710,882

111,726
19,550

8,938
1,564

10,933,454
190,518
53,871,845
107,217,507
59,871,984
100,871
5,250,041
5,206,890
1,696,051

10,788,495
186,529
50,802,520
106,469,911
59,809,665
100,795
5,250,041
5,206,890
1,682,995

2,719,377
154,394
45,906,131
80,744,040
24,927,740
151,193
2,690,719
5,206,890
2,428,396

217,550
12,352
3,672,490
6,459,523
1,994,219
12,095
215,258
416,551
194,272

288,918,488

275,496,512

165,060,156

13,204,812

21,945,654
1,067,569
4,176
13,227

21,476,703
1,067,569
4,176
13,227

17,682,827
350,308
835
19,811

1,414,626
28,025
67
1,585

23,030,626

22,561,675

18,053,781

1,444,303

311,949,114

298,058,187

183,113,937

14,649,115

PILLAR 3
DISCLOSURE
PUBLIC BANK BERHAD

4.

CREDIT RISK (CONT’D.)
Minimum Regulatory Capital Requirements for Credit Risk (Cont’d.)
Total
Exposures
after
Credit Risk
Mitigation
RM’000

RiskWeighted
Assets
RM’000

Minimum
Capital
Requirement
at 8%
RM’000

2012 (Restated)
On-Balance Sheet Exposures
Sovereigns/Central Banks
Public Sector Entities
Banks, DFIs and MDBs
Insurance Companies, Securities Firms and Fund Managers
Corporates
Regulatory Retail
Residential Mortgages
Higher Risk Assets
Other Assets
Equity Exposures
Defaulted Exposures

38,425,804
740,737
9,781,795
134,790
47,424,805
97,047,517
52,341,275
152,057
4,795,255
5,089,445
1,454,976

30,282,326
740,737
9,781,795
130,117
44,430,110
96,313,977
52,282,314
151,979
4,795,255
5,089,445
1,442,142

58,286
25,525
2,325,113
120,287
40,465,715
73,069,073
22,493,564
227,968
2,697,942
5,064,687
2,063,939

4,663
2,042
186,009
9,623
3,237,258
5,845,526
1,799,485
18,237
215,835
405,175
165,115

257,388,456

245,440,197

148,612,099

11,888,968

19,166,094
1,140,543
30,386
13,172

18,720,701
1,140,543
30,386
13,172

15,291,364
350,402
6,077
19,602

1,223,309
28,032
486
1,568

20,350,195

19,904,802

15,667,445

1,253,395

277,738,651

265,344,999

164,279,544

13,142,363

Off-Balance Sheet Exposures
Credit-related Exposures
Derivative Financial Instruments
Other Treasury-related Exposures
Defaulted Exposures

Total Credit Exposures

271

ANNUAL REPORT 2013

Group
Exposure Class

Total
Exposures
before
Credit Risk
Mitigation
RM’000

745.495 4.833 5.316 84.028.921.189 21.217 223.730.293 370.726 1.673.365 1. Securities Firms and Fund Managers Corporates Regulatory Retail Residential Mortgages Higher Risk Assets Other Assets Equity Exposures Defaulted Exposures 31.808 379.736 858 3. CREDIT RISK (CONT’D.256.282.872.278 4.215.340.195.605 10.979 247.465 1.061 137.848 154.011 16.608 9.391 235.286.722 12.147.131 91.454 85.931 16.305 30.004 20.646 10.519.937.472 1.013.057.534.711.907 63.308.858 Off-Balance Sheet Exposures Credit-related Exposures Derivative Financial Instruments Defaulted Exposures Total Credit Exposures .938 147 156.841 1.365 1.692 8.048.387.584 51.776 23.637.392.813 111.971 19.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.034.755 91.135 11.365 10.) Minimum Regulatory Capital Requirements for Credit Risk (Cont’d.098.386 8.726 45.360.989 159.519 21.048.556 4. DFIs and MDBs Insurance Companies.400.587 1.247.078.426 321.256.269.224 51.726 40.203 10.221 243.423.913 14.) ANNUAL REPORT 2013 272 Bank Exposure Class Total Exposures before Credit Risk Mitigation RM’000 Total Exposures after Credit Risk Mitigation RM’000 RiskWeighted Assets RM’000 Minimum Capital Requirement at 8% RM’000 2013 On-Balance Sheet Exposures Sovereigns/Central Banks Public Sector Entities Banks.637.393 1.365 1.692 8.151 321.726 48.242 3.159 4.313.823.959.091.278 4.931 19.442 1.887 256.837 137.992.348.866 1.215.608 9.637.193.

539 122.114.091.145 9.862 76.013 17.040.665 152.338 1.145.326 1.565 40.535.626.697.470 4.394 1.260 218.013 13. Securities Firms and Fund Managers Corporates Regulatory Retail Residential Mortgages Higher Risk Assets Other Assets Equity Exposures Defaulted Exposures Total Exposures before Credit Risk Mitigation RM’000 .394 1.230 17.558.358 14.158.716.042.369 360.696.690.496.825 1.904.479.479.363.419.188.470 4.663 309 143.798. DFIs and MDBs Insurance Companies.940 331.505 123.788.887.095.565 42.610 4.008 30.069 18.265 10.221 1.479 183.925.604 12.066.364 1.722 76.806 7.701 273 ANNUAL REPORT 2013 2012 (Restated) On-Balance Sheet Exposures Sovereigns/Central Banks Public Sector Entities Banks.471.925 13.063. CREDIT RISK (CONT’D.488 137.860.979 1.511.850 12.361 4.005 2.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.145 9.133 211.871 9.065 331.983 14.288 57.668 1.535.484 18.806 7.) Bank Exposure Class Off-Balance Sheet Exposures Credit-related Exposures Derivative Financial Instruments Defaulted Exposures Total Credit Exposures Total Exposures after Credit Risk Mitigation RM’000 RiskWeighted Assets RM’000 Minimum Capital Requirement at 8% RM’000 29.565 36.) Minimum Regulatory Capital Requirements for Credit Risk (Cont’d.318.598.225 19.288.105 379.135 45.231 45.288.255 122.152.471 229.997.860 1.205 3.401.869 12.063.852.905.482 22.776 200.269 3.898 130.482 58.145.623 4.697.979 1.308 1.286 3.102.

The CRMC reviews the Group’s credit risk framework and policies. • Loan exposures analysis • Regular reporting to relevant Committees and Board • Independent Credit Review • Review of policies. CREDIT RISK (CONT’D.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. credit profile of the credit portfolios and recommends necessary actions to ensure that the credit risk is well managed and within the Group’s risk appetite. discretionary power for loans approval. guidelines and procedures. Within the Risk Management Division (“RMD”). rehabilitation and restructuring of problematic and delinquent loans. Risk Management Approach The Group’s credit risk management includes the establishment of comprehensive credit risk policies. guidelines and procedures which are periodically reviewed to ensure their continued relevance. and the review. the Credit Risk Management Department has functional responsibility for credit risk management which includes formulating and reviewing the group-wide credit risk policies. Other independent risk management and control units are responsible for managing the credit portfolios and ensuring the credit risk policies are implemented and complied with. PROCEDURES AND LIMITS Risk Governance The CRMC supports the RMC in credit risk management oversight. guidelines and procedures which document the Group’s lending standards. . credit risk rating. guidelines and rating system Monitoring Identification • Benchmarking of asset quality • Post-mortem review on significant impaired loans • Profiling of loan portfolio • Risk Analytics Credit Risk Management Processes • Credit policies and guidelines • Discretionary Powers for approving parties • Segregation of duties • Independent credit control and monitoring Control & Mitigation Assessment & Measurement • Standard credit evaluation format • Credit risk scoresheet • Stress Testing INDEPENDENT AUDIT & REVIEW ANNUAL REPORT 2013 274 INDEPENDENT RISK MANAGEMENT & INTERNAL CONTROL BOARD AND SENIOR MANAGEMENT OVERSIGHT BUSINESS UNITS’ ADHERENCE TO POLICIES. acceptable collateral and valuation. All credit approving authorities are guided by credit policies.) The following diagram presents the risk management processes over credit risk.

Independent credit reviews are performed regularly to complement risk identification as well as to evaluate the quality of credit appraisals and the competency of credit personnel. the investment in debt securities are subject to the minimum investment grade. the Group does not have any direct or indirect exposure to asset-backed securities. collateral. industry and economic factors.) The management of credit risk starts with experienced key personnel being appointed to the Credit Committee. take corrective actions and formulate business strategies. (d) Counterparty Credit Risk on Derivative Financial Instruments The management of the CCR on derivative financial instruments is set out in item 4. The Board of Directors of the respective entities has the authority to reject or modify the terms and conditions of loans which have been approved by the Credit Committee. minimum acceptable return and the maximum tenure. Credit Committee. or other credit support such as standby letters of credit or bank guarantees.) PUBLIC BANK BERHAD 4.2(b) of the Pillar 3 Disclosure. results of independent credit review. ANNUAL REPORT 2013 The credit granting to retail consumers and SMEs is individually underwritten. containing information on asset quality trends across major credit portfolios. The holdings of Collateralised 3Debt Obligations (“CDO”) or Collateralised Loan Obligations (“CLO”) require the specific approval of the Board. guidelines and procedures to manage. (a) Lending to Retail Consumers and SMEs Lending to Corporate and Institutional Customers The credit granting to corporate and institutional customers is individually underwritten and risk-rated through the use of an internal credit risk rating scoresheet. Risk Management Approach (Cont’d. CRMC and RMC. control and monitor credit risk. taking into consideration their financial and business profiles. (b) 275 . The investment parameters are also subject to regular review. The Credit Committee approves major credit decisions. includes the assessment of the historical repayment track record and the current repayment capacity of the customer through the use of an internal credit risk rating scoresheet. As at reporting date. results of the credit profiling conducted. significant credit exposures to connected parties and credit concentration by economic sectors and by large single customers. CRMC and RMC to identify adverse credit trends. In addition. Internal risk management reports are presented to the Credit Committee. The credit approving authorities are assigned discretionary powers based on their seniority and track record. which amongst others. (c) Credit Risk from Trading and Investment Activities The management of the credit risk arising from the Group’s trading or investing its surplus funds is primarily via the setting of issuers’ credit limits which are specifically approved by the relevant approving authorities. CDO or CLO and does not participate in any securitisation deals.PILLAR 3 DISCLOSURE CREDIT RISK (CONT’D. All loan applications of significant amounts are approved at Head Office or by the Credit Committee while experienced senior credit officers at branches are given authority to approve loans with lower risk exposure. Such information allows senior management. Credit officers identify and assess the credit risk of large corporate or institutional customers. The credit approving authorities have the responsibility to ensure that credit risk is properly assessed and all crucial credit information of the customer is included in the customer’s loan application. or customer groups.

448 Group Government and Central Banks RM’000 Financial Services RM’000 2013 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.793.179 5.155.070 32.321 11.644 – 14.527.969 1.832 45.428.046 333. the maximum exposure to credit risk equals their carrying amounts.644 14.922 11.162 13.093 58.354 5.094 301.400.027.383 72.834.337 6.969 15.566 – 14.330 365.356.332 33. CREDIT RISK (CONT’D.513.019.574.102 11.513.094 – 22.928 39.880 45.435.718 32.143.162. For credit commitments.187 359.680 993.417 9.944.360 41.053.526 14.261.162 4.) 4.069 – – – – – – – 36.229 79.485 83.185.924.272 – – – 12.063.491.885 13.993 – – – 28.229.533.354 17.793.080.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.109 517.215.470 1.162.541.722 3. the maximum exposure to credit risk is the full amount of undrawn credit granted to customers.803 6.533. & Business Wholesale & Construction Services Retail Trade & Real Estate RM’000 RM’000 RM’000 Residential Mortgages RM’000 Motor Vehicle Financing RM’000 Other Consumer Loans RM’000 Total RM’000 9.718 – – – – – – – 32.407.279 4.375.987.705 20.1 Distribution of Credit Exposures Tables (a)-(c) present the analysis of credit exposures of financial assets before the effect of credit risk mitigation of the Group as follows: ANNUAL REPORT 2013 276 (a) Industrial analysis based on its industrial distribution (b) Geographical analysis based on the geographical location where the credit risk resides (c) Maturity analysis based on the residual contractual maturity For the the the (a) on-balance sheet exposures.640 – 10.295.602 12.713 36.914 6.851 9.581 7.551 221.925 54.777. advances and financing Statutory deposits with Central Banks 13.858 12.998 1.069 36.260.840 2.175. Industry Analysis Agriculture.981.149.416 224.390 – – – – – – – 72.837 854.963 365.583.758 28.590 38.811.361. For financial guarantees.380. Transport Manufacturing.522 – – – – – 869.696.342 1.338 1. maximum exposure to credit risk is the maximum amount that the Group would have to pay if the obligations for which instruments issued are called upon.781 – 11.541.292.260.385.190 45.918.924.821.027.682 28.106.375.053 518.978 46.060.401 – – – – – 850.955.371 13.860 5.832 Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures .473.415.

