F IN A N C IA L R E P O RT 2023

AC C E L E R AT I N G

TOMORROW
 AMMB HOLDINGS BERHAD

BASIS OF THIS REPORT

AMMB Holdings Berhad’s Financial Report (AmBank Group Integrated Annual Report

Financial Report 2023) provides information and detailed CONTENT

Provides a thorough evaluation

reporting of our financial performance for the period of 1 April of AmBank Group’s progress,
including its Corporate Governance Statements, milestones

2022 to 31 March 2023 (FY2023) unless indicated otherwise. and accomplishments, and illustrates how we generate value
while catering to the interests of all stakeholders during the
financial year ended 31 March 2023 (FY2023). Additionally,
it outlines our future prospects for the financial year ending

AMMB Holdings Berhad (AMMB or the Company) is a public

31 March 2024 (FY2024).

FRAMEWORKS & GUIDELINES

company listed on the Main Market of Bursa Malaysia Securities • International Integrated Reporting Framework (IIRF) of the
International Integrated Reporting Council (IIRC)
Berhad (Bursa Malaysia). This Report covers AMMB and its • Bursa Malaysia Securities Berhad Main Market Listing
Requirements (MMLR)
subsidiary companies (AmBank Group or the Group or we). • Corporate Governance Guide (4th Edition) issued by Bursa
Malaysia and Securities Commission Malaysia
• Companies Act 2016
• Malaysia Code on Corporate Governance (MCCG) 2021
• Global Reporting Initiative (GRI) Standards

Sustainability Report

CONTENT
Presents our sustainability
progress and performance.
It provides disclosures on how we create positive environmental
and social impacts for the betterment of the broader society.

FRAMEWORKS & GUIDELINES

• GRI Standards
• Bursa Malaysia Sustainability Reporting Guide
• The ACCA Malaysia Sustainability Reporting Guidelines for
Malaysian Companies
• Independent Limited Assurance by SIRIM QAS International Sdn
Bhd

Financial Report

CONTENT
Provides a comprehensive
overview of the Financial
Statements and Audited Annual Financial Results for FY2023,
providing in-depth reporting and also outlines our prospects for the
upcoming financial year, FY2024.

FRAMEWORKS & GUIDELINES

• MCCG 2021
• Bursa Malaysia’s MMLR
• Corporate Governance Guide (4th Edition) issued by Bursa
Malaysia and Securities Commission Malaysia
• Companies Act 2016
ONLINE VERSION • Bank Negara Malaysia (BNM) Policy Documents and Guidelines
The Reports are available on our corporate website at ambankgroup.com • Malaysian Financial Reporting Standards (MFRS)
and Bursa Malaysia’s website • International Financial Reporting Standards (IFRS)
• Financial Services Act (FSA) 2013
• Islamic Financial Services Act (IFSA) 2013
 Financial Pillar 3
Statements Disclosures

BASIS OF THIS REPORT

Inside this Report

32 nd Annual
FINANCIAL STATEMENTS PILLAR 3 DISCLOSURES
General Meeting
2 Statement of Directors’ 287 Scope of Application
Responsibilities in Respect of the Broadcast Venue
288 Capital Management
Audited Financial Statements
293 Capital Structure Board Room, 26th Floor
3 Directors’ Report
298 General Risk Management Bangunan AmBank Group
13 Statement by Directors
302 Credit Risk Management Jalan Raja Chulan 50200
13 Statutory Declaration Kuala Lumpur Malaysia
313 Credit Risk Exposure under
14 Independent Auditors’ Report
Standardised Approach
20 Statements of Financial Position Wednesday, 23 August 2023
318 Credit Risk Mitigation
21 Statements of Profit or Loss
321 Off-Balance Sheet Exposures and
10.00 a.m.
22 Statements of Comprehensive Counterparty Credit Risk
Income
324 Securitisation
23 Statements of Changes in Equity
327 Operational Risk
26 Statements of Cash Flows
330 Market Risk Management
29 Notes to the Financial Statements
334 Equities (Banking Book Positions)
284 Appendix
335 Liquidity Risk and Funding
Management
336 Shariah Governance Structure
339 Profit Sharing Investment Account
(“PSIA”)

This Financial Report is

available on the website at
ambankgroup.com

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STATEMENT OF DIRECTORS’ RESPONSIBILITIES

IN RESPECT OF THE AUDITED FINANCIAL STATEMENTS
The Directors are responsible for ensuring that the annual audited financial statements of the Group and of the Company are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards, the requirements of the Companies Act 2016 in Malaysia, Bank Negara
Malaysia’s Guidelines and the Listing Requirements of Bursa Malaysia Securities Berhad.

The Directors are also responsible for ensuring that the annual audited financial statements of the Group and of the Company are prepared with reasonable
accuracy from the accounting records of the Group and of the Company so as to give a true and fair view of the financial position of the Group and of the
Company as at 31 March 2023, and of their financial performance and cash flows for the financial year then ended.

The audited financial statements are prepared on a going concern basis and the Directors have ensured that appropriate and relevant accounting policies are
applied on a consistent basis and accounting judgements and estimates made are reasonable and fair so as to enable the preparation of the financial statements
of the Group and the Company.

The Directors also have a general responsibility to take reasonable steps to safeguard the assets of the Group and of the Company to prevent and detect fraud
and other irregularities.

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Statements Disclosures

DIRECTORS’ REPORT

The Directors have pleasure in presenting their report together with the audited financial statements of AMMB Holdings Berhad (“the Company”) and its subsidiaries
(“the Group”) for the financial year ended 31 March 2023.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of an investment holding company.

The subsidiaries, as listed in Note 16 to the financial statements, provide a wide range of retail banking, business banking, wholesale banking, investment banking,
Islamic banking and related financial services which also include underwriting of general insurance, stock and share-broking, futures broking, investment advisory asset,
real estate investment trust and unit trust management.

There have been no significant changes in the nature of the activities of the Group and of the Company during the financial year except for the disposal of general
insurance business as disclosed in Note 56 to the financial statements.

FINANCIAL RESULTS

Group Company
RM’000 RM’000

Profit from continuing operations 1,742,378 378,675

Loss from discontinued operation (66,073) -
Profit for the financial year 1,676,305 378,675

Attributable to:
Equity holders of the Company 1,735,153 378,675
Non-controlling interests (58,848) -
Profit for the financial year 1,676,305 378,675

OUTLOOK FOR NEXT FINANCIAL YEAR

Malaysia’s 2022 Gross Domestic Product (“GDP”) growth of 8.7% was the highest growth rate recorded in more than 25 years, largely supported by the post-pandemic
recovery of business, consumer and investor activities. While the positives of 2022 are likely to continue into 2023, it is expected that growth will be at a more
moderated pace due to concerns surrounding impact of steep interest rate hikes, tighter credit conditions, prolonged geopolitical tensions and other related external
factors.

Malaysia’s 2023 GDP is projected to grow between 4% and 5%, driven by domestic demand, underpinned by further improvements in local labour market conditions,
implementation of multi-year investment projects and continued high tourism activity. In view of the resilient economy and citing a need to normalise monetary
accommodation as well as manage persistent inflation, Bank Negara Malaysia (“BNM”) raised the Overnight Policy Rate (“OPR”) by a further 0.25% to 3% in May 2023.
To recap, BNM raised the OPR 4 times or a cumulative 100bps in 2022.

While the interest rate hikes have benefited the Group’s 2022 income, 2023 will see funding cost catching up as a direct consequence of deposit competition, inevitably
leading to margin compression. In this environment, the Group will continue to maintain cost discipline through paced hiring and smart investments.

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DIRECTORS’ REPORT

OUTLOOK FOR NEXT FINANCIAL YEAR (CONT’D.)

Notwithstanding, the Group’s asset quality is expected to remain stable with pre-emptive management overlays in place to absorb any increase in credit losses from
borrowers exiting repayment assistance programmes, if required. While the debt-servicing capacity of majority of businesses and households remain intact, the Group
maintains its credit vigilance against borrowers with higher debt service burdens.

Strong FY2023 financial results enabled the Group to further strengthen its capital, allowing it to distribute a much-improved dividend payout ratio of 35% for FY2023.
The Group remains steadfast in its commitment to create sustainable long-term value for its shareholders in the next financial year and beyond.

SIGNIFICANT EVENT

The significant event is disclosed in Note 56 to the financial statements.

SIGNIFICANT SUBSEQUENT EVENT

There were no material events subsequent to the reporting date that required disclosure or adjustment to the financial statements.

BUSINESS PLAN AND STRATEGY

(i) Performance review for financial year ended 31 March 2023

For the financial year (“FY”) ended 31 March 2023, the Group’s net profit after tax and minority interests (“PATMI”) improved from RM1,502.7 million to RM1,735.2
million. Based on continuing operations, PATMI grew 27.5% year-on-year (“YoY”).

Total income stood at RM4,737.7 million, underpinned by a 8.1% increase in net interest income to RM3,540.7 million on the back of higher loans and financing
growth and net interest margin expansion. This was offset by a RM192.8 million reduction in non-interest income mainly due to the disposal of AmGeneral
Insurance Berhad to Liberty Insurance Berhad. Based on continuing operations, total income grew 12.4% YoY.

Expenses saw a slight increase to RM2,100.3 million with cost-to-income (“CTI”) ratio improved at 44.3% (FY2022: 44.9%) from higher income growth. Based on
continuing operations, CTI for the financial year was improved further at 43.4%.

Profit before impairment (“PBP”) improved by 2.6% to RM2,637.4 million. Based on continuing operations, PBP grew 12.9% driven by strong growth in income.

Further, net impairment charge decreased to RM466.9 million (FY2022: RM766.0 million), inclusive of AmGeneral Insurance Berhad’s net impairment of RM113.2
million. Gross impaired loans and financing ratio stood at 1.46% (FY2022: 1.40%), with a loan and financing loss coverage ratio (includes regulatory reserves) of
127.67% (FY2022: 139.24%). With the improved profitability, the CET1 Capital Ratio after deducting proposed final dividend increased to 12.515% from 12.202%
and Total Capital Ratio increased to 15.653% from 15.315% a year ago.

The Group continued its strategy in growing the more profitable products such as wealth management, transaction banking and better penetration into the small
and medium enterprises segment while managing the mortgage portfolio. At the same time, the Group continued to focus on growing its current and savings
account (“CASA”) which grew by 13.2%, resulting in CASA ratio of 37.4%.

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DIRECTORS’ REPORT

BUSINESS PLAN AND STRATEGY (CONT’D.)

(ii) Strategic Highlights

The Group entered financial year FY2024 on strong financial footing, as evidenced by the highest financial year net profit after tax and minority interests
posted since FY2015 as well as the successful completion of the divestiture of AmGeneral Insurance Berhad, which has allowed for the release of capital
and complemented the capital rebuild post Settlement. As FOCUS 8 enters its last year of execution in FY2024, digitalisation and Environmental, Social and
Governance (“ESG”) initiatives remain a priority, alongside a continued focus on strengthening capital and liquidity, vigilant monitoring of loans/financing portfolio
and maximising cost efficiencies.

To support its digital transformation, the Group has continuously invested in technology, adopting automation and exploring artificial intelligence (“AI”) and
machine learning capabilities, which has allowed the Group to improve its products and services, making banking more convenient for its customers. The Group
takes the security of its customers’ data seriously and use AI to enhance its fraud detection and prevention capabilities, ensuring the highest level of security for
all customer transactions. The Group’s commitment to customer’s trust is unwavering and proactively monitor and address any vulnerabilities or incidents.

In line with its commitment to sustainability and responsible business practices, the Group has set targets to reduce its carbon emissions and increase lending to
sustainable industries. Additionally, the Group has launched initiatives to support small businesses and entrepreneurs, as well as provide financing access and
capacity building platforms to support the Small and Medium Enterprises.

The Group’s overarching goal is to continuously improve its sustainability practices and our customers’ experience while maintaining good risk management as
well as strong capital and liquidity positions. By embracing the latest technologies, safeguarding customer data and prioritising the needs of our customers, the
Group aims to continually develop innovative solutions that meet the evolving needs of our customers and drive growth towards a lower carbon economy.

ITEMS OF MATERIAL AND UNUSUAL NATURE

In the opinion of the Directors, the results of operations of the Group and of the Company for the financial year have not been substantially affected by any item,
transaction or event of a material and unusual nature other than the effects of the disposal of its subsidiary as disclosed in Note 56 and Note 57 to the financial
statements.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely,
in the opinion of the Directors, to affect substantially the results of the operations of the Group and of the Company for the current financial year in which this report is
made.

DIVIDENDS

During the financial year, the Company paid:

(a) a final single-tier dividend of 5.0 sen per share in respect of the financial year ended 31 March 2022 which amounted to approximately RM165,606,270. This
amount was noted in the Directors’ Report for that financial year and paid on 6 July 2022 to shareholders whose names appear in the record of Depositors as at
21 June 2022.

(b) an interim single-tier dividend of 6.0 sen per share for the financial year ended 31 March 2023 which amounted to approximately RM198,565,437 was paid on
28 December 2022 to shareholders whose names appear in the record of Depositors as at 15 December 2022.

The Directors propose the payment of a final single-tier dividend of 12.3 sen per share in respect of the current financial year ended 31 March 2023, to be paid to
shareholders whose names appear in the record of Depositors on a date to be determined by the Directors. The financial statements for the current financial year do
not reflect this proposed dividend and will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 March 2024.

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DIRECTORS’ REPORT

RESERVES, PROVISIONS AND ALLOWANCES

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

BAD AND DOUBTFUL DEBTS AND FINANCING

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

At the date of this report, the Directors are not aware of any circumstances that would render the amount written off for bad debts and loans/financing or the amount of
the allowances for doubtful debts and loans/financing in the financial statements of the Group and of the Company inadequate to any substantial extent.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that current assets, which were
unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company, have been written down
to their estimated realisable values.

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

VALUATION METHODS

At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of
assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

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

(a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person;
or

(b) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year, other than those incurred in the normal
course of business of the Group and of the Company.

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

CHANGE OF CIRCUMSTANCES

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

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Statements Disclosures

DIRECTORS’ REPORT

ISSUANCE OF SHARES AND DEBENTURES

The following are changes during the financial year in connection with the debt and equity securities that were issued by the Group and the Company:

(i) Issuance of debt securities

(1) AmBank (M) Berhad (“AmBank”) issued the following tranches in nominal value under its RM4.0 billion Subordinated Notes programme:

(i) Tranche 9 with nominal value of RM745.0 million on 12 October 2022. The interest rate of this tranche is at 5.20% per annum, payable semi-annually
with a tenure of 10 years (callable in the 5th years); and
(ii) Tranche 10 with nominal value of RM350.0 million on 28 March 2023. The interest rate of this tranche is at 4.58% per annum, payable semi-annually
with a tenure of 10 years (callable in the 5th years).

(2) On 28 March 2023, AmBank Islamic Berhad (“AmBank Islamic”) issued Tranche 10 with nominal value of RM150.0 million under its RM3.0 billion Subordinated
Sukuk Murabahah (“Sukuk Murabahah”) programme. The profit rate of this tranche is at 4.53% per annum, payable semi-annually with a tenure of 10 years
(non-callable 5 years).

(ii) Redemption of debt securities

(1) AmBank redeemed the following tranches of its Subordinated Notes Programme of RM4.0 billion in nominal value:

(i) Tranche 3 with nominal value of RM570.0 million on its first call date of 17 October 2022;
(ii) Tranche 4 with nominal value of RM175.0 million on its first call date of 23 February 2023; and
(iii) Tranche 5 with nominal value of RM350.0 million on its first call date of 14 March 2023.

(2) On its first call date of 23 February 2023, AmBank Islamic redeemed Tranche 6 of the Sukuk Murabahah with nominal value of RM150.0 million.

Save as disclosed above and in Notes 25, 26, 28 and 29 to the financial statements, there were no new shares and debentures, share cancellations, shares held as
treasury shares nor resale of treasury shares by the Group and the Company during the financial year.

SHARE OPTIONS

There were no options granted during the financial year by the Company to take up unissued shares of the Company.

No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial
year, there were no unissued shares of the Company under options.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company maintained on a group basis, a Directors’ and Officers’ Liability Insurance up to an aggregate limit of RM200.0 million against any legal liability incurred by
the Directors and Officers in the discharge of their duties while holding office for the Company and its subsidiaries. The Directors and Officers shall not be indemnified
by such insurance for any deliberate negligence, fraud, intentional breach of law or breach of trust proven against them. The gross amount of insurance premium paid
by the Company for the Directors and Officers of the Company and its subsidiaries for the current financial year was RM418,425 (2022: RM398,500).

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DIRECTORS’ REPORT

EXECUTIVES’ SHARE SCHEME

On 5 October 2018, the Board approved the implementation of an Executives’ Share Scheme (“ESS”) for Eligible Executives of the Group.

The awards under the ESS are up to ten percent (10%) of the total number of issued shares of the Company (excluding treasury shares) at any point of time for the
duration of the ESS for Eligible Executives including Executive Directors. The ESS is implemented and administered by the Group Nomination and Remuneration
Committee (“GNRC”). The effective date of the ESS is 5 October 2018 and would be in force for a period of ten (10) years to 4 October 2028.

The awards granted to such Eligible Executives only comprises shares. Shares to be made available under the ESS will only vest to Eligible Executives who have duly
accepted the offers of awards under the ESS in accordance with the By-Laws of the ESS and subject to the satisfaction of stipulated conditions. Such conditions are
stipulated and determined by the GNRC.

The salient features of the ESS are disclosed in Note 30 to the financial statements.

SHARE BUY-BACK

During the current financial year, the Company bought back from the open market, a total of 10,949,250 ordinary shares listed on the Main Market of Bursa Malaysia
Securities Berhad at an average buy-back price of RM4.00 per share. The total consideration paid for the share buy-back including transaction costs was approximately
RM43,743,923 and was financed by internally generated funds. None of the shares were resold or cancelled during the current financial year.

DIRECTORS

The Directors who have served on the Board since the beginning of the current financial year to the date of this report are:

Tan Sri Md Nor bin Md Yusof (Appointed on 30 April 2022)

Robert William Goudswaard
Soo Kim Wai
Voon Seng Chuan
Seow Yoo Lin
Farina binti Farikhullah Khan
Hong Kean Yong
Dato’ Kong Sooi Lin
Felicity Ann Youl (Appointed on 15 April 2022)
Tan Sri Azman Hashim (Retired on 29 April 2022)

The names of the Directors of the Company’s subsidiary companies who served on the respective board of the subsidiary companies since the beginning of the financial
year to the date of this report are disclosed in the Appendix to the financial statements.

DIRECTORS’ INTERESTS

Under the Company’s Constitution, the Directors are not required to hold shares in the Company.

There are no interests in shares and options in the Company, of those who were Directors at the end of the financial year as recorded in the Register of Directors’
Shareholdings kept by the Company under Section 59 of the Companies Act 2016.

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Statements Disclosures

DIRECTORS’ REPORT

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than a benefit included in
the aggregate amount of emoluments received or due and receivable by Directors or the fixed salary of a full-time employee as shown in Note 36 to the financial
statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm in which the Director is a member, or with a company
in which the Director has a substantial financial interest, except for the related party transactions as shown in Note 42 to the financial statements.

Neither during nor at the end of the financial year was the Company a party to any arrangements whose object is to enable the Directors to acquire benefits by means
of the acquisition of shares in, or debentures of, the Company or any other body corporate.

CORPORATE GOVERNANCE

(i) BOARD RESPONSIBILITY AND OVERSIGHT

The Board of Directors (“the Board”) remains fully committed in ensuring that the principles and best practices in corporate governance are applied consistently
in the Group. Since the Company is a holding company, its major business activities are conducted through its various subsidiaries. The Board complies with the
recommendations on corporate governance as set out in the Malaysian Code on Corporate Governance 2021.

The Board supervises the management of the Group’s businesses, policies and affairs with the goal of long term sustainability of the Group. The Board meets no
less than six (6) times in a year to carry out its duties and responsibilities, with additional Board meetings being convened, whenever required.

The Board addresses key matters concerning strategy, finance, organisation structure, business developments, human resource (subject to matters reserved
for shareholders’ meetings By-Laws), promote sustainability in the Group’s business strategies,and establishes guidelines for overall business, risk and control
policies, capital allocation and approves all key business developments.

The Board currently comprises nine (9) Directors with wide skills and experience, of which seven (7) are Independent Non-Executive Directors. The Directors
participate fully in decision making on key issues regarding the Company and its subsidiaries. The Independent Non-Executive Directors ensure strategies
proposed by the Management are fully discussed and examined, as well as take into account the long term interests of various stakeholders.

There is a clear division between the roles of Chairman and the Group Chief Executive Officer.

The Senior Management team of the subsidiaries are invited to attend Board Meetings to provide presentations and detailed explanations on matters that have
been tabled. The Group Company Secretary has been empowered by the Board to assist the Board in matters of governance and in complying with statutory
duties.

(ii) COMMITTEES OF THE BOARD

The Board delegates certain responsibilities to Board Committees. These committees, which were created to assist the Board in certain areas of deliberation, are:

1 Group Nomination and Remuneration Committee;

2 Audit and Examination Committee;
3 Risk Management Committee; and
4 Group Information Technology Committee.

The roles and responsibilities of each committee are set out under the respective terms of reference, which have been approved by the Board. The minutes of
the Committee meetings are tabled at the subsequent Board meetings for comment and notation.

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DIRECTORS’ REPORT

CORPORATE GOVERNANCE (CONT’D.)

(iii) MANAGEMENT INFORMATION

All Directors review Board papers and reports prior to the Board meeting. Information and materials, relating to the operations of the Company and its subsidiaries
that are important to the Directors’ understanding of the items in the agenda and related topics, are distributed in advance of the meeting. The Board reports, include
among others, minutes of meetings of all Committees of the Board, monthly performance of the Group, review of business strategy, credit risk management, asset
liability and market risk management and industry benchmarking as well as prevailing regulatory developments and the economic and business environment.

These reports are issued giving sufficient time before the meeting to enable the Directors to be prepared and to obtain further explanations, where necessary,
and provides input on Group policies.

CREDIT RATINGS

From a credit rating perspective, we believe in providing our stakeholders with an independent view of our banking subsidiaries as well as that of the Company. As such,
we continue to maintain credit ratings with Moody’s Investors Service, S&P Global Ratings and RAM Rating Services Berhad.

Rating agency Rating Date Rating classification Rating Accorded

The Company
RAM Rating Services Berhad 10 January 2023 Long-term Corporate Credit Rating AA3
Short-term Corporate Credit Rating P1
Outlook Positive

AmBank (M) Berhad

Moody’s Investors Service 27 June 2022 Long-term Bank Deposits (Foreign) Rating A3
Short-term Bank Deposits (Foreign) Rating P-2
Outlook Stable

S&P Global Ratings 11 November 2022 Long-term Foreign Currency Rating BBB+
Short-term Foreign Currency Rating A-2
Outlook Stable

RAM Rating Services Berhad 10 January 2023 Long-term Financial Institution Rating AA3
Short-term Financial Institution Rating P1
Outlook Positive

Fitch Ratings 23 August 2022 Long-term Foreign Currency Rating BBB-

Short-term Foreign Currency Rating F3
Outlook Stable

AmBank Islamic Berhad

RAM Rating Services Berhad 10 January 2023 Long-term Financial Institution Rating AA3
Short-term Financial Institution Rating P1
Outlook Positive

AmInvestment Bank Berhad

RAM Rating Services Berhad 10 January 2023 Long-term Financial Institution Rating AA3
Short-term Financial Institution Rating P1
Outlook Positive

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Statements Disclosures

DIRECTORS’ REPORT

SHARIAH COMMITTEE

The Shariah Committee reports functionally to AmBank Islamic’s Board of Directors and this provides for the independence of the Shariah Committee in exercising their
duties.

The Shariah Committee comprises six (6) members and is responsible and accountable for all Shariah-related decisions, views and opinions. The main functions and
duties of the Shariah Committee shall include, but are not limited to the following:

(i) to advise the Board and AmBank Islamic on Shariah matters to ensure that AmBank Islamic’s business, operations, affairs and activities comply with Shariah
requirements at all times;

(ii) to review and endorse policies and procedures of AmBank Islamic from Shariah perspectives, and to ensure that the contents do not contain any elements which
are not in line with Shariah requirements;

(iii) to review and approve the documentations in relation to AmBank Islamic’s products to ensure that the products are in compliance with Shariah requirements,
which may include:
(a) the terms and conditions contained in the forms, contracts, agreements and other legal documentation used in executing the transactions; and
(b) the product manuals, marketing advertisements, sales illustrations, pamphlets and brochures used to describe the product.

(iv) to provide a decision, advice or opinion on AmBank Islamic’s business, operations, affairs and activities which may trigger a Shariah non-compliance (“SNC”)
event;

(v) to perform oversight on and assess the strategies, initiatives and work carried out by the Shariah Management Department, in order to ensure compliance with
Shariah matters which form part of their duties in providing their assessment of Shariah compliance and assurance information in the annual report. This includes
performing the annual assessment of the Head of Shariah Management;

(vi) to perform oversight on the strategies, initiatives and work carried out by the:
(a) Group Compliance relating to the Shariah Review function;
(b) Group Risk Management Department relating to the Shariah Risk Management function; and
(c) Group Internal Audit Department relating to the Shariah Audit function
in order to ensure compliance with Shariah matters which form part of their duties in providing their assessment of Shariah compliance and assurance information
in the annual report;

(vii) to provide assistance to parties related to AmBank Islamic such as its legal counsel, auditors or consultants on Shariah matters upon request;

(viii) to advise AmBank Islamic to consult the Shariah Advisory Council of Bank Negara Malaysia (“SAC of BNM”) or the Shariah Advisory Council of Securities
Commission (“SAC of SC”) on any Shariah matters that could not be resolved by the Shariah Committee;

(ix) to provide written Shariah opinions to the SAC of BNM or SAC of SC as and when required, including the following circumstances where AmBank Islamic:
(a) makes reference to the SAC of BNM or SAC of SC for advice; or
(b) submits an application to BNM or SC for new product approval.

(x) to provide advice and guidance to Senior Management on the management of the Zakat fund, charity and other social programmes or activities;

(xi) to endorse the Shariah operations manual which specify the manner in which a submission or request for advice be made to the Shariah Committee, the conduct
of the Shariah Committee’s meeting and the manner of compliance with any Shariah decision;

(xii) to oversee the overall SNC management including to endorse purification of SNC income;

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DIRECTORS’ REPORT

SHARIAH COMMITTEE (CONT’D.)

(xiii) to assist in AmBank Islamic’s sustainability and value-based intermediation (“VBI”) agenda, including in relevant capacity building and awareness creation
initiatives;

(xiv) the Chairman of the Shariah Committee, in leading the Shariah Committee is responsible for the effective functioning of the Shariah Committee. In fulfilling this
role, the Chairman must:
(a) ensure appropriate procedures are in place to govern the Shariah Committee’s deliberations and proceedings;
(b) act as a direct liaison between the Board and the Shariah Committee to foster greater understanding between both organs;
(c) ensure that Shariah decisions or advice are made on a sound and well-informed basis, including based on a robust decision-making methodology which
ensures that all business, operations and risk implications are considered by the Shariah Committee;
(d) encourage healthy discussion, participation and contribution, and ensure that dissenting views can be freely expressed and discussed; and
(e) ensure sufficient records of the discussion leading to formulation of the Shariah Committee’s decision, advice or opinion are maintained.

The Shariah Committee may, if it thinks fit and proper and from time to time, delegate, re-delegate, suspend or revoke any powers given to the Shariah Management
Department to do certain acts on behalf of the Shariah Committee such as review, advice and/or endorse certain materials or issues within the Shariah Committee’s
terms of reference.

The Shariah Committee members also sit in Shariah Oversight Committee. The Shariah Oversight Committee is established as a sub-committee of the Shariah
Committee to assist the Shariah Committee to oversee the strategies, initiatives and work carried out by the Shariah Control Functions namely Shariah Review, Shariah
Risk Management and Shariah Audit.

The main functions and duties of Shariah Oversight Committee shall include, but are not limited to the following:
(i) determine whether potential SNC events are actual SNC incidents or not;
(ii) endorse action plan/rectification measure in addressing SNC incident and purification of income methodology and amount;
(iii) recommend alternative ways to rectify issues found through Shariah Audit, Shariah Review and Shariah Risk Management activities and/or other credible sources;
(iv) provide advice on the recognition of income pursuant to SNC events and/or its disposal; and
(v) recommend possible implementation methods to improve AmBank Islamic’s business activities vis-à-vis Shariah in line with applicable statutes and guidelines/
policies/circulars issued by relevant regulatory bodies.

AUDITORS AND AUDITORS’ REMUNERATION

The auditors, Ernst & Young PLT, have expressed their willingness to continue in office.

The auditors’ remuneration is disclosed in Note 35 to the financial statements.

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

TAN SRI MD NOR BIN MD YUSOF SEOW YOO LIN

Kuala Lumpur, Malaysia

29 May 2023

12 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

STATEMENT BY DIRECTORS
Pursuant To Section 251(2) Of The Companies Act 2016

We, TAN SRI MD NOR BIN MD YUSOF and SEOW YOO LIN, being two of the Directors of AMMB HOLDINGS BERHAD, do hereby state that, in the opinion of the
Directors, the accompanying financial statements set out on pages 20 to 286 are drawn up in accordance with Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and
of the Company as at 31 March 2023 and of their financial performance and cash flows for the financial year then ended.

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

TAN SRI MD NOR BIN MD YUSOF SEOW YOO LIN

Kuala Lumpur, Malaysia

29 May 2023

STATUTORY DECLARATION
Pursuant To Section 251(1)(b) Of The Companies Act 2016

I, LING FOU-TSONG @ JAMIE LING, being the Officer primarily responsible for the financial management of AMMB HOLDINGS BERHAD, do solemnly and sincerely
declare that the accompanying financial statements set out on pages 20 to 286 are, in my opinion, correct and I make this solemn declaration conscientiously believing
the declaration to be true, and by virtue of the Statutory Declarations Act 1960.

Subscribed and solemnly declared by the abovenamed

LING FOU-TSONG @ JAMIE LING at Kuala Lumpur
in Wilayah Persekutuan this 29 May 2023
LING FOU-TSONG @ JAMIE LING
Before me,

COMMISSIONER FOR OATHS

13
 AMMB HOLDINGS BERHAD

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of AMMB Holdings Berhad, which comprise the statements of financial position as at 31 March 2023 of the Group and of the
Company, and statements of profit or loss, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the
Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 20 to 286.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2023, and of
their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those
standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of
Accountants (“By-Laws”) and the International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we
have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key audit matters

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

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to
these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the
financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on
the accompanying financial statements.

14 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

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

Key audit matters (cont’d.)

Risk area and rationale Our response

Expected credit losses of loans, advances and financing and debt

instruments not carried at fair value through profit or loss

As at 31 March 2023, the loans, advances and financing represent Our audit procedures included the assessment of key controls over the origination,
65% of the total assets of the Group, and the debt instruments carried segmentation, ongoing internal credit quality assessments, recording, and monitoring of the
at amortised cost and fair value through other comprehensive income loans, advances and financing and the debt instruments not carried at fair value through profit
represent 19% of the total assets of the Group. or loss.

MFRS 9 Financial Instruments (“MFRS 9”) requires the Group to We also assessed the processes and effectiveness of key controls over the transfer criteria
account for the impairment losses on loans, advances and financing (for the three stages of credit exposures under MFRS 9 in accordance with their credit quality),
and debt instruments not carried at fair value through profit or loss with impairment measurement methodologies, governance for development, maintenance, and
a forward-looking expected credit losses (“ECL”) approach. validation of ECL models, inputs, basis and assumptions used by the Group in staging the
credit exposures and calculating the ECL.
The measurement of ECL requires the application of significant
judgement and increased complexity which includes the identification For staging and identification of credit exposures with significant deterioration in credit quality,
of on-balance sheet and off-balance sheet credit exposures with we assessed and tested the reasonableness of the transfer criteria applied by the Group for
significant deterioration in credit quality, assumptions used in the ECL different types of credit exposures. We evaluated if the transfer criteria are consistent with the
models (for exposures assessed individually or collectively) such as the Group’s credit risk management practices.
expected future cash flows, forward-looking macroeconomic factors
and probability-weighted multiple scenarios. For the measurement of ECL, we assessed and tested reasonableness of the Group’s ECL
models, including model inputs, model design, and model performance for significant portfolios.
Management overlays have been applied due to remaining COVID-19 We challenged whether historical experience is representative of current circumstances and
uncertainties and emerging risks. of the recent losses incurred in the portfolios and assessed the reasonableness of forward-
looking adjustments, macroeconomic factor analysis and probability-weighted multiple
Refer to summary of significant accounting policies in Note 2.5(o), scenarios.
significant accounting judgements, estimates and assumptions in Note
5.1, disclosures of loans, advances and financing and debt instruments We evaluated if changes in modeling approaches, parameters and assumptions are needed
in Notes 13, 11 and 12, and disclosures on credit risk in Note 49.2 to and if any changes made were appropriate. We also assessed, tested and monitored the
the financial statements. sensitivity of the credit loss provisions to changes in modelling assumptions. In assessing the
management overlays applied in the ECL amid current environment with remaining COVID-19
uncertainties and emerging risks, we performed scenario analysis to cross-check the impacts
and challenged reasonableness of the basis applied by the management, particularly for the
loans, advances and financing and debt instruments not carried at fair value through profit or
loss under Stages 1 and 2.

With respect to individually assessed ECL which are mainly in relation to the impaired loans,
advances and financing and debt instruments not carried at fair value through profit or loss
in Stage 3, we reviewed and tested a sample of loans, advances and financing and debt
instruments not carried at fair value through profit or loss to evaluate the timely identification
by the Group of exposures with significant deterioration in credit quality or which have
been impaired. For cases where impairment has been identified, we assessed the Group’s
assumptions on the expected future cash flows, including the value of realisable collaterals
based on available market information and the multiple scenarios considered. We also
challenged the assumptions and compared estimates to external evidence where available,
including the management overlays applied due to remaining COVID-19 uncertainties and
emerging risks.

15
 AMMB HOLDINGS BERHAD

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

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

Key audit matters (cont’d.)

Risk area and rationale (cont’d.) Our response (cont’d.)

Expected credit losses of loans, advances and financing and debt instruments not carried
at fair value through profit or loss (cont’d.)

We also assessed whether the financial statements disclosures are

adequately and appropriately reflect the Group’s exposures to credit
risk.

We involved our credit modelling specialists and information technology

(“IT”) specialists in the performance of these procedures where their
specific expertise were required.

Impairment of (i) goodwill, (ii) investment in subsidiaries, associates and joint ventures

(i) Goodwill

As at 31 March 2023, goodwill amounts to RM303.5 million. The Group is required to Our audit procedures included, amongst others, evaluating the
annually test the carrying amount of goodwill for impairment. assumptions and methodologies used by the Group and the Company in
performing the impairment assessment.
Goodwill impairment testing of cash-generating units (“CGUs”) relies on value-in-use (“VIU”)
estimates based on estimated future cash flows. We tested the basis of preparing the cash flow forecasts, taking into
account the back-testing results on the accuracy of previous forecasts
This is an area of focus in the preparation of the financial statements due to: and the historical evidence supporting underlying assumptions.

(i) the significance of the goodwill recognised in the financial statements of the Group; We assessed the appropriateness of the other key assumptions, such
as the growth rates used to extrapolate the cash flows and the discount
(ii) the level of subjectivity associated with the assumptions used in estimating VIU of the rates applied, by comparing against internal information, external
CGUs; and economic and market data.

(iii) the subjectivity involved in determining the appropriate discount rates to be applied to We have also performed sensitivity analysis around the key drivers of the
measure the net present value of each CGU. growth rates of the cash flow forecasts including the revenue growth.

We have assessed the adequacy and appropriateness of the disclosures

made in the financial statements.

16 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

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

Key audit matters (cont’d.)

Risk area and rationale (cont’d.) Our response (cont’d.)

Impairment of (i) goodwill, (ii) investment in subsidiaries, associates and joint ventures
(cont’d.)

(ii) Investment in subsidiaries, associates and joint ventures

As at 31 March 2023, the carrying amount of investment in subsidiaries stood at RM10.9

billion and investment in associates and joint ventures stood at RM1.6 billion.

We focused on impairment assessment of investment in subsidiaries, associates and joint

ventures as the impairment testing relies on VIU estimates based on estimated future cash flows
where significant judgement and estimation is involved in determining the future cash flows.

This is an area of focus in the preparation of the financial statements due to:

(i) the significance of the investment in subsidiaries, associates and joint ventures
recognised in the financial statements of the Group and the Company;

(ii) the level of subjectivity associated with the assumptions used in estimating VIU of the
subsidiaries, associates and joint ventures; and

(iii) the subjectivity involved in determining the appropriate discount rates to be applied to
measure the net present value for each investment.

Refer to summary of significant accounting policies in Notes 2.5(b), 2.5(c) and 2.5(r),
significant accounting judgements, estimates and assumptions in Notes 5.3 and 5.7, and
the disclosure of goodwill, investment in subsidiaries and investment in associates and joint
ventures in Notes 21(a), 16 and 17 to the financial statements.

Information other than the financial statements and auditors’ report thereon

The directors of the Company are responsible for the other information. The other information comprises the directors’ report and the annual report, but does not
include the financial statements of the Group and of the Company and our auditors’ report thereon, and the annual report which is expected to be made available to
us after the date of this auditors’ report.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information identified above and, in
doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained
in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors’ report, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors of the
Company and take appropriate action.

17
 AMMB HOLDINGS BERHAD

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

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

Responsibilities of the directors for the financial statements

The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors
are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company
that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

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

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

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

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

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

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

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

18 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

INDEPENDENT AUDITORS’ REPORT

to the members of AMMB Holdings Berhad (Incorporated in Malaysia)

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

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

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group
and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiary of which we have not acted as auditors, is disclosed in
Note 16(a) to the financial statements.

OTHER MATTERS

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

Ernst & Young PLT Ahmad Qadri Bin Jahubar Sathik

202006000003 (LLP0022760-LCA) & AF 0039 No. 03254/05/2024 J
Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia

29 May 2023

19
 AMMB HOLDINGS BERHAD

STATEMENTS OF FINANCIAL POSITION

As at 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

ASSETS
Cash and short-term funds 6 8,521,940 13,221,099 208,565 717,660
Deposits and placements with banks and other financial institutions 8 176,604 1,301,449 - -
Derivative financial assets 9 921,109 821,373 - -
Financial assets at fair value through profit or loss 10 12,770,907 7,216,560 1,158 1,128
Financial investments at fair value through other comprehensive income (“FVOCI”) 11 25,610,733 18,756,757 - -
Financial investments at amortised cost 12 13,469,703 9,037,766 - -
Loans, advances and financing 13 128,242,605 118,065,685 - -
Statutory deposits with Bank Negara Malaysia 14 2,446,547 376,523 - -
Deferred tax assets 15 220,655 218,551 - -
Investments in subsidiaries and other investments 16 - - 10,852,185 10,857,350
Investments in associates and joint ventures 17 1,631,600 604,542 - -
Other assets 18 2,626,036 2,885,319 4,005 11,615
Reinsurance assets and other insurance receivables 52(I) - 580,705 - -
Property and equipment 19 161,778 180,968 20 -
Right-of-use assets 20 229,770 189,372 - -
Intangible assets 21 510,644 1,399,912 - -
Assets held for sale 54 - 2,324 - -
TOTAL ASSETS 197,540,631 174,858,905 11,065,933 11,587,753

LIABILITIES AND EQUITY

Deposits from customers 22 130,315,080 122,592,850 - -
Investment accounts of customers 55(XIII) 16,474 377,861 - -
Deposits and placements of banks and other financial institutions 23 11,462,245 9,894,585 - -
Securities sold under repurchase agreements 7 16,466,674 1,582,717 - -
Recourse obligation on loans and financing sold to Cagamas Berhad 24 9,915,040 8,375,023 - -
Derivative financial liabilities 9 964,319 803,563 - -
Term funding 25 2,172,333 1,880,097 - -
Debt capital 26 4,395,000 4,395,000 - -
Deferred tax liabilities 15 - 8,093 - -
Other liabilities 27 3,697,557 4,302,862 23,117 533,827
Insurance contract liabilities and other insurance payables 52(I) - 2,687,361 - -
TOTAL LIABILITIES 179,404,722 156,900,012 23,117 533,827

Share capital 28 6,376,240 6,776,240 6,372,870 6,372,870

Treasury shares 29(f) (28,579) (11,041) (28,579) (11,041)
Reserves 29 11,787,384 9,994,593 4,698,525 4,692,097
Equity attributable to equity holders of the Company 18,135,045 16,759,792 11,042,816 11,053,926
Non-controlling interests 31 864 1,199,101 - -
TOTAL EQUITY 18,135,909 17,958,893 11,042,816 11,053,926

TOTAL LIABILITIES AND EQUITY 197,540,631 174,858,905 11,065,933 11,587,753

COMMITMENTS AND CONTINGENCIES 46 124,872,952 122,661,380 - -

NET ASSETS PER SHARE (RM) 5.48 5.06 3.34 3.34

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

20 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

STATEMENTS OF PROFIT OR LOSS

For the financial year ended 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Continuing operations:
Interest income 32 4,975,955 3,942,076 6,418 19,327
Interest expense 33 (2,695,320) (1,770,242) - -
Net interest income 2,280,635 2,171,834 6,418 19,327
Net income from Islamic banking 55(XXVIII) 1,301,270 1,062,026 - -
Other operating income 34 956,404 822,371 407,314 194,214
Share in results of associates and joint ventures 69,862 44,091 - -
Net income 4,608,171 4,100,322 413,732 213,541
Other operating expenses 35 (1,999,092) (1,788,981) (35,814) (17,643)
Transaction cost from disposal of subsidiary - - (15,725) -
Operating profit before impairment losses 2,609,079 2,311,341 362,193 195,898
Allowances for impairment on loans, advances and financing 37 (421,846) (314,179) - -
(Allowances for)/writeback of impairment on:
Financial investments 38 (9,508) (270,240) - -
Other financial assets 38 (665) (1,878) - -
Subsidiary 16(a) - - 18,000 -
Provision for commitments and contingencies
- writeback/(charge) 27(c),(d) 77,806 (176,988) - -
Other recoveries, net 575 217 - -
Impairment of investment in associate 17(c) - (4,625) - -
Profit before taxation and zakat from continuing operations 2,255,441 1,543,648 380,193 195,898
Taxation and zakat 39 (513,063) (177,277) (1,518) (4,399)
Profit after taxation and zakat from continuing operations 1,742,378 1,366,371 378,675 191,499

Discontinued operation: 57
Profit from operations of discontinued general insurance
(including estimated loss on disposal of RM53.9 million) 31,029 261,097 - -
Impairment of Kurnia Brand, agent relationship and other assets (115,981) - - -
(Loss)/profit before taxation from discontinued operation (84,952) 261,097 - -
Taxation 39 18,879 (32,529) - -
(Loss)/profit after taxation from discontinued operation (66,073) 228,568 - -
Profit for the financial year 1,676,305 1,594,939 378,675 191,499

Profit/(loss) for the financial year attributable to:

Equity holders of the Company 1,735,153 1,502,682 378,675 191,499
Non-controlling interests (58,848) 92,257 - -
Profit for the financial year 1,676,305 1,594,939 378,675 191,499

EARNINGS/(LOSS) PER SHARE (SEN)

Basic/diluted:
Continuing operations 40 52.62 41.40
Discontinued operation 40 (0.21) 4.14
52.41 45.54

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

21
 AMMB HOLDINGS BERHAD

STATEMENTS OF COMPREHENSIVE INCOME

For the financial year ended 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Profit for the financial year 1,676,305 1,594,939 378,675 191,499

Other comprehensive income/(loss):

Continuing operations:
Items that will not be reclassified subsequently to statements of profit or loss
Financial investments at FVOCI
- net unrealised gain on changes in fair value 7,769 3,148 - -
Share of other comprehensive loss of equity accounted associates (342) - - -
7,427 3,148 - -
Items that may be reclassified subsequently to statements of profit or loss
Currency translation gain on foreign operations 13,341 3,879 - -
Cash flow hedge
- gain arising during the financial year 9(v) - 1,654 - -
- amortisation of fair value changes for terminated hedge 9(v) 6,320 8,724 - -
Financial investments at FVOCI
- net unrealised gain/(loss) on changes in fair value 8,577 (260,663) - -
- net gain reclassified to profit or loss (211) (4,813) - -
- changes in expected credit losses ("ECL") 38 (7,041) 2,263 - -
- foreign exchange differences 12 2 - -
Tax effect relating to the components of other comprehensive (income)/loss
- cash flow hedge 9(v),15 (1,516) (2,491) - -
- financial investments at FVOCI 15 (2,048) 63,626 - -
Share of reserve movements in equity accounted associates and joint ventures 5,024 (4,255) - -
22,458 (192,074) - -
Other comprehensive income/(loss) for the financial year, net of tax from
continuing operations 29,885 (188,926) - -

Discontinued operation:
Items that will not be reclassified subsequently to statements of profit or loss
Remeasurement of defined benefit liability 27(b)(ii) - (1,133) - -
Tax effect relating to components of other comprehensive loss
- defined benefit liability 15, 27(b)(ii) - 272 - -
Other comprehensive loss for the financial year, net of tax from discontinued
operation - (861) - -
Total comprehensive income for the financial year 1,706,190 1,405,152 378,675 191,499

Total comprehensive income/(loss) for the financial year attributable to:

Equity holders of the Company
Continuing operations 1,772,053 1,177,043 378,675 191,499
Discontinued operation (7,015) 136,274 - -
Non-controlling interests
Continuing operations 210 402 - -
Discontinued operation (59,058) 91,433 - -
1,706,190 1,405,152 378,675 191,499

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

22 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

STATEMENTS OF CHANGES IN EQUITY

For the financial year ended 31 March 2023

Attributable to Equity Holders of the Company

Non-Distributable Distributable
Retained earnings
Foreign Executives’
Cash flow currency share Non- Non-
Share Regulatory Fair value hedging translation scheme Treasury participating controlling Total
capital reserve reserve deficit reserve reserve shares funds Total interests equity
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2021 5,951,557 - 708,790 (16,949) 94,992 67,778 (20,970) 45,715 7,809,864 14,640,777 949,582 15,590,359

Profit for the financial year - - - - - - - - 1,502,682 1,502,682 92,257 1,594,939

Other comprehensive
(loss)/income, net - - (200,692) 7,887 3,879 - - - (439) (189,365) (422) (189,787)
Total comprehensive
(loss)/income for the
financial year - - (200,692) 7,887 3,879 - - - 1,502,243 1,313,317 91,835 1,405,152

Issue of ordinary share

capital pursuant to:
- private placement 28 824,683 - - - - - - - - 824,683 - 824,683
Buy-back of shares - - - - - - (16,812) - - (16,812) - (16,812)
Share-based payment
under ESS, net - - - - - (2,173) - - - (2,173) - (2,173)
ESS shares vested to
employees - - - - - (29,133) 26,741 - 2,392 - - -
Transfer to regulatory
reserve - 102,920 - - - - - - (102,920) - - -
Subscription of shares
arising from conversion
of redeemable
cumulative convertible
preference shares by a
subsidiary - - - - - - - - - - 256,164 256,164
Transfer of net gain upon
disposal of financial
investments at FVOCI
to retained earnings 11(i) - - (8,871) - - - - - 8,871 - - -
Dividends paid 41 - - - - - - - - - - (98,480) (98,480)
Transactions with owners
and other equity
movements 824,683 102,920 (8,871) - - (31,306) 9,929 - (91,657) 805,698 157,684 963,382
At 31 March 2022 6,776,240 102,920 499,227 (9,062) 98,871 36,472 (11,041) 45,715 9,220,450 16,759,792 1,199,101 17,958,893

23
 AMMB HOLDINGS BERHAD

STATEMENTS OF CHANGES IN EQUITY

For the financial year ended 31 March 2023

Attributable to Equity Holders of the Company

Non-Distributable Distributable
Retained earnings
Foreign Executives’
Cash flow currency share Non- Non-
Share Regulatory Fair value hedging translation scheme Treasury participating controlling Total
capital reserve reserve deficit reserve reserve shares funds Total interests equity
Group Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2022 6,776,240 102,920 499,227 (9,062) 98,871 36,472 (11,041) 45,715 9,220,450 16,759,792 1,199,101 17,958,893

Profit/(loss) for the

financial year - - - - - - - - 1,735,153 1,735,153 (58,848) 1,676,305
Other comprehensive
income/(loss), net - - 12,082 4,804 13,341 - - - (342) 29,885 - 29,885
Total comprehensive
income/(loss) for the
financial year - - 12,082 4,804 13,341 - - - 1,734,811 1,765,038 (58,848) 1,706,190

Buy-back of shares - - - - - - (43,744) - - (43,744) - (43,744)

Share-based payment
under ESS, net - - - - - 16,367 - - 763 17,130 - 17,130
ESS shares vested to
employees - - - - - (26,414) 26,206 - 208 - - -
Transfer to regulatory
reserve - 108,787 - - - - - - (108,787) - - -
Transfer to retained
earnings arising
from redemption of
preference shares by
a subsidiary (400,000) - - - - - - - 400,000 - - -
Arising from disposal of
a subsidiary - - - - - - - - - - (61,415) (61,415)
Reversal of dividend
accrued - ESS shares - - - - - - - - 1,001 1,001 - 1,001
Capital reduction from a
subsidiary 16(a)(3)(ii) - - - - - - - - - - (1,075,993) (1,075,993)
Dividends paid 41 - - - - - - - - (364,172) (364,172) (1,981) (366,153)
Transactions with
owners and other
equity movements (400,000) 108,787 - - - (10,047) (17,538) - (70,987) (389,785) (1,139,389) (1,529,174)
At 31 March 2023 6,376,240 211,707 511,309 (4,258) 112,212 26,425 (28,579) 45,715 10,884,274 18,135,045 864 18,135,909

24 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

STATEMENTS OF CHANGES IN EQUITY

For the financial year ended 31 March 2023

Attributable to Equity Holders of the Company

Non-Distributable Distributable
Executives’
Ordinary share
share scheme Treasury Retained Total
capital reserve shares earnings equity
Company Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2021 5,550,250 67,778 (20,970) 4,461,734 10,058,792

Profit for the financial year - - - 191,499 191,499
Total comprehensive income for the financial year - - - 191,499 191,499

Issue of ordinary share capital pursuant to:

- private placement 28 822,620 - - - 822,620
Buy-back of shares - - (16,812) - (16,812)
Share-based payment under ESS, net - (2,173) - - (2,173)
ESS shares vested to employees - (29,133) 26,741 2,392 -
Transactions with owners and other equity movements 822,620 (31,306) 9,929 2,392 803,635
At 31 March 2022 6,372,870 36,472 (11,041) 4,655,625 11,053,926

Attributable to Equity Holders of the Company

Non-Distributable Distributable
Executives’
Ordinary share
share scheme Treasury Retained Total
capital reserve shares earnings equity
Company Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 April 2022 6,372,870 36,472 (11,041) 4,655,625 11,053,926

Profit for the financial year - - - 378,675 378,675
Total comprehensive income for the financial year - - - 378,675 378,675

Buy-back of shares - - (43,744) - (43,744)

Share-based payment under ESS, net - 16,367 - 763 17,130
ESS shares vested to employees - (26,414) 26,206 208 -
Reversal of dividend accrued - ESS shares - - - 1,001 1,001
Dividends paid 41 - - - (364,172) (364,172)
Transactions with owners and other equity movements - (10,047) (17,538) (362,200) (389,785)
At 31 March 2023 6,372,870 26,425 (28,579) 4,672,100 11,042,816

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

25
 AMMB HOLDINGS BERHAD

STATEMENTS OF CASH FLOWS

For the financial year ended 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit/(loss) before taxation and zakat
Continuing operations 2,255,441 1,543,648 380,193 195,898
Discontinued operation (84,952) 261,097 - -
Profit before taxation and zakat including discontinued operation 2,170,489 1,804,745 380,193 195,898
Adjustments for:
Amortisation of fair value changes on terminated hedge 9 6,320 8,724 - -
Amortisation of intangible assets 35, 57(IV) 84,754 107,195 - -
Amortisation of issuance costs and premium for term funding 25 1,237 3,471 - -
Net accretion of discount for securities (175,209) (43,673) - -
Gain on liquidation of subsidiaries 34 - (5) - (65)
Depreciation of property and equipment 35, 57(IV) 53,071 62,901 8 1
Depreciation of right-of-use assets 35, 57(IV) 77,010 77,884 - -
Interest on lease liabilities 35, 57(IV) 6,486 7,815 - -
Provision for reinstatement of leased properties 35 82 107 - -
Gain on disposal of property and equipment 34, 57(III) (9,056) (75) - -
Dividend income 34 (3,139) (4,206) (396,947) (193,058)
Allowances for impairment on financial investments 38 9,508 270,240 - -
Impairment loss on investment in associate 17(c) - 4,625 - -
Writeback of impairment on investment in subsidiary 16(a) - - (18,000) -
(Writeback of)/allowances for impairment loss of other financial assets and
insurance receivables 38, 57(I) (2,071) 197 - -
Property and equipment written off 35 33 55 - -
Intangible assets written off 21(b) - 5 - -
Allowance for ECL on loans, advances and financing, net 37 732,186 554,563 - -
Net loss on revaluation of derivatives 61,019 5,225 - -
Unrealised loss on revaluation of hedged item arising from fair value hedge 9 7,973 9,087 - -
Net (gain)/loss on sale of financial assets at fair value through profit or loss (45,990) 442 - -
Net gain on sale of financial investments at fair value through other
comprehensive income (211) (4,814) - -
Net loss on revaluation of financial assets at fair value through profit or loss 27,145 41,502 - -
(Writeback of)/allowances for ECL on loan/financing commitments and
financial guarantees 27(d) (77,937) 182,681 - -
Allowances for/(writeback of) provision for commitments and contingencies 27(c) 131 (5,693) - -
Shares granted under ESS - charge/(writeback) 35, 57(IV) 17,815 (2,256) - -
Share in results of associates and joint ventures (69,862) (44,091) - -
Net adjustments of COVID-19 relief measures (61,601) (76,022) - -
Unrealised foreign exchange loss on term funding 25(c) 21,123 6,897 - -
Operating profit/(loss) before working capital changes carried forward 2,831,306 2,967,526 (34,746) 2,776

26 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

STATEMENTS OF CASH FLOWS

For the financial year ended 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D.)