294 43.964 8.009.855 270.977.938 – – – – – – – 62.544.474 3. advances and financing Statutory deposits with Central Banks Agriculture.506 16.311 – 27.715. 277 ANNUAL REPORT 2013 2012 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading* Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.110 3.206 Excluding equity securities of RM126.929.730.666 73.709 2.703 9.328.) Group Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures * Residential Mortgages RM’000 Motor Vehicle Financing RM’000 Other Consumer Loans RM’000 Total RM’000 7.280 41.) (a) Industry Analysis (Cont’d.669.776 933.378. & Business Wholesale & Construction Services Retail Trade & Real Estate RM’000 RM’000 RM’000 Government and Central Banks RM’000 .045.601.837.757.838.023 51.401.328.403.913 12.) 4.265 – – – – – 822.000.156 Financial Services RM’000 10.974.665 28.328.506 3.219.822.302 3.666 1.494.907.489.677 24.601.783.993 – 11.380 34.140 11.140 29.277 56.259 874.543 6.974.493 6.311 – – – 519.951 8.206 42.525 34.446 – – 35.042 24.855 – 18.256 370.836 34.944.158.787.826 12.599.505 17.311 27.041.404 40.255.854 370.257.373.324 5.337.603.158.746.077.166 120. Transport Manufacturing.335 1.787.940 1.240 11.152.878 322.1 Distribution of Credit Exposures (Cont’d.797.877 – 835.444 10.607.785 34.076 48.079 – 10.301.616.716 4.491 41.665 – – – – – – – 28.058 507.465 17.120 35.660.426 62.639.856.400.281 – – – 118.789 13.654.164 5.218 508.525 – – – – – – – 34.658.5 million) which do not have any credit risk. CREDIT RISK (CONT’D.465 5.9 million (2012: RM156.247 8.106.366 – 29.634.826 20.085.832 12.862 1.987 – 12.771 197.635.373.

176 374.206 249.495 4.060 183.402.672 4.256 241.551 221.381.737 4.757.045.428 1.849 11.188.924.953 15.164 5.255 2.271.969 15.471 2.944.673 17.616.098 – – 4.292.448 2012 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading* Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.018.045.146.5 million) which do not have any credit risk.654.772 96 – 128.862 2.713.786.491.978 Total Credit Exposures 334.541.162.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. advances and financing Statutory deposits with Central Banks 14.158.120 – 1.491.281 31.599.793.) (b) Geographical Analysis Malaysia RM’000 Hong Kong & China RM’000 Cambodia RM’000 Other Countries RM’000 Total RM’000 17.950 1.505 14.311.662.077.869 3.288 122.036 736. .848 359.097 376.654.080.076 – 937.051 34.134.442.506.811.168 6.016 – 104.635.458 419.300 2.974 1.907 2.189 1.833 18.228 12.560.470 2.156 Group ANNUAL REPORT 2013 278 2013 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.256 370.783.241 33.616.043 – – 316 – 1.417 9.410 16.376.925 54.963 256.543 6.794 322.771 197.134 205.917 3.506 16.465 17.973 48 708.107 399.093 382.496 22.767 296.677.537.048 65.093 – 680.944.253.430.655.371 5.101 16.644.076 48.052 58.053 55.977 17.838.) 4.484.582.603 28.262.1 Distribution of Credit Exposures (Cont’d.185.787.348 72.138 38.902 1.336.172.520.862 1.187 270.043 679.175.083.218 49.870 – – – – – 2.169 9.141.308 47.354 17.936.408.618.581 5.998.294 299.813. advances and financing Statutory deposits with Central Banks Commitments and Contingencies Contingent liabilities Commitments Commitments and Contingencies Contingent liabilities Commitments Total Credit Exposures * Excluding equity securities of RM126.150 773.777.363.158.832 278.176 17.476.257 – 625. CREDIT RISK (CONT’D.101 29.581 7.245 15.9 million (2012: RM156.266 8.914 3.951 8.722 99.413 – – – – – 2.630.522 3.706 52.828.596 1.879.811.106.796 301.569.319.803 6.344 3.106.257.072.556 3.301 3.963 365.607 51.

793.004 – – – – 57.557 6.512. The longer maturity is from the housing loans/financing and hire purchase which made up 52% (2012: 52%) of the portfolio and are traditionally longer term in nature and well secured.892 92.399 – – – – 218.478.727.410 7. having contractual maturity of one year or less. Approximately 30% (2012: 30%) of the Group’s exposures to customers and counterparties are short-term.261.148.733.783.750 1.592 8.635.654.185.969 15.164 5.059 129.951 8.951 8. About 67% (2012: 66%) of the Group’s gross loans.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.771 3.614.056 5.491.453.923.671. The residual contractual maturity for off-balance sheet exposures is not presented as the total off-balance sheet exposures do not represent future cash requirements since the Group expects many of these commitments (such as direct credit substitutes) to expire or be unconditionally cancelled without being called or drawn upon.175.517 21.086 1.862 * Excluding equity securities of RM126.935 5.985 601.832 22.389 21.337 – – – – 31.719.996.080.559 148.220 141.385.654.506 16.616.385 5.297 18.206 Total On-Balance Sheet Exposures 82.528 2.465 17.761.) (c) Maturity Analysis Group Up to 1 Year RM’000 > 1 to 3 Years RM’000 > 3 to 5 Years RM’000 >5 Years RM’000 Total RM’000 279 22.180.933.969 15.628 29.924.9 million (2012: RM156.771 197.438 1.834 27.095 – 740.5 million) which do not have any credit risk.417 9.924.354 17.524.867 17.037 270. whereas many of the contingent liabilities (such as letters of credit) are reimbursable by customers.206 18.899. advances and financing Statutory deposits with Central Banks .622 270.642 22.811.787.221.491.598 301.541.080.117 10.) 4.186 19.470 2012 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading* Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.594 1.256 370.616 162.071 185.543 6.506 16.600 22.389.551 221.528 – – – – 112. advances and financing has residual maturity of more than 5 years.1 Distribution of Credit Exposures (Cont’d.832 Total On-Balance Sheet Exposures 91.257.045. CREDIT RISK (CONT’D.549 4.786.158.656 24.206.963 365.803 6.417 9. ANNUAL REPORT 2013 2013 On-Balance Sheet Exposures Cash and balances with banks Reverse repurchase agreements Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale* Financial investments held-to-maturity Gross loans.384.158.392.635.787.787.480.905 – – – 50.581 7.773 26.852 – – – 135.541.287. advances and financing Statutory deposits with Central Banks 18.847 21.

PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. Unlike on-balance sheet financial instruments. As at 31 December 2013. the Group’s financial loss is not the entire contracted notional principal value of the derivatives. All outstanding financial derivative positions are marked-to-market on a daily basis. interest rate. The Group may also take conservative trading derivative positions. option or credit derivative contract defaults prior to maturity date of the contract and that the Group. usually in the form of cash or government securities upon any excess in threshold levels.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (a) 280 Off-Balance Sheet Exposures Off-balance sheet exposures of the Group are mainly from the following: (i) Financial guarantees and standby letters of credit. which represent undertakings that the Group will make payments in the event that a customer cannot meet its obligations to third parties. Treasury Control & Processing Department monitors counterparties’ positions and promptly follows up with the requirements to post collateral upon any excess in threshold levels. ANNUAL REPORT 2013 (iii) Commitments to extend credit including the unutilised or undrawn portions of credit facilities. (v) Principal/notional amount of derivative financial instruments. the Group establishes settlement limits through the Group’s credit approval process. (b) Counterparty Credit Risk on Derivative Financial Instruments CCR on derivative financial instruments is the risk that the Group’s counterparty in a foreign exchange. These exposures are usually collateralised by the underlying shipment of goods to which they relate.) 4. at the relevant time. which are undertakings by the Group on behalf of the customer. Where possible. equity. (ii) Documentary and commercial letters of credit. within certain pre-set limits. International Swaps and Derivatives Association (“ISDA”) and Credit Support Annex (“CSA”) agreements. (ii) Credit Ratings Downgrade Some netting and collateral arrangements may contain rating triggers. The Group will only suffer losses if the contract carries a positive economic value at time of default. For derivative financial instruments where the PVP settlement method is not possible.2 million). The management of off-balance sheet exposures is in accordance to the credit risk management approach as set out in item 4 of the Pillar 3 Disclosure. the Group settles its OTC derivatives via the Payment-Versus-Payment (“PVP”) settlement method to further reduce settlement risk. Over-the-Counter (“OTC”) derivative financial instruments. although the threshold levels in the majority of the Group’s agreements are identical in the event of a one-notch rating downgrade. especially Interest Rate Swaps and Options are transacted under master agreements. ISDA allows for the close-out netting in the event of default by a counterparty and CSA provides credit protection with the requirements to post collateral. the estimated additional collateral required to be posted for one notch downgrade was RM4. has a claim on the counterparty. (iv) Unutilised credit card lines. (i) Risk Management Approach The CCR arising from all derivative financial instruments is managed via the establishment of credit exposure limits and daily settlement limits for each counterparty. CREDIT RISK (CONT’D. . commodity.4 million (2012: RM17. Derivative financial instruments are primarily entered into for hedging purposes. with the expectation to make arbitrage gains from favourable movements in prices or rates. These exposures carry the same credit risk as loans even though they are contingent in nature. Where possible. but equivalent to the cost to replace the defaulted derivative financial instruments with another similar contract.

176 12. such as formal standby facilities and credit lines.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.002 16.711 4.986. CREDIT RISK (CONT’D.521.030.886. with an original maturity of: – exceeding one year – not exceeding one year Unutilised credit card lines Forward asset purchases Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 1.514 467.925 2.823 3. All derivative financial instruments are at their notional amounts.742 6.228 365.044 359.953.354 23.053.582 123.746 166.377.808 1.206 365.) Composition of Off-Balance Sheet Exposures The following tables present the composition of off-balance sheet exposure of the Group and the Bank.273 1.181 57.055 1.569 350.308 87.176.918 – 312.009 198.626 18.173.614.000.462.229.528 1.823.666 124.067.056 5.176 14.631 2.836.553 Principal Amount RM’000 Derivative Financial Instruments Foreign exchange related contracts: – less than one year – one year to less than five years Interest rate related contracts: – less than one year – one year to less than five years – five years and above Commodity related contracts: – less than one year Equity related contracts: – less than one year Total Off-Balance Sheet Exposures 16.053 19.770 1.759 41.708 89.770 586.781 281 ANNUAL REPORT 2013 2013 Contingent Liabilities Direct credit substitutes Transaction-related contingent items Short-term self-liquidating trade-related contingencies Positive Fair Value of Derivative Contracts RM’000 .641 1.757 93.033.521.553 4.527 282.403 1.649 70.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.202.751 4.819 3.890 1 20 20 52.364 764.074 29.761.354 1.625 6.616 19.227 3.501 21.920 29.162.977 1.706.944.632 86.089 16.366 573.240.844 2.879. Group Commitments Other commitments.662 248.151.665.) 4.533 835 54.