Operating profit/(loss) before working capital changes brought forward 2,831,306 2,967,526 (34,746) 2,776
Adjustments for: (cont’d.)
Impairment of Kurnia Brand, agent relationship and other assets 57 115,981 - - -
Estimated loss on disposal of subsidiary 57 53,893 - - -
Remeasurement of leases 20, 27(e) (59) (523) - -
Termination of lease (116) (54) - -
Operating profit/(loss) before working capital changes 3,001,005 2,966,949 (34,746) 2,776
Decrease/(increase) in operating assets:
Deposits and placements with banks and other financial institutions 9,254 (132) - -
Financial assets at fair value through profit or loss (9,099,830) 2,349,902 (30) (24)
Loans, advances and financing (10,812,595) (7,896,224) - -
Statutory deposits with Bank Negara Malaysia (2,070,024) 48,754 - -
Other assets 225,977 (393,088) 9,960 1,821,743
Reinsurance assets and other insurance receivables 15,939 (146,857) - -
Increase/(decrease) in operating liabilities:
Deposits from customers 7,722,230 2,049,664 - -
Investment accounts of customers (361,387) 283,026 - -
Deposits and placements of banks and other financial institutions 1,532,458 (57,800) - -
Securities sold under repurchase agreements 14,883,956 772,546 - -
Recourse obligation on loans and financing sold to Cagamas Berhad 1,540,018 1,100,005 - -
Term funding 269,875 119,859 - -
Other liabilities (237,833) (1,704,389) (491,289) (2,342,053)
Insurance contract liabilities and other insurance payables (39,909) 208,354 - -
Cash generated from/(used in) operations 6,579,134 (299,431) (516,105) (517,558)
Taxation and zakat paid, net (610,349) (234,201) (5,158) (3,114)
Net cash generated from/(used in) operating activities 5,968,785 (533,632) (521,263) (520,672)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of financial investments (11,249,815) (4,502,185) - -

Dividend income received from other investments 34 3,139 4,206 - -
Proceeds from disposal of property and equipment 20,588 358 - -
Proceeds from capital reduction in subsidiaries - - 23,165 -
Capital return from subsidiaries liquidated during the year - - - 140
Purchase of property and equipment 19 (57,510) (25,425) (28) -
Purchase of intangible assets 21 (67,175) (75,009) - -
Dividend received from subsidiaries 34 - - 396,947 193,058
Subscription of shares in subsidiary 16(a)(4)(i) - - - (450,000)
Net cash inflow from disposal of subsidiary 1,126,025 - - -
Purchase of treasury shares 29(f) (43,744) (16,812) (43,744) (16,812)
Dividend received from associate 5,633 19,606 - -
Net cash (used in)/generated from investing activities (10,262,859) (4,595,261) 376,340 (273,614)

27
 AMMB HOLDINGS BERHAD

STATEMENTS OF CASH FLOWS

For the financial year ended 31 March 2023

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of Subordinated Notes/Sukuk, net 26(a) - 100,000 - -

Repayment of lease liabilities 27(e) (80,423) (85,647) - -
Dividends paid by the Company to its shareholders 41 (364,172) - (364,172) -
Dividends paid to non-controlling interests (1,981) (98,480) - -
Return of capital to non-controlling interest (1,075,993) - - -
Proceeds from issuance of shares from private placement, net - 824,683 - 822,620
Net cash (used in)/generated from financing activities (1,522,569) 740,556 (364,172) 822,620

Net (decrease)/increase in cash and cash equivalents (5,816,643) (4,388,337) (509,095) 28,334
Cash and cash equivalents at beginning of the financial year 14,516,864 18,905,756 717,660 689,326
Effect of exchange rate changes 146 (555) - -
Cash and cash equivalents at end of the financial year (Note a) 8,700,367 14,516,864 208,565 717,660

Note a: Cash and Cash Equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following amounts:

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Cash and short-term funds 6 8,521,940 13,221,099 208,565 717,660

Deposits and placements with banks and other financial institutions 8 176,604 1,301,449 - -
8,698,544 14,522,548 208,565 717,660
Less: Deposits with original maturity of more than 3 months 8 - (9,254) - -
8,698,544 14,513,294 208,565 717,660
Add:
Allowances for ECL for cash and cash equivalents 6, 8 1,823 3,570 - -
Cash and cash equivalents 8,700,367 14,516,864 208,565 717,660

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

28 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

1. CORPORATE INFORMATION

AMMB Holdings Berhad (“AMMB”) (or “the Company”) is a public limited liability company incorporated and domiciled in Malaysia, and listed on the main market
of Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The registered office of the Company is located at Level 22, Bangunan AmBank Group, No. 55, Jalan Raja
Chulan, 50200 Kuala Lumpur.

The principal activity of the Company is that of investment holding.

The subsidiaries, as listed in Note 16, provide a wide range of wholesale banking, business banking, retail banking, investment banking and related financial
services which also include Islamic banking business, underwriting of general insurance, stock and share-broking, futures broking, investment advisory and
asset, real estate investment trust and unit trust management services. There have been no significant changes in the nature of the principal activities during the
financial year except for the disposal of general insurance business as disclosed in Note 56 to the financial statements.

The consolidated financial statements of the Company and its subsidiaries (“AMMB Group” or “the Group”) and the separate financial statements of the Company
have been approved and authorised for issue by the Board of Directors on 28 April 2023.

2. ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements have been prepared on a historical cost basis unless otherwise indicated in the financial statements.

In the preparation of these financial statements, the management of the Group and the Company have made an assessment of the ability of the Group
and the Company to continue as a going concern. From the assessment, the management is not aware of any material uncertainties related to events or
conditions that may cast significant doubt upon the Group’s and the Company’s ability to continue as a going concern, hence these financial statements
have been prepared on a going concern basis.

2.2 Statement of compliance

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

2.3 Presentation of financial statements

The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (“RM’000”) except when otherwise
indicated.

The statements of financial position are presented in order of liquidity. An analysis regarding recovery or settlement within 12 months after the reporting
date (i.e. “current”) and more than 12 months after the reporting date (i.e. “non-current”) is presented in Note 47.

29
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 March 2023.

Subsidiaries are entities (including structured entities) over which the Group has control.

The Group controls an investee if, and only if, the Group has:

- power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
- exposure, or rights, to variable returns from its involvement with the investee; and
- the ability to use its power over the investee to affect its returns.

Generally, control is established when the Group holds a majority of the voting rights of an investee. When the Group has less than a majority of the voting
or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

- the contractual arrangement with the other vote holders of the investee;
- rights arising from other contractual arrangements; and
- the size of the Group’s voting rights and potential voting rights relative to the size and dispersion of voting rights and potential rights held by the other
vote holders.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of
the subsidiary. Assets, liabilities, income, expenses and cash flows of a subsidiary are included in the consolidated financial statements, from the date the
Group gains control until the date the Group ceases to control the subsidiary.

The profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity owners of the Company and to the non-
controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

On consolidation, the assets and liabilities denominated in foreign currency are translated into RM at the exchange rates prevailing at the reporting date and
their profit or loss items are translated at the average exchange rates for the financial year. The exchange differences arising on translation for consolidation
are recognised in OCI. On disposal of a foreign subsidiary or operation, the component of OCI relating to that particular foreign subsidiary or operation is
reclassified to profit or loss.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as transaction with equity owners of the Group. If the Group
loses control over a subsidiary, it:

- derecognises the assets (including goodwill) and liabilities of the subsidiary;

- derecognises the carrying amount of any non-controlling interests;
- derecognises the cumulative translation differences recorded in equity;
- recognises any consideration received at its fair value;
- recognises any investment retained at its fair value;
- recognises any surplus or deficit in profit or loss; and
- reclassifies the parent’s share of components previously recognised in OCI to profit or loss, or retained earnings, as appropriate, as would be required
if the Group had directly disposed of the related assets or liabilities.

30 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies

(a) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred for the acquisition of a subsidiary is the
acquisition date fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by
the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and
fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially
at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis,
either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. For financial liabilities, this
includes the separation of embedded derivatives in host contracts by the acquiree.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, any previously held equity interest is remeasured at its acquisition date fair value and any resulting
gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration that is classified as a financial asset or a financial liability is recognised in accordance with MFRS 9 Financial
Instruments (“MFRS 9”) in profit or loss. If the contingent consideration is not within the scope of MFRS 9, it is measured at fair value at each reporting
date with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent
settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of consideration
transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary
acquired, the difference is recognised directly in profit or loss as a bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually, or more
frequently, if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill
acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units (“CGU”), or groups of CGUs,
that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Each unit to which the goodwill is allocated represents the lowest level within the Group 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 (“MFRS 8”).

Where goodwill has been allocated to a CGU (or a group of CGUs) and part of the operation within that unit is disposed of, the goodwill associated
with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in
these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU retained.

(b) Investment in subsidiaries

In the Company’s separate financial statements, investment in subsidiaries is accounted for at cost less accumulated impairment losses. On disposal
of such investments, the difference between the net disposal proceeds and its carrying amounts are recognised in profit or loss.

31
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(c) Investment in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating
policy decisions of the investee, but is not control or joint control over those policies.

A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties, i.e. joint control,
where decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties sharing control. A joint venture
is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.

The Group’s investment in associates and joint ventures are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is
adjusted to recognise changes in the Group’s share of net assets of the associates or joint ventures since the acquisition date. Dividends received
or receivable from an associate or a joint venture are recognised as a reduction in the carrying amount of the investment. Goodwill relating to the
associate or joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The statements of profit or loss reflects the Group’s share of the results of operations of the associates or joint ventures. Any change in OCI of those
investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associates or
joint ventures, the Group recognises its share of any changes, when applicable, in the statements of changes in equity. Unrealised gains and losses
resulting from transactions between the Group and the associates or joint ventures are eliminated to the extent of the interest in the associates or
joint ventures.

The aggregate of the Group’s share of profit or loss of the associates and joint ventures is shown on the face of the statements of profit or loss and
represents profit or loss after tax and non-controlling interests in the associates or joint ventures.

When the Group’s share of losses in an associate or a joint venture equals or exceeds its interests in the investee, including any long-term interests
that, in substance, form part of the Group’s net investment in the investee, the Group does not recognise further losses, unless it has incurred legal
or constructive obligations or made payments on behalf of the associate or joint venture.

The financial statements of the associates or joint ventures are prepared for the same reporting period as the Group. When necessary, adjustments
are made to bring the accounting policies in line with those of the Group. Nevertheless, no adjustment is made to the accounting policies relating to
financial instruments of any associate or joint venture with activities that are predominantly connected with insurance if the associate or joint venture
concerned applies the temporary exemption from MFRS 9.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investments in associates
or joint ventures. At each reporting date, the Group determines whether there is objective evidence that the investments in associates or joint
ventures are impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amounts
of the associates or joint ventures and their carrying values, and recognises the loss as “impairment loss on associates or joint ventures” in profit or
loss.

Upon loss of significant influence or joint control over the associate or joint venture respectively, the Group measures and recognises any retained
investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint
control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investments in associates or joint ventures are stated at cost less accumulated impairment losses.
On disposal of such investment, the difference between net disposal proceeds and its carrying amounts are recognised in profit or loss.

32 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(d) Transactions with non-controlling interests

Non-controlling interests represent the portion of equity in subsidiaries not held directly or indirectly by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statements of profit or loss, statements
of comprehensive income, statements of changes in equity and statements of financial position, respectively. Any losses applicable to the non-
controlling interests in excess of the non-controlling interests are allocated against the interests of the non-controlling interests even if this results in
the non-controlling interests having a deficit balance.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with
the owners in their capacity as owners. In such circumstances, the carrying amounts of the non-controlling interests shall be adjusted to reflect the
changes in relative interests in the subsidiaries. Any differences between the amount by which the non-controlling interests are adjusted and the fair
value of the consideration paid or received shall be recognised directly in equity and attributable to the owners of the Group.

(e) Foreign currencies

(i) Functional and presentation currency

The individual financial statements of each entity within the Group are measured using the currency of the primary economic environment
in which the entity operates (“the functional currency”). The Group’s consolidated financial statements and the Company’s separate financial
statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(ii) Transactions and balances

Transactions in foreign currencies are initially recorded by the entities within the Group at their respective functional currency spot rates at the
date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot exchange rate at the reporting
date.

All differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items that
are designated as part of the hedge of the Group’s net investment of a foreign operation. These are recognised in OCI until the net investment
is disposed, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences
on those monetary items are also recognised in OCI.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates
of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain
or loss on changes in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in OCI or profit or
loss are also recognised in OCI or profit or loss, respectively).

33
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(f) Property and equipment

Property and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses. Such cost includes its purchase price
and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner
intended by management, as well as borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.
When significant parts of property and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with
specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount
of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit
or loss as incurred. The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective
asset if the recognition criteria for a provision are met.

Purchased computer software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Freehold land has an unlimited life and therefore, is not depreciated. Work-in-progress which are not yet available for use are not depreciated.
Depreciation of other property and equipment is calculated on a straight-line basis to write off the cost of each asset to its residual value over the
estimated useful lives of the assets.

The annual depreciation rates for the various classes of property and equipment are as follows:

Leasehold land 2% or remaining lease period (whichever is shorter)

Buildings 2% or over the term of short term lease (whichever is shorter)
Leasehold improvements 15% to 20%
Motor vehicles 10% to 20%
Computer equipment 12.5% to 33.33%
Office equipment, furniture and fittings 10% to 50%

An item of property and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively if the
expectations differ from previous estimates.

(g) Leases

The determination of whether an arrangement is, or contains, a lease is based on whether the arrangement conveys a right to control the use of asset,
even if that right is not explicitly specified in an arrangement.

34 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(g) Leases (cont’d.)

(i) The Group as a lessee

Leases are recognised as right-of-use assets and corresponding lease liabilities at the date at which the leased asset is available for use by the
Group.

At the commencement date of the leases, the Group recognises lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on
an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received (if any). Where applicable, the cost of right-of-use
assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it
is located. Unless the Group is reasonably certain to obtain ownership of the underlying asset at the end of the lease term, the recognised right-
of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. If the Group is reasonably
certain to obtain ownership of the underlying asset at the end of the lease term, the right-of-use asset is depreciated over the underlying asset’s
useful life. Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term of the
assets, as follows:

Premises 50 years or over the term of short term lease

Computer equipment 3 to 8 years

Right-of-use assets are assessed for impairment whenever there is an indication that the right-of-use assets may be impaired.

The Group applies the short-term lease recognition exemption to its short-term leases, i.e. those leases that have a lease term of 12 months or
less from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to
leases of office equipment that are considered of low value, i.e. those with a value of RM20,000 or less when new. Lease payments on short-
term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

(ii) The Group as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases.
Rental income is recognised over the term of the lease on a straight-line basis. Initial direct costs incurred in negotiating an operating lease are
added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are
recognised as revenue in the period in which they are earned.

35
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(h) Intangible assets, other than goodwill arising from business combination

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is
their fair value as at the date of acquisition. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and
the related expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The
useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at
the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied
in the asset are accounted for by changing the amortisation period or method, as appropriate, which are treated as changes in accounting estimates.
The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category that is consistent with the
function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually, or at the cash-generating unit
level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in profit or loss when the asset is derecognised.

(i) Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual software project are recognised as an intangible asset
when the Group can demonstrate:

- the technical feasibility of completing the intangible asset so that the asset will be available for use or sale;
- its intention to complete and its ability to use or sell the asset;
- how the asset will generate future economic benefits;
- the availability of resources to complete the asset;
- the ability to measure reliably the expenditure during development; and
- the ability to use the intangible asset generated.

Following initial recognition of the software development expenditure as an asset, the asset is carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is
amortised on a straight-line basis over the period of expected benefit of 3 to 10 years. During the period of development, the asset is tested
for impairment annually.

36 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(i) Financial instruments – initial recognition and measurement

(i) Initial recognition

Financial assets and financial liabilities are recognised when the Group and the Company become a party to the contractual provisions of the
instrument. Regular way purchases and sales of financial assets are recognised using trade date accounting or settlement date accounting.
The method used is applied consistently for all purchases and sales of financial assets that belong to the same category of financial assets. The
Group and the Company apply trade date accounting for derivative financial instruments and investments in equity instruments, and settlement
date accounting for investments in debt instruments.

(ii) Initial measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss,
transaction costs that are attributable to the acquisition of the financial asset.

All financial liabilities are recognised initially at fair value and, in the case of financial liabilities not recorded at fair value through profit or loss,
net of directly attributable transaction costs.

(iii) “Day 1” profit or loss

At initial measurement, if the transaction price differs from the fair value, the Group and the Company immediately recognise the difference
between the transaction price and fair value (a “Day 1” profit or loss) provided that fair value is evidenced by a quoted price in an active market
for an identical asset or liability (i.e. Level 1 input) or based on a valuation technique that uses only data from observable markets. In all other
cases, the difference between the transaction price and model value is recognised in profit or loss on a systematic and rational basis that
reflects the nature of the instrument over its tenure.

( j) Financial assets – classification and subsequent measurement

The Group and the Company classify its financial assets in the following measurement categories:

- Amortised cost;
- Fair value through other comprehensive income (“FVOCI”); or
- Fair value through profit or loss (“FVTPL”).

37
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

( j) Financial assets – classification and subsequent measurement (cont’d.)

The classification requirements for debt and equity instruments are described below:

(i) Debt instruments

Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective. Classification and subsequent
measurement of debt instruments depend on:

Business model

The business model reflects how the Group and the Company manage the financial assets in order to generate cash flows. That is, whether the
Group’s and the Company’s objective is solely to collect the contractual cash flows from the assets, or is to collect both the contractual cash
flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. the financial assets are held-for-trading purposes),
then the financial assets are classified as part of “other” business model. Factors considered by the Group and the Company in determining
the business model for a portfolio of assets include past experience on how the cash flows for these assets were collected, how the asset’s
performance is evaluated and reported to key management personnel, and how risks are assessed and managed.

Cash flow characteristics

Where the business model is to hold the financial assets to collect contractual cash flows, or to collect contractual cash flows and sell, the Group
and the Company assess whether the financial assets’ contractual cash flows represent solely payment of principal and interest (“SPPI”)/principal
and profit (“SPPP”). In making this assessment, the Group and the Company consider whether the contractual cash flows are consistent with
a basic lending/financing arrangement, i.e. interest/profit includes only consideration for time value of money, credit risk, other basic lending/
financing risks and a profit margin that is consistent with a basic lending/financing arrangement. Financial assets with embedded derivatives
are considered in their entirety when determining whether their cash flows are SPPI/SPPP.

Based on these factors, the Group and the Company classify the debt instruments into one of the following three measurement categories:

Amortised cost

Financial assets that are held for collection of contractual cash flows where those cash flows represent SPPI/SPPP, and that are not designated
at FVTPL, are measured at amortised cost using the effective interest/effective profit method. The carrying amount of these assets is adjusted
by any expected credit loss allowance recognised and measured using the methodology described in Note 2.5(o). Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate (“EIR”)/
effective profit rate (“EPR”). The EIR/EPR amortisation is included in “interest income”/“profit income” in profit or loss. The losses arising from
impairment are recognised in the statement of profit or loss in “impairment losses on financial investments” for bonds and sukuk, “impairment
losses on loans, advances and financing” for loans, advances and financing or “doubtful receivables” for losses other than bonds, sukuk, loans,
advances and financing.

FVOCI

Financial assets that are held for contractual cash flows and for selling the assets, where the assets’ cash flows represent SPPI/SPPP, and are
not designated at FVTPL, are measured at FVOCI. Changes in the fair value are recognised through OCI, except for interest income/profit
income and foreign exchange gains or losses on the assets’ amortised cost which are recognised in profit or loss. Interest/profit earned whilst
holding the assets are reported as “interest income”/”profit income” using the effective interest/effective profit method. The losses arising from
impairment are reclassified from OCI to profit or loss in “impairment losses on financial investments”. When the financial asset is derecognised,
the cumulative gain or loss previously recognised in OCI is reclassified to profit or loss and recognised in “other operating income”.

38 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

( j) Financial assets – classification and subsequent measurement (cont’d.)

(i) Debt instruments (cont’d.)

FVTPL

Financial assets that do not meet the criteria for amortised cost or FVOCI, including financial assets held-for-trading and derivatives, are
measured at FVTPL. A gain or loss on an asset that is subsequently measured at FVTPL and is not part of a hedging relationship is recognised
in profit or loss and presented within “investment and trading income”. Interest/profit earned whilst holding the assets are reported as “interest
income”/”profit income” using the effective interest/effective profit method.

In addition, financial assets that meet the criteria for amortised cost or FVOCI may be irrevocably designated by management as FVTPL on
initial recognition, provided the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from
measuring the assets or liabilities or recognising gains or losses on them on a different basis. Such designation is determined on an instrument
by instrument basis. Any change in fair value is recognised in profit or loss and presented within “investment and trading income”. Interest/profit
earned is recognised in “interest income”/“profit income” using the effective interest/effective profit method.

(ii) Reclassification of debt investments

The Group and the Company reclassify debt investments when and only when the business model for managing those assets changes. The
reclassification takes place from the start of the first reporting period following the change. Such changes are expected to be very infrequent
and none occurred during the financial year.

(iii) Equity instruments

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a
contractual obligation to pay and that evidence a residual interest in the issuer’s net assets.

The Group and the Company subsequently measure all equity investments at FVTPL, except where the management has elected at initial
recognition to irrevocably designate an equity investment that is not held-for-trading at FVOCI. When this election is used, fair value gains and
losses are recognised in OCI and are not subsequently reclassified to profit or loss, including on disposal. Dividends earned whilst holding the
equity investment are recognised in profit or loss as “other operating income” when the right to the payment has been established.

Gains and losses on equity investments at FVTPL, including dividends earned, are included in “investment and trading income” in profit or loss.

(k) Financial liabilities – classification and subsequent measurement

Financial liabilities are classified as subsequently measured at amortised cost, except for:

- financial liabilities at FVTPL; and

- financial guarantee contracts and loans, advances and financing commitments (see Note 2.5(w)).

39
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(k) Financial liabilities – classification and subsequent measurement (cont’d.)

(i) Amortised cost

Financial liabilities issued by the Group and the Company, that are not designated at FVTPL, are classified as financial liabilities at amortised
cost, where the substance of the contractual arrangement results in the Group and the Company having an obligation either to deliver cash or
another financial asset to the holder, or to satisfy the obligation other than by the exchange of a fixed amount of cash or another financial asset
for a fixed number of own equity shares.

After initial measurement, term funding, debt capital and other borrowings/financings are subsequently measured at amortised cost using the
effective interest/effective profit method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR/EPR.

A compound financial instrument which contains both a liability and an equity component is separated at the issue date. A portion of the net
proceeds of the instrument is allocated to the debt component on the date of issue based on its fair value (which is generally determined based
on the quoted market prices for similar debt instruments). The equity component is assigned the residual amount after deducting from the fair
value of the instrument as a whole the amount separately determined for the debt component. The value of any derivative features (such as a
call option) embedded in the compound financial instrument other than the equity component is included in the debt component.

(ii) FVTPL

This classification is applied to derivatives, financial liabilities held-for-trading and other financial liabilities designated as such at initial
recognition. Gains or losses on financial liabilities designated at FVTPL are presented partially in OCI (being the amount of change in the fair
value of the financial liability that is attributable to changes in credit risk of that liability) and partially in profit or loss (i.e. the remaining amount of
change in fair value of the liability). This is unless such presentation would create, or enlarge, an accounting mismatch, in which case the gains
and losses attributable to changes in the credit risk of the liability are also presented in profit or loss.

(l) Derecognition of financial instruments

(i) Derecognition of financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

- the rights to receive cash flows from the asset have expired; or
- the Group and the Company have transferred rights to receive cash flows from the asset or have assumed an obligation to pay the
received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either:
- the Group and the Company have transferred substantially all the risks and rewards of the asset; or
- the Group and the Company have neither transferred nor retained substantially all the risks and rewards of the asset, but have
transferred control of the asset.

When the Group and the Company have transferred rights to receive cash flows from an asset or have entered into a pass-through arrangement,
and have neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Group’s and the Company’s continuing involvement in the asset. In that case, the Group and the Company
also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group and the Company have retained.

40 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(l) Derecognition of financial instruments (cont’d.)

(ii) Modification of loans, advances and financing

The Group sometimes renegotiate or otherwise modify the contractual cash flows of loans/financing to customers. When this happens, the
Group assesses whether or not the new terms are substantially different to the original terms. The Group does this by considering, among
others, the following factors:

- if the borrower/customer is in financial difficulty, whether the modification merely reduces the contractual cash flows to amounts the
borrower/customer is expected to be able to pay;
- whether any substantial new terms are introduced, such as a profit share or equity-based return that substantially affects the risk profile
of the loan/financing;
- significant extension of the loan/financing term when the borrower/customer is not in financial difficulty;
- significant change in the interest rate/profit rate;
- change in the currency the loan/financing is denominated in; or
- insertion of collateral, other security or credit enhancements that significantly affect the credit risk associated with the loan/financing.

If the terms are substantially different, the Group derecognises the original financial asset and recognise a “new” asset at fair value and recalculate
a new EIR/EPR for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation
purposes, including for the purpose of determining whether a significant increase in credit risk (“SICR”) has occurred. However, the Group also
assesses whether the new financial asset recognised is deemed to be credit-impaired at initial recognition, especially in circumstances where
the renegotiation was driven by the borrower/customer being unable to make the originally agreed payments. Differences in the carrying
amount are also recognised in profit or loss as a gain or loss on derecognition.

If the terms are not substantially different, the renegotiation or modification does not result in derecognition, and the Group recalculates the
gross carrying amount based on the revised cash flows of the financial asset and recognises a modification gain or loss in profit or loss. The
new gross carrying amount is recalculated by discounting the modified cash flows at the original EIR/EPR.

(iii) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.

When an existing financial liability is replaced by another from the same lender/financier on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the
recognition of a new liability. The terms are substantially different if the discounted present value of the cash flows under the new terms,
including any fees paid net of any fees received and discounted using the original EIR/EPR, is at least 10% different from the discounted present
value of the remaining cash flows of the original financial liability. In addition, other qualitative factors such as the currency that the instrument is
denominated in, changes in the type of interest rate/profit rate, new conversion features attached to the instrument and changes in covenants
are also taken into consideration. The difference in the respective carrying amount of the original financial liability and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred are adjusted to the carrying amount of the
financial liability and are amortised over the remaining term of the modified financial liability.

41
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(m) Repurchase and reverse repurchase agreements

Securities sold under repurchase agreements at a specified future date are not derecognised from the statements of financial position as the Group
retains substantially all the risks and rewards of ownership. The corresponding cash received is recognised in the statements of financial position as
an asset with a corresponding obligation to return it, including accrued interest, as a liability within “securities sold under repurchase agreements”,
reflecting the transaction’s economic substance as a loan to the Group. The difference between the sale and repurchase prices is treated as interest
expense and is accrued over the life of the agreement using the EIR. When the counterparty has the right to sell or repledge the securities, the Group
reclassifies those securities in the statements of financial position to “financial assets at FVTPL pledged as collateral” or to “financial investments at
FVOCI pledged as collateral”, as appropriate.

Conversely, securities purchased under agreements to resell at a specified future date are not recognised in the statement of financial position.
The consideration paid, including accrued interest, is recorded in the statement of financial position, within “securities purchased under resale
agreements”, reflecting the transaction’s economic substance as a loan by the Group. The difference between the purchase and resale prices is
recorded in “interest income” and is accrued over the life of the agreement using the EIR.

If securities purchased under agreement to resell are subsequently sold to third parties, the obligation to return the securities is recorded as a short
sale within “financial liabilities at FVTPL” and measured at fair value with any gains or losses included in “investment and trading income”.

(n) Fair value measurement

The Group measures financial instruments such as financial assets at FVTPL, financial investments at FVOCI and derivatives at fair value at each
reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place
either:

- in the principal market for the asset or liability; or

- in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or most advantageous market must be accessible to the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset
in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are in the circumstances and for which sufficient data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs.

42 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(n) Fair value measurement (cont’d.)

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurements as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;
and/or
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets or liabilities that are recognised at fair value in the financial statements on a recurring basis, the Group determines whether transfers
have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each reporting period.

The fair value hierarchies of the following are disclosed in Note 50:

(i) financial instruments that are measured at fair value; and

(ii) financial assets, financial liabilities and non-financial assets that are not measured at fair value, but for which fair value is disclosed.

(o) Financial instruments - expected credit losses (“ECL”)

The Group and the Company assess on a forward-looking basis the ECL associated with debt instrument assets carried at amortised cost and FVOCI
and with the exposure arising from loan/financing commitments and financial guarantee contracts. The Group and the Company recognise a loss
allowance for such losses at each reporting date. The measurement of ECL reflects:

- an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
- the time value of money; and
- reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions
and forecasts of future economic conditions.

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss, except for debt
instruments measured at FVOCI. Interest income/profit income continues to be accrued in profit or loss on the reduced carrying amount and is
accrued using the rate of interest/rate of profit used to discount the future cash flows for the purpose of measuring the impairment loss. If, in a
subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring or a change in forward-looking
adjustments after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance
account.