792 525.383 553.800 78.019 1.465 20.077 48.170.445 .154 4.056 223.649.221 1.134 1.879.) 4.693.589 53.896 105.549.) ANNUAL REPORT 2013 282 Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 Group Principal Amount RM’000 2012 Contingent Liabilities Direct credit substitutes Transaction-related contingent items Short-term self-liquidating trade-related contingencies 1.184 738.740 6.005 – 12. with an original maturity of: – exceeding one year – not exceeding one year Unutilised credit card lines Forward asset purchases Derivative Financial Instruments Foreign exchange related contracts: – less than one year – one year to less than five years Interest rate related contracts: – less than one year – one year to less than five years – five years and above Commodity related contracts: – less than one year Equity related contracts: – less than one year – one year to less than five years Total Off-Balance Sheet Exposures 11.350.295 327.784 112.394 2.893 42.039.218 17.000 9.997 277.387 89.150 1.456.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.191.535 – 129.592 13.301 370.866.386 9.197 55.100 15.595 370.923 3.030 1.549.807 526.369 3.076 2.450. CREDIT RISK (CONT’D.197 27. such as formal standby facilities and credit lines.622 30.402 79.158.552.967 6.134 515.935 7.465 1.195 15.440 2.955.110 30.513.140.838.) Composition of Off-Balance Sheet Exposures (Cont’d.031.796 Commitments Other commitments.376.561 151.457.415 16.447 1.850.106.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.386 12.402 206 1 3 3 73.929.543 350.799 20.400 4.152 3.060 1.079.208 8.015 178.667.247 24.044.

164 83.777.240 3.593 1.960 13.446 350.) Contingent Liabilities Direct credit substitutes Transaction-related contingent items Short-term self-liquidating trade-related contingencies Positive Fair Value of Derivative Contracts RM’000 .238 290.629 742.616 19.808 1.042.688.094 50.792 11.746 166.582 119.713.564 90.534.000 Principal Amount RM’000 16.890 1 20 20 52.129.146 3.448. with an original maturity of: – exceeding one year – not exceeding one year Unutilised credit card lines Derivative Financial Instruments Foreign exchange related contracts: – less than one year – one year to less than five years Interest rate related contracts: – less than one year – one year to less than five years – five years and above Commodity related contracts: – less than one year Equity related contracts: – less than one year Total Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 1.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.001 248.243 333.) 4.335 124.215.803.838.729 1.752.000 1.729 21.990 1.587.937.684 1.237 3.897.632 86.646 1.087 18.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4. such as formal standby facilities and credit lines.990 520.908 2.808.394.652.601 16.089 16.) Bank Commitments Other commitments.227 1.226 5.247.151.208.960 283 ANNUAL REPORT 2013 2013 Bank (excluding Public Bank (L) Ltd.981 19.300.136 871.) Composition of Off-Balance Sheet Exposures (Cont’d.821 6.593 – 311.766 350.103 376.959 59.196.919 295. CREDIT RISK (CONT’D.742 6.717 66.074 30.041.666 557.860 40.796 26.203.711 46.114.085 1.196.028 303.983 2.413 14.992 3.

749 547.729 21.) 4. CREDIT RISK (CONT’D.403 – – – 289 2.627 84.919 99.147.607 98.894 19.459 442.423.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.979 19.814 – 7.135.627 – 32.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.919 4.004 16. with an original maturity of: – not exceeding one year Derivative Financial Instruments Interest rate related contracts: – less than one year – one year to less than five years – five years and above Total Total Off-Balance Sheet Exposures of the Bank and Public Bank (L) Ltd.073 350. Contingent Liabilities Direct credit substitutes Commitments Other commitments.804 229. Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 4.) Composition of Off-Balance Sheet Exposures (Cont’d.296 4.146 2.959 Principal Amount RM’000 114.587 .505 3.403 28. such as formal standby facilities and credit lines.919 4.) ANNUAL REPORT 2013 284 Bank 2013 Public Bank (L) Ltd.920 144 1.

197 28.292.118 22.777 85.105.415 16.758.208 8.552.058 454.952 1.589 53.000 9.376.058 908.) 4.408.409 – 128.748 206 1 3 3 73.148 3.350 3.175.247 75. CREDIT RISK (CONT’D.413 717.390 875.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.972 1.561 147.214 1.550 1.044.750 2.800 12. such as formal standby facilities and credit lines.005 – 12.822.175.584 9.100 15.204 341.639 14.626 49.884.306 89.447 1.742 274. with an original maturity of: – exceeding one year – not exceeding one year Unutilised credit card lines Derivative Financial Instruments Foreign exchange related contracts: – less than one year – one year to less than five years Interest rate related contracts: – less than one year – one year to less than five years – five years and above Commodity related contracts: – less than one year Equity related contracts: – less than one year – one year to less than five years Total 11.762 285 ANNUAL REPORT 2013 Bank Principal Amount RM’000 .422.289 377.893 42.) Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 2012 Bank (excluding Public Bank (L) Ltd.595 15.344 1.612 178.154 4.277.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.) Composition of Off-Balance Sheet Exposures (Cont’d.397 Commitments Other commitments.068 3.125.221.) Contingent Liabilities Direct credit substitutes Transaction–related contingent items Short-term self-liquidating trade–related contingencies 1.566 108.052.707.691.606 19.715.200.425.158 7.394 2.061 538.807 512.803 3.587.697.188 45.031 364.427 428.056 222.211.102 68.682.222 364.738 1.344 18.000 6.921 11.

676 509. Positive Fair Value of Derivative Contracts RM’000 Credit Equivalent Amount RM’000 RiskWeighted Assets RM’000 4.845 25.) ANNUAL REPORT 2013 286 Bank 2012 Public Bank (L) Ltd.394 .586 92.) Composition of Off-Balance Sheet Exposures (Cont’d.) 4.740 – – 5.856 2.090 91.830 – 10.352 5.2 Off-Balance Sheet Exposures and Counterparty Credit Risk (Cont’d.632 76.101 412.455 364.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.344 18.008 18.484 14. Contingent Liabilities Direct credit substitutes Commitments Other commitments such as formal standby facilities and credit lines. with an original maturity of: – not exceeding one year Derivative Financial Instruments Interest rate related contracts: – one year to less than five years – five years and above Total Total Off-Balance Sheet Exposures of the Bank and Public Bank (L) Ltd.504 1.370 Principal Amount RM’000 321.586 4.200.575 1.403 18. CREDIT RISK (CONT’D.586 4.716.318.424 – 33.

mitigation of credit risk is a key aspect of effective risk management and takes many forms. Especially in mortgage financing.) PUBLIC BANK BERHAD 4. subject to internal guidelines on eligibility. Where there is a currency mismatch. with the respective banking entities as the loss payee under the insurance policy. for instance. In addition. the Group enters into master netting arrangements with its derivative counterparties to reduce the credit risk where in the event of default. corporate and institutional customers to mitigate credit risk. 287 ANNUAL REPORT 2013 (a) . The quality. Policies and procedures are in place to govern the protection of the Group’s position from the onset of a customer relationship. for instance in requiring standard terms and conditions or specifically agreed upon documentation to ensure the legal enforceability of the CRM. liquidity and collateral type will determine the appropriate haircuts or discounts applied on the market value of the collateral. market value and the ease of realising the CRM. The main types of collateral obtained by the Group to mitigate credit risk are as follows: for residential mortgages – charges over residential properties (b) for commercial property loans – charges over the properties being financed (c) for motor vehicle financing – ownership claims over the vehicles financed (d) for share margin financing – pledges over securities from listed exchange (e) for other loans – charges over business assets such as premises. 4. Policy on the periodic valuation updates of CRM is in place to ensure this. In addition. Currently. such as. the collateral is required to be insured at all times against major risks. death and permanent disability. Depending on a customer’s credit standing and the type of product. Nevertheless. the Group does not employ the use of derivative credit instruments such as credit default swaps. in addition to ongoing review and controls over maturity mismatch between collateral and exposures. The value of properties taken as collateral is generally updated from time to time during the review of the customers’ facilities to reflect the current market value. The Group also accepts guarantees from individuals. trade receivables or deposits The reliance that can be placed on CRM is carefully assessed in light of issues such as legal enforceability. The valuation of CRM seeks to monitor and ensure that they will continue to provide the credit protection. facilities may be provided unsecured. against fire. inventories. source of repayment and debt servicing ability rather than placing primary reliance on credit risk mitigants (“CRM”). haircuts are applied to protect against currency fluctuations.PILLAR 3 DISCLOSURE CREDIT RISK (CONT’D.3 Credit Risk Mitigation The Group’s approach in granting credit facilities is based on the credit standing of the customer. structured credit notes and securitisation structures to mitigate the Group’s credit exposures. customers are generally insured against major risks. all amounts with the counterparty are settled on a net basis.

445 710.3 Credit Risk Mitigation (Cont’d.868.696.984 100. Securities Firms and Fund Managers Corporates Regulatory Retail Residential Mortgages Higher Risk Assets Other Assets Equity Exposures Defaulted Exposures Off-Balance Sheet Exposures Credit-related Exposures Derivative Financial Instruments Other Treasury-related Exposures Defaulted Exposures Total Credit Exposures Total Exposures Covered by Guarantees RM’000 Total Exposures Covered by Eligible Financial Collateral RM’000 Total Exposures Covered by Other Eligible Collateral RM’000 43.845 107.) Credit Risk Mitigation Analysis The following tables present the credit risk mitigation analysis of the Group i.114 2.518 53. DFIs and MDBs Insurance Companies.054 13.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.380.871.976 – 21.945.522 468.522 – – – 468. securities from listed exchange.656 – 144.882 10. Eligible financial collateral consists primarily of cash.890 1.871. unit trust or marketable securities.067.e.403.933.256 – – – – – 9.949.056 – – – – – – – – – – – 288.951 – – – – – – – 23.664 1.654 1.918.250.227 258.319 76 – – 13.051 – 613.507 59.488 2.989 3.927 – Total Exposures before Credit Risk Mitigation RM’000 .325 747.145. CREDIT RISK (CONT’D.626 258.421. credit exposures covered by eligible financial collateral and financial guarantees as defined under the Standardised Approach.959 3.030.041 5.206. ANNUAL REPORT 2013 288 Group Exposure Class 2013 On-Balance Sheet Exposures Sovereigns/Central Banks Public Sector Entities Banks.596 62.576 13.134 – – 1.454 190.217.951 – 311.) 4.871 5.890. The Group does not have any credit exposure which is reduced through the application of other eligible collateral.069.176 13.569 4.530.

094 1.113 – – 901.738.795 134.341.543 30.805 97.393 – 277.255 5.425.424.869 12.517 52.795.166.695 733.768 445.726.651 1.047.3 Credit Risk Mitigation (Cont’d.) Total Exposures Covered by Other Eligible Collateral RM’000 38.393.307 4. CREDIT RISK (CONT’D.259 – 19.143.961 78 – – 12.673 2.768 – – – 445.101 11.454.804 740.681 – – – – – 8.737 9.834 – – – – – – – – – – – 257.976 – 613. Securities Firms and Fund Managers Corporates Regulatory Retail Residential Mortgages Higher Risk Assets Other Assets Equity Exposures Defaulted Exposures Off-Balance Sheet Exposures Credit-related Exposures Derivative Financial Instruments Other Treasury-related Exposures Defaulted Exposures Total Credit Exposures 289 ANNUAL REPORT 2013 Total Exposures Covered by Guarantees RM’000 Total Exposures Covered by Eligible Financial Collateral RM’000 Total Exposures before Credit Risk Mitigation RM’000 .388.140.948.781.994.478 – – 4.456 1.195 207.089.172 207.790 47.652 – Group Exposure Class 2012 (Restated) On-Balance Sheet Exposures Sovereigns/Central Banks Public Sector Entities Banks.275 152.540 58.393 – – – – – – – 20.386 13.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.519.) 4. DFIs and MDBs Insurance Companies.350.445 1.057 4.) Credit Risk Mitigation Analysis (Cont’d.

CREDIT RISK (CONT’D. Where no specific rating exists. the Group makes use of credit ratings assigned by credit rating agencies in its calculation of credit risk-weighted assets. the second highest rating is then used to determine the risk weight. as stipulated in the RWCAF.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach Under the Standardised Approach. i. the issue rating. it is deemed as unrated or the rating of another rated obligation of the same counterparty may be used if the exposure is ranked at least pari passu with the obligation that is rated. the risk weights similar to that of the guarantor are assigned. The following are the rating agencies or Eligible Credit Assessment Institutions (“ECAI”) ratings used by the Group and are recognised by BNM in the RWCAF: ANNUAL REPORT 2013 290 (a) Standard & Poor’s (“S&P”) (b) Moody’s Investors Services (“Moody’s”) (c) Fitch Ratings (“Fitch”) (d) Rating Agency Malaysia Berhad (“RAM”) (e) Malaysian Rating Corporation Berhad (“MARC”) The ECAI ratings accorded to the following counterparty exposure classes are used in the calculation of risk-weighted assets for capital adequacy purposes: (a) Sovereigns and Central Banks (b) Banking Institutions (c) Corporates Unrated and Rated Counterparties In general. Each exposure must be assigned to one of the six credit quality rating categories defined in the table below: Rating Category S&P Moody’s Fitch RAM MARC 1 AAA to AA- Aaa to Aa3 AAA to AA- AAA to AA3 AAA to AA- 2 A+ to A- A1 to A3 A+ to A- A1 to A3 A+ to A- 3 BBB+ to BBB- Baa1 to Baa3 BBB+ to BBB- BBB1 to BBB3 BBB+ to BBB- 4 BB+ to BB- Ba1 to Ba3 BB+ to BB- BB1 to BB3 BB+ to BB- 5 B+ to B- B1 to B3 B+ to B- B1 to B3 B+ to B- 6 CCC+ and below Caa1 and below CCC+ and below C1 and below C+ and below . The following is a summary of the rules governing the assignment of risk weights under the Standardised Approach. In cases where an exposure has neither an issue or issuer rating.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. the credit rating assigned to the issuer or counterparty of that particular credit exposure is used.) 4. the rating specific to the credit exposure is used. In cases where the credit exposures are secured by guarantees issued by eligible or rated guarantors. Where a counterparty or an exposure is rated by more than one ECAI.e.

credit exposures under the counterparty exposure class of Banking Institutions.) The Group uses a system to automatically execute the selection of ratings and allocation of risk weights.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4. ANNUAL REPORT 2013 Rating Category .4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.) 4. CREDIT RISK (CONT’D. are all risk-weighted at 20% regardless of credit rating. with an original maturity of below three months and denominated in RM. The following table is a summarised risk weight mapping matrix for each credit quality rating category: Risk Weights Based on Credit Rating of the Counterparty Exposure Class Banking Institutions Sovereigns and Central Banks 1 291 Corporates For Exposure Greater than Six Months Original Maturity For Exposure Less than Six Months Original Maturity 0% 20% 20% 20% 2 20% 50% 50% 20% 3 50% 100% 50% 20% 4 100% 100% 100% 50% 5 100% 150% 100% 50% 6 150% 150% 150% 150% In addition to the above.

062 1.922 4.256 1.020 1.757.735 5.176 1.035.409 – 306.134. CREDIT RISK (CONT’D.967 – – – 6.134 572.048 – Unrated RM’000 Total RM’000 227.048 – – – – – 43.111 306.956 288.913.878 1.408 – – – – – – – – 8.247.508 613.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.956 227.961 27.488 .408 – – 9.784 2.363 1.165.958 1.948.048 – 60.759 1.016.134 572.189.186.189.644.956 227.411.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.999.830.948.050. DFIs and MDBs – Corporates – Regulatory Retail Total Rated Exposures 1 RM’000 2 RM’000 3 RM’000 4 RM’000 5 RM’000 6 RM’000 3.784 2.604.727.192.401 – – 894.799.165.604.918.181 47.Rating Categories --------------------------------------------------------------> Group Exposure Class 2013 On-Balance Sheet Exposures (a) Rated Exposures (i) Exposures risk-weighted using ratings of Corporates – Corporates (ii) Exposures risk-weighted using ratings of Sovereigns and Central Banks# – Sovereigns and Central Banks – Public Sector Entities – Corporates (iii) Exposures risk-weighted using ratings of Banking Institutions – Banks.532 (b) Total Unrated Exposures 9.381 42.969.048 – 44.) 4.208 1.158.830 3.999.144 306.256 4.803 1.) Credit Exposures before the Effect of Credit Risk Mitigation by Credit Quality Rating Categories The following tables present the credit exposures of the Group before the effect of credit risk mitigation by credit quality rating categories.408 894. ANNUAL REPORT 2013 292 <-------------------------------------------------------------.175.181 47.759 – – – – – – 894.104.948.937 613.808.494 9.381 – – 41.964 – 4.111 306.408 894.

761.643 21.268.268. DFIs and MDBs – Corporates – Regulatory Retail Total Rated Exposures 2 RM’000 3 RM’000 4 RM’000 5 RM’000 6 RM’000 Total RM’000 293 134.175 224.641 – – – – 441.919.320.808 2.114 ANNUAL REPORT 2013 2013 Off-Balance Sheet Exposures (a) Rated Exposures (i) Exposures risk-weighted using ratings of Corporates – Corporates 1 RM’000 .685 – – – 21.626 9.685 – – – 1.274 920.983 (b) Total Unrated Exposures Total Credit Exposures before Credit Risk Mitigation Unrated RM’000 21.949.117 – 590.030.024 41.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.) 4. CREDIT RISK (CONT’D.024 41.292 613.060 625 – – – – – – – – – – 1.048 – 249.383 41.623 441.) Credit Exposures before the Effect of Credit Risk Mitigation by Credit Quality Rating Categories (Cont’d.685 – – – 1.217.382 22.274 920.360 800.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.268.072.408 894.818 925 665.796 306.Rating Categories --------------------------------------------------------------> Group Exposure Class (ii) Exposures risk-weighted using ratings of Banking Institutions – Banks.617 246.) <-------------------------------------------------------------.643 800.643 23.645.599 311.076 925 41.455 48.965.982 306.

525 – – – – – 38.472.356.805.787 1.436 895.456 .504.222.663 – – 36.499 7.723.260 151.681 3.461 – – – – – – – – 7.353.803 2.) Credit Exposures before the Effect of Credit Risk Mitigation by Credit Quality Rating Categories (Cont’d.366 (b) Total Unrated Exposures 7.965.663 37.003.140 24.461 793.646 614.065.335.583.) Group Exposure Class ANNUAL REPORT 2013 294 2012 (Restated) On-Balance Sheet Exposures (a) Rated Exposures (i) Exposures risk-weighted using ratings of Corporates – Corporates (ii) Exposures risk-weighted using ratings of Sovereigns and Central Banks# – Sovereigns and Central Banks – Public Sector Entities – Corporates (iii) Exposures risk-weighted using ratings of Banking Institutions – Banks.829.367 – 24.140 24.382 4.944 – – – 5.499.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.916.579.) 4.Rating Categories --------------------------------------------------------------> 1 2 3 4 5 6 Unrated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Total RM’000 3.196 24.090 257.805.829 4.525 – 203.437 42.886 739.356.829.765 1.169 3.055 4. DFIs and MDBs – Corporates – Regulatory Retail Total Rated Exposures <-------------------------------------------------------------.458 614.324.172 – – – – – – 793.816. CREDIT RISK (CONT’D.322.461 – – 8.801.525 – 53.681 1.719 1.621 15.579.172 818.428 818.069.251 – – 793.621 15.805.803 2.388.846 1.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.461 793.090 203.525 – 38.437 42.090 203.000 4.439 2.

307.562 596.402.754 20.947. BNM.316 – 1.625 1.067 – 917 – – – – 917 911.058 1.461 794.738.651 Under the RWCAF.844 277.733 – 1.873 24.402.733 – 1.926 1.743 990 – – – – 1.461 221. CREDIT RISK (CONT’D.Rating Categories --------------------------------------------------------------> 1 RM’000 2 RM’000 3 RM’000 4 RM’000 5 RM’000 6 RM’000 2012 (Restated) Off-Balance Sheet Exposures (a) Rated Exposures (i) Exposures risk-weighted using ratings of Corporates – Corporates 174.441 (ii) Exposures risk-weighted using ratings of Sovereigns and Central Banks# – Sovereigns and Central Banks (iii) Exposures risk-weighted using ratings of Banking Institutions – Banks.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.830 41.316 – 1.633 2.619. exposures to and/or guaranteed by the Federal Government of Malaysia.207.) <-------------------------------------------------------------.625 40.830 41.316 – – – – – 1.805 41.603 443.774 234.383.316 – 18.870.841 – 222.733 – 1.) 4.195 8.457 1.999 43. DFIs and MDBs – Corporates – Regulatory Retail Total Rated Exposures (b) Total Unrated Exposures Total Credit Exposures before Credit Risk Mitigation # Unrated RM’000 Total RM’000 18.) Credit Exposures before the Effect of Credit Risk Mitigation by Credit Quality Rating Categories (Cont’d.754 1.176.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.663. overseas federal governments and central banks of their respective jurisdictions are accorded a preferential sovereign risk weight of 0%.754 18.132.254 11. 295 ANNUAL REPORT 2013 Group Exposure Class .307.402.142 – 430.959 152.350.108 – – – – 327.562 596.

343 68.595 – 1. Securities Higher Sovereigns/ Public Banks.601.904 54.065.344 – 42.719 5.139 – 1.785 52.856.736.388 15.3% 2.789 2.910.084 25.8% 25.296 3.0% 61.713.055.595 Total 34.722 119.492 61.937 Average Risk Weights 0.430.438.890 68.711.184 2.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.892 2013 0% 20% 35% 50% 75% 100% 150% 34.795 – – – 2.486 8.206.937 Risk-Weighted Assets by Exposures 111.113.560 174.187 183.613 11. Firms and Fund Regulatory Residential Risk Other Equity Central Sector DFIs and Retail Mortgages Assets Assets Exposures Banks Entities MDBs Managers Corporates RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Total Exposures after Credit Risk Mitigation RM’000 Total RiskWeighted Assets RM’000 – 3.769 1 510.025 594.960 – – 38.890 298.479 – – – – – – 10.119.4% – – .383 114.134 101.) 4.055.072 – – – – 111.100 – 429.206.149.690.885 1.104 – 114.931 – – – 1.440.687.286 148.292 161.542 12.673.595 2.182 – – – – 64.7% 42.388 – 17.770 91.890 183.587.246 – – 42.041 5.804 172.333.476.304.726 – 613.394.789 5.206.069 14.370 – 15.290 14.871.2% 76.798 714.123. CREDIT RISK (CONT’D.486 4.0% 51.054.463.040.791 5.113.601.006 2.660.329. ANNUAL REPORT 2013 296 Group Risk Weights <------------------------------------------------------------.706.038 59.7% 84.878 – 5.674 – – – – – – 114.5% 91.570.058.) Credit Exposures after the Effect of Credit Risk Mitigation by Risk Weights The following tables present the credit exposures of the Group and the Bank after the effect of credit risk mitigation by risk weights.268 – 142.169 – 113.250.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.0% 150.Credit Exposures after the Effect of Credit Risk Mitigation -------------------------------------------------------------> Insurance Companies.319.745.175.620.281.552 85.3% Deduction from Total Capital – 100.726 20.421 207.