For loan/financing commitments and financial guarantee contracts, the loss allowance is recognised as a provision. However, for contracts that
include both a loan/financing and an undrawn commitment and the Group cannot separately identify the expected credit losses on the undrawn
commitment component from those on the loan/financing component, the ECL on the undrawn commitment are recognised together with the
loss allowance for the loan/financing. To the extent that the combined ECL exceeds the gross carrying amount of the loan/financing, the ECL are
recognised as a provision.

The methodology applied in measuring ECL is explained in Note 49.2.

Loans/financing together with the associated allowance are written off when all practical recovery efforts have been exhausted and there is no
realistic prospect of future recovery, and all collateral has been realised or has been transferred to the Group. The Group may also write-off financial
assets that are still subject to enforcement activity when there is no reasonable expectation of full recovery. If a write-off is later recovered, the
recovery is credited to profit or loss.

43
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(o) Financial instruments - expected credit losses (“ECL”) (cont’d.)

(i) Rescheduled and restructured loans/financing

Where possible, the Group seeks to reschedule or restructure loans/financing rather than to take possession of collateral. This may involve
extending the payment arrangements and the agreement of new loan/financing conditions. Once the terms have been rescheduled or
restructured, any impairment is measured using the original EIR/EPR as calculated before the modification of terms. Management continually
reviews impaired rescheduled or restructured loans/financing for a certain period to ensure all terms are adhered to and that future payments
are likely to occur before reclassification back to performing status.

(ii) Collateral valuation

The Group seeks to use collateral, where possible, to mitigate its risks on financial assets. The collateral comes in various forms such as
cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other non-financial assets and credit enhancements such as
netting agreements. The fair value of collateral is generally assessed, at a minimum, at inception and based on the Group’s quarterly reporting
schedule, however, some collateral, for example, cash or securities relating to margining requirements, is valued daily.

To the extent possible, the Group uses active market data for valuing financial assets held as collateral. Other financial assets which do not have
a readily determinable market value are valued using models. Non-financial collateral, such as real estate, is valued based on data provided by
third parties such as property valuers, mortgage brokers, housing price indices, audited financial statements, and other independent sources.
(See Note 49.2.1d for further analysis of collateral).

(iii) Collateral repossessed

The Group’s policy is to determine whether a repossessed asset is best used for internal operations or should be sold. Repossessed financial
assets determined to be useful for the internal operations are classified based on their characteristics, business model and the cash flow
characteristics, and are measured at their fair value in the same manner as described in Note 2.5(n). Repossessed non-financial assets
determined to be useful for the internal operations are transferred to their relevant asset category at the lower of their repossessed value and
the carrying value of the original secured asset. Repossessed assets that are determined better to be sold are immediately transferred to assets
held for sale if the sale is deemed highly probable within a short period following the repossession, whereby financial assets are measured at
their fair value whereas non-financial assets are measured at the lower of fair value less cost to sell at the repossession date and the carrying
value of the original secured asset.

(p) Hedge accounting

The Group makes use of derivative instruments to manage exposures to interest rate/profit rate, foreign currency and credit risks, including exposures
arising from forecast transactions and firm commitments. In order to manage particular risks, the Group applies hedge accounting for transactions
which meet specified criteria.

At inception of the hedge relationship, the Group formally documents the relationship between the hedged item and the hedging instrument,
including the nature of the risk, the risk management objective and strategy for undertaking the hedge and the method that will be used to assess
the effectiveness of the hedging relationship at inception and on an ongoing basis.

44 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(p) Hedge accounting (cont’d.)

At each hedge effectiveness assessment date, a hedge relationship must be expected to be highly effective on a prospective basis for the designated
period in order to qualify for hedge accounting. A formal assessment is undertaken by comparing the hedging instrument’s effectiveness in offsetting
the changes in fair value or cash flows attributable to the hedged risk in the hedged item, both at inception and at each quarter end on an ongoing
basis. Hedge ineffectiveness is recognised in profit or loss. For situations where the hedged item is a forecast transaction, the Group also assesses
whether the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect profit or loss.

(i) Fair value hedges

The change in the fair value of a hedging derivative is recognised in “investment and trading income” in profit or loss. The change in the fair
value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognised in
“investment and trading income” in the statement of profit or loss.

For fair value hedges relating to items recorded at amortised cost, any adjustment to carrying value is amortised through profit or loss over
the remaining term of the hedge using the effective interest/effective profit method. EIR/EPR amortisation may begin as soon as an adjustment
exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognised, the unamortised fair value is recognised immediately in profit or loss.

(ii) Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the “cash flow hedge reserve”, while any ineffective
portion is recognised immediately in “investment and trading income” in the statement of profit or loss.

Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged
financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset
or non-financial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability.

If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if
its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

(iii) Hedges of a net investment

Hedges of net investments in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are
accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge
are recognised in OCI while any gains or losses relating to the ineffective portion are recognised in profit or loss. On disposal of the foreign
operation, the cumulative value of any such gains or losses recorded in equity is transferred to profit or loss.

(q) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if there is a currently
enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.

45
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(r) Impairment of non-financial assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists,
or when annual impairment testing for an asset is required, the Group and the Company estimate the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When
the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre–tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded entities or other available fair value indicators.

For assets excluding goodwill and intangible assets with indefinite useful lives, an assessment is made at each reporting date to determine whether
there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Group and the
Company estimate the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change
in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss.

The following assets have specific characteristics for impairment testing:

(i) Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates.
When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to
goodwill cannot be reversed in future periods.

(ii) Intangible assets

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the CGU level, as appropriate, and when
circumstances indicate that the carrying value may be impaired.

(s) Cash and cash equivalents

Cash and short-term funds in the statements of financial position comprise cash and bank balances with banks and other financial institutions and
short-term deposits maturing within one month.

For the purpose of the statements of cash flows, cash and cash equivalents consist of cash and short-term funds with original maturity of 3 months or
less and net of outstanding bank overdrafts.

46 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(t) Assets held for sale and discontinued operation

The Group classifies assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing
use. This condition is regarded as met only when the sale is probable and the assets are available for immediate sale in their present condition,
management has committed to the sale and the sale is expected to have been completed within one year from the date of the classification. Such
assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

Property and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position.

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale,
and:

- represents a separate major line of business or geographical area of operations;

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
- is a subsidiary acquired exclusively with a view to resale.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from
discontinued operations in profit or loss.

Additional disclosures are provided in Note 54 and 57. All other notes to the financial statements mainly include amounts for continuing operations,
unless otherwise mentioned.

(u) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in profit or loss net of any
reimbursement.

(v) Contingent liabilities and contingent assets

A contingent liability is a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the
obligation or in extremely rare cases whereby there is a liability that cannot be recognised because it cannot be measured with sufficient reliability.
The contingent liability is not recognised but instead is disclosed in the financial statements. A possible obligation that arises from past events whose
existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Group is also disclosed as a contingent liability unless the probability of outflow or economic resources is remote.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed only by the occurrence or non-occurrence
of one or more uncertain future events not wholly within the control of the Group. The Group does not recognise contingent assets in the financial
statements but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

47
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(w) Financial guarantee contracts and loan/financing commitments

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs
because the specified debtor/customer fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the amount of loss allowance (calculated as described in Note 2.5(o)) and the premium
received on initial recognition less income recognised in accordance with the principles of MFRS 15.

Loan/financing commitments provided by the Group are measured at the amount of the loss allowance (calculated as described in Note 2.5(o)).

(x) Recognition of income and expenses

(A) Recognition of income and expenses relating to financial instruments

(i) Interest/profit income and similar income and expense

For all interest-bearing/profit-bearing financial assets and financial liabilities measured at amortised cost, interest-bearing/profit-bearing
financial investments at FVOCI and financial assets and financial liabilities at FVTPL, interest/financing income or expense is calculated
using the effective interest/effective profit method. EIR/EPR is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial
asset or financial liability. The calculation takes into account all contractual terms of the financial instrument and includes any fees or
incremental costs that are directly attributable to the instrument and are an integral part of the EIR/EPR, but not future credit losses.

The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The
adjusted carrying amount is calculated based on the original EIR/EPR and the change in carrying amount is recorded in profit or loss.
However, for a reclassified financial asset for which the Group subsequently increases its estimates of future cash receipts as a result of
increased recoverability of those cash receipts, the effect of that increase is recognised as an adjustment to the EIR/EPR from the date
of the change in estimate.

Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest
income/profit income continues to be recognised using the rate of interest/profit used to discount the future cash flows for the purpose
of measuring the impairment loss.

Loan/financing commitment fees for loans/financing that are likely to be drawn down and other credit related fees are deferred (together
with any incremental costs) and recognised as an adjustment to the EIR/EPR on the loan/financing.

(ii) Dividend income

Revenue is recognised when the Group’s right to receive the payment is established, it is probable that the economic benefits will flow
to the Group and the amount of payment can be reliably measured. The conditions are generally met when shareholders approve the
dividend.

(iii) Investment and trading income

Results arising from trading activities include all gains and losses from changes in fair value and dividends for financial investments held-
for-trading classified as financial assets at FVTPL. This includes any ineffectiveness recorded in hedging transactions.

48 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(x) Recognition of income and expenses (cont’d.)

(B) Recognition of revenue from contracts with customers

Revenue is recognised by reference to each distinct performance obligation promised in the contract with customer as or when the Group
transfers the control of the goods or services promised in a contract and the customer obtains control of the goods or services. Depending on
the substance of the respective contract with customer, the control of the promised goods or services may transfer over time or at a point in
time.

A contract with customer exists when the contract has commercial substance, the Group and its customer have approved the contract and
intend to perform their respective obligations, the Group’s and the customer’s rights regarding the goods or services to be transferred and the
payment terms can be identified, and it is probable that the Group will collect the consideration to which it will be entitled to in exchange of
those goods or services.

At the inception of each contract with customer, the Group assesses the contract to identify distinct performance obligations, being the units of
account that determine when and how revenue from the contract with customer is recognised.

Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised
goods or services to the customers, excluding amounts collected on behalf of third parties. If the amount of consideration varies, the Group
estimates the amount of consideration that it expects to be entitled based on the expected value or the most likely outcome but the estimation
is constrained up to the amount that is highly probable of no significant reversal in the future. If the contract with customer contains more than
one distinct performance obligation, the amount of consideration is allocated to each distinct performance obligation based on the relative
stand-alone selling prices of the goods or services promised in the contract.

The consideration allocated to each performance obligation is recognised as revenue as or when the customer obtains control of the goods or
services. At the inception of each contract with customer, the Group determines whether control of the goods or services for each performance
obligation is transferred over time or at a point in time. Revenue is recognised over time if the control over the goods or services is transferred
over time. Revenue for performance obligation that is not satisfied over time is recognised at the point in time at which the customer obtains
control of the promised goods or services.

The following specific recognition criteria must be met before revenue is recognised:

(i) Fee and commission income

The Group earns fee and commission income from a diverse range of services it provides to its customers. Fee income can be divided
into the following two categories:

Fee income earned from services that are provided over a period of time

Fees earned for the provision of services over a period of time are accrued over that period by reference to the stage of completion of
the services. These fees include loan/financing arrangement, commission income, asset management, custody and other management
and advisory fees. Loan/Financing commitment fees for loans/financing that are unlikely to be drawn down are recognised over the
commitment period on a straight-line basis.

49
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(x) Recognition of income and expenses (cont’d.)

(B) Recognition of revenue from contracts with customers (cont’d.)

(i) Fee and commission income (cont’d.)

Fee income from providing transaction services

Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the arrangement of the acquisition
of shares or other securities or the purchase or sale of businesses, are recognised on completion of the underlying transaction. Fees or
components of fees that are linked to a certain performance are recognised after fulfilling the corresponding criteria. Revenue from sale
of unit trusts is recognised upon allotment of units, net of cost of units sold or as a percentage of sales value.

(ii) Customer loyalty programmes

Award credits under customer loyalty programmes are accounted for as a separately identifiable component of the transaction in which
the award credits are granted. The fair value of the consideration received in respect of the initial sale is allocated between the award
credits and the other components of the transaction on a relative stand-alone selling price basis. If stand-alone selling price of the other
component is uncertain, the Group estimates the stand-alone selling price by reference to the total transaction price less the fair value
of the award credits. Revenue from the award credits is recognised when the award credits are redeemed or expired. The amount of
revenue recognised when the award credits are redeemed is based on the number of award credits redeemed relative to the total
number expected to be redeemed.

(y) Employee benefits

(i) Short-term benefits

Wages, salaries, bonuses and social security contributions that are expected to be settled wholly within 12 months after the end of the financial
year in which the employees render the related service are recognised as an expense in the financial year in which the associated services are
rendered by employees of the Group and are measured at the amounts paid or expected to be paid when the liabilities are settled. Short-term
accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their
entitlement to future compensated absences, and short-term non-accumulating compensated absences such as sick leave are recognised
when the absences occur.

(ii) Defined contribution pension plan

The Group makes contributions to the Employee Provident Fund (“EPF”), as well as defined contribution private retirement schemes in Malaysia.
Such contributions are recognised as an expense in profit or loss in the financial year to which they relate. Once the contributions have been
paid, the Group has no further payment obligations.

50 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(y) Employee benefits (cont’d.)

(iii) Defined benefit plans

The calculation of defined benefit liability, based on the present value of the defined benefit obligations at the end of the reporting less the fair
value of plan assets, is performed annually by qualified actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-
quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating
to the terms of the related defined benefit obligations.

The Group recognises the following changes in the net defined benefit obligations in profit or loss:

- service costs comprising current service costs, past service costs, gains and losses on curtailments and non-routine settlements; and
- net interest expense or income.

Past service costs are recognised in profit or loss on the earlier of:

- the date of the plan amendment or curtailment; or

- the date that the Group recognises restructuring-related costs.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding net interest)
and the effect of the asset ceiling (if any, excluding net interest), are recognised immediately in OCI in the period in which they occur and
recorded in defined benefit reserve. Remeasurements are not reclassified to profit or loss in subsequent periods.

(iv) Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever
an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when the Group
demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of
withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than
12 months after the reporting date are discounted to present value.

(v) Share-based payment transactions

The Company operates an equity-settled share-based compensation scheme wherein shares or options to subscribe for shares of the Company
are granted to eligible directors and employees of the Group based on certain financial and performance criteria and such conditions as it may
deem fit.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting
date”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge
or writeback of shares granted under ESS for the period is recorded in “personnel costs” and represents the movement in cumulative expense
recognised as at the beginning and end of that period.

51
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(y) Employee benefits (cont’d.)

(v) Share-based payment transactions (cont’d.)

Where the terms of an equity-settled award are modified, the minimum expense recognised in “personnel costs” is the expense as if the
terms had not been modified. An additional expense is recognised for any modification which increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the
counterparty are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date
that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous
paragraph.

(z) Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders. Interim
dividends are deducted from equity when they are declared.

Dividends for the year that are approved between the end of the reporting period and the date the financial statements are authorised for issue are
disclosed as an event after the reporting period.

(aa) Taxes

(i) Current tax

Current tax assets and liabilities for the current and prior financial years are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the
reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss. Current taxes
relating to items recognised in OCI or directly in equity is recognised in OCI or equity respectively.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

- when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
- in respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

52 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(aa) Taxes (cont’d.)

(ii) Deferred tax (cont’d.)

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

- when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss;
- in respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the
deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in
correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised
subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as
it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

(ab) Zakat

This represents business zakat payable by the Group to comply with Shariah principles as approved by AmBank Islamic’s Shariah Committee. Zakat
provision is calculated by reference to the zakat rate of 2.5% of the net profit after tax of AmBank Islamic. The amount of zakat assessed is recognised
as an expense in the period in which it is incurred.

In the financial year, the Group has fulfilled its obligation to pay business zakat to state zakat authorities and other identified beneficiaries (asnaf)
comprising poor and needy students under the student adoption programme, flood victims and non-governmental organisations.

53
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(ac) Earnings Per Share (“EPS”)

The Group presents basic and diluted EPS data for its ordinary shares in Note 40. Basic EPS is calculated by dividing the profit or loss attributable
to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period net of treasury shares.
Diluted EPS is determined by adjusting the profit or loss attributable to the ordinary shareholder and the weighted average number of ordinary shares
outstanding for the effects of all dilutive potential ordinary shares.

(ad) Segment reporting

Segment reporting in the financial statements is presented on the same basis as is used by management internally for evaluating operating segment
performance and in deciding how to allocate resources to operating segments. Operating segments are distinguishable components of the Group
about which separate financial information is available and is evaluated regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Reportable segments are operating segments or aggregations of operating segments of similar economic
characteristics that meet specific aggregation criteria.

The Group’s segmental reporting is based on the following operating segments: retail banking, business banking, wholesale banking, investment
banking, fund management, insurance and group funding and others, as disclosed in Note 51.

(ae) Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all the liabilities. Ordinary shares
are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Changes in the fair value of the
ordinary shares are not recognised in the financial statements.

(af) Fiduciary assets

The Group provides trust and other fiduciary services that result in the holding or investing of assets on behalf of their clients. Assets held in a
fiduciary capacity are not recognised as assets of the Group.

(ag) Insurance product classification

The Group issues contracts that transfer insurance risks or financial risks or both.

Financial risk is the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign
exchange rate, index of price or rate, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is
not specific to a party to the contract. Insurance risk is the risk other than financial risk.

Insurance contracts are those contracts when the Group has accepted significant insurance risk from another party (the “policyholders”) by agreeing
to compensate the policyholders if a specified uncertain future event (the “insured event”) adversely affects the policyholders. As a general guideline,
the insurer determines whether it has significant insurance risk, by comparing claims paid with claims payable if the insured event did not occur.

Investment contracts are those contracts that transfer significant financial risk and not significant insurance risk.

54 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(ag) Insurance product classification (cont’d.)

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance
risk reduces significantly during this financial year, unless all rights and obligations are extinguished or expired. Investment contracts can, however,
be reclassified as insurance contracts after inception if insurance risk becomes significant.

The Group currently only issues contracts that transfer insurance risk.

(ah) Reinsurance

The Group cedes insurance risk in the normal course of business for all its businesses. Reinsurance assets represent balances due from reinsurance
companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims
associated with the reinsurers’ policies and are in accordance with the related reinsurance contracts.

Ceded reinsurance arrangements do not relieve the Group from its obligations to the policyholders. Premiums and claims are presented on a gross
basis for both ceded and assumed reinsurance.

Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the
reporting period. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance
asset that the Group may not receive all outstanding amounts due under the terms of the contract and the event has a reliable measurable impact on
the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in profit or loss.

The Group also assumes reinsurance risk in the normal course of business when applicable.

Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were
considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to
reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract.

Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expired or when the contract is transferred to
another party.

Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are
deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to
be retained by the reinsured. Investment income on these contracts is accounted for using the effective yield method when accrued.

(ai) Insurance receivables

Insurance receivables are amounts receivable under the contractual terms of an insurance contract. On initial recognition, insurance receivables are
measured at fair value based on the consideration receivable. Subsequent to initial recognition, insurance receivables are measured at amortised
cost using the effective yield method.

The Group assesses on a forward-looking basis the ECL associated with its insurance receivables. The Group recognises a loss allowance for such
losses at each reporting date in profit or loss. The ECL is calculated using the same methodology applied for financial assets carried at amortised cost,
as detailed in Note 2.5(o).

Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in Note 2.5(l), have been met.

55
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(aj) General insurance underwriting results

The general insurance underwriting results are determined for each class of business after taking into account premiums, movements in premiums
and claims liabilities and commissions.

(i) Gross premiums

Gross premiums are recognised as income in the financial year in respect of risks assumed during the particular financial year.

(ii) Reinsurance premiums

Inwards facultative reinsurance premiums are recognised in the financial year in respect of the facultative risk assumed during the particular
financial year, as in the case of direct policies, following individual risks’ inception dates.

Inwards treaty reinsurance premiums comprise both proportional and non-proportional treaties. In respect of reinsurance premiums relating
to proportional treaties, it is recognised on the basis of periodic advices received from the cedents given that the periodic advices reflect the
individual underlying risks being incepted and reinsured at various inception dates of these risks and contractually accounted for, as such to
reinsurers under the terms of the proportional treaties. In respect of reinsurance premiums relating to non-proportional treaties which cover
losses occurring during a specified treaty period, the inwards treaty reinsurance premiums are recognised based on the contractual premiums
already established at the start of the treaty period under the non-proportional treaty contract.

(iii) Premium liabilities

Premium liabilities represent the Group’s future obligations on insurance contracts as represented by premiums received for risks that have not
yet expired. In determining premium liabilities at reporting date, the method that most accurately reflects the actual unearned premium is used,
as described in Note 2.5(ak).

(iv) Claims liabilities

A liability for outstanding claims is recognised in respect of both direct insurance and inward reinsurance.

The amount of claims liabilities is the best estimate of the expenditure required together with related expenses less recoveries to settle the
present obligation at the reporting date.

Provision is also made for the cost of claims, together with related expenses, incurred but not reported at the reporting date, using a mathematical
method of estimation.

(v) Acquisition costs

The gross costs of acquiring and renewing insurance policies and income derived from ceding reinsurance premiums are recognised as
incurred and properly allocated to the periods in which it is probable they give rise to income.

(ak) General insurance contract liabilities

General insurance contract liabilities are recognised when contracts are entered into and premiums are charged. The valuation of general insurance
contract liabilities is in accordance with the Risk-Based Capital (“RBC”) Framework for Insurers issued by Bank Negara Malaysia (“BNM”).

These liabilities comprise claims liabilities and premium liabilities.

56 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

2. ACCOUNTING POLICIES (CONT’D.)

2.5 Summary of significant accounting policies (cont’d.)

(ak) General insurance contract liabilities (cont’d.)

(i) Claims liabilities

Claims liabilities are recognised in respect of both direct insurance and inward reinsurance. Claims liabilities refer to the obligation by the
Group, whether contractual or otherwise to make future payments in relation to all claims that have been incurred as at valuation date. These
include provision for claims reported, claims incurred but not reported (“IBNR”), claims incurred but not enough reserved (“IBNER”) together
with related claims handling costs. Claims liabilities consist of the best estimate value of the claims liabilities and the Provision of Risk Margin
for Adverse Deviation (“PRAD”) calculated at the overall level. The liability is discounted at a risk free rate. No provision for equalisation or
catastrophe reserve is recognised. The liabilities are derecognised when the claim is paid and settled, discharged or cancelled.

(ii) Premium liabilities

Premium liabilities are recorded at the higher of the following:

- aggregate of the unearned premium reserves (“UPR”); and

- the best estimate value of the Group’s unexpired risk reserve (“URR”) as at the valuation date and the PRAD calculated at the overall level.

(iii) UPR

The UPR represent the portion of the premiums of insurance policies written less deductible acquisition costs that relate to the unexpired
period of the policies at the end of the financial year.

In determining UPR at the end of the reporting period, the method that most accurately reflect the actual unearned premium used is as follows:

i. 25% method for Malaysian marine cargo, aviation cargo and transit business;
ii. Daily time apportionment method for all other classes; or
iii. 1/24th method for inward treaty business.

(iv) URR

The URR is the prospective estimate of the expected future payments arising from future events insured under policies in force as at the valuation
date and also includes allowance for the Group’s expenses, including overheads and cost of reinsurance expected to be incurred during
administering these policies and settling the relevant claims and expected future premium refunds. The URR is discounted at a risk free rate.

(v) Liability adequacy test

At each reporting date, the Group reviews its unexpired risks and a liability adequacy test (“LAT”) is performed to determine whether there is
any overall excess of expected claims and deferred acquisition costs over unearned premiums. This calculation uses current estimates of future
contractual cash flows (taking into consideration current loss ratios) after taking account of the investment return expected to arise on assets
relating to the relevant general insurance technical provisions. If these estimates show that the carrying amount of the unearned premiums less
related deferred acquisition costs is inadequate, the deficiency is recognised in profit or loss by setting up a provision for liability adequacy.

(al) Government grant

A government grant is recognised only when there is a reasonable assurance that the grant will be received and all attached conditions will be met.
It is measured at its fair value and is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to
compensate, are expensed. The benefit of a government loan at a below-market rate of interest, measured as the difference between the fair value
of the loan and proceeds received, is similarly treated as a government grant.

57
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

3. CHANGES IN ACCOUNTING POLICIES

3.1 Adoption of amendments and annual improvements to standards

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of the following amendments to published
standards:

- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to MFRS 116)
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to MFRS 137)
- Reference to the Conceptual Framework (Amendments to MFRS 3)
- Annual Improvements to MFRS Standards 2018-2020

The adoption of these amendments to published standards did not have any material impact on the financial statements of the Group and of the Company.
The Group and the Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments
to published standards.

The nature of the amendments to published standards relevant to the Group and the Company are described below:

(a) Property, Plant and Equipment: Proceeds before Intended Use (Amendments to MFRS 116)

The amendments clarify that an entity is ‘testing whether the asset is functioning properly’ when it assesses the technical and physical performance
of the asset, and prohibits an entity from deducting from the cost of an item of property, plant and equipment any proceeds received from selling
items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a
machine to see if it is functioning properly). The proceeds from selling such samples, together with the costs of producing them, shall be recognised
in profit or loss. The adoption of these amendments did not result in any impact to the financial statements of the Group and the Company.

(b) Onerous Contracts - Cost of Fulfilling a Contract (Amendments to MFRS 137)

The amendments explain that, for the purpose of determining the unavoidable costs of meeting the entity’s contractual obligations, the direct cost
of fulfilling a contract comprises the incremental costs of fulfilling that contract (e.g. direct labour and materials) and an allocation of other costs that
relate directly to fulfilling contracts (e.g. an allocation of the depreciation charge for an asset used to fulfil the contract). The amendments also clarify
that, before a separate provision for an onerous contract is established, an entity recognises any impairment loss that has occurred on assets used in
fulfilling the contract, rather than on assets dedicated to that contract. The adoption of these amendments did not result in any impact to the financial
statements of the Group and the Company.

(c) Reference to the Conceptual Framework (Amendments to MFRS 3)

The amendments updated MFRS 3 Business Combinations to refer to the revised Conceptual Framework for Financial Reporting (“Conceptual
Framework”) in order to determine what constitutes an asset or a liability in a business combination. In addition, a new exception is added in MFRS
3 in connection with liabilities and contingent liabilities. The exception specifies that, for some types of liabilities and contingent liabilities, an entity
applying MFRS 3 should instead refer to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets or IC Interpretation 21 Levies, rather than
the Conceptual Framework. The adoption of these amendments did not result in any impact as there is no business combination or asset acquisition
occurred during the financial year 31 March 2023.

58 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

3. CHANGES IN ACCOUNTING POLICIES (CONT’D.)

3.1 Adoption of amendments and annual improvements to standards (cont’d.)

The nature of the amendments to published standards relevant to the Group and the Company are described below: (cont’d.)

(d) Annual Improvements to MFRS Standards 2018-2020

The Annual Improvements to MFRS Standards 2018-2020 include minor amendments as summarised below:

(i) MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards

When a subsidiary adopts MFRS at a later date than its parent, MFRS 1 permits the subsidiary to measure its assets and liabilities at the
carrying amounts that would be included in its parent’s consolidated financial statements, based on the parent’s date of transition to MFRS,
if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the
subsidiary. The amendment expanded the above by allowing the subsidiary to also measure cumulative translation differences using the
amounts reported by the parent, based on the parent’s date of transition to MFRS. The adoption of these amendments did not result in any
impact as there is no subsidiary of the Group that adopt MFRS later than the Company.

(ii) MFRS 9 Financial Instruments

The amendment clarified that costs or fees paid to third parties shall not be included in the 10% test for derecognition of financial liabilities. The
adoption of these amendments did not result in any impact to the financial statements of the Group and the Company.

(iii) MFRS 141 Agriculture

The amendment removed the requirement for entities to exclude cash flows for taxation when measuring fair value to align with the requirement
in the standard to discount cash flows on a post-tax basis. The adoption of this amendment did not result in any impact as the Group is not in
the agriculture business.