374 143.279.282 253.2% 3.364 – – – – – – 168.506 2.7% 76.0% 56.064.266 13.345 – – 35.585 – 16.973 – – – – – – 9.595 1.970.066 53.631 152.514.214 78.787 2.383.362.) 4.697.887 – 35.506 – 1.177 108.188 4.254 742.000 – – 1.311 45.209.377 12.541.113.795 2. CREDIT RISK (CONT’D.980.293 Total 30.934 187.834 297 ANNUAL REPORT 2013 Group Risk Weights <------------------------------------------------------------.968 – – – – 58.324.577.286 25.591 – 1.4% 94.544 Average Risk Weights 0.514.681.834 99.992.304 83.5% 24.089.648 168.086 10.273.279.445 265.Credit Exposures after the Effect of Credit Risk Mitigation -------------------------------------------------------------> Insurance Companies.942 5.497 60.102 60.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.633 46.157.957 3.286 – 613.) Total Exposures after Credit Risk Mitigation RM’000 Total RiskWeighted Assets RM’000 – 2.427 – 104.979 4.544 Risk-Weighted Assets by Exposures 58.634.470 5.476 – 102. Firms and Fund Regulatory Residential Risk Other Equity Central Sector DFIs and Retail Mortgages Assets Assets Exposures Banks Entities MDBs Managers Corporates RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 . Securities Higher Sovereigns/ Public Banks.418 – – – 2.661 – 130.328.255 5.194.923.057.113 128.366.440 2012 (Restated) 0% 20% 35% 50% 75% 100% 150% 30.426.459.3% Deduction from Total Capital 46.883 10.657 1.5% 61.2% 91.905 8.9% – 46.171 – 4.687 164.810.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.6% 150.344.) Credit Exposures after the Effect of Credit Risk Mitigation by Risk Weights (Cont’d.666.004.979 1.772 23.381.579 158.183.739.948 14.673 – – – – 19.908.139.865.362.376.831 30.469 2.458 51.010 15.159 2.058.258 – – 32.367 – 155.470.585 13.8% 43.795.999 164.107.642.

492 36.0% 63.374 1.726 2.849 58.462 – – – 36.432.054.637.5% 76.152.692 22.) Credit Exposures after the Effect of Credit Risk Mitigation by Risk Weights (Cont’d.561 – – – – – – – 31.435 – – – – 111.469 – 1.043 69.644.124.511.722 Risk-Weighted Assets by Exposures 111.973 4.346.600.459 3.921 2.157.085 92.256.346.048.5% 42.910 16.487 12.044.306.848 154.161 4.042.042.748 31.575 2013 0% 20% 35% 50% 75% 100% 150% 1250% 23.360.4% 100.) 4.023.966.542 – 46.551 89.129 – – – – – – – 103.161 325.320 – – – – 12.045.170 92.8% 25.587 – 197.966 – 2.719 1.637.418 156.360.768 8.823.240.) ANNUAL REPORT 2013 298 Bank Risk Weights <------------------------------------------------------------.088 – 1.374 1.341 96.279 52.846.649.234 53.586 – 89.394.Credit Exposures after the Effect of Credit Risk Mitigation -------------------------------------------------------------> Insurance Companies.945.988.726 – – 312.621 13.188 73.137 58.617 31.498 12. Firms and Fund Regulatory Residential Risk Other Equity Central Sector DFIs and Retail Mortgages Assets Assets Exposures Banks Entities MDBs Managers Corporates RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Total Exposures after Credit Risk Mitigation RM’000 Total RiskWeighted Assets RM’000 26.5% 0.587 2.234 48.1% 150.402.482.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.512 103.233 1 – 484.0% 90.327 1.722 Average Risk Weights 0.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4.935 – – – – – – – 8.325.0% 72.382.786 539.365 243.492.422 9.726 – – – – 1.467.278 4.6% Deduction from Total Capital – 100.639 – 2. Securities Higher Sovereigns/ Public Banks.3% – – .002.639 4.637.127.635.562 155.928 2.966 – – – – – 4.199.365 – – Total 23.365 154. CREDIT RISK (CONT’D.091.394.910 13.127.021.766 11.

557.154 8.488 137.001.860.896 2.834 24.697.023 1.392 Total 22.594 99.476 83.502.948 – – – 4.056.391 205.391.219.230 – – – – – – 32.5% 43.610 4.444.834 299 ANNUAL REPORT 2013 Bank Risk Weights <------------------------------------------------------------.859 – – – – 1.469 4.681 15.4 Assignment of Risk Weights for Portfolios Under the Standardised Approach (Cont’d.410 831.114 4.246 20.109.703.000 – 13.500. Firms and Fund Regulatory Residential Risk Other Equity Credit Risk Central Sector DFIs and Retail Mortgages Assets Assets Exposures Mitigation Banks Entities MDBs Managers Corporates RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 . CREDIT RISK (CONT’D.535.636 137.328.937.752 – 3.8% 150.286 4.9% 91.896 51.772.610 – – 30.860 9.390.477 – – 29.471.032 10.391 35.387 – 1.2% 26.0% 76.278.511.869 333.506 20.) Credit Exposures after the Effect of Credit Risk Mitigation by Risk Weights (Cont’d.0% 51.623.3% 102.685.904.772.432.944.043 2.719.314.505.3% 1.422 51.023 3.Credit Exposures after the Effect of Credit Risk Mitigation -------------------------------------------------------------> Insurance Total Companies.406 46.286 – 312.233 84.130 2.010 10.031 – – 2.864 1.544 66.370.158 29.738.) Total RiskWeighted Assets RM’000 2012 (Restated) 0% 20% 35% 50% 75% 100% 150% 22. Exposures Securities after Higher Sovereigns/ Public Banks.585.864 1.8% – 46.860.175 – 1.420.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.861 87.508.438 7.236.904.5% Deduction from Total Capital 46.560.906 45.265 Average Risk Weights 0.) 4.221 137.193.535 1.911 41.719.471.541 129.853 2.568 – 131.792.595.910 1.979 218.117 63.681 12.062 11.583 – – – – 58.332 – – – – – – 137.265 Risk-Weighted Assets by Exposures 58.279 – 40.664.5% 62.185 34.648 – – – – – – 6.

67% 0.164 0.69% Neither Past Due Nor Impaired The credit quality of gross loans.5 Credit Quality of Gross Loans. advances and financing of the Group. advances and financing of the Group analysed by credit quality.779 174.605. and include loans which are due one or more days after the contractual due date but less than 3 months.253 1. advances and financing are loans where the customer has failed to make a principal or interest payment when contractually due. advances and financing which are neither past due nor impaired is set out in Note 44(ii)(a) to the financial statements.803. CREDIT RISK (CONT’D. Tables (i)-(iii) present the analysis of past due but not impaired loans. Advances and Financing Gross Loans.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. ANNUAL REPORT 2013 300 Group Neither past due nor impaired Past due but not impaired Impaired Gross impaired loans as a percentage of gross loans. as follows: (i) Economic purpose analysis (ii) Geographical analysis (iii) Aging analysis .) 4.111.175.783. 60% (2012: 59%) of the past due loans of the Group are past due for less than 1 month.825 21.086 221.374.803 197.579. Advances and Financing by Credit Quality The following tables present the gross loans.484.102 23. advances and financing (a) 2013 RM’000 2012 RM’000 196.922 1. (b) Past Due But Not Impaired Past due but not impaired loans.

781 10.253 Purchase of fixed assets (excluding landed properties) Personal use Credit card Purchase of consumer durables Construction Working capital Other purpose (ii) Geographical Analysis Group Malaysia Hong Kong & China Cambodia Other countries (iii) Aging Analysis Group 1 day to <1 month 1 month to <2 months 2 months to <3 months 301 ANNUAL REPORT 2013 2013 RM’000 Group .111.216 229.929.380 280.298 23.754 23.407.253 2013 RM’000 2012 RM’000 22.518 641.922 21.731 79.700 21.015 44.337.513 23.803.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.349 144.) 4.131 14.111.689 199.570 10.539.521 167.965.922 21.922 21.783 1.835 9.865.492.633 176. Advances and Financing (Cont’d.329.927.803.938.538 173.111.471.686 249.253 2013 RM’000 2012 RM’000 13.899.5 Credit Quality of Gross Loans.971 9.532 7.017 12.111.276 (Of which: – residential – non-residential) 7.292 2.803.387.172 6.990 1.617 23.060.109 10.619.623 2.679 615.) (i) Economic Purpose Analysis 2012 RM’000 Purchase of securities Purchase of transport vehicles Purchase of landed properties 11.613 6.083 659.483 2.163 151.177 97.) (b) Past Due But Not Impaired (Cont’d.305 2. CREDIT RISK (CONT’D.073 1.754.

The carrying amount of the loan is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of profit or loss. at each reporting period. CREDIT RISK (CONT’D.) (c) ANNUAL REPORT 2013 302 Impaired Loans. Advances and Financing The Group assesses. advances and financing are loans whereby payments of principal or interest or both are past due for three (3) months or more. Loans. Collective assessment allowance is made on any shortfall in these discounted cash flows against the carrying value of the group of loans. Advances and Financing (Cont’d. The future cash flows of each of the group of loans with similar credit risk characteristics are estimated on the basis of historical loss experience for such assets and discounted to present value. If there is objective evidence that an impairment loss has been incurred.) 4. If the Group determines that no objective evidence of impairment exists for an individually assessed loan.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. Impaired loans. or loans which are past due for less than three (3) months which exhibit indications of significant credit weaknesses. the loan is included in a group of loans with similar credit risk characteristics for collective impairment assessment. advances and financing which are not individually significant are collectively assessed.5 Credit Quality of Gross Loans. analysed by the following: (i) Economic purpose (ii) Geographical location . The criteria that the Group uses to determine whether there is any objective evidence of impairment are set out in Note 44 to the financial statements. “Objective evidence of impairment” exists when one or more events that have occurred after the initial recognition of the loan (an incurred “loss event”) and that the loss event has an impact on future estimated cash flows of the loan or group of loans that can be reliably estimated. Tables (i)-(ii) present the impaired loans. the amount of the impairment loss is measured as the difference between the loan’s carrying amount and the present value of estimated future cash flows discounted at the loan’s original effective interest rate. whether there is any objective evidence that an individually significant loan is impaired. but where repayments based on the revised terms have yet to fulfill six (6) consecutive months of observation period. advances and financing of the Group and the related impairment allowances of the Group. or impaired loans which have been restructured/rescheduled.

Advances and Financing and the Related Impairment Allowances by Economic Purpose Individual Assessment Allowance at 31 December RM’000 Collective Assessment Allowance at 31 December RM’000 2.850 25.931 526.446 379 104.817) 167.113 833.197 18.781 179 12.093 387 199.232 262.663 9.711 95.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.583 460 38.995 225.650) 230 16.891 – – 4.5 Credit Quality of Gross Loans.066 (Of which: – residential – non-residential) Purchase of fixed assets (excluding landed properties) Personal use Credit card Purchase of consumer durables Construction Mergers and acquisitions Working capital Other purpose Group 303 ANNUAL REPORT 2013 Net Charge for the Year RM’000 Amounts Written Off/Other Movements RM’000 Total Impairment Allowances for Loans.088 18.775 554.123) (1.085 1.136 691 25.592.469 – 223. Advances and Financing RM’000 Individual Assessment Allowance at 1 January RM’000 2013 Purchase of securities Purchase of transport vehicles Purchase of landed properties 3.413 529.884 538.930 149.184) – – (3.203 379 195.312 23.662 (6.538 (476) (380) (197.779 201. Advances and Financing RM’000 .) (c) Impaired Loans.484.163 14.007 9.846) (2.471 7.896 5.137 – 117.178 135.760.617 1.153 16.) (i) Impaired Loans.308 13.924 7.789) – 467 39.632 – – 547 – 30.462 279.474 676.694 554.966 1.003 169.010 Impaired Loans. CREDIT RISK (CONT’D.190 1.925 1.645 4.207 – – 4.) 4.471 8.881 – 303 (5.948) – – 73 – (57. Advances and Financing (Cont’d.469 6.773) 2.960 817.781 179 7.747 (259.466 357. Advances and Financing (Cont’d.349 2.757 – 90.161 82 11.