3.2 Standards issued but not yet effective

The following are new standard and amendments to published standards issued but not yet effective up to the date of issuance of the Group’s and of the
Company’s financial statements. The Group and the Company intend to adopt the relevant standards and amendments to published standards when they
become effective.

Description Effective for annual periods beginning on or after

- MFRS 17 Insurance Contracts 1 January 2023

- Initial Application of MFRS 17 and MFRS 9 - Comparative Information (Amendment to MFRS
17 Insurance Contracts) 1 January 2023
- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments
to MFRS 112 Income Taxes) 1 January 2023
- Lease Liability in a Sale and Leaseback (Amendments to MFRS 16 Leases) 1 January 2024
- Non-current Liabilities with Covenants (Amendments to MFRS 101 Presentation of Financial
Statements) 1 January 2024
- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in
Associates and Joint Ventures) To be determined by MASB

59
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

3. CHANGES IN ACCOUNTING POLICIES (CONT’D.)

3.2 Standards issued but not yet effective (cont’d.)

The nature of the new standard and amendments to published standards that are issued but not yet effective are described below. The Group and the
Company are currently assessing the financial effects of their adoption.

(a) New standard and amendments to published standards effective for financial year ending 31 March 2024

MFRS 17 Insurance Contracts and Initial Application of MFRS 17 and MFRS 9 - Comparative Information (Amendment to MFRS 17 Insurance
Contracts)

MFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure
which supersedes MFRS 4 Insurance Contracts.

MFRS 17 requires a general measurement model, where estimates are remeasured in each reporting period. The measurement is based on the
building blocks of discounted, probability-weighted fulfilment cash flows, a risk adjustment and a contractual service margin (“CSM”) representing
the unearned profit of the contract. A simplified premium allocation approach is permitted for the liability for the remaining coverage if it provides a
measurement that is not materially different from the general model or if the coverage period is one year or less. However, claims incurred will need
to be measured based on the building blocks of discounted, risk-adjusted, probability weighted cash flows.

For insurance contracts with direct participation features, the CSM is measured using the variable fee approach to deduct a variable fee comprising
the Group’s share of the fair value of the underlying items less fulfilment cash flows that do not vary based on the returns of the underlying items.

Changes in cash flows related to future services should be recognised against the CSM. The CSM cannot be negative, so changes in future cash
flows that are greater than the remaining CSM are recognised in profit or loss. Interest is accreted on the CSM at rates locked in at initial recognition
of a contract. To reflect the service provided, the CSM is released to profit or loss in each period on the basis of passage of time. Entities have an
accounting policy choice to recognise the impact of changes in discount rates and other assumptions that relate to financial risks either in profit or
loss or in other comprehensive income.

MFRS 17 is effective for reporting periods beginning on or after 1 January 2023. Early application is permitted, provided MFRS 9 is also applied. A full
retrospective application is required; an entity is permitted to choose between a modified retrospective approach and the fair value approach if full
retrospective application is impracticable. An entity that first applies MFRS 17 and MFRS 9 at the same time is also permitted to apply a classification
overlay on the comparative information about a financial asset as if the classification and measurement requirements of MFRS 9 had been applied to
that financial asset before to overcome potential accounting mismatches.

The adoption of MFRS 17 is expected to impact the value of investment in associates and joint ventures.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to MFRS 112 Income Taxes)

The amendments clarified that the initial exemption rule from recognising deferred taxes does not apply to transactions where both an asset and
a liability are recognised at the same time resulting in equal amounts of taxable and deductible temporary differences. This essentially means that
lessees would not be able to apply the initial exemption rule in MFRS 112 for the assets and liabilities arising from leases.

The amendments are applied from annual reporting period beginning on or after 1 January 2023. Early adoption is permitted. The Group currently
adopted the policy not to recognise deferred taxes on leases, additional deferred taxes on temporary differences associated with right-of-use assets,
lease liabilities and decommissioning obligations would need to be recognised when the amendments become effective.

60 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

3. CHANGES IN ACCOUNTING POLICIES (CONT’D.)

3.2 Standards issued but not yet effective (cont’d.)

(b) Amendments to published standards effective for financial year ending 31 March 2025

Lease Liability in a Sale and Leaseback (Amendments to MFRS 16 Leases)

The amendments clarified that, in subsequently measuring the lease liability, seller-lessee determines lease payments and revised leased payments
in a way that does not recognise any amount of the gain or loss that relates to the right of use it retains.

The amendments are applied from annual reporting period beginning on or after 1 January 2024. Early adoption is permitted.

Non-current Liabilities with Covenants (Amendments to MFRS 101 Presentation of Financial Statements)

The amendments clarified that covenants of loan arrangements which an entity must comply with only after the reporting date would not affect
classification of a liability as current or non-current at the reporting date. However, those covenants that an entity is required to comply with on or
before reporting date would affect classification as current or non-current, even if the covenant is only assessed after the entity’s reporting date.

The amendments are applied from annual reporting period beginning on or after 1 January 2024. Early adoption is permitted.

(c) Standard effective on a date to be determined by MASB

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to MFRS 10 Consolidated Financial
Statements and MFRS 128 Investments in Associates and Joint Ventures)

The amendments clarify that:

- gains and losses resulting from transactions involving assets that do not constitute a business, between investor and its associate or joint
venture are recognised in the entity’s financial statements only to the extent of unrelated investors’ interests in the associate or joint venture;
and
- gains and losses resulting from transactions involving the sale or contribution to an associate of a joint venture of assets that constitute a
business is recognised in full.

4. SIGNIFICANT CHANGES IN REGULATORY REQUIREMENTS

There are no significant changes in regulatory requirements during the current financial year.

61
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the financial statements in accordance with MFRS requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures and the disclosure of
contingent liabilities. Judgements, estimates and assumptions are continually evaluated and are based on the past experience, reasonable expectations of future
events and other factors. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount
of assets or liabilities affected in future periods.

In the process of applying the Group’s accounting policies, management has made the following judgements, estimates and assumptions which have the most
significant effect on the amounts recognised in the financial statements.

5.1 Measurement of ECL allowances (Notes 6, 8, 11, 12, 13, 18, 27, 37, 38 and 52)

The measurement of the ECL allowances for loans, advances and financing, financial investments measured at amortised cost, FVOCI, loan/financing
commitments and financial guarantee contracts requires the use of complex models and significant assumptions about future economic conditions and
credit behaviour. Explanation of the inputs, assumptions and estimation techniques used in measuring ECL is further detailed in Note 49.2 (Credit Risk
Management).

Components of ECL models that involve significant judgement includes:

- determining criteria for significant increase in credit risk in the qualitative assessment and the impact of the instrument being measured at lifetime
ECL basis due to significant increase in credit risk;
- choosing appropriate models and assumptions including the various formulae and choice of inputs for the measurement of ECL;
- establishing the forward-looking macroeconomic scenarios and the associated probability weightings, which are used in forward-looking ECL
measurement;
- establishing groups of similar financial assets for the purposes of measuring ECL; and
- application of the Group’s internal credit grading model which assigns Probability of Default (“PD”) to the individual grades.

5.2 Lease term of agreements with renewal options (Note 20)

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised.

The Group has the option, under some of its leases to lease the assets for additional terms of three to twelve years. The extension options held are
exercisable only by the Group and not by the respective lessor. In determining the lease term, the Group considers all facts and circumstances that create
an economic incentive to exercise an extension option. Factors considered include historical lease durations and the costs and business disruption required
to replace the leased asset. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances
that is within its control and affects its ability to exercise (or not to exercise) the option to renew. The Group included the renewal period as part of the lease
term for most of its leases of premises due to the significance of these assets to its operations.

5.3 Impairment of goodwill (Note 21)

The Group tests annually whether the goodwill that has an indefinite life is impaired by measuring the recoverable amount of the CGU based on the value-
in-use method, which requires the use of estimates of future cash flow projections, terminal growth rates and discount rates. Changes to the assumptions
used by management, particularly the discount rate and the terminal value, may affect the results of the impairment assessment.

62 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONT’D.)

5.4 Deferred tax assets (Note 15) and income taxes (Note 39)

The Group’s income tax expense, deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid.

Deferred tax assets are recognised in respect of unabsorbed capital allowances and other temporary differences to the extent that it is probable that future
taxable profit will be available against which the unabsorbed capital allowances and other temporary differences can be utilised. Management judgement is
required to determine the amount of the deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together
with future tax planning strategies.

Significant judgement is required in estimating the provision for income taxes. Such estimate involves dealing with uncertainties in the application on the
tax treatment of certain income or expenses that requires interpretation of the provisions in the income tax act of the relevant tax authorities. Liabilities
for taxation are recognised based on estimates as to whether the payment of additional tax is probable. Management may seek experts’ advice for such
complex areas. As there is significant judgement and estimation uncertainty involved in determining provision for income taxes, the actual tax liability
payable to the relevant tax authorities for the relevant year of assessment may be materially different from the amounts that were initially recorded; and
such differences, if any, will be reflected as adjustments of over or under provisions of income tax and deferred tax provision in the period in which the
estimate is revised or when the final tax liability is established.

In the previous financial year, AmBank (M) Berhad (“AmBank”) and AmInvestment Bank Berhad (“AmInvestment Bank”) have claimed tax deduction on the
settlement of RM2.83 billion with Ministry of Finance Malaysia and its related expenses of RM21.0 million (“settlement sum”) in the Year of Assessment
(“YA”) 2021 tax returns. The claim for tax deduction on the settlement sum was made based on legal opinion received and accordingly, AmBank and
AmInvestment Bank recognised a portion of tax deduction amounting to RM220.5 million and RM14.1 million respectively as tax recoverable.

During the financial year, the Inland Revenue Board (“IRB”) has formally communicated to both Banks with a differing view on the tax deductibility of the
settlement sum. Management has seek legal advice arising from this latest update from IRB and concluded that the tax position taken by AmBank and
AmInvestment Bank in prior year remains unchanged as the tax deduction on the settlement sum still hold merits. As such, the Group maintained the same
tax position with the total of RM234.6 million as tax recoverable that is consistent with prior year tax treatment, resulting in nil tax impact to the Group’s
statement of profit or loss for the financial year ended 31 March 2023.

Management has also taken all the necessary steps and actions to ensure compliance with the tax regulations to maintain the Group’s tax position in
the current financial year. The Group will continuously reassess the tax recoverable recognised and the unutilised tax loss arose from the remaining tax
deduction based on the developments of the discussion with IRB.

5.5 Fair value measurement of financial instruments (Notes 9, 10, 11 and 50)

When the fair values of financial assets and financial liabilities recorded on the statements of financial position cannot be derived from active markets, they
are determined using a variety of valuation techniques that include the use of financial models. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, judgement is required to establish fair values. Judgements include considerations of liquidity and
model inputs such as volatility for longer-dated derivatives and discount rates, prepayment rates and default rate assumptions for asset-backed securities.

5.6 Development costs (Note 21)

Costs incurred in the development and implementation of software systems for the Group are capitalised as development costs if specific criteria are met.
In determining whether the costs are capitalisable, management applies judgement to ascertain the technical feasibility of completing the intangible asset,
which is usually evidenced by the achievement of defined milestone according to an established project management model.

63
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONT’D.)

5.7 Impairment of investments in subsidiaries, associates and joint ventures (Note 16 and 17)

Investments in subsidiaries, associates and joint ventures (“investments”) are for a long-term basis and the Group and the Company determine whether the
carrying amounts of its investments are impaired as and when there is indication of impairment at reporting date. This requires an estimation of the VIU of
the investments which is attributable to those investments. Estimating a VIU amount requires management to make an estimate of the expected future cash
flows from the investments and also to use a suitable discount rate in order to calculate the VIU.

5.8 Estimated loss on disposal of a subsidiary (Note 56)

In arriving the estimated loss on disposal of AmGeneral Insurance Berhad (“AGIB”) disclosed in Note 56, the Group estimated at the adjusted final disposal
price based on the management accounts of AGIB and Liberty Insurance Bhd (“LIB”) as of the date of disposal which includes an estimated actuarial
loss of RM186 million based on the draft Independent Reserve Review (“IRR”) report conducted by an independent actuary. The Group has engaged a
separate independent reviewer to assess the value of the estimated actuarial loss. As at the end of the financial year, the Group’s independent reviewer
has completed its assessment. The adjusted disposal price will be finalised upon the completion of negotiation between the Group and LIB. Hence, the
estimated loss on disposal of AGIB may be adjusted.

6. CASH AND SHORT-TERM FUNDS

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Cash and balances with banks and other financial institutions 2,530,187 1,502,255 208,565 717,660
Deposits and placements maturing within one month:
Licensed banks 2,518,377 3,234,599 - -
Bank Negara Malaysia 3,460,000 8,191,800 - -
Other financial institutions 15,133 294,690 - -
5,993,510 11,721,089 - -

8,523,697 13,223,344 208,565 717,660

Less: Allowances for ECL (1,757) (2,245) - -
8,521,940 13,221,099 208,565 717,660

64 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

6. CASH AND SHORT-TERM FUNDS (CONT’D.)

Movements in allowances for ECL are as follows:

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group Note RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 2,225 20 2,245
Net (writeback of)/allowances for ECL 38 (858) 341 (517)
Transfer to 12-month ECL (Stage 1) 5 (24) (19)
Transfer from deposits and placements with banks and other financial institutions 8 6,204 35 6,239
New financial assets originated 16,914 685 17,599
Financial assets derecognised (23,807) (585) (24,392)
Net remeasurement of allowances (174) 230 56
Foreign exchange differences 89 (60) 29
Balance at end of the financial year 1,456 301 1,757

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group Note RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 2,310 21 2,331
Net writeback of ECL 38 (60) - (60)
Transfer from deposits and placements with banks and other financial institutions 8 3,325 - 3,325
New financial assets originated 22,795 4 22,799
Financial assets derecognised (26,374) (2) (26,376)
Net remeasurement of allowances 194 (2) 192
Foreign exchange differences (25) (1) (26)
Balance at end of the financial year 2,225 20 2,245

The decrease in allowances for ECL for the current financial year is mainly due to decrease in the Group’s foreign currencies placements at the end of the financial
year which had correspondingly resulted in decrease of allowance for ECL in Stage 1.

7. SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

The amount represents the liabilities in correspondence to the cash received from the sale of securities under repurchase agreements, whereby the securities
are not derecognised as the Group retains substantially all of the risks and rewards of ownership of the securities.

65
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

8. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

Group
2023 2022
RM’000 RM’000

Deposits and placements with licensed banks maturing more than one month:
Licensed banks 176,670 1,302,774
Less: Allowances for ECL (66) (1,325)
176,604 1,301,449

Of which deposits and placements with original maturity of:

Three months or less 176,670 1,293,520
More than three months - 9,254
176,670 1,302,774

Movements in allowances for ECL are as follows:

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group Note RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 1,325 - 1,325
Net writeback of ECL 38 (1,259) - (1,259)
Transfer to cash and short-term funds 6 (6,204) (35) (6,239)
New financial assets originated 5,042 35 5,077
Net remeasurement of allowances (97) - (97)

Balance at end of the financial year 66 - 66

Stage 1
12-month
ECL
Group Note RM’000

2022
Balance at beginning of the financial year 42
Net allowances for ECL 38 1,283
Transfer to cash and short-term funds 6 (3,325)
New financial assets originated 4,573
Net remeasurement of allowances 35

Balance at end of the financial year 1,325

The allowances for impairment on deposits and placement with banks and other financial institutions decreased mainly due to the transfer to cash and short-term
funds; partially offset by new deposits and placements with licensed banks.

66 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES

2023 2022
Contract/ Fair Value Contract/ Fair Value
Notional Notional
Amount Assets Liabilities Amount Assets Liabilities
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Trading derivatives
Interest/profit rate related contracts: 34,547,432 398,874 213,434 38,845,917 424,297 345,542
- One year or less 12,307,294 24,561 18,527 12,051,408 54,274 49,463
- Over one year to three years 9,901,808 123,928 59,679 15,851,862 125,730 119,451
- Over three years 12,338,330 250,385 135,228 10,942,647 244,293 176,628

Foreign exchange related contracts: 52,555,959 503,261 723,723 48,628,852 341,606 372,353
- One year or less 45,087,669 293,947 368,421 40,258,048 124,735 105,866
- Over one year to three years 4,074,334 120,828 156,028 5,031,525 142,909 144,524
- Over three years 3,393,956 88,486 199,274 3,339,279 73,962 121,963

Equity and commodity related contracts: 1,432,375 18,974 23,897 1,645,753 55,470 74,386
- One year or less 1,352,573 12,452 17,353 1,570,386 47,256 66,123
- Over one year to three years 79,802 6,522 6,544 75,367 8,214 8,263

88,535,766 921,109 961,054 89,120,522 821,373 792,281

Hedging derivatives
Interest/profit rate related contracts:
Interest/profit rate swaps:
Fair value hedge 350,000 - 3,265 350,000 - 11,282
- Over one year to three years 350,000 - 3,265 350,000 - 11,282

Total 88,885,766 921,109 964,319 89,470,522 821,373 803,563

67
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Purpose of engaging in financial derivatives

Financial derivative instruments are contracts whose value is derived from one or more underlying financial instruments or indices. They include swaps, forward
rate agreements, futures, options and combinations of these instruments. Derivatives are contracts that transfer risks, mainly market risks. Financial derivative is
one of the financial instruments engaged by the Group both for client solutions generating revenue for future as well as to manage the Group’s own market risk
exposure.

The principal foreign exchange rate contracts used are forward foreign exchange contracts, cross currency swaps and foreign exchange options. Forward foreign
exchange contracts are agreements to buy or sell a specified quantity of foreign currency on a specified future date at an agreed rate. A cross currency swap
generally involves the exchange, or notional exchange, of equivalent amounts of two currencies and a commitment to exchange interest/profit periodically until
the principal amounts are re-exchanged on a future date. A foreign exchange option is a financial derivative that provides the buyer of the option with the right, but
not obligation, to buy/sell a specified amount of one currency for another currency at a nominated strike rate during a certain period of time or on a specific date.

The principal interest/profit rate contracts used are interest/profit rate futures and interest/profit rate swaps. An interest/profit rate futures contract is an exchange
traded contract whose value is based on the difference between a specific interest/profit rate and a reference rate on a notional deposit or fixed income security
at a future settlement date. Interest/profit rate swap transactions generally involve the exchange of fixed and floating interest/profit payment obligations without
the exchange of the underlying principal amounts.

The principal equity contracts used are equity option, equity futures and equity swap. An equity option is a financial derivative that represents a contract sold by
one party (“option writer”) to another party (“option holder”). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) an equity at
an agreed-upon price (the “strike price”) during a certain period of time or on a specific date (“exercise date”). An equity futures contract is an exchange traded
contract to buy specific quantities of an equity at a specified price with delivery set at a specified time in the future. Equity swaps are one of the most basic equity
derivatives products and are usually traded over-the-counter (“OTC”) with financial institutions and corporates. It is a contractual agreement between parties to
exchange two streams of payments, one based on a pre-determined index or equity price, and the other based on a reference interest rate (that is KLIBOR or
LIBOR). The underlying reference for equity swaps is usually to an index, a basket of stocks or a single underlying stock.

The Group maintains trading positions in these instruments and engages in transactions with customers to satisfy their needs in managing their respective
interest/profit rate, equity and foreign exchange rate exposures. Derivative transactions generate income for the Group from the buy-sell spreads. The Group also
takes conservative exposures, within acceptable limits, to carry an inventory of these instruments in order to provide market liquidity and to earn potential gains
on fluctuations in the value of these instruments.

As part of the asset and liability exposure management, the Group uses derivatives to manage the Group’s market risk exposure. As the value of these financial
derivatives are principally driven by interest/profit rate and foreign exchange rate factors, the Group uses them to reduce the overall interest/profit rate and
foreign exchange rate exposures of the Group. These are performed by entering into an exposure in derivatives that produces opposite value movements vis-
à-vis exposures generated by other non-derivative activities of the Group. The Group manages these risks on a portfolio basis. Hence, exposures on derivatives
are aggregated or netted against similar exposures arising from other financial instruments engaged by the Group.

The risks associated with the use of derivative financial instruments, as well as management’s policy for controlling these risks are set out in Note 49.

Derivative financial instruments and hedge accounting

Derivative financial instruments are recognised at fair value upon inception in the statements of financial position, and are subsequently remeasured at fair value.
Fair values of exchange-traded derivatives are obtained from quoted market prices. Fair values of over-the-counter derivatives are obtained using valuation
techniques, including the discounted cash flows method and option pricing models. Financial derivatives are classified as assets when their fair values are positive
and as liabilities when their fair values are negative.

The Group enters into derivative transactions for trading and for hedging purposes. For derivatives held-for-trading purposes, fair value changes are recognised
in the profit or loss. For derivative transactions that meet the specific criteria for hedge accounting, the Group applies either fair value, cash flow or net investment
hedge accounting.

At inception of a hedge, the Group formally documents the relationship between the hedging instrument and the hedged item, including the nature of the hedged
risk, the risk management objective and strategy for undertaking the hedge.

The Group discontinues hedge accounting prospectively if the hedged item(s) or the hedging instrument(s) is/are sold, terminated or exercised or if the hedge no
longer meets the requirements of hedge accounting (after taking into account any rebalancing of the hedging relationship).

68 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Derivative financial instruments and hedge accounting (cont’d.)

(i) Fair value hedge

The Group’s fair value hedges principally consist of profit rate swaps that are used to protect against changes in the fair value of fixed-rate long-term
financial instruments due to movements in market profit rates. A wholly-owned subsidiary, AmBank Islamic had undertaken a fair value hedge to hedge the
profit rate risk of its unquoted securities as disclosed in Note 11.

Profit rate risk

The Group holds a portfolio of long-term fixed rate financial investments, therefore is exposed to changes in fair value due to movements in market profit
rates. The Group manages a portion of this risk exposure that is not naturally offset against floating rate positions held by the Group in financial investments
by entering into pay fixed/receive floating profit rate swaps.

Only the profit rate risk element is hedged and therefore other risks, such as credit risk, are managed but not hedged by the Group. The profit rate risk
component is determined as the change in fair value of the long-term fixed rate financial investments (e.g. sukuk) arising solely from changes in 6-month
KLIBOR (the benchmark rate of interest). Such changes are usually the largest component of the overall change in fair value. This strategy is designated as
a fair value hedge and its effectiveness is assessed with reference to the effectiveness requirements as set out in MFRS 9, which include demonstrating
economic relationship, assessing the effect of credit risk and calculating hedge ratio.

The Group establishes the hedging ratio by matching the notional of the derivatives with the principal of the long-term fixed rate financial investments being
hedged. The main source of ineffectiveness is differences in timing of cash flows between debt instruments and profit rate swaps.

(ii) Cash flow hedge

Interest rate risk

The Group’s cash flow hedges principally consist of interest rate swaps that are used to protect against exposures to variability in future interest cash flows
on variable rate interest bearing assets and incurring liabilities. This hedging strategy is applied towards treasury fixed deposits and short-term treasury
deposits. The amounts and timing of future cash flows, representing both principal and interest flows, are projected for each portfolio on the basis of their
contractual terms and other relevant factors, including estimates of early repayment for loans and withdrawal for deposits. As a result, the Group adopts a
dynamic hedging strategy (sometimes referred to as a “macro” or “portfolio” hedge) to hedge the exposure profile by closing and entering into new swap
agreements at each month-end. The aggregate principal balances and interest cash flows over time form the basis for identifying gains and losses on
the effective portions of derivatives designated as cash flow hedges of forecast transactions. Gains and losses are initially recognised directly in equity in
the cash flow hedge reserve and are transferred to profit or loss when the forecast cash flows affect the profit or loss. The effectiveness of this hedge is
assessed with reference to the effectiveness requirements as set out in MFRS 9, which include demonstrating economic relationship, assessing the effect
of credit risk and calculating hedge ratio.

The Group establishes the hedging ratio by matching the notional of the derivative with the principal of the portfolio being hedged. The main source of
ineffectiveness is the differences in timing of cash flows between debt instruments and interest rate swaps.

As at 31 March 2023, there is no underlying hedged cash flows recognised in the profit or loss as the cash flow hedge was discontinued. As at 31 March
2022, all underlying hedged cash flows had been fully recognised in the profit or loss.

All gains and losses associated with the ineffective portion of the hedging derivatives are recognised immediately in profit or loss. No ineffectiveness
amount recognised by the Group in profit or loss during the current and previous financial year in respect of cash flow hedges.

In the previous financial year, the Group had discontinued its cash flow hedges on its variable rate short-term treasury deposits and fixed deposits portfolio
using interest rate swaps with a total notional value of RM1.4 billion. Hence, the total unamortised fair value balances in the cash flow hedging reserve are
to be amortised to the profit or loss over the remaining life of the hedge instruments. Total fair value loss amortised during the current financial year was
RM6,320,000 (2022: fair value loss of RM8,724,000).

69
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Derivative financial instruments and hedge accounting (cont’d.)

(iii) The following table sets out the maturity profile and average price/rate of the hedging instruments used in the Group’s non-dynamic hedging strategies:

Maturity
> 1 month > 3 months > 1 year to More than
Up to 1 month to 3 months to 1 year 5 years 5 years
Group RM’000 RM’000 RM’000 RM’000 RM’000

2023
Fair value hedge
- Profit rate risk
Profit rate swap
Notional - - - 350,000 -
Average floating profit rate - - - 3.30% -

Maturity
> 1 month > 3 months > 1 year to More than
Up to 1 month to 3 months to 1 year 5 years 5 years
Group RM’000 RM’000 RM’000 RM’000 RM’000

2022
Fair value hedge
- Profit rate risk
Profit rate swap
Notional - - - 350,000 -
Average floating profit rate - - - 3.30% -

(iv) The following table contains details of the hedging instruments used in the Group’s hedging strategies:

Carrying amount of Changes in fair

value used for
calculating
Derivative Derivative hedge
Financial Financial ineffectiveness
Notional Assets Liabilities during the year
Group RM’000 RM’000 RM’000 RM’000

2023
Fair value hedge
Profit rate risk
- Profit rate swaps 350,000 - (3,265) 8,017

70 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Derivative financial instruments and hedge accounting (cont’d.)

(iv) The following table contains details of the hedging instruments used in the Group’s hedging strategies: (cont’d.)

Carrying amount of Changes in fair

value used for
calculating
Derivative Derivative hedge
Financial Financial ineffectiveness
Notional Assets Liabilities during the year
Group RM’000 RM’000 RM’000 RM’000

2022
Fair value hedge
Profit rate risk
- Profit rate swaps 350,000 - (11,282) 9,052

Cash flow hedge

Interest rate risk
- Interest rate swaps - - - 1,654

(v) The following table shows a reconciliation of each component of equity and an analysis of other comprehensive income in relation to the Group’s cash flow
hedge reserve:

2023 2022
Group RM’000 RM’000

Balance at beginning of the financial year (9,062) (16,949)

Interest rate risk:
- effective portion of changes in fair value of interest rate swaps - 1,654
- amortisation of fair value changes for terminated hedge 6,320 8,724
- tax effect (1,516) (2,491)
Balance at end of the financial year (4,258) (9,062)

71
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Derivative financial instruments and hedge accounting (cont’d.)

(vi) The following table contains details of the hedged item covered by the Group’s hedging strategies:

Accumulated amount
of fair value hedge
adjustments on the
Changes in fair
hedged item included in
value used for
the carrying amount of
calculating
Carrying amount of the hedged item Cash flow hedge reserve
hedge
ineffectiveness Continuing Discontinued
Assets Liabilities Assets Liabilities Statement of during the year hedge hedge
Group RM’000 RM’000 RM’000 RM’000 financial position line item RM’000 RM’000 RM’000

2023
Fair value hedge
Profit rate risk
- Unquoted Sukuk 353,409 - 3,385 - Financial investments at FVOCI (7,973) - -

Accumulated amount
of fair value hedge
adjustments on the
Changes in fair
hedged item included in
value used for
the carrying amount of
calculating
Carrying amount of the hedged item Cash flow hedge reserve
hedge
ineffectiveness Continuing Discontinued
Assets Liabilities Assets Liabilities Statement of during the year hedge hedge
Group RM’000 RM’000 RM’000 RM’000 financial position line item RM’000 RM’000 RM’000

2022
Fair value hedge
Profit rate risk
- Unquoted Sukuk 357,424 - 11,358 - Financial investments at FVOCI (9,087) - -

Cash flow hedge

Interest rate risk
- Deposits - - - - - (1,654) - -

72 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

9. DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONT’D.)

Derivative financial instruments and hedge accounting (cont’d.)

(vii) The following table contains information regarding the effectiveness of the hedging relationships designated by the Group, as well as the impact on profit
or loss and other comprehensive income:

Amount reclassified from reserves

Statement of
to profit or loss as
profit or
(Loss)/gain Hedge loss/other Profit or loss
recognised in ineffectiveness comprehensive Hedged line item that
other recognised income line cash flows Hedged item includes
comprehensive in profit item that will no affecting profit reclassified
income or loss includes hedge longer occur or loss amount
Group RM’000 RM’000 ineffectiveness RM’000 RM’000 RM’000

2023
Fair value hedge
Profit rate risk
- Unquoted Sukuk (7,973) 44 Other operating - - -
income

Amount reclassified from reserves

Statement of
to profit or loss as
profit or
(Loss)/gain Hedge loss/other Profit or loss
recognised in ineffectiveness comprehensive Hedged line item that
other recognised income line cash flows Hedged item includes
comprehensive in profit item that will no affecting profit reclassified
income or loss includes hedge longer occur or loss amount
Group RM’000 RM’000 ineffectiveness RM’000 RM’000 RM’000

2022
Fair value hedge
Profit rate risk
- Unquoted Sukuk (9,087) (35) Other operating - - -
income

Cash flow hedge

Interest rate risk
- Deposits 1,654 - Other operating - - -
income

73
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group Company
2023 2022 2023 2022
At Fair Value Note RM’000 RM’000 RM’000 RM’000

Money Market Instruments:

Malaysian Treasury Bills 2,766,826 100,625 - -
Malaysian Islamic Treasury Bills 3,644,507 1,313,273 - -
Malaysian Government Securities 582,357 258,277 - -
Malaysian Government Investment Issues 287,727 401,406 - -
Cagamas bonds - 99,460 - -
Bank Negara Monetary Notes 2,887,770 - - -
10,169,187 2,173,041 - -

Quoted Securities:
In Malaysia:
Shares (a) 627,690 643,145 - -
Unit trusts * 22,854 178,219 1,158 1,128
Corporate bonds and sukuk * 10,236 13,315 - -
Outside Malaysia:
Shares (a) 446,560 481,104 - -
1,107,340 1,315,783 1,158 1,128

Unquoted Securities:
In Malaysia:
Shares 33 31 - -
Corporate bonds and sukuk * 1,494,347 3,727,705 - -
1,494,380 3,727,736 - -
Total 12,770,907 7,216,560 1,158 1,128

(a) Shares held for purposes of derivatives transactions.

* The significant decrease is mainly due to the derecognition of investments as a result of the disposal of a subsidiary.

74 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

11. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”)

Group
2023 2022
At Fair Value Note RM’000 RM’000

Money Market Instruments:

Malaysian Treasury Bills 466,728 -
Malaysian Government Securities (“MGS”) 4,273,588 3,099,232
Malaysian Government Investment Issues (“MGII”) 5,083,442 4,356,026
Bank Negara Monetary Notes 494,320 -
Negotiable Instruments of Deposit - 450,001
Islamic Negotiable Instruments of Deposit - 579,298
Malaysian Islamic Treasury Bills 2,218,495 -
Foreign Government Investment Issues 13,309 13,619
12,549,882 8,498,176

Unquoted Securities:
In Malaysia:
Shares (i) 682,097 674,457
Corporate bonds and sukuk 12,367,702 9,573,069
Outside Malaysia:
Shares (i) 761 632
Corporate bonds and sukuk 10,291 10,423
13,060,851 10,258,581
Total 25,610,733 18,756,757

The Group had undertaken a fair value hedge on the profit rate risk of unquoted sukuk of RM350.0 million (2022: RM350.0 million). The gain/(loss) arising from
the fair value hedge is as follows:

Group
2023 2022
RM’000 RM’000

Relating to hedged item (7,973) (9,087)

Relating to hedging instrument 8,017 9,052
44 (35)

In the previous financial year, the Group had recognised a total carrying amount of RM1.90 billion (RM1.85 billion in nominal value) of MGS and MGII for statutory
reserve requirement purposes as part of the flexibility allowed by BNM based on the policy document Statutory Reserve Requirements on 27 March 2020. The
flexibility was available until 31 December 2022 with no subsequent extensions. As such, no MGS and MGII were held in Statutory Reserve Account as at 31
March 2023.

75
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

11. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”) (CONT’D.)

Movements in allowances for ECL are as follows:

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group Note RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 10,494 9,842 20,336
Net writeback of ECL 38 (224) (6,817) (7,041)
- Transfer to 12-month ECL (Stage 1) 596 (8,650) (8,054)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (1,595) 3,410 1,815
- New financial assets originated 10,871 - 10,871
- Financial assets derecognised (7,209) (2,996) (10,205)
- Net remeasurement of allowances (2,887) 1,419 (1,468)
Foreign exchange differences 12 (1) 11
Balance at end of the financial year 10,282 3,024 13,306

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group Note RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 11,224 6,847 18,071
Net (writeback of)/allowances for ECL 38 (732) 2,995 2,263
- Transfer to Lifetime ECL not credit impaired (Stage 2) (893) 3,602 2,709
- New financial assets originated 4,809 - 4,809
- Financial assets derecognised (4,010) (607) (4,617)
- Net remeasurement of allowances (638) - (638)
Foreign exchange differences 2 - 2
Balance at end of the financial year 10,494 9,842 20,336

The movements in allowances for ECL during the current financial year are due to the following:

- 12-month ECL (Stage 1) - decrease of RM212,000 mainly due to derecognition of financial assets, net remeasurement of allowances, transfer to lifetime
ECL not credit impaired (Stage 2); partially offset by ECL for new financial assets originated.

- Lifetime ECL not credit impaired (Stage 2) - decrease of RM6,818,000 mainly due to transfer to 12 month ECL (Stage 1), derecognition of financial assets
and partially offset by transfer to lifetime ECL not credit impaired (Stage 2) and net remeasurement of allowances.

76 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

11. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (“FVOCI”) (CONT’D.)

(i) Equity investments at fair value through other comprehensive income comprise the following individual investments:

2023 2022
Dividend Dividend
Carrying income Carrying income
value (Note 34) value (Note 34)
Group RM’000 RM’000 RM’000 RM’000

Unquoted securities in Malaysia:

Shares
ABM Investments Sdn Bhd 1 - 1 -
Cagamas Holdings Berhad 404,505 2,413 406,878 2,413
Credit Guarantee Corporation Malaysia Bhd 83,412 - 89,834 -
Financial Park (Labuan) Sdn Bhd 84,647 500 82,185 1,000
Malaysia South-South Corporation Bhd 2,960 146 3,131 293
Malaysian Rating Corporation Berhad 2,614 80 2,769 160
Payments Network Malaysian Sdn Bhd 103,958 - 89,659 -
RAM Holdings Berhad - - - 340
682,097 3,139 674,457 4,206

Unquoted securities outside Malaysia:

Shares
S.W.I.F.T SCRL 761 - 632 -

The Group elected to present in other comprehensive income changes in the fair value of the above equity investments because these equity investments
are held for long-term strategic or socioeconomic purposes instead of for selling in the near term or for short-term profit taking.

In the previous financial year, the Group disposed its entire investment in RAM Holdings Berhad due to favourable offer received and to monetise the
non-core investment. The net gain from the disposal of RM8.9 million was not recycled to profit or loss, was transferred from fair value reserve to retained
earnings.

Other than as disclosed above, there have been no new acquisition or disposal of equity investments at fair value through other comprehensive income
during the current and previous financial year.

77
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

12. FINANCIAL INVESTMENTS AT AMORTISED COST

Group
2023 2022
At Amortised Cost RM’000 RM’000

Money Market Instruments:

Malaysian Government Securities 1,346,712 907,429
Malaysian Government Investment Issues 4,107,989 2,261,515
5,454,701 3,168,944
Unquoted Securities:
In Malaysia:
Corporate bonds and sukuk 8,514,775 6,352,046
13,969,476 9,520,990
Less: Allowances for ECL (499,773) (483,224)
Total 13,469,703 9,037,766

Movements in allowances for ECL are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 4,497 - 478,727 483,224
Net allowances for ECL 38 2,430 - 14,119 16,549
- New financial assets originated 3,792 - - 3,792
- Net remeasurement of allowances (457) - 14,119 13,662
- Financial assets derecognised (905) - - (905)

Balance at end of the financial year 6,927 - 492,846 499,773

78 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

12. FINANCIAL INVESTMENTS AT AMORTISED COST (CONT’D.)

Movements in allowances for ECL are as follows: (cont’d.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 3,916 211,331 - 215,247
Net allowances for/(writeback of) ECL 38 581 (211,331) 478,727 267,977
- Transfer to 12-month ECL (Stage 1) 591 (8,549) - (7,958)
- Transfer to Lifetime ECL credit impaired (Stage 3) - (10,788) 478,727 467,939
- New financial assets originated 385 - - 385
- Net remeasurement of allowances (379) - - (379)
- Financial assets derecognised (16) - - (16)
- Changes in model assumptions and methodologies - (191,994) - (191,994)

Balance at end of the financial year 4,497 - 478,727 483,224

The increase in allowances for ECL is mainly contributed by net remeasurement of allowances and new financial assets originated.

79
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING

Group
2023 2022
At Amortised Cost Note RM’000 RM’000

Loans, advances and financing:

Term loans/financing 43,398,222 38,801,821
Revolving credit 12,350,195 11,370,620
Housing loans/financing 41,736,571 39,031,362
Hire purchase receivables 14,483,326 13,854,097
Card receivables 2,099,858 1,903,171
Overdrafts 3,285,631 3,222,656
Claims on customers under acceptance credits 7,121,490 6,485,259
Trust receipts 2,554,759 2,577,510
Bills receivables 2,947,175 2,473,103
Staff loans 102,547 106,105
Others 146,997 167,557
Gross loans, advances and financing 130,226,771 119,993,261

Less: Allowances for ECL

- Stage 1 - 12-month ECL (i) (236,612) (217,884)
- Stage 2 - Lifetime ECL not credit impaired (i) (1,160,966) (1,159,616)
- Stage 3 - Lifetime ECL credit impaired (i) (586,588) (550,076)
(1,984,166) (1,927,576)
Net loans, advances and financing 128,242,605 118,065,685

(a) Gross loans, advances and financing analysed by type of customer are as follows:

Group
2023 2022
RM’000 RM’000

Domestic non-bank financial institutions 3,316,997 3,133,599

Domestic business enterprises:
- Small and medium enterprises 26,680,264 24,919,016
- Others 27,188,177 25,613,034
Government and statutory bodies 2,638,909 163,603
Individuals 68,456,302 64,535,980
Other domestic entities 8,848 7,647
Foreign individuals and entities 1,937,274 1,620,382
130,226,771 119,993,261

80 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(b) Gross loans, advances and financing analysed by geographical distribution are as follows:

Group
2023 2022
RM’000 RM’000

In Malaysia 129,943,758 119,099,088

Outside Malaysia 283,013 894,173
130,226,771 119,993,261

(c) Gross loans, advances and financing analysed by interest rate/profit rate of return sensitivity are as follows:

Group
2023 2022
RM’000 RM’000

Fixed rate:
- Housing loans/financing 616,368 314,482
- Hire purchase receivables 14,085,713 13,355,884
- Other loans/financing 13,554,457 10,907,556

Variable rate:
- Base rate and lending/financing rate plus 69,490,820 65,265,205
- Cost plus 31,331,647 28,898,958
- Other variable rates 1,147,766 1,251,176
130,226,771 119,993,261

81
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(d) Gross loans, advances and financing analysed by sector are as follows:

Group
2023 2022
RM’000 RM’000

Agriculture 3,056,513 2,374,086

Mining and quarrying 2,166,074 2,130,214
Manufacturing 15,768,934 15,902,661
Electricity, gas and water 1,522,997 1,182,630
Construction 4,471,263 4,352,593
Wholesale and retail trade and hotels and restaurants 12,165,060 10,534,493
Transport, storage and communication 5,183,071 4,842,904
Finance and insurance 5,119,567 3,266,845
Real estate 7,737,253 6,616,194
Business activities 2,457,545 2,258,944
Education and health 1,537,580 1,409,736
Household of which: 69,035,564 65,096,931
- Purchase of residential properties 42,054,000 39,390,816
- Purchase of transport vehicles 13,161,422 12,575,408
- Others 13,820,142 13,130,707
Others 5,350 25,030
130,226,771 119,993,261

(e) Gross loans, advances and financing analysed by residual contractual maturity are as follows:

Group
2023 2022
RM’000 RM’000

Maturing within one year 33,676,035 30,390,452

Over one year to three years 6,892,129 6,830,043
Over three years to five years 12,039,646 11,611,293
Over five years 77,618,961 71,161,473
130,226,771 119,993,261

82 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(f) Movements in impaired loans, advances and financing are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year 1,676,044 1,770,320

Additions during the financial year 1,961,165 1,357,323
Reclassified as non-impaired (199,101) (205,843)
Recoveries (865,651) (542,645)
Amount written off (676,386) (702,792)
Foreign exchange differences 376 (319)
Balance at end of the financial year 1,896,447 1,676,044

Gross impaired loans, advances and financing as % of gross loans, advances and financing 1.46% 1.40%
Loan/financing loss coverage (including regulatory reserve) 127.67% 139.24%

(g) Impaired loans, advances and financing analysed by geographical distribution are as follows:

Group
2023 2022
RM’000 RM’000

In Malaysia 1,896,447 1,666,873

Outside Malaysia - 9,171
1,896,447 1,676,044

83
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(h) Impaired loans, advances and financing analysed by sector are as follows:

Group
2023 2022
RM’000 RM’000

Agriculture 7,152 8,834

Mining and quarrying 43,082 175,741
Manufacturing 214,954 226,687
Electricity, gas and water 47,366 4,639
Construction 172,476 112,676
Wholesale and retail trade and hotels and restaurants 213,270 170,049
Transport, storage and communication 23,594 18,518
Finance and insurance 11,201 1,494
Real estate 11,413 188,167
Business activities 44,095 37,595
Education and health 11,863 6,218
Household of which: 1,095,981 725,426
- Purchase of residential properties 841,786 540,323
- Purchase of transport vehicles 115,068 80,127
- Others 139,127 104,976

1,896,447 1,676,044

84 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(i) Movements in allowances for ECL are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 217,884 1,159,616 550,076 1,927,576
Net allowances for ECL 37 18,382 1,378 712,426 732,186
- Transfer to 12-month ECL (Stage 1) 14,137 (158,939) (5,763) (150,565)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (15,556) 174,054 (22,465) 136,033
- Transfer to Lifetime ECL credit impaired (Stage 3) (1,463) (35,213) 290,890 254,214
- New financial assets originated 65,456 87,732 10,888 164,076
- Net remeasurement of allowances 10,549 29,078 475,977 515,604
- Modification of contractual cash flows of financial assets (144) 2,213 2,027 4,096
- Financial assets derecognised (38,131) (108,258) (75,940) (222,329)
- Changes in model assumptions and methodologies (16,466) 10,711 36,812 31,057
Foreign exchange differences 415 (28) 472 859
Amount written off - - (676,386) (676,386)
Derecognition - disposal of subsidiary (69) - - (69)
Balance at end of the financial year 236,612 1,160,966 586,588 1,984,166

85
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

13. LOANS, ADVANCES AND FINANCING (CONT’D.)

(i) Movements in allowances for ECL are as follows: (cont’d.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 431,800 1,109,340 534,631 2,075,771
Net (writeback of)/allowances for ECL 37 (214,035) 50,259 718,339 554,563
- Transfer to 12-month ECL (Stage 1) 10,638 (116,234) (4,209) (109,805)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (20,546) 165,613 (24,785) 120,282
- Transfer to Lifetime ECL credit impaired (Stage 3) (1,304) (37,541) 99,054 60,209
- New financial assets originated 56,300 71,735 5,707 133,742
- Net remeasurement of allowances (55,790) 24,165 741,532 709,907
- Modification of contractual cash flows of financial assets (1,750) 4,847 83 3,180
- Financial assets derecognised (39,585) (72,934) (99,043) (211,562)
- Changes in model assumptions and methodologies (161,998) 10,608 - (151,390)
Foreign exchange differences 119 17 (102) 34
Amount written off - - (702,792) (702,792)
Balance at end of the financial year 217,884 1,159,616 550,076 1,927,576

Overall, the total allowance for impairment on loans, advances and financing had increased due to the following:

(a) 12-month ECL (Stage 1) – increase of RM18,728,000 mainly due to newly originated loans, advances and financing, impact from migration to Stage
1; partially offset by financial assets derecognised and the impact from migration to Stage 2.

(b) Lifetime ECL not credit impaired (Stage 2) – increase of RM1,350,000 mainly due to the impact of migration to Stage 2, newly originated loans,
advances and financing, net remeasurement of allowances and impacts from the changes in model assumptions and methodologies; partially offset
by loans, advances and financing derecognised impact of migration to Stage 1 and Stage 3.

(c) Lifetime ECL credit impaired (Stage 3) – increase of RM36,512,000 mainly due to the net remeasurement of allowances and migration of loans,
advances and financing to Stage 3 due to deterioration in credit quality; partially offset by written off of loans, advances and financing.

14. STATUTORY DEPOSITS WITH BANK NEGARA MALAYSIA

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
2009, the amounts of which are determined as set percentages of total eligible liabilities. The Statutory Reserve Requirement (“SRR”) rate for banking industries
is 2.0% of eligible liabilities.

86 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

15. DEFERRED TAX ASSETS/(LIABILITIES)

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 fiscal authority. The following amounts are shown in the statements of financial position, after appropriate offsetting:

Group
2023 2022
RM’000 RM’000

Deferred tax assets 220,655 218,551

Deferred tax liabilities - (8,093)
220,655 210,458

Deferred tax assets and liabilities prior to offsetting are summarised as follows:

Group
2023 2022
RM’000 RM’000

Deferred tax assets 300,614 337,691

Deferred tax liabilities (79,959) (127,233)
220,655 210,458

The components and movements of deferred tax assets/(liabilities) prior to offsetting are as follows:

Deferred tax assets

Continuing operations Discontinued operation

Balance at Recognised
beginning Recognised in other Recognised Derecognition Balance at
of the in profit comprehensive in profit - disposal of end of the
financial year or loss income or loss subsidiary financial year
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Cash flow hedge reserve 2,861 - (1,516) - - 1,345
Provision for commitments and
contingencies 852 30 - - - 882
Provision for expenses 126,770 21,827 - (5,096) (41,933) 101,568
Allowances for ECL 142,416 16,104 - - - 158,520
Fair value reserve 31,597 2,431 (2,048) 6,491 (10,075) 28,396
Other temporary differences 33,195 (23,292) - - - 9,903
337,691 17,100 (3,564) 1,395 (52,008) 300,614

87
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

15. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D.)

The components and movements of deferred tax assets/(liabilities) prior to offsetting are as follows: (cont’d.)

Deferred tax assets (cont’d.)

Discontinued
Continuing operations operation
Balance at Recognised
beginning Recognised in other Recognised Balance at
of the in profit comprehensive in profit end of the
financial year or loss income or loss financial year
Group RM’000 RM’000 RM’000 RM’000 RM’000

2022
Cash flow hedge reserve 5,352 - (2,491) - 2,861
Provision for commitments and contingencies 859 (7) - - 852
Provision for expenses 95,860 20,022 - 10,888 126,770
Allowances for ECL 142,340 76 - - 142,416
Fair value reserve - - 31,597 - 31,597
Other temporary differences 60,499 (27,304) - - 33,195
304,910 (7,213) 29,106 10,888 337,691

Deferred tax liabilities

Continuing
operations Discontinued operation
Balance at
beginning Recognised Recognised Derecognition Balance at
of the in profit in profit - disposal of end of the
financial year or loss or loss subsidiary financial year
Group RM’000 RM’000 RM’000 RM’000 RM’000

2023
Excess of capital allowance over depreciation and amortisation 36,823 (4,101) 1,908 (5,269) 29,361
Deferred charges 45,674 4,694 - - 50,368
Intangible assets 29,229 2,306 (33,914) 2,379 -
Fair value reserve 9,690 (9,460) - - 230
Other temporary differences 5,817 (2,825) (301) (2,691) -
127,233 (9,386) (32,307) (5,581) 79,959

88 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

15. DEFERRED TAX ASSETS/(LIABILITIES) (CONT’D.)

The components and movements of deferred tax assets/(liabilities) prior to offsetting are as follows: (cont’d.)

Deferred tax liabilities (cont’d.)

Continuing operations Discontinued operation

Balance at Recognised Recognised
beginning Conversion Recognised in other Recognised in other Balance at
of the of in profit comprehensive in profit comprehensive end of the
financial year RCCPS or loss income or loss income financial year
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Excess of capital
allowance over
depreciation and
amortisation 40,688 - (4,020) - 155 - 36,823
Deferred charges 46,235 - (561) - - - 45,674
Intangible assets 32,698 - (2,460) - (1,009) - 29,229
Redeemable cumulative
convertible preference
share ("RCCPS") 12,537 (11,944) (593) - - - -
Fair value reserve 51,999 - - (32,029) (10,280) - 9,690
Other temporary
differences 6,072 - 1 - 16 (272) 5,817
190,229 (11,944) (7,633) (32,029) (11,118) (272) 127,233

As at 31 March 2023, there is unabsorbed capital allowances which amounted to RM451,032,000 (2022: RM451,081,000) that is available for offset against
future taxable profit of leasing business from two (2022: four) of its subsidiaries. The non-recognition of deferred tax asset arose from unabsorbed capital
allowances is due to the uncertainty in timing of its recoverability. The recognition of deferred tax asset arose from unutilised tax losses is as disclosed in Note 5.4.

89
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS

(a) Investment in subsidiaries

Company
2023 2022
Note RM’000 RM’000

At cost
Unquoted shares in Malaysia
Balance at beginning of the financial year 11,113,482 10,663,557
Return of capital 16(a)(3)(i) (23,165) -
Subscription of new ordinary shares 16(a)(4)(i) - 450,000
Dissolution of a subsidiary 16(a)(4)(ii) - (75)
11,090,317 11,113,482
Less: Impairment (238,132) (256,132)
Balance at end of the financial year 10,852,185 10,857,350

Movements in impairment allowance for investment in subsidiaries are as follows:

Company
2023 2022
RM’000 RM’000

Balance at beginning of the financial year 256,132 256,132

Writeback of impairment for the financial year (18,000) -
Balance at end of the financial year 238,132 256,132

90 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(a) Investment in subsidiaries (cont’d.)

(1) Details of the subsidiaries are as follows:

Effective
equity interest
2023 2022
Subsidiaries Principal activities % %

AmInvestment Group Berhad (“AIGB”) Investment holding 100.00 100.00

AMAB Holdings Sdn Bhd (“AMAB Holdings”) Investment holding 100.00 100.00
AmBank (M) Berhad (“AmBank”) Commercial banking 100.00 100.00
AmInvestment Bank Berhad (“AmInvestment Bank”) Investment banking 100.00 100.00
AmBank Islamic Berhad ("AmBank Islamic") Islamic banking 100.00 100.00
MBF Cards (M’sia) Sdn Bhd ("MBF Cards") Dormant 100.00 100.00
AmSecurities Holding Sdn Bhd ("AMSH") Investment holding 100.00 100.00
AmCard Services Berhad Outsourcing servicer for mortgage related services 100.00 100.00
AmGeneral Holdings Berhad ("AGHB") Investment holding 100.00 51.00
AmGeneral Insurance Berhad ("AGIB") General insurance - 51.00
AmFunds Management Berhad ("AFM") Fund management including management
of unit trusts and private retirement schemes 100.00 100.00
AmIslamic Funds Management Sdn Bhd (“AIFM”) Islamic fund management services and distribution
of Islamic wholesale funds 100.00 100.00
AMMB Nominees (Tempatan) Sdn Bhd2 Dormant 100.00 100.00
AMSEC Nominees (Tempatan) Sdn Bhd Nominee services 100.00 100.00
AMSEC Nominees (Asing) Sdn Bhd Nominee services 100.00 100.00
1
AM Nominees (Tempatan) Sdn Bhd Nominee services 100.00 100.00
AM Nominees (Asing) Sdn Bhd Nominee services 100.00 100.00
AmREIT Holdings Sdn Bhd Investment holding 70.00 70.00
AmREIT Managers Sdn Bhd Management of real estate investment trusts 70.00 70.00
MBf Information Services Sdn Bhd Property investment 100.00 100.00

91
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(a) Investment in subsidiaries (cont’d.)

(1) Details of the subsidiaries are as follows: (cont’d.)

Effective
equity interest
2023 2022
Subsidiaries Principal activities % %

MBf Nominees (Tempatan) Sdn Bhd3 Dormant 100.00 100.00

MBf Trustees Berhad4 Dormant 60.00 60.00
AmProperty Holdings Sdn Bhd Property investment 100.00 100.00
Teras Oak Pembangunan Sendirian Berhad Dormant 100.00 100.00
Bougainvillaea Development Sdn Bhd Property investment 100.00 100.00
Malco Properties Sdn Bhd3 Dormant 81.51 81.51
AmMortgage One Berhad ("AmMortgage") Securitisation of mortgage loans 100.00 100.00
AmLabuan Holdings (L) Ltd Investment holding 100.00 100.00
5
AmInvestment Management Sdn Bhd ("AIM") Dormant 100.00 100.00
5
AmPrivate Equity Sdn Bhd ("AmPrivate Equity") Dormant 80.00 80.00
AmFutures Sdn Bhd ("AmFutures")6 Dormant 100.00 100.00
AmResearch Sdn Bhd ("AmResearch")5 Dormant 100.00 100.00
Malaysian Ventures Management Incorporated
Sdn Bhd (“MVMI”) 5 Dormant 100.00 100.00
Komuda Credit & Leasing Sdn Bhd7 Dormant - 100.00

The above subsidiaries are incorporated in Malaysia.

1
Subsidiary audited by a firm other than Ernst & Young PLT, Malaysia.
2
Subsidiary commenced Members’ Voluntary Liquidation on 22 May 2020.
3
Subsidiaries commenced Members’ Voluntary Liquidation on 31 March 2021.
4
Subsidiary commenced Members’ Voluntary Liquidation on 17 September 2020.
5
Subsidiaries commenced Members’ Voluntary Liquidation on 23 December 2016.
6
Subsidiary commenced Members’ Voluntary Liquidation on 27 March 2018.
7
Subsidiary commenced Members’ Voluntary Liquidation on 31 July 2013 and dissolved on 7 July 2022.

(2) There are no restrictions on transfer of funds, for example paying dividends or repaying loans and advances by the subsidiaries. The ability of
the subsidiaries to pay dividends or make advances to the Company depends on their regulatory capital requirements, financial and operating
performance.

92 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(a) Investment in subsidiaries (cont’d.)

(3) Transactions in the current financial year are as follows:

(i) MBF Cards (M’sia) Sdn Bhd and AmInvestment Group Berhad conducted capital reduction and paid RM5.2 million and RM18.0 million
respectively to the Company.

(ii) On 19 July 2021, AmGeneral Holdings Berhad (“AGHB”), a 51%-owned subsidiary of AMAB Holdings Sdn Bhd, entered into an Implementation
Agreement with Liberty Insurance Berhad (“LIB”) to dispose its wholly-owned subsidiary, AmGeneral Insurance Berhad (“AGIB”), to LIB.