886 19.894 – 141.997 451 42.268 133.857 417 115.086 245.995 1.925 1.396) (6.018 1.510 11.313 591.5 Credit Quality of Gross Loans.376 8.710 333 188.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 4. Advances and Financing RM’000 Group The movements in the collective assessment allowance for 2013 and 2012 are set out in Note 9 to the financial statements.471 7.561 Impaired Loans. Advances and Financing (Cont’d.667) – 9. Advances and Financing (Cont’d. Advances and Financing RM’000 Individual Assessment Allowance at 1 January RM’000 2012 Purchase of securities Purchase of transport vehicles Purchase of landed properties 5.897 – (2.246) (3.493) (4.704 (5.315 16.207 – – 4.966 305.425 6.472 1.997) 691 25. .625 (1.694 843.108 16.) (c) Impaired Loans.109 – – (3.731.144 14.421 377 14. CREDIT RISK (CONT’D.852 263.544 869.610 – – 7.490) 2.566 1.778 136 7.235 563.190 563.512) – – (90) – (33.758 (Of which: – residential – non-residential) Purchase of fixed assets (excluding landed properties) Personal use Credit card Purchase of consumer durables Construction Mergers and acquisitions Working capital Other purpose 304 ANNUAL REPORT 2013 Net Charge for the Year RM’000 Amounts Written Off/Other Movements RM’000 Total Impairment Allowances for Loans.275 280.766 (609) (324) (192.109 – 283.660 433.008) 460 38.) (i) Impaired Loans.040 20.562 272 4.881 9.914 27.286 171.912 25.778 136 11.093 808 95.529.) 4.205 23.994 417 233.850 25.865 (238.137 – 117.) Individual Assessment Allowance at 31 December RM’000 Collective Assessment Allowance at 31 December RM’000 767 15.196 194. Advances and Financing and the Related Impairment Allowances by Economic Purpose (Cont’d.896 5.189 425.168 165.474 1.668) 4.391 420.374.066) 201.

621 9.830 137.105 26.196 194.779 Net Charge for the Year RM’000 Amounts Written Off/Other Movements RM’000 Individual Assessment Allowance at 31 December RM’000 Collective Assessment Allowance at 31 December RM’000 Total Impairment Allowances for Loans.372 (3. CREDIT RISK (CONT’D.846 201.858 1.393 199.) (ii) Impaired Loans.063 39.106) (213.063 39.865 (238.743 8.601 245.231 50.237 74.731.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD 4.108 23.912 88.817) 167.760.565 77.321) 194.455. Advances and Financing (Cont’d.995 1. Advances and Financing and the Related Impairment Allowances by Geographical Location 2013 Malaysia Hong Kong & China Cambodia Other countries Group 2012 Malaysia Hong Kong & China Cambodia Other countries Individual Assessment Allowance at 31 December RM’000 Collective Assessment Allowance at 31 December RM’000 111.331) (174) 111.5 Credit Quality of Gross Loans.894 34.343.345 67.650) 122 81.925 1.271 1.) 4. Advances and Financing RM’000 137.294 5.726 1.727 96.743 1. 305 ANNUAL REPORT 2013 Group Net Charge for the Year RM’000 Amounts Written Off/Other Movements RM’000 Total Impairment Allowances for Loans.566 1.995 225.200 1.484.209) (22.127 8.502 38.230 5.561 Impaired Loans.529.699 136. Advances and Financing RM’000 .494 1.120 1.474 34.468 86.010 Impaired Loans.620 17.271 1.592.810) (22.727 (3.918 49.844 76.054 63.624 7.374.918 49.747 (259.536.370 42.080) (198.085 1.565 7.086 The movements in the collective assessment allowance for 2013 and 2012 are set out in Note 9 to the financial statements.396.329 44.508.455) (2. Advances and Financing RM’000 Individual Assessment Allowance at 1 January RM’000 1. Advances and Financing RM’000 Individual Assessment Allowance at 1 January RM’000 1.105 1.066) 201.) (c) Impaired Loans.188.873 (139) (39. Advances and Financing (Cont’d.

745 1.079 68.625 (12.185 (17.500 1.351) – 658.537.440 159. the market risk of Islamic banking activities of the Group includes rate of return risk and displaced commercial risk (“DCR”).223.819) (566.026.111.532.579.432 52.439.324) 1.774) – 823.374) 2. In addition.784) (682.652 Total 35.579 228. ANNUAL REPORT 2013 306 Minimum Capital Requirement at 8% RM’000 Long Position RM’000 Short Position RM’000 RiskWeighted Assets RM’000 2013 Interest rate/rate of return risk Foreign exchange risk 33.198.108.049 115 Total 30. such as interest rates.715 153.995.416.079) 855. credit spreads.003.606 Total 32.109 1.432 65.152 80.334.671.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 5.849.076 137. equity prices and foreign exchange rates.263 88.033 1.690 (17.046 2012 Interest rate risk Foreign exchange risk Equity risk 25.047 Interest rate risk Foreign exchange risk 31.747) 2.284 1.152 (17.883 71.136. Minimum Regulatory Capital Requirements for Market Risk The following tables present the minimum regulatory capital requirements for market risk of the Group and the Bank.918.558) 1.995.418 1.143) 2.668) (1.765.762. commodity prices.850.972 879 (11.721 206.108 (19.919.938 1.596 (13.919.915 2012 Interest rate/rate of return risk Foreign exchange risk Equity risk 29.351 1.548 115 Total 26.120.535 888.131. MARKET RISK Market risk is the risk of loss arising from movements in market variables.713.436 168.109 879 (11.378 Group Bank 2013 .230.843.023) (1.108.637 888.

These trading book positions are mainly originated by the treasury operations. The market risk of the Group is identified into traded market risk and non-traded market risk.) Risk Governance The ALCO supports the RMC in market risk management oversight. INDEPENDENT RISK MANAGEMENT & INTERNAL CONTROL 5. The ALCO reviews the Group’s market risk framework and policies. • Review of interest rate/rate of return outlook • Review of market movements Monitoring Identification Traded Market Risk Management Processes • Setting of trigger limits • Trading policies and guidelines • Discretionary Powers for approving parties • Daily compliance checking Control & Mitigation Assessment & Measurement • Mark-to-Market Techniques • Stress Testing BUSINESS UNITS’ ADHERENCE TO POLICIES. policies and guidelines 307 ANNUAL REPORT 2013 The following diagram presents the risk management processes over traded market risk. exists in the Group’s trading book positions held for the purpose of benefiting from short-term price movements. .1 Traded Market Risk Traded market risk. primarily the interest rate/rate of return risk and credit spread risk. 5. and recommends actions to ensure that the market risk remains within established risk tolerance level.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD MARKET RISK (CONT’D. PROCEDURES AND LIMITS INDEPENDENT AUDIT & REVIEW BOARD AND SENIOR MANAGEMENT OVERSIGHT • Periodic reporting on compliance to approved policies and limits • Review of framework. aligns market risk management with business strategies and planning.

PROCEDURES AND LIMITS INDEPENDENT AUDIT & REVIEW ANNUAL REPORT 2013 308 5. The compliance officers are deployed to conduct daily compliance checking on the treasury operations. The following diagram presents the risk management processes over IRR/RoRBB. basis risk and optionality risk. INDEPENDENT RISK MANAGEMENT & INTERNAL CONTROL PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE . The composition of the Group’s trading portfolio is set out in Note 5 to the financial statements.) 5. Any instances of non-compliance with the operational processes.MARKET RISK (CONT’D. foreign exchange risk and equity risk. 5. averaged at RM276. The sources of IRR/RoRBB are repricing risk. market risk limits and valuation methodologies. the compliance officers conduct independent verification on the daily mark-to-market of fixed income instruments. The Group’s traded market risk for fixed income instruments is measured by the present value of 1 basis point change (“PV01”) and controlled by daily and cumulative cut-loss limits. During the financial year. yield curve risk. In addition. DCR in the Group’s Islamic banking business.1 Traded Market Risk (Cont’d.000). Changes to market risk limits must be approved by the Board. delegation of authority. The trading book positions and limits are regularly reported to the ALCO. procedures and limits will be documented with remedial action plans and reported to the RMC. the Group’s traded market risk exposures on fixed income instruments as measured by PV01.2 Non-Traded Market Risk The Group’s core non-traded market risks are interest rate/rate of return risk in the banking book.) Risk Management Approach The Group’s traded market risk framework comprises market risk policies and practices. (a) Interest Rate/Rate of Return Risk in the Banking Book Interest rate/rate of return risk in the banking book (“IRR/RoRBB”) is the risk to the Group’s earnings and economic value of equity (“EVE”) arising from adverse movements in the interest rate/rate of return. BOARD AND SENIOR MANAGEMENT OVERSIGHT • Periodic reporting on compliance to approved policies and limits • Review of effectiveness of hedging activities • Review of framework. policies and guidelines • Repricing mismatches of assets and liabilities • Review of domestic and global economic data • New products and strategies Monitoring Identification Interest Rate/ Rate of Return Risk Management Processes Control & Mitigation • Setting of repricing gap limits and risk tolerance limits • Hedging strategies • Policies and guidelines Assessment & Measurement • Repricing gap analysis for each significant currencies • Sensitivity simulation • Stress Testing BUSINESS UNITS’ ADHERENCE TO POLICIES.000 (2012: RM354. The market risk limits are determined after taking into account the risk appetite and the risk-return relationship and are periodically reviewed by RMD. The Group maintains its policy of prohibiting exposures in trading financial derivative positions unless with the prior specific approval of the Board.

) (a) Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.7 million (2012: RM34. whilst balancing the cost of such hedging activities on the current revenue streams. 309 .PILLAR 3 DISCLOSURE MARKET RISK (CONT’D.2 Non-Traded Market Risk (Cont’d.2 million). the Group had an overall positive interest rate/rate of return gap of RM39.399. Where the current interest rate/rate of return is lower than 1%. The impact on NII/NPI and EVE is considered at all times in measuring the IRR/RoRBB. the acquisition of new financial assets and liabilities to narrow the mismatch in the interest rate/rate of return sensitive assets and liabilities and entering into derivative financial instruments which have the opposite effects. Limits and policies approved by the RMC are established and are regularly reviewed to ensure its relevance. ANNUAL REPORT 2013 The Group uses various tools including repricing gap reports.) Risk Management Approach The primary objective in managing the IRR/RoRBB is to manage the volatility in the Group’s net interest/profit income (“NII/NPI”) and EVE. advances and financing or early withdrawal of deposits. (i) The table in Note 44(ii)(a)(i) to the financial statements sets out the Group’s sensitivity to the interest rate/rate of return by time band based on the earlier of contractual repricing date and maturity date.) PUBLIC BANK BERHAD 5. the downward rate shock applied is restricted to the prevailing interest rate/rate of return.865. 5. sensitivity analysis and income scenario simulations to measure its IRR/RoRBB. (ii) Interest Rate/Rate of Return Risk Sensitivity Analysis The following tables present the projected Group’s sensitivity to a 100 basis point parallel rate movement across all maturities applied on the Group’s interest rate/rate of return sensivity gap as at the reporting date. This is achieved in a variety of ways such as the offsetting of positions against each other for any matching assets and liabilities. Actual repricing dates may differ from contractual repricing dates due to prepayment of loans. The use of derivative financial instruments to hedge the interest rate/rate of return risk is set out in Note 6 to the financial statements. As at 31 December 2013. being the net difference between interest rate/rate of return sensitive assets and liabilities.