Upon receiving the approval from the Higher Court of Malaysia on 7 July 2022, AGHB undertook selective capital reduction (“SCR”) and capital
repayment in respect of IAG International Pty Limited’s (“IAG”) 49% shareholding in AGHB comprising of 93,100,000 ordinary shares. IAG
received a total capital repayment amount of RM1,076 million and ceased to be a shareholder of AGHB.

The disposal of AGIB to LIB was completed on 28 July 2022. Further details are disclosed in Note 56.

(iii) The Group’s non-operating subsidiary, Komuda Credit & Leasing Sdn Bhd, under members’ voluntary winding-up was dissolved on 7 July 2022.

(4) Transactions in the previous financial year are as follows:

(i) On 31 May 2021, the Company subscribed for the issuance of 46,680,498 new shares ordinary shares by AmBank at an issue price of RM9.64
per ordinary share which amounted to RM450.0 million.

(ii) Dissolution of subsidiaries

Commencement Date of Members’

Subsidiaries Voluntary Winding-up Dissolution date

AMSEC Holdings Sdn Bhd 6 August 2013 16 November 2021

AMFB Holdings Berhad (“AMFB”) 23 December 2016 1 March 2022
AMMB Nominees (Asing) Sdn Bhd 30 January 2019 13 November 2021
AmPremier Capital Berhad (“AmPremier”) 25 October 2019 1 March 2022

(iii) Conversion of Redeemable Cumulative Convertible Preference Shares (“RCCPS”)

In January 2022, AmGeneral Holdings Berhad converted its RCCPS amounted to RM691.9 million.

93
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(a) Investment in subsidiaries (cont’d.)

(5) The subsidiaries which are not wholly-owned are not material individually or in aggregate to the financial position or performance of the Group,
except for AGHB. As disclosed in Note 16(a)(3)(ii), AGHB became a wholly-owned subsidiary of the Group during the current financial year.

Summarised consolidated financial statements of AGHB, its subsidiary and other investments (“AGHB Group”)

The summarised financial information of AGHB Group which has non-controlling interests that are material to the Group is set out below. The
summarised financial information presented below is the amount before inter-company elimination.

(i) Non-controlling interest (“NCI”) in AGHB Group

The Group’s subsidiary that has material NCI is as follows:

AGHB Group
1.4.2022 to 1.4.2021 to
28.7.2022 31.3.2022
RM’000 RM’000

NCI percentage of ownership interest and voting interest 49% 49%

Net carrying amount of NCI at beginning of the financial year 1,198,297 948,700
Share of net results (59,058) 91,855
Share of other comprehensive income - (422)
Capital reduction (Note 16(a)(3)(ii)) (1,075,993) -
Subscription of shares arising from conversion of redeemable cumulative convertible preference
shares - 256,164
63,246 1,296,297
Dividends paid (1,831) (98,000)
Disposal of subsidiary (61,415) -
Net carrying amount of NCI at end of the financial year - 1,198,297

Total Assets - 5,517,444

Total Liabilities - (3,072,850)
Net assets - 2,444,594

Equity attributable to Owners of the Company - 1,246,297

NCI - 1,198,297

94 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(a) Investment in subsidiaries (cont’d.)

(5) The subsidiaries which are not wholly-owned are not material individually or in aggregate to the financial position or performance of the Group,
except for AGHB. As disclosed in Note 16(a)(3)(ii), AGHB became a wholly-owned subsidiary of the Group during the current financial year. (cont’d.)

Summarised consolidated financial statements of AGHB, its subsidiary and other investments (“AGHB Group”) (cont’d.)

The summarised financial information of AGHB Group which has non-controlling interests that are material to the Group is set out below. The
summarised financial information presented below is the amount before inter-company elimination. (cont’d.)

(ii) Summarised statement of comprehensive income

AGHB Group
1.4.2022 to 1.4.2021 to
28.7.2022 31.3.2022
RM’000 RM’000

Operating revenue 374,952 1,423,729

Profit for the financial year (90,168) 187,459

Attributable to:
Equity holders of the Company (31,110) 95,604
NCI (59,058) 91,855

Total comprehensive income (90,168) 186,598

Attributable to:
Equity holders of the Company (31,110) 95,165
NCI (59,058) 91,433

Dividend paid to NCI (1,831) (98,000)

(iii) Summarised statement of cash flows

AGHB Group
2023 2022
RM’000 RM’000

Operating activities 701,963 262,780

Investing activities (395,635) (10,035)
Financing activities (306,328) (212,956)
Net increase in cash and cash equivalents for the financial year - 39,789

95
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

16. INVESTMENTS IN SUBSIDIARIES AND OTHER INVESTMENTS (CONT’D.)

(b) Investment in collective investment schemes

Collective investment schemes held indirectly

Effective
equity interest
2023 2022
Name of fund Principal activities % %

In Malaysia
Unquoted unit trusts
AmIncome Institutional 1 Investment in debt securities and money market - 51.00
AmIncome Institutional 3 Investment in debt securities and money market - 51.00
AmCash Plus Investment in government related securities and money market - 51.00

These collective investment schemes have been consolidated in accordance with MFRS 10 Consolidated Financial Statements.

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

Group
2023 2022
RM’000 RM’000

Unquoted shares:
At cost at the beginning of the financial year 669,169 669,169
Acquisition 958,147 -
At cost at end of the financial year 1,627,316 669,169
Share of post acquisition reserves 156,728 87,817
1,784,044 756,986
Less: Impairment loss (152,444) (152,444)
Balance at end of the financial year 1,631,600 604,542

(a) The carrying amount of interest in joint ventures of the Group amounting to approximately RM546,127,000 (2022: RM512,250,000) are included in the
total carrying amount of investment in associates and joint ventures. As at 31 March 2023, the carrying amount of the Group’s material joint venture,
AmMetLife Insurance Berhad, amounted to approximately RM510,619,000 (2022: RM479,036,000).

(b) The addition during the current financial year relates to the investment in Liberty Insurance Berhad (“LIB”), representing the partial proceeds of the disposal
of AGIB via shares. Further details are disclosed in Note 56.

96 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(c) The investments are reviewed for impairment as and when there are indications of impairment. The recoverable amount used in the impairment assessment
is based on the higher of value-in-use (“VIU”) calculations and fair value less cost to sell.

During the current financial year, no impairment is recognised by the Group (2022: impairment loss in investment in an associate, Bonuskad Loyalty Sdn
Bhd (“Bonuskad”) amounted to RM4,625,000 was recognised).

In the previous financial year, the VIU for Bonuskad were pre-tax cash flows projection based on financial budget approved by the Board of Directors of
the associate for 31 December 2022. The estimated cash flows projection beyond the period covered by the financial budgets are estimated using a
growth rate and terminal growth rate of 3.00%. The discount rate applied is 10.00% which is based on the Group’s estimated return of its investment in the
associate.

(d) Information about associates and joint ventures which are all incorporated in Malaysia are as follows:

Effective
equity interest
2023 2022
Name of associate/joint venture Principal activities % %

Associates:
Liberty Insurance Berhad ("LIB")1 General insurance 30.00 -
AmFirst Real Estate Investment Trust Investment in real estate
(“AmFirst REIT”) 26.73 26.73

Bonuskad Loyalty Sdn Bhd (“Bonuskad”)1 Managing customer loyalty schemes 33.33 33.33

Joint ventures ("JVs"):

AmMetLife Insurance Berhad Life assurance
(“AmMetLife Insurance”)2 50.00 50.00

AmMetLife Takaful Berhad Family Takaful

(“AmMetLife Takaful”) 50.00 50.00
1
The financial year-end of Bonuskad and LIB is on 31 December 2022 and for the purpose of applying the equity method of accounting, appropriate adjustments have been
made for the effects of significant transactions up to the Group’s financial reporting date.

2
AmMetLife Insurance holds 100% (2022: 100%) equity interest in a collective investment scheme, AmIncome Institutional 5 (“AMII 5”) and has been consolidated in
accordance with MFRS 10 Consolidated Financial Statements and included in the Group’s carrying amount of interest in joint ventures.

97
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(e) The following table summarises the information of the Group’s material associate and joint venture and other individually immaterial associate and joint
venture:

AmFirst AmMetLife AmMetLife

LIB REIT Insurance Bonuskad Takaful
RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year/period ended 31 March 2023

Profit after tax from continuing operations 109,417 15,706 58,040 8,393 2,055
Other comprehensive income 2,840 - 5,126 - 327
Total comprehensive income 112,257 15,706 63,166 8,393 2,382

AmFirst AmMetLife AmMetLife

REIT Insurance Bonuskad Takaful
RM’000 RM’000 RM’000 RM’000

For the financial year ended 31 March 2022

Profit/(loss) after tax from continuing operations 5,639 76,063 (2,123) 5,888
Other comprehensive loss - (5,293) - (3,218)
Total comprehensive income/(loss) 5,639 70,770 (2,123) 2,670

The above profit/(loss) after tax from continuing operations for the material associate and joint venture includes the following:

2023 2022
AmMetLife AmFirst AmMetLife
LIB Insurance REIT2 Insurance
RM’000 RM’000 RM’000 RM’000

Total assets1 7,341,245 4,747,988 1,661,569 4,411,503

Total liabilities (4,098,990) (3,729,027) (849,527) (3,455,708)
Net assets 3,242,255 1,018,961 812,042 955,795

1
Includes fair value adjustments made by the Group at the time of acquisition.

2
The fair value of investment in AmFirst REIT based on the quoted price as at 31 March 2023 is approximately RM60,551,000 (2022: RM69,726,000).

98 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(e) The above profit/(loss) after tax from continuing operations for the material associate and joint venture includes the following: (cont’d.)

AmMetLife AmFirst AmMetLife

LIB Insurance REIT Insurance
29.7.2022 to 1.4.2022 to 1.4.2021 to 1.4.2021 to
31.3.2023 31.3.2023 31.3.2022 31.3.2022
RM’000 RM’000 RM’000 RM’000

Interest income 29,357 152,632 42 155,171

Interest expense - - (26,789) -
Depreciation of property and equipment (4,824) (3,074) - (2,980)
Depreciation of right-of-use assets (8,489) - (221) -
Amortisation of intangible assets (81,360) (14,346) - (11,905)
Taxation (9,383) (31,335) (833) (29,204)

The above amounts of assets and liabilities for the material associate and joint venture include the following:

AmMetLife AmFirst AmMetLife

LIB Insurance REIT Insurance
2023 2023 2022 2022
RM’000 RM’000 RM’000 RM’000

Cash and cash equivalents 391,970 340,780 5,431 251,839

Current financial liabilities (excluding trade, other payables and provisions) (3,020,796) (5,504) (118,719) (4,895)
Non-current financial liabilities (excluding trade, other payables and
provisions) (1,042,571) (19,768) (697,550) (23,105)

(f) Reconciliation of the summarised financial information to the carrying amount of the interest in the material joint venture and associate recognised in the
consolidated financial statements:

AmMetLife AmFirst AmMetLife

LIB Insurance REIT Insurance
29.7.2022 to 1.4.2022 to 1.4.2021 to 1.4.2021 to
31.3.2023 31.3.2023 31.3.2022 31.3.2022
RM’000 RM’000 RM’000 RM’000

Proportion of net assets at date of recognition 30.0% 50.0% 26.7% 50.0%

Carrying amount at the beginning of the financial year - 479,035 72,355 443,651
Acquisition 958,147 -
Share of net results for the financial year 32,825 29,020 5,137 38,031
Share of other comprehensive income for the financial year 852 2,563 - (2,647)
Distribution received - - (4,606) -
Carrying amount at the end of the financial year 991,824 510,618 72,886 479,035

99
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(g) AmMetLife Insurance Berhad and AmMetLife Takaful Berhad, the two JVs of the Group are applying the temporary exemptions from MFRS 9. Both JVs have
concluded that they qualify for the temporary exemption from MFRS 9 as the two JVs have not previously applied any versions of MFRS 9 and their activities
are predominantly connected with insurance/takaful at annual reporting date that immediately precedes 1 April 2016. Since 31 March 2016, there has
been no change in the activities of the JVs that requires reassessment of the use of the temporary exemption.

The following are disclosures required by MFRS 4 for an insurer which has applied for temporary exemption from MFRS 9.

(1) The table below presents an analysis of the fair value of classes of financial assets as at 31 March 2023 and 31 March 2022, as well as the
corresponding change in fair value during the financial year.

(i) Individually material JV - AmMetLife Insurance (entity level)

Result of the Classification

Fair value Fair value cash flows and
as at Change in as at characteristics measurement
1 April 2022 fair value* 31 March 2023 test under MFRS 9
RM’000 RM’000 RM’000

2023
Investments:
Loans and receivables ("LAR") 211,067 105,456 316,523 SPPI Amortised cost
Available-for-sale ("AFS") securities 1,324,095 2,221 1,326,316
- Quoted equities 55,497 (6,127) 49,370 Non-SPPI FVTPL
- Unquoted equities 2,147 - 2,147 Non-SPPI FVTPL
- Malaysian Government Securities 132,032 (20,215) 111,817 SPPI FVOCI
- Unquoted corporate bonds 1,128,651 22,916 1,151,567 SPPI FVOCI
- Unquoted corporate bonds - 5,005 5,005 SPPI FVTPL
- Quoted unit and property trust funds 5,768 642 6,410 Non-SPPI FVTPL

Fair value through profit or loss (“FVTPL”) 1,787,750 177,503 1,965,253

- Quoted equities 80,992 2,221 83,213 Non-SPPI FVTPL
- Malaysian Government Securities 187,092 63,154 250,246 SPPI FVTPL
- Unquoted corporate bonds 1,466,720 93,711 1,560,431 SPPI FVTPL
- Quoted unit and property trust funds 1,730 180 1,910 Non-SPPI FVTPL
- Unquoted unit and property trust funds 51,216 18,237 69,453 Non-SPPI FVTPL
Other receivables 34,536 (155) 34,381 SPPI Amortised cost
Cash and bank balances 79,371 (14,503) 64,868 SPPI Amortised cost

* Includes purchases, disposals, maturities and unrealised gains/(losses).

In the table above, the amortised cost of loans and receivables, other receivables and cash and bank balances have been used as a reasonable
approximation to fair value. Similarly, unquoted equities have been reflected at cost less impairment loss as they approximate the fair value.

As at 31 March 2023, all SPPI assets meet the characteristics of low credit risk financial instruments.

100 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(1) The table below presents an analysis of the fair value of classes of financial assets as at 31 March 2023 and 31 March 2022, as well as the
corresponding change in fair value during the financial year. (cont’d.)

(i) Individually material JV - AmMetLife Insurance (entity level) (cont’d.)

Result of the Classification

Fair value Fair value cash flows and
as at Change in as at characteristics measurement
1 April 2021 fair value* 31 March 2022 test under MFRS 9
RM’000 RM’000 RM’000

2022
Investments:
Loans and receivables ("LAR") 332,123 (121,056) 211,067 SPPI Amortised cost
Available-for-sale ("AFS") securities 1,306,541 17,554 1,324,095
- Quoted equities 58,550 (3,053) 55,497 Non-SPPI FVTPL
- Unquoted equities 2,147 - 2,147 Non-SPPI FVTPL
- Malaysian Government Securities 147,357 (15,325) 132,032 SPPI FVOCI
- Unquoted corporate bonds 1,090,321 38,330 1,128,651 SPPI FVOCI
- Quoted unit and property trust funds 8,166 (2,398) 5,768 Non-SPPI FVTPL

Fair value through profit or loss (“FVTPL”) 1,614,009 173,741 1,787,750

- Quoted equities 76,350 4,642 80,992 Non-SPPI FVTPL
- Malaysian Government Securities 116,481 70,611 187,092 SPPI FVTPL
- Unquoted corporate bonds 1,379,217 87,503 1,466,720 SPPI FVTPL
- Quoted unit and property trust funds 3,048 (1,318) 1,730 Non-SPPI FVTPL
- Unquoted unit and property trust funds 38,913 12,303 51,216 Non-SPPI FVTPL
Other receivables 29,243 5,293 34,536 SPPI Amortised cost
Cash and bank balances 74,518 4,853 79,371 SPPI Amortised cost

* Includes purchases, disposals, maturities and unrealised gains/(losses).

In the table above, the amortised cost of loans and receivables, other receivables and cash and bank balances have been used as a reasonable
approximation to fair value. Similarly, unquoted equities have been reflected at cost less impairment loss as they approximate the fair value.

As at 31 March 2022, all SPPI assets meet the characteristics of low credit risk financial instruments.

101
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(1) The table below presents an analysis of the fair value of classes of financial assets as at 31 March 2023 and 31 March 2022, as well as the
corresponding change in fair value during the financial year. (cont’d.)

(ii) Individually immaterial JV - AmMetLife Takaful

Result of the Classification

Fair value Fair value cash flows and
as at Change in as at characteristics measurement
1 April 2022 fair value* 31 March 2023 test under MFRS 9
RM’000 RM’000 RM’000

2023
Investments:
Financing and receivables (“FAR”) 67,095 28,024 95,119 SPPI/SPPP Amortised cost
Available-for-sale ("AFS") 337,731 51,762 389,493
- Malaysian Government guaranteed
financing 13,917 20,721 34,638 SPPI/SPPP FVOCI
- Islamic private debt securities 323,814 31,041 354,855 SPPI/SPPP FVOCI

Fair value through profit or loss (“FVTPL”) 52,706 2,503 55,209

- Quoted Shariah approved equities 23,486 1,548 25,034 Non-SPPI/SPPP FVTPL
- Unit and property trust funds 19,517 203 19,720 Non-SPPI/SPPP FVTPL
- Malaysian Government guaranteed
financing 295 11 306 Non-SPPI/SPPP FVTPL
- Islamic private debt securities 9,408 741 10,149 Non-SPPI/SPPP FVTPL
Accrued interest 4,422 770 5,192 SPPI/SPPP Amortised cost
Other receivables 342 12,419 12,761 SPPI/SPPP Amortised cost
Cash and bank balances 59,289 4,947 64,236 SPPI/SPPP Amortised cost

* Includes purchases, disposals, maturities and unrealised gains/(losses).

In the table above, the amortised cost of financing and receivables, takaful receivables and cash and bank balances have been used as a
reasonable approximation to fair value.

As at 31 March 2023, all SPPI assets meet the characteristics of low credit risk financial instruments.

102 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(1) The table below presents an analysis of the fair value of classes of financial assets as at 31 March 2023 and 31 March 2022, as well as the
corresponding change in fair value during the financial year. (cont’d.)

(ii) Individually immaterial JV - AmMetLife Takaful (cont’d)

Result of the Classification

Fair value Fair value cash flows and
as at Change in as at characteristics measurement
1 April 2021 fair value* 31 March 2022 test under MFRS 9
RM’000 RM’000 RM’000

2022
Investments:
Financing and receivables (“FAR”) 54,250 12,845 67,095 SPPI/SPPP Amortised cost
Available-for-sale (“AFS”) 243,652 94,079 337,731
- Malaysian Government guaranteed
financing 14,323 (406) 13,917 SPPI/SPPP FVOCI
- Islamic private debt securities 229,329 94,485 323,814 SPPI/SPPP FVOCI

Fair value through profit or loss (“FVTPL”) 52,371 335 52,706

- Quoted Shariah approved equities 24,133 (647) 23,486 Non-SPPI/SPPP FVTPL
- Unit and property trust funds 19,459 58 19,517 Non-SPPI/SPPP FVTPL
- Malaysian Government guaranteed
financing 302 (7) 295 Non-SPPI/SPPP FVTPL
- Islamic private debt securities 8,477 931 9,408 Non-SPPI/SPPP FVTPL
Accrued interest 3,674 748 4,422 SPPI/SPPP Amortised cost
Other receivables 314 28 342 SPPI/SPPP Amortised cost
Cash and bank balances 75,535 (16,246) 59,289 SPPI/SPPP Amortised cost

* Includes purchases, disposals, maturities and unrealised gains/(losses).

In the table above, the amortised cost of financing and receivables, takaful receivables and cash and bank balances have been used as a
reasonable approximation to fair value.

As at 31 March 2022, all SPPI assets meet the characteristics of low credit risk financial instruments.

103
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(2) The table below provides information regarding the credit risk exposures of the JVs of the Group for assets subject to credit risk according to the
JV’s credit ratings of counterparties. The carrying amount is measured in accordance with MFRS 139 excluding any impairment allowance for those
measured at amortised cost.

(i) Individually material JV - AmMetLife Insurance (entity level)

Credit exposure by credit rating

Neither past due nor impaired

Government
AAA AA guaranteed Unrated Unit linked Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Investments:
LAR:
- Deposit with licensed banks 177,442 73,707 - - 4,443 255,592
- Loans
Policy loans - - - 60,858 - 60,858
Mortgage loans - - - 73 - 73
AFS:
- Malaysian Government Securities - - 111,817 - - 111,817
- Corporate bonds 385,779 129,489 641,304 - - 1,156,572
FVTPL:
- Malaysian Government Securities - - 249,243 - 1,003 250,246
- Corporate bonds 276,736 137,367 1,095,921 - 50,407 1,560,431
Other receivables* 8,122 3,480 19,128 2,973 678 34,381
Cash and bank balances 24,214 15,825 - 2 24,827 64,868
872,293 359,868 2,117,413 63,906 81,358 3,494,838

As at 31 March 2023, all SPPI assets meet the characteristics of low credit risk financial instruments.

* excluding prepayment and tax recoverable

104 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(2) The table below provides information regarding the credit risk exposures of the JVs of the Group for assets subject to credit risk according to the
JV’s credit ratings of counterparties. The carrying amount is measured in accordance with MFRS 139 excluding any impairment allowance for those
measured at amortised cost. (cont’d.)

(i) Individually material JV - AmMetLife Insurance (entity level) (cont’d.)

Credit exposure by credit rating (cont’d.)

Neither past due nor impaired

Government
AAA AA guaranteed Unrated Unit linked Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Investments:
LAR:
- Deposit with licensed banks 77,456 66,189 - - 2,495 146,140
- Loans
Policy loans - - - 64,730 - 64,730
Mortgage loans - - - 197 - 197
AFS:
- Malaysian Government Securities - - 132,032 - - 132,032
- Corporate bonds 388,450 79,366 660,835 - - 1,128,651
FVTPL:
- Malaysian Government Securities - - 186,098 - 994 187,092
- Corporate bonds 240,454 114,298 1,070,245 - 41,723 1,466,720
Other receivables* 6,925 2,400 18,837 5,424 950 34,536
Cash and bank balances 41,224 12,234 - 2 25,911 79,371
754,509 274,487 2,068,047 70,353 72,073 3,239,469

As at 31 March 2022, all SPPI assets meet the characteristics of low credit risk financial instruments.

* excluding prepayment and tax recoverable

105
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(2) The table below provides information regarding the credit risk exposures of the JVs of the Group for assets subject to credit risk according to the
JV’s credit ratings of counterparties. The carrying amount is measured in accordance with MFRS 139 excluding any impairment allowance for those
measured at amortised cost. (cont’d.)

(ii) Individually immaterial JV - AmMetLife Takaful

Neither past due nor impaired

Investment
Government grade*
guaranteed (A - AAA) Unrated Total
RM’000 RM’000 RM’000 RM’000

2023
Investments:
Financial assets at FVTPL:
- Malaysian Government Securities 306 - - 306
- Unquoted securities in Malaysia:
Secured Islamic corporate debt securities 1,896 - - 1,896
Unsecured Islamic corporate debt securities - 8,253 - 8,253
AFS securities:
- Malaysian Government Securities 34,638 - - 34,638
- Unquoted securities in Malaysia:
Secured Islamic corporate debt securities 38,818 - - 38,818
Unsecured Islamic corporate debt securities - 316,037 - 316,037
FAR:
- Islamic investment accounts with licensed Islamic banks - 95,119 - 95,119
Accrued interest and other receivables (excluding prepayments
and tax recoverable) 923 4,176 12,854 17,953
Cash and bank balances - 64,219 17 64,236
76,581 487,804 12,871 577,256

* Based on public ratings assigned by RAM Rating Services Berhad (“RAM”) and Malaysian Rating Corporation Berhad.

As at 31 March 2023, all SPPI assets meet the characteristics of low credit risk financial instruments.

106 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONT’D.)

(2) The table below provides information regarding the credit risk exposures of the JVs of the Group for assets subject to credit risk according to the
JV’s credit ratings of counterparties. The carrying amount is measured in accordance with MFRS 139 excluding any impairment allowance for those
measured at amortised cost. (cont’d.)

(ii) Individually immaterial JV - AmMetLife Takaful (cont’d.)

Neither past due nor impaired

Investment
Government grade*
guaranteed (A - AAA) Unrated Total
RM’000 RM’000 RM’000 RM’000

2022
Investments:
Financial assets at FVTPL:
- Malaysian Government Securities 295 - - 295
- Unquoted securities in Malaysia:
Secured Islamic corporate debt securities 1,870 - - 1,870
Unsecured Islamic corporate debt securities - 7,538 - 7,538
AFS securities:
- Malaysian Government Securities 13,917 - - 13,917
- Unquoted securities in Malaysia:
Secured Islamic corporate debt securities 32,475 - - 32,475
Unsecured Islamic corporate debt securities - 291,339 - 291,339
FAR:
- Islamic investment accounts with licensed Islamic banks - 67,095 - 67,095
Accrued interest and other receivables (excluding prepayments
and tax recoverable) 488 3,858 418 4,764
Cash and bank balances - 59,261 28 59,289
49,045 429,091 446 478,582

* Based on public ratings assigned by RAM and Malaysian Rating Corporation Berhad.

As at 31 March 2022, all SPPI assets meet the characteristics of low credit risk financial instruments.

107
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

18. OTHER ASSETS

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Trade receivables (a) 271,463 432,591 - -

Other receivables, deposits and prepayments (b) 1,021,772 944,628 134 11,410
Interest/profit receivable 508,106 456,844 - -
Fee receivable 23,177 18,229 - -
Amount due from associates and joint ventures 17,915 9,884 1,521 205
Amount due from agents, brokers and reinsurers 102,061 412,153 - -
Foreclosed properties 2,644 2,634 - -
Tax recoverable 220,584 168,371 2,350 -
Collateral pledged for derivative and securities transactions 467,034 446,809 - -
2,634,756 2,892,143 4,005 11,615
Less: Accumulated impairment losses (c) (8,720) (6,824) - -
2,626,036 2,885,319 4,005 11,615

(a) Trade receivables mainly relate to the stock and futures broking operations and fund management operations of the Group which include amount
outstanding from purchase contracts and management fees receivable in respect of funds under the management of its subsidiaries.

(b) Included in other receivables, deposits and prepayments of the Group and of the Company are amounts due from other related companies. These
intercompany balances are unsecured, non-interest bearing and are payable on demand.

(c) The movements of Lifetime ECL/allowances for impairment losses for other assets using simplified approach are as follows:

(i) Movements for trade receivables, other receivables, deposits and prepayments, interest receivable and fee receivable are as follows:

Group
2023 2022
Note RM’000 RM’000

Balance at beginning of the financial year 6,667 6,604

Allowances for impairment, net 38 2,441 655
Amount written off (298) (607)
Derecognition - disposal of subsidiary (263) -
Foreign exchange differences 16 15
Balance at end of the financial year 8,563 6,667

Trade receivables that are individually assessed to be impaired at the reporting date relate to debtors that are in significant financial difficulties and
have defaulted in payments. These receivables are not secured by any collateral or credit enhancements.

As at reporting date, trade receivables of the Group that are classified as impaired amounted to RM1,797,000 (2022: RM1,887,000).