both of which are reported to the ALCO and the RMC.068) (4. MARKET RISK (CONT’D.973) (5. The projection assumes that the interest rate/rate of return of all maturities move by the same amount and. therefore.809 (163.711 Total (248.281 6 (4.481) (4.069) 9.660 1.717) (558.475 6.846 Ringgit Malaysia United States Dollars Hong Kong Dollars Other Currencies 929.538 (25.808 4.) Risk Management Approach (Cont’d. Actual dates may differ from contractual dates owing to prepayments.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 5.689) 914.) 5. loans/financing prepayments are generally estimated based on past statistics and trends.) (a) Interest Rate/Rate of Return Risk in the Banking Book (Cont’d.718 (561.989 (548.2 Non-Traded Market Risk (Cont’d.973 (2.022) 140. treasury operations seek to proactively change the interest rate/rate of return risk profile to minimise losses and maximise net revenue.133) 7. The projection also assumes a constant statements of financial position and that all positions run to maturity.144 914.573 (161.747 4.532) 3.299 (2. Where possible and material.781 6.807) 65. The impact on the NII/NPI is measured on a monthly basis and the impact on the EVE is on a quarterly basis.345) 436 4.230) 5.535) 86.036) 5. Stress testing is performed to provide early warnings of potential losses to facilitate the proactive management of the interest rate/rate of return risk. .732) Impact on EVE The reported amounts do not take into account actions that would be taken by treasury operations or business units to mitigate the impact of this interest rate/rate of return risk. (iii) Stress testing is conducted semi-annually to determine the adequacy of capital in meeting the impact of extreme interest rate/rate of return movements on the Group’s statements of financial position. In reality.) (ii) Interest Rate/Rate of Return Risk Sensitivity Analysis (Cont'd.209) (6.) 2013 -100 bps +100 bps 310 ANNUAL REPORT 2013 Group 2012 -100 bps +100 bps <--------------------------. The repricing profile of loans/financing that does not have maturity is based on the earliest possible repricing dates.377) (574.930 Total 932.770) (1.840 (1.659) 164. does not reflect the potential impact on the NII/NPI and EVE of some rates changing while others remain unchanged.044 (25.Increase/(Decrease) ---------------------------> RM’000 RM’000 RM’000 RM’000 Impact on NII/NPI Ringgit Malaysia United States Dollars Hong Kong Dollars Other Currencies (246.

Public Islamic does not have Profit Sharing Investment Accounts (“PSIA”) which are eligible for risk absorbent treatment. In addition. Risk Management Approach The Group manages such risk via pre-approved portfolio size and cut-loss limits.2 Non-Traded Market Risk (Cont’d. Risk Management Approach The Group manages such risk through funding in the same functional currencies. Net Open Position (“NOP”) limit is set for overall NOP as well as NOP limits for individual currencies. ANNUAL REPORT 2013 Public Islamic uses Profit Equalisation Reserve (“PER”) to manage its DCR and is governed by the Profit Equalisation Reserve Framework. a net long position of RM533.0 million (2012: RM195. PER is created by setting aside an amount out of the total gross income before distribution to the IAH and to Public Islamic. Foreign Exchange Risk Foreign exchange risk refers to the adverse impact arising from movements in exchange rates on foreign currency positions originating from treasury money market activities and from the Group’s investments and retained earnings in its subsidiary companies.) (b) Displaced Commercial Risk DCR refers to the risk of Public Islamic bearing the credit and market risk losses as a result of paying a return that exceeds the actual return that was supposedly to be earned by the Investment Account Holders (“IAH”) based on the contractual profit sharing ratio. As at 31 December 2013. (d) Equity Risk Equity risk refers to the adverse impact arising from movements in equity prices on equity positions held by the Group for yield purposes. whose functional currencies are not in Ringgit Malaysia. and/or (ii) to transfer Public Islamic’s current year profits or retained earnings to the IAH on the basis of hibah. where possible. The table in Note 44(ii)(c) to the financial statements sets out the Group’s assets.) PUBLIC BANK BERHAD 5. In the event that there is no PER balance to be released. Risk Management Approach (c) (i) to forgo part or all of Public Islamic’s share of profit as mudharib to the IAH by way of varying the percentage of profit taken as the mudharib share in order to increase the share attributed to the IAH in any particular year. PER may be released to smoothen the rate of return. Decisions concerning such positions are made by the Share Investment Committee.9 million) or 13% (2012: 5%) of the Group’s structural position.PILLAR 3 DISCLOSURE MARKET RISK (CONT’D. Public Islamic may employ the following techniques to ensure that the IAH receive market rate of return: 311 . liabilities and NOP by currencies and the Group’s structural foreign exchange positions. The main foreign currencies in which the Group’s businesses are transacted in are United States Dollars and Hong Kong Dollars. 5. The amount of PER set aside is shared by both the IAH and Public Islamic. The decision to hedge the Group’s net investment in its overseas operations is based on its potential economic benefit and is periodically assessed by the ALCO. overseas branches and associated companies.

805 5.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 6.947 31.768 18.122 5. Decisions concerning investing in equities are made by Share Investment Committee.627 25.192 10.240 125.805 4.977 5.680 87.225.122 5.962.997 9.235.768 28. if any.871 5.897 4.680 5.749 116.755 21.758 5. Equity positions are monitored against pre-determined cut-loss limits.107.119.120.107.765 37.119.875 38. EQUITY EXPOSURES IN THE BANKING BOOK The following tables present the equity exposures in the banking book and the gains and losses on equity exposures in the banking book of the Group. All publicly traded equity exposures are stated at fair value.078 118.362 5.123 (64) Unrealised gains/(losses) recognised in other comprehensive income – Investments in unit trust funds – Publicly traded equity investments 15. Holdings of equity investments comprise mainly of shares listed in an exchange. (a) Equity Exposures in the Banking Book 2013 312 Group Gross Credit Exposure RM’000 Gross Credit Exposure RM’000 RiskWeighted Assets RM’000 5. (b) Gains and Losses on Equity Exposures in the Banking Book 2013 RM’000 2012 RM’000 Realised gains/(losses) recognised in the statement of profit or loss – Publicly traded equity investments 2. are held for yield purposes.472 87.970 106.657 ANNUAL REPORT 2013 Publicly traded Investments in unit trust funds Holdings of equity investments Privately held For socio-economic purposes Not for socio-economic purposes Total (i) 2012 RiskWeighted Assets RM’000 Publicly Traded The investment in unit trust funds comprises bond fund and money market funds.126. (ii) Privately Held The privately held equity investments are unquoted and stated at cost adjusted for impairment loss.897 5.981 87.001.007 55.001.962.313 63.875 38.225 11.624 Group . are held for dividend yield purpose and to take advantage of favourable movements in equity prices.225 11.

BOARD AND SENIOR MANAGEMENT OVERSIGHT • Setting of liquidity and funding trigger limits • Contingency Funding Plan • Maintenance of liquid assets • Policies and guidelines Monitoring Identification Liquidity and Funding Risk Management Processes Control & Mitigation Assessment & Measurement • Review the liquidity positions • Project the Cumulative Cash Flows Mismatches • Review the contractual and behavioural profiles • Identify abnormal withdrawals • New products and strategies • Analyse liquidity and funding ratios • Measure the size of Cumulative Cash Flows Mismatches for each significant currencies • Measure funding concentration • Group-wide contagion risk assessment • Stress Testing INDEPENDENT AUDIT & REVIEW • Periodic reporting on compliance to approved policies and limits • Review of framework. the Group maintains a liquidity compliance buffer to meet any unexpected cash outflows. As at 31 December 2013. Funding risk is the risk that the Group does not have sufficiently stable and diverse sources of funding or the funding structure is inefficient.4 million) or 39% (2012: 44%) of its portfolio of securities. Risk Management Approach The liquidity and funding risk management of the Group is aligned to the New Liquidity Framework issued by BNM.9 million (2012: RM17. ANNUAL REPORT 2013 INDEPENDENT RISK MANAGEMENT & INTERNAL CONTROL 7. PROCEDURES AND LIMITS Risk Governance The ALCO is the primary committee responsible for liquidity and funding risk management based on guidelines approved by the RMC. The day-to-day funding management is undertaken by the treasury operations and this includes the maintenance of a portfolio of liquid assets that can be easily liquidated as protection against any unforeseen interruption to cash flows and the replenishment of funds as they matured or are borrowed by/financed to the customers. The following diagram presents the risk management processes over liquidity and funding risk. . policies and guidelines 313 BUSINESS UNITS’ ADHERENCE TO POLICIES.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD LIQUIDITY AND FUNDING RISK Liquidity risk is the risk that the Group is unable to maintain sufficient liquid assets to meet its financial commitments and obligations when they fall due or securing the funding requirements at excessive cost. In addition to ensuring the compliance with the New Liquidity Framework.089. and is measured and managed based on projected cash flows. Liquidity policies and framework are reviewed by the ALCO and approved by the RMC prior to implementation. the Group holds a sizeable balance of government securities amounting to RM16.651.

) The Group’s liquidity and funding positions are supported by the Group’s significant retail deposit base. 2013 Group Bank 2012 RiskWeighted Assets RM’000 Minimum Capital Requirement at 8% RM’000 RiskWeighted Assets RM’000 Minimum Capital Requirement at 8% RM’000 14.788 818. 8.228.324 9.915. The Group’s retail deposit base comprises current and savings deposits which. The objective of the operational risk management of the Group is to manage its operational risk within an acceptable level.234 . strong credit rating.666 793.) Risk Management Approach (Cont’d.497. although payable on demand. The Group accesses the wholesale markets through the issuance of debt instruments.098.159. earnings generation capacity. The contingency funding plans also set out the crisis escalation process as well as the various strategies to be employed to preserve liquidity including an orderly communication channel during a liquidity problem. have traditionally in aggregate provided stable sources of funding.677 1. accompanied by funding from wholesale markets.430 1. The Group’s reputation. Contingency funding plans are in place to identify early warning signals of a liquidity problem. Minimum Regulatory Capital Requirements for Operational Risk The following tables present the minimum regulatory capital requirements for operational risk of the Group and the Bank. Operational risk is unavoidable as it is inherent in all banking businesses. Overseas subsidiary companies and overseas branches are required to comply with their respective local regulatory liquidity requirements and internal liquidity and funding limits. Similar risk management processes as practiced by Head Office are adopted by its overseas subsidiary companies and overseas branches. A liquidity stress test programme is in place to ensure liquidity stress tests are systematically performed by the various entities under the Group to determine the cash flows mismatches under the “Specific Institution Liquidity Problem” and “Systemic Wide Liquidity Problem” scenarios and the possible sources of funding to meet the shortfalls during a liquidity crisis. people and systems or from external events. LIQUIDITY AND FUNDING RISK (CONT’D.294 13.733. computed using the Basic Indicator Approach. the availability of unencumbered assets and the use of market-wide information to identify possible liquidity problems. OPERATIONAL RISK Operational risk is the risk of loss resulting from inadequate or failed internal processes. financial and capital strength including offering of competitive deposit rates are core attributes to preserve depositors’ confidence and ensure liquidity. It is the Group’s policy that the overseas subsidiary companies and overseas branches strive to attain a self-funding position in funding their respective operations.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 7. certificate of deposits and the taking of money market deposits to meet short-term obligations and to maintain its presence in the local money markets.356 10. assessment on the concentration of fundings. 314 ANNUAL REPORT 2013 The primary tools for monitoring liquidity and funding positions are the maturity mismatch analysis. Liquidity and funding positions are reported to the ALCO on a monthly basis in Ringgit Malaysia and United States Dollars.

The ORMC is responsible for assessing the effectiveness of risk management policies and processes in relation to operational risk. The ORMC assists the RMC in operational risk management oversight. managing and mitigating operational risks within their lines of business and ensure that their business activities are carried out within the established operational risk management policies. .) The following diagram presents the risk management processes over operational risk. ANNUAL REPORT 2013 INDEPENDENT RISK MANAGEMENT & INTERNAL CONTROL 8. monitoring and mitigating operational risk. guidelines.PILLAR 3 DISCLOSURE PUBLIC BANK BERHAD OPERATIONAL RISK (CONT’D. procedures and limits are implemented and complied with. guidelines. The Group’s Risk Management Framework sets out the Group’s approach to identifying. BOARD AND SENIOR MANAGEMENT OVERSIGHT • Operational Risk Incident Reporting • Product/Process Evaluation Monitoring Identification Operational Risk Management Processes • System of Internal Controls • Business Continuity Management • Insurance • Review of Outsourcing Activities Control & Mitigation Assessment & Measurement • Self Assessment • Independent Review 315 INDEPENDENT AUDIT & REVIEW • Key Risk Indicators • Operational Risk Incident Data Collection • Control Self Assessment BUSINESS UNITS’ ADHERENCE TO POLICIES. The various business units are responsible for identifying. maintains overall responsibility for risk oversight within the Group. assessing. The Board. dedicated independent risk management and control units are put in place for ensuring the operational risk management policies. To ensure effective oversight and management of operational risk. through RMC. procedures and limits. PROCEDURES AND LIMITS Risk Governance The Group’s operational risk management is guided by the Group’s Risk Management Framework and the Group’s operational risk management policies which are designed to provide a sound and well-controlled operational environment within the Group.) Minimum Regulatory Capital Requirements for Operational Risk (Cont’d.

The Group seeks to meet the standards and expectations of regulatory authorities through a number of initiatives and activities to support compliance with regulations governing anti-money laundering and counter financing of terrorism. Each new product or service introduced as well as variations to existing products or services are subject to a rigorous risk review and sign-off process where risks are identified and assessed by divisions independent of the risk taking unit that proposes the products or services. In addition.) Risk Management Approach The day-to-day management of operational risk exposures is through a comprehensive system of internal controls to ensure that operational policies. Analyses of impaired loans attributed to operational lapses are also conducted and the findings are disseminated to all business units as learning points. This is further augmented by the Group’s Framework on Product Transparency and Disclosure which emphasises the importance of safeguarding customers’ confidentiality and promoting their awareness and understanding of the products and services. and implementation of appropriate security controls to protect against the misuse or compromise of information assets. (a) Strategy and Processes The Group has put in place a disciplined product evaluation process. guidelines and procedures are being adhered to at all levels throughout the Group. guidelines. where appropriate . the Group continues to strengthen and refine its operational risk management processes to ensure that the current and potential operational risk exposures are properly understood and managed. As events and business conditions evolve. independent checks. the Group continues to undertake initiatives to maintain 100% system availability and robust system performance in the Group’s computer systems. controls and procedures and appropriate punitive actions are taken against errant staff (iv) Periodic review and enhancement of operational risk limits and control effectiveness (v) Disaster recovery and business continuity plans put in place to mitigate risk and manage the impact of loss events (vi) Insurance coverage to mitigate risk of high impact loss events. (b) Tools and Methods for Risk Mitigation The Group employs the following key methods to mitigate its operational risk: (i) System of internal controls based on segregation of duties. The Group manages its outsourcing activities through the Guidelines on Outsourcing Activities which stipulate the requirements and the operating procedures to be observed in managing activities that are outsourced to third party service providers. The Group’s product evaluation process is governed by the Group’s Policy and Procedures on Risk Management Practices for New Products. OPERATIONAL RISK (CONT’D. and informed decision making. To further enhance operational risk management in response to threat of external fraud. peripherals and network infrastructure to ensure uninterrupted transmission. losses arising from frauds or control lapses are analysed to identify the causes of such losses and to implement remedial actions to prevent recurrence. This is to ensure that the risks associated with outsourcing activities are managed effectively. segmented system access control and multi-tier authorisation processes (ii) Documented operational risk management policies and procedural manuals to mitigate errors by users (iii) Processes to ensure compliance with internal policies.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 8. ANNUAL REPORT 2013 316 The Group continues to direct group-wide efforts to maintain its legal and regulatory compliance culture in all jurisdictions that the Group operates in. The Group protects information security through continuous assessment of the security features on all computer platforms and network infrastructure.

such as the Shariah Advisory Council (“SAC”) of BNM and the SAC of Securities Commission (“SACSC”). 9. system availability. The Framework. The Board of Public Islamic is ultimately responsible for Shariah compliance. Risk Management Approach (Cont’d. Islamic Banking Operations Shariah non-compliance risk emanating from Islamic banking operations is managed through the Shariah Governance Framework (“the Framework”) which was endorsed by the Shariah Committee and approved by the Board of Directors of Public Islamic (“the Board of Public Islamic”).) (b) Tools and Methods for Risk Mitigation (Cont’d. The Group’s risk management processes are designed to ensure that operational issues are identified. which provide analyses and action plans for each significant business operation. compliance review results and legal actions taken against the Group. In this regard. disaster recovery and business continuity plan simulations. outsourcing activities.PILLAR 3 DISCLOSURE OPERATIONAL RISK (CONT’D. SHARIAH NON-COMPLIANCE RISK Shariah non-compliance risk is the risk of failure to comply with the Shariah rules and principles as determined by the respective entities’ Shariah Committee/Adviser or the relevant bodies. escalated and managed on a timely manner. The operational risk management reports are tabled to the ORMC and the RMC for deliberations. amongst others. losses due to fraud or control lapses. On a periodic basis. the Shariah Committee perform on-site inspections at branches to review the operations of Public Islamic to ensure that the operations are conducted in accordance to Shariah rules and principles.) To monitor and mitigate operational risk. the Group uses various tools including: (i) Control self-assessment – to enhance management assessment of the state of the control environment (ii) Key risk indicators – to collect statistical data on an ongoing basis to facilitate early detection of operational control deficiencies (c) Reporting Reporting forms an essential part of operational risk management. The Shariah Committee is presided by qualified members who deliberate and endorse all Shariah matters which are subsequently noted and/or approved by the Board of Public Islamic. as well as the adoption of a systematic approach in reviewing Shariah compliance and the reporting process on Shariah matters. Shariah non-compliance risk of the Group may emanate from the Islamic banking operations of Public Islamic and management of Shariah-based funds by Public Mutual Berhad (“Public Mutual”). The operational risk areas considered include premises controls and safety. The Framework is drawn up in accordance to the Shariah Governance Framework for Islamic Financial Institutions issued by BNM on 22 October 2010. 317 ANNUAL REPORT 2013 (iii) Operational risk incident reporting and data collection – to facilitate an enhanced analysis and timely reporting of operational risk data which are useful in assessing the Group’s operational risk exposure and in strengthening the internal control environment . it performs diligence over the effective functioning of the Framework and ensures that policies relating to Shariah matters are implemented accordingly. sets out the roles and responsibilities of the Board of Public Islamic and the Shariah Committee. Operational risk areas for the key business and control units are reported through monthly operational risk management reports.) PUBLIC BANK BERHAD 8.

internal audits are performed periodically to verify that the Islamic operations conducted by the branches or business units are in compliance with the decisions endorsed by the Shariah Committee. monitoring and reporting on the company’s compliance with the applicable Shariah rules and regulations in managing its Shariah-based fund. Remedial actions. Shariah research is responsible for conducting research on Shariah issues and providing Shariah advisory support to branches and business units. Any excess capital gains derived from such disposal would be channelled to charitable bodies accordingly.062.) ANNUAL REPORT 2013 318 The Shariah Compliance Unit. SHARIAH NON-COMPLIANCE RISK (CONT’D. The Compliance Department of Public Mutual is responsible for assessing. Any securities held by the Shariah-based funds which subsequently turn Shariah non-compliant based on announcements made by the SACSC will be disposed of in the manner as stipulated by the SACSC. a non-permissible income of RM1. In addition. Ongoing Shariah review conducted on Public Islamic’s operational processes in Islamic banking and financing transactions revealed that there is no Shariah non-compliant income recorded during the financial year under review (2012: Nil).973 (2012: RM2. Management of Shariah-Based Funds Shariah non-compliance risk emanating from investments and operations of Shariah-based funds is managed through Shariah noncompliance risk management processes.143) under the Shariah-based funds arising from the disposal of Shariah non-compliant securities has been channelled to charitable bodies as approved by the Shariah Adviser. which comprises Shariah review and Shariah research functions. An independent third party approved by the Securities Commission is appointed as the Shariah Adviser of the Shariah-based funds managed by Public Mutual. The Shariah Adviser reviews the funds’ investments and meets with the investment management team to advise on the funds’ compliance with Shariah requirements. including but not limited to the immediate termination of the Shariah non-compliant products or services and the treatment of the consequential Shariah non-compliant income or activities are proposed for the endorsement of the Shariah Committee and the approval by the Board of Public Islamic prior to implementation.) Islamic Banking Operations (Cont’d. During the financial year. The Compliance Department conducts regular reviews and works closely with the Shariah Adviser to ensure all transactions under the Shariah-based funds comply with the Shariah requirements at all times. Any incidences of Shariah non-compliance are reported to both the Shariah Committee and the Audit Committee. The role of Shariah review is to examine and evaluate Public Islamic’s level of compliance with the Shariah rules and principles through an end-to-end process from product development to operational review including the review of the uses of the financing extended to detect application of financing in Shariah non-compliance activities.PUBLIC BANK BERHAD PILLAR 3 DISCLOSURE 9. . The role of the Shariah Adviser is to ensure the investments and operations of the Shariah-based funds are in compliance with Shariah requirements.099. is responsible for the continuous assessment on Shariah compliance for all activities and business operations of Public Islamic.

Past Award – Winning ANNUAL REPORTS 2013 NACRA Award • Overall Excellence Award – Silver Award • Best Annual Report in Bahasa Malaysia – Platinum Award 2012 NACRA Award • Most Outstanding Annual Report – Gold Award • Best Annual Report in Bahasa Malaysia – Platinum Award 2011 2010 2009 2008 2007 2006 2005 2004 2003 NACRA Award • Most Outstanding Annual Report – Gold Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Platinum Award NACRA Award • Most Outstanding Annual Report – Platinum Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Gold Award NACRA Award • Most Outstanding Annual Report – Platinum Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Platinum Award NACRA Award • Most Outstanding Annual Report – Platinum Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Platinum Award NACRA Award • Most Outstanding Annual Report – Platinum Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Platinum Award • Best Design Annual Report – Platinum Award NACRA Award • Most Outstanding Annual Report – Gold Award • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia – Platinum Award NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector • Best Annual Report in Bahasa Malaysia CITRA Award • Merit Award 2002 NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector 2012 CITRA Award • Special Jury Award 2001 NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector CITRA Award • Special Jury Award 2000 NACRA Award • Industry Excellence Award – Finance Sector CITRA Award • Main Award 1999 NACRA Award • Industry Excellence Award – Finance Sector 1998 NACRA Award • Industry Excellence Award – Finance Sector 1997 NACRA Award • Best Annual Report in Bahasa Malaysia • Industry Excellence Award – Finance Sector 1996 NACRA Award • Most Outstanding Annual Report • Industry Excellence Award – Finance Sector 1995 NACRA Commendation Award • Accounting Information • Annual Report in Bahasa Malaysia 1994 NACRA Commendation Award • Accounting Information • Corporate Information • Annual Report in Bahasa Malaysia 1991 NACRA Award • Best Accounting Information – NACRA Commendation Award • Corporate Information 1990 NACRA Award • Best Accounting Information 1989 NACRA Award • Most Outstanding Annual Report • Best Annual Report – Finance Sector 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1991 1990 1989 1988 1987 1986 NACRA Commendation Award • Corporate Information • Accounting Information • Annual Report in Bahasa Malaysia 1988 MACRA Award • Best Overall Annual Report • Best Corporate Information – NARA Award • Best Annual Report – Finance Sector 1987 MACRA Award • Best Corporate Information – NARA Award • Best Annual Report – Finance Sector 1986 MACRA Award • Best Corporate Information .

my . Malaysia Tel: 603 2163 8888/603 2163 8899 Fax: 603 2163 9917 www. 146 Jalan Ampang.publicbank.PUBLIC BANK BERHAD (6463-H) Menara Public Bank. 50450 Kuala Lumpur.com.