(ii) The movement in accumulated impairment losses for foreclosed properties is as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning/end of the financial year 157 157

108 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

19. PROPERTY AND EQUIPMENT

Office,
Long term Short term equipment
Freehold leasehold leasehold Motor Leasehold Computer furniture Work-in-
land land land Buildings vehicles improvements equipment and fittings progress Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Cost
At beginning of the financial year 8,897 7,977 321 53,498 7,976 238,666 716,257 212,210 4,386 1,250,188
Additions - - - - - 6,100 24,029 3,468 23,913 57,510
Disposals - - - (19,515) (309) - (17,721) (7,524) - (45,069)
Written off - - - - (5) (721) (119) (2,312) - (3,157)
Reclassification/adjustments - - - - - 990 3,382 (1,104) (3,744) (476)
Transfer to intangible assets
(Note 21(b)) - - - - - - - - (219) (219)
Foreign exchange differences - - - - 9 - 16 86 - 111
Derecognition - disposal of subsidiary - - - (181) (1,389) (15,666) (73,190) (26,581) (85) (117,092)
At end of the financial year 8,897 7,977 321 33,802 6,282 229,369 652,654 178,243 24,251 1,141,796

Accumulated depreciation
At beginning of the financial year - 3,413 262 25,984 5,993 220,743 617,013 194,679 - 1,068,087
Depreciation for the financial year
(Note 35, 57(IV)) - 144 13 1,011 210 7,871 38,874 4,948 - 53,071
Disposals - - - (8,116) (220) - (17,710) (7,491) - (33,537)
Written off - - - - (5) (704) (110) (2,305) - (3,124)
Reclassification/adjustments - - - - - 990 (94) (1,108) - (212)
Foreign exchange differences - - - - 8 - 16 86 - 110
Derecognition - disposal of subsidiary - - - (44) (910) (14,988) (70,110) (19,331) - (105,383)
At end of the financial year - 3,557 275 18,835 5,076 213,912 567,879 169,478 - 979,012

Accumulated impairment loss

At beginning of the financial year - 254 - 879 - - - - - 1,133
Derecognition - disposal of subsidiary - - - (127) - - - - - (127)
At end of the financial year - 254 - 752 - - - - - 1,006

Carrying amount
At end of the financial year 8,897 4,166 46 14,215 1,206 15,457 84,775 8,765 24,251 161,778

109
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

19. PROPERTY AND EQUIPMENT (CONT’D.)

Office,
Long term Short term equipment
Freehold leasehold leasehold Motor Leasehold Computer furniture Work-in-
land land land Buildings vehicles improvements equipment and fittings progress Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Cost
At beginning of the financial year 8,897 7,977 321 53,498 8,551 235,849 697,494 213,361 7,473 1,233,421
Additions - - - - 346 2,698 15,216 3,202 3,963 25,425
Disposals - - - - (923) - (3,373) (932) - (5,228)
Written off - - - - - (737) (2,055) (3,518) - (6,310)
Reclassification/adjustments - - - - - 856 8,970 72 (10,887) (989)
Transfer from intangible assets
(Note 21(b)) - - - - - - - - 3,837 3,837
Foreign exchange differences - - - - 2 - 5 25 - 32
At end of the financial year 8,897 7,977 321 53,498 7,976 238,666 716,257 212,210 4,386 1,250,188

Accumulated depreciation
At beginning of the financial year - 3,264 254 24,930 6,239 210,615 579,476 191,576 - 1,016,354
Depreciation for the financial year
(Note 35, 57(IV)) - 149 8 1,054 398 10,864 42,938 7,490 - 62,901
Disposals - - - - (646) - (3,372) (927) - (4,945)
Written off - - - - - (736) (2,036) (3,483) - (6,255)
Reclassification/adjustments - - - - - - 2 (2) - -
Foreign exchange differences - - - - 2 - 5 25 - 32
At end of the financial year - 3,413 262 25,984 5,993 220,743 617,013 194,679 - 1,068,087

Accumulated impairment loss

At beginning and end of the financial
year - 254 - 879 - - - - - 1,133

Carrying amount
At end of the financial year 8,897 4,310 59 26,635 1,983 17,923 99,244 17,531 4,386 180,968

110 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

19. PROPERTY AND EQUIPMENT (CONT’D.)

Office Motor Computer

equipment vehicles hardware Total
Company RM’000 RM’000 RM’000 RM’000

2023
Cost
At beginning of the financial year 4 758 18 780
Additions 3 - 25 28
At end of the financial year 7 758 43 808

Accumulated depreciation
At beginning of the financial year 4 758 18 780
Depreciation for the financial year (Note 35) - - 8 8
At end of the financial year 4 758 26 788

Carrying amount
At end of the financial year 3 - 17 20

Office Motor Computer

equipment vehicles hardware Total
Company RM’000 RM’000 RM’000 RM’000

2022
Cost
At beginning/end of the financial year 4 758 18 780

Accumulated depreciation
At beginning of the financial year 4 758 17 779
Depreciation for the financial year (Note 35) - - 1 1
At end of the financial year 4 758 18 780

Carrying amount
At end of the financial year - - - -

111
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

20. RIGHT-OF-USE ASSETS

Computer
Premises equipment Total
Group RM’000 RM’000 RM’000

2023
Cost
At beginning of the financial year 417,655 8,858 426,513
Additions 77,623 - 77,623
Remeasurements 49,996 - 49,996
Termination (3,717) - (3,717)
Derecognition - disposal of subsidiary (47,845) - (47,845)
At end of the financial year 493,712 8,858 502,570

Accumulated depreciation
At beginning of the financial year 231,335 5,806 237,141
Depreciation for the financial year (Note 35, 57(IV)) 75,865 1,145 77,010
Termination (1,509) - (1,509)
Derecognition - disposal of subsidiary (39,842) - (39,842)
At end of the financial year 265,849 6,951 272,800

Carrying amount
At end of the financial year 227,863 1,907 229,770

Computer
Premises equipment Total
Group RM’000 RM’000 RM’000

2022
Cost
At beginning of the financial year 422,414 8,858 431,272
Additions 11,580 - 11,580
Remeasurements (13,647) - (13,647)
Termination (1,901) - (1,901)
Derecognition of expired leases (791) - (791)
At end of the financial year 417,655 8,858 426,513

Accumulated depreciation
At beginning of the financial year 156,902 3,617 160,519
Depreciation for the financial year (Note 35, 57(IV)) 75,695 2,189 77,884
Termination (471) - (471)
Derecognition of expired leases (791) - (791)
At end of the financial year 231,335 5,806 237,141

Carrying amount
At end of the financial year 186,320 3,052 189,372

The carrying amount of right-of-use assets includes estimated cost for reinstatement amounting to RM2,120,000 (2022: RM3,210,000).

The corresponding lease liabilities relating to the right-of-use assets is disclosed in Note 27(e).

112 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

20. RIGHT-OF-USE ASSETS (CONT’D.)

The Group has entered into commercial leases for premises and computer equipment, all of which do not contain any variable payment terms or residual payment
guarantees. The Group is not subjected to any covenants or restrictions by entering into the leases.

The leases are typically made for fixed period of three years, but some of the leases for premises may have extension options of between three to twelve years.
These options, which are exercisable only by the Group and not by the respective lessor, are negotiated by management to provide operational flexibility in
managing the assets used in the operations of the Group. Management exercises significant judgement in determining whether these extension options are
reasonably certain to be exercised (refer to Note 5.2). For most of the leases of premises, the periods covered by the extension options are included as part of the
lease terms due to the significance of these assets to the Group. As such, substantially all of the future cash outflows that the Group is exposed to in connection
with the leases have been reflected in the measurement of lease liabilities.

21. INTANGIBLE ASSETS

Group
2023 2022
Note RM’000 RM’000

Goodwill (a) 303,492 1,020,562

Other intangibles:
Brand (b) - 94,440
Agent relationship (b) - 22,185
Computer software (b) 164,121 215,288
Work-in-progress (“WIP”) for computer software (b) 43,031 47,437
207,152 379,350
510,644 1,399,912

Brand

Brand relates to Kurnia Brand (“K-Brand”) that arose from the acquisition of AmGeneral Insurance Berhad (“AMGI”). K-Brand is deemed to have an indefinite useful
life based on management’s view that K-Brand has over 20 years of recognition and there is no foreseeable limit to the period over which the asset is expected
to generate net cash flows for AMGI. K-Brand is reviewed for impairment annually and when there are indications of impairment.

In the current financial year, the recoverable amount of general insurance CGU is based on the purchase price offered by Liberty Insurance Berhad (“LIB”),
whereby no consideration of the K-Brand was allocated as part of the purchase price offered. As such, the Group has recognised impairment of RM94,440,000
prior to the completion of the disposal.

In the previous financial year, the recoverable amount of K-Brand was based on its value-in-use by discounting the expected future cash flows. The key assumptions
for the computation of value-in-use include the growth rates and discount rates applied. Cash flow projection was based on the actual results for 2022 with
premium growth rate of 2.1% to 5.0% over the next 5 years and terminal growth rate of 3.0%. The discount rate applied was 8.2% which was the estimated cost
of equity plus a risk adjustment.

Agent relationship

Agent relationship arose from the acquisition of AMGI. The agent relationship is deemed to have a finite useful life of 15 years and is amortised based on a
straight-line basis.

In the current financial year, the recoverable amount of general insurance CGU is based on the purchase price offered by LIB, whereby no consideration of the
agent relationship was allocated as part of the purchase price offered. As such, the Group has recognised impairment of RM20,837,000 as disclosed in Note
21(b) prior to the completion of the disposal.

113
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

21. INTANGIBLE ASSETS (CONT’D.)

(a) Goodwill

Group
2023 2022
Note RM’000 RM’000

Cost
At beginning of the financial year 2,811,037 2,811,037
Derecognition - disposal of subsidiary 56 (717,070) -
At end of the financial year 2,093,967 2,811,037

Accumulated impairment
At beginning/end of the financial year (1,790,475) (1,790,475)

Carrying amount
At end of the financial year 303,492 1,020,562

Impairment test for goodwill

Goodwill is reviewed for impairment annually or when there are indications of impairment. At the date of acquisition, goodwill is allocated to the Group’s
cash generating units (“CGU”) for impairment testing purposes, identified according to business segments expected to benefit from the synergies as
follows:

Group
2023 2022
RM’000 RM’000

Investment banking 4,227 4,227

Asset and fund management 116,128 116,128
Commercial and retail:
- Conventional banking 129,655 129,655
- Islamic banking 53,482 53,482
General insurance - 717,070
303,492 1,020,562

(i) The recoverable amount of these CGUs, which are monitored at the operating segment level, has been determined based on value-in-use calculations.
These calculations use pre-tax cash flow projections based on financial budgets approved by the management. The discount rate applied to the
cash flow projections is derived from the pre-tax weighted average cost of capital plus a reasonable risk premium at the date of assessment of the
respective CGU.

The cash flow projections for these CGUs are based on the financial budgets approved by the management covering a five-year period, taking into
account the projected regulatory capital requirements, as well as the terminal growth rate of 3.00% (2022: 3.00%) based on long-term GDP forecast
and expectations of market opportunities. The discount rate applied ranged from 9.21% to 10.61% (2022: 9.81% to 11.02%).

The terminal growth rates used do not exceed the long-term average growth rate for the markets in which the businesses operate.

The management believes that any reasonably possible change in the key assumptions would not cause the carrying amounts of the goodwill to
exceed their recoverable amounts.

114 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

21. INTANGIBLE ASSETS (CONT’D.)

(a) Goodwill (cont’d.)

(ii) In the previous financial year, the recoverable amount of general insurance CGU was the cash flow projections based on the financial budgets
approved by management covering a one-year period, taking into account the projected premium growth rate of 2.7% to 5.0% based on the current
and future industry trends. Estimated cash flows beyond the period covered by the financial budgets are extrapolated using the terminal growth rate
of 3.0% and the discount rate applied was 9.2%.

The terminal growth rates used do not exceed the long-term average growth rate for the markets in which the businesses operate.

In the current financial year, the recoverable amount of general insurance CGU is based on the purchase price offered by Liberty Insurance Berhad
(“LIB”), whereby no consideration of the general insurance goodwill was allocated as part of the purchase price offered. As such, the Group has fully
impaired the general insurance CGU of RM717,070,000 prior to the completion of the disposal.

(b) The movements in intangible assets are as follows:

WIP for
In-force Merchants Agent Credit cards Computer computer
Brand business relationship relationship relationship software software Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Cost
At beginning of the financial year 94,440 53,538 25,000 60,490 38,000 1,317,838 47,437 1,636,743
Additions - - - - - 23,235 43,940 67,175
Written off - - - - - (30) - (30)
Reclassification/adjustments - - - - - 40,016 (43,788) (3,772)
Transfer from property and equipment
(Note 19) - - - - - - 219 219
Foreign exchange differences - - - - - 3 - 3
Derecognition - disposal of subsidiary (94,440) (53,538) - (60,490) - (138,061) (4,777) (351,306)
At end of the financial year - - 25,000 - 38,000 1,243,001 43,031 1,349,032

Accumulated amortisation
At beginning of the financial year - 53,538 25,000 38,305 38,000 1,102,550 - 1,257,393
Amortisation (Note 35, 57(IV)) - - - 1,348 - 83,406 - 84,754
Written off - - - - - (30) - (30)
Reclassification/adjustments - - - - - 132 - 132
Foreign exchange differences - - - - - 3 - 3
Derecognition - disposal of subsidiary - (53,538) - (39,653) - (107,181) - (200,372)
At end of the financial year - - 25,000 - 38,000 1,078,880 - 1,141,880

Accumulated impairment loss

At beginning of the financial year - - - - - - - -
Impairment 94,440 - - 20,837 - - - 115,277
Derecognition - disposal of subsidiary (94,440) - - (20,837) - - - (115,277)
At end of the financial year - - - - - - - -

Carrying amount
At end of the financial year - - - - - 164,121 43,031 207,152

115
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

21. INTANGIBLE ASSETS (CONT’D.)

(b) The movements in intangible assets are as follows: (cont’d.)

WIP for
In-force Merchants Agent Credit cards Computer computer
Brand business relationship relationship relationship software software Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Cost
At beginning of the financial year 94,440 53,538 25,000 60,490 38,000 1,256,546 45,604 1,573,618
Additions - - - - - 20,748 54,261 75,009
Written off - - - - - (176) - (176)
Reclassification/adjustments - - - - - 40,718 (48,591) (7,873)
Transfer to property and equipment (Note 19) - - - - - - (3,837) (3,837)
Foreign exchange differences - - - - - 2 - 2
At end of the financial year 94,440 53,538 25,000 60,490 38,000 1,317,838 47,437 1,636,743

Accumulated amortisation
At beginning of the financial year - 53,538 25,000 34,272 38,000 999,423 - 1,150,233
Amortisation (Note 35, 57(IV)) - - - 4,033 - 103,162 - 107,195
Written off - - - - - (171) - (171)
Reclassification/adjustments - - - - - 134 - 134
Foreign exchange differences - - - - - 2 - 2
At end of the financial year - 53,538 25,000 38,305 38,000 1,102,550 - 1,257,393

Carrying amount
At end of the financial year 94,440 - - 22,185 - 215,288 47,437 379,350

22. DEPOSITS FROM CUSTOMERS

Group
2023 2022
RM’000 RM’000

Demand deposits 38,135,787 33,709,677

Savings deposits 10,664,158 9,397,684
Term/investment deposits 81,515,135 79,485,489
130,315,080 122,592,850

116 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

22. DEPOSITS FROM CUSTOMERS (CONT’D.)

Included in deposits from customers of the Group are deposits of RM2,202.2 million (2022: RM2,198.1 million) held as collateral for loans, advances and financing.

The maturity structure of term/investment deposits is as follows:

Group
2023 2022
RM’000 RM’000

Due within six months 65,635,656 62,120,020

Six months to one year 13,133,341 15,645,790
Over one year to three years 2,660,643 1,540,070
Over three years to five years 85,495 179,609
81,515,135 79,485,489

The deposits are sourced from the following types of customers:

Group
2023 2022
RM’000 RM’000

Government and statutory bodies 6,588,571 4,730,100

Business enterprises 63,994,960 61,314,620
Individuals 52,302,587 45,921,495
Others 7,428,962 10,626,635
130,315,080 122,592,850

23. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group
2023 2022
Note RM’000 RM’000

Licensed banks 6,793,325 5,571,352

Licensed investment banks 939,128 651,726
Bank Negara Malaysia (a) 1,390,807 1,270,123
Other financial institutions 2,338,985 2,401,384
11,462,245 9,894,585

(a) A total amount of RM1,100,590,000 received by the Group under the government financing scheme as part of the support measures by the government
in response to the COVID-19 pandemic for the purpose of lending to small and medium-sized enterprises (“SMEs”) at below market rate with six-year (6)
to eight and half year (8.5) maturities. The fair value gain arising from the deposits from Bank Negara Malaysia with the Group is applied to address the
financial and accounting impact arising from lending at concession rates and is recognised in the profit or loss.

117
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

24. RECOURSE OBLIGATION ON LOANS AND FINANCING SOLD TO CAGAMAS BERHAD

Recourse obligation on loans and financing sold to Cagamas Berhad represents the proceeds received from loans and financing sold to Cagamas Berhad with
recourse. Under this arrangement, the Group undertakes to administer the loans and financing on behalf of Cagamas Berhad and to buy back any loans and
financing, which are regarded as defective based on prudential criteria with recourse to the Group.

25. TERM FUNDING

Group
2023 2022
Note RM’000 RM’000

Senior Notes/Sukuk (a) 1,200,000 1,200,000

Credit-Linked Notes (b) - -
Other borrowings (net of unamortised issuance expenses of RM1,166,000; 2022: RM1,044,000) (c) 972,333 680,097
2,172,333 1,880,097

(a) The Senior Notes/Sukuk outstanding were issued under the following:

Group
2023 2022
Note RM’000 RM’000

Senior Notes Programme (i) 400,000 400,000

Senior Sukuk Programme (ii) 800,000 800,000
1,200,000 1,200,000

(i) The movements of debt securities under the Senior Notes Programme are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year 400,000 -

Issuance during the financial year - 400,000
Balance at end of the financial year 400,000 400,000

118 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

25. TERM FUNDING (CONT’D.)

(a) The Senior Notes/Sukuk outstanding were issued under the following: (cont’d.)

(i) The movements of debt securities under the Senior Notes Programme are as follows: (cont’d.)

Group

Senior Notes of the Group refers to the Senior Notes Programme (“SNP”) of up to RM7.0 billion nominal value by AmBank. The proceeds from the
issuance of the Senior Notes are to be utilised for AmBank’s general working capital requirements.

The SNP has a tenure of up to thirty (30) years from the date of first issuance under the programme. Under the SNP, AmBank may issue Senior Notes
with a tenure of more than one (1) year and up to ten (10) years provided that the Senior Notes mature prior to the expiry of the SNP. Unless previously
redeemed or purchased and cancelled, the Senior Notes shall be fully redeemed on the respective maturity date(s) at 100% of their nominal value.

The Senior Notes rank pari-passu with all other present and future unsecured and unsubordinated obligations (excluding deposits) of AmBank.

The salient features of Senior Notes issued and outstanding are as follows:

- Tranche 8 - Series 1 which amounted to RM150.0 million in nominal value was issued on 30 December 2021 with a tenure of 1.5 years and
interest rate of 2.94% per annum, payable semi-annually.

- Tranche 8 - Series 2 which amounted to RM250.0 million in nominal value was issued on 30 December 2021 with tenure of 2 years and interest
rate of 3.14% per annum, payable semi-annually.

As at 31 March 2023, RAM Rating has assigned a long-term rating of AA3/Positive to the SNP.

(ii) The movements of debt securities under the Senior Sukuk Programme are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year 800,000 1,000,000

Redemption during the financial year - (200,000)
Balance at end of the financial year 800,000 800,000

In the financial year ended 31 March 2011, AmBank Islamic implemented a Senior Islamic securities issuance (“Senior Sukuk”) programme under
the Shariah principle of Musharakah with nominal value of up to RM3.0 billion. As at 31 March 2023, the Senior Sukuk was assigned a rating of AA3/
Positive by RAM.

The salient features of Senior Sukuk issued and outstanding are as follows:

- On 27 March 2020, Tranche 5 and Tranche 6 with nominal value of RM200.0 million and RM800.0 million respectively were issued. Profit is
payable semi-annually at rate of 3.55% per annum for Tranche 5 and 4.10% per annum for Tranche 6. Tranche 5 has a tenure of 2 years and
Tranche 6 has a tenure of 5 years. Tranche 5 was fully redeemed on 25 March 2022.

119
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

25. TERM FUNDING (CONT’D.)

(b) The movements of Credit-Linked Notes (“CLN”) are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year - 147,691

Repayment - (150,000)
Amortisation of premium - 2,309
Balance at end of the financial year - -

In the previous financial year, the CLN were structured investment products issued by AmBank and subscribed at nominal value. The nominal value of CLN
issued amounted to RM150.0 million and it carried a fixed interest rate at 2.0% per annum matured on 14 September 2021.

(c) The movements in other borrowings are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year:

Structured deposit 261,295 188,430
Term loan 418,802 413,749

Drawdown during the financial year:

Term loan - 419,314

Net issuance/(repayment) during the financial year:

Structured deposit 269,876 72,795
Term loan - (422,250)

Amortisation of:
- premium for structured deposit 71 70
- issuance expenses for term loan 1,166 1,092
Foreign exchange differences 21,123 6,897
Balance at end of the financial year 972,333 680,097

Other borrowings comprise term loan and structured deposits:

(i) On 13 December 2019, AmBank drawdown a term loan of USD100.0 million from two joint lenders, Wells Fargo Bank, National Association and
Commerzbank Aktiengesellschaft, Luxembourg Branch. This term loan is for a period of two years and interest is charged at 3-month LIBOR + 0.6%.
This loan is utilised for diversifying the sources of funding the growth of the USD balance sheet. This term loan has been fully repaid in full upon
maturity on 13 December 2021.

On 22 December 2021, AmBank drawdown a new term loan of USD100.0 million from Wells Fargo Bank, National Association for similar purpose.
This term loan is for a period of two years and interest is charged at 3-month LIBOR + 0.55%, payable on quarterly basis.

120 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

25. TERM FUNDING (CONT’D.)

(c) Other borrowings comprise term loan and structured deposits: (cont’d.)

(ii) Structured deposits which amounted to RM531,242,000 (2022: RM261,295,000) are non-principal guaranteed deposits placed by the customers.
The structured deposits will mature within 1 month to 5 years (2022: 1 month to 3 years) and are roll-overed on maturity date depending on
customers’ request. Structured deposits for operations of Islamic banking amounted to RM34,907,000 (2022: RM34,836,000).

26. DEBT CAPITAL

Group
2023 2022
Note RM’000 RM’000

Subordinated Notes and Sukuk (a) 4,395,000 4,395,000

(a) Subordinated Notes and Sukuk

The outstanding Subordinated Notes and Sukuk are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year:

Subordinated Sukuk 1,300,000 1,300,000
Subordinated Notes 3,095,000 2,995,000
Issuance during the financial year:
Subordinated Sukuk 150,000 250,000
Subordinated Notes 1,095,000 600,000
Redemption during the financial year:
Subordinated Sukuk (150,000) (250,000)
Subordinated Notes (1,095,000) (500,000)
Balance at end of the financial year: 4,395,000 4,395,000

(i) Subordinated Sukuk Murabahah

On 28 February 2014, AmBank Islamic had implemented a Subordinated Sukuk Murabahah programme of RM3.0 billion. The objective of the
programme is to enable the issuance of Tier 2 capital from time to time, for the purpose of enhancing the AmBank Islamic’s total capital position. The
programme is set up in accordance to the requirements spelt out in the Capital Adequacy Framework for Islamic Banks (Capital Components) issued
by Bank Negara Malaysia (“BNM”), and the securities issued under this programme qualified for recognition as Tier 2 Capital for the purpose of capital
adequacy ratio computation.

The programme has a tenure of thirty (30) years from the date of the first issuance under the programme. Each issuance of Tier 2 Subordinated Sukuk
under this programme shall have a tenure of at least five (5) years from the issue date, and is callable on any coupon payment date after a minimum
period of five (5) years from the date of issuance of each tranche. As at 31 March 2023, the Tier 2 Subordinated Sukuk have been assigned a credit
rating of A1/Positive by RAM.

121
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

26. DEBT CAPITAL (CONT’D.)

(a) Subordinated Notes and Sukuk (cont’d.)

(i) Subordinated Sukuk Murabahah (cont’d.)

The salient features of Subordinated Sukuk issued and outstanding are as follows:

- Tranche 4 which amounted to RM10.0 million was issued on 30 December 2016. The profit rate of this tranche is 5.50% per annum, payable
semi-annually. This tranche was fully redeemed on 30 December 2021.
- Tranche 5 which amounted to RM240.0 million was issued on 15 March 2017. The profit rate of this tranche is 5.20% per annum, payable semi-
annually. This tranche was fully redeemed on 15 March 2022.
- Tranche 6 which amounted to RM150.0 million was issued on 23 February 2018. The profit rate of this tranche is 5.23% per annum, payable
semi-annually. This tranche was fully redeemed on 23 February 2023.
- Tranche 7 which amounted to RM500.0 million was issued on 18 October 2018. The profit rate of this tranche is 4.88% per annum, payable
semi-annually.
- Tranche 8 which amounted to RM400.0 million was issued on 8 December 2020. The profit rate of this tranche is 3.13% per annum, payable
semi-annually.
- Tranche 9 which amounted to RM250.0 million was issued on 8 March 2022. The profit rate of this tranche is 4.25% per annum, payable semi-
annually.
- Tranche 10 which amounted to RM150.0 million was issued on 28 March 2023. The profit rate of this tranche is 4.53% per annum, payable
semi-annually.

All the above tranches are for a tenure of 10 years.

The full amount of these tranches issued qualify for recognition as Tier 2 capital in the capital adequacy ratio computation of AmBank Islamic. Total
outstanding Subordinated Sukuk Murabahah as at 31 March 2023 amounted to RM1,300,000,000 (2022: RM1,300,000,000).

(ii) Subordinated Notes

On 30 December 2013, AmBank established a Subordinated Notes programme of RM4.0 billion. The objective of the programme is to enable the
issuance of Tier 2 Capital from time to time, for the purpose of enhancing AmBank’s total capital position. The programme is set up in accordance to
the requirements spelt out in the Capital Adequacy Framework (Capital Components) issued by BNM.

The programme has a tenure of thirty (30) years from the date of the first issuance under the programme. Each issuance of Tier 2 Subordinated Notes
under this programme shall have a tenure of at least five (5) years from the issue date, and is callable on any coupon payment date after a minimum
period of five (5) years from the date of issuance of each tranche. As at 31 March 2023, the Tier 2 Subordinated Notes have been assigned a credit
rating of A1/Positive by RAM.

The salient features of Subordinated Notes issued and outstanding are as follows:

- Tranche 2 which amounted to RM500.0 million was issued on 15 March 2017. The interest rate of this tranche is 5.20% per annum, payable
semi-annually. This tranche was fully redeemed on 15 March 2022.
- Tranche 3 which amounted to RM570.0 million was issued on 16 October 2017. The interest rate of this tranche is 4.90% per annum, payable
semi-annually. This tranche was fully redeemed on 17 October 2022.
- Tranche 4 which amounted to RM175.0 million was issued on 23 February 2018. The interest rate of this tranche is 5.23% per annum, payable
semi-annually. This tranche was fully redeemed on 23 February 2023.
- Tranche 5 which amounted to RM350.0 million was issued on 14 March 2018. The interest rate of this tranche is 5.23% per annum, payable
semi-annually. This tranche was fully redeemed on 14 March 2023.
- Tranche 6 which amounted to RM1.0 billion was issued on 15 November 2018. The interest rate of this tranche is 4.98% per annum, payable
semi-annually.
- Tranche 7 which amounted to RM400.0 million was issued on 30 March 2021. The interest rate of this tranche is 4.18% per annum, payable
semi-annually.

122 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

26. DEBT CAPITAL (CONT’D.)

(a) Subordinated Notes and Sukuk (cont’d.)

(ii) Subordinated Notes (cont’d.)

- Tranche 8 which amounted to RM600.0 million was issued on 8 March 2022. The interest rate of this tranche is 4.30% per annum, payable
semi-annually.
- Tranche 9 which amounted to RM745.0 million was issued on 12 October 2022. The interest rate of this tranche is 5.20% per annum, payable
semi-annually.
- Tranche 10 which amounted to RM350.0 million was issued on 28 March 2023. The interest rate of this tranche is 4.58% per annum, payable
semi-annually.

All the above tranches are for a tenure of 10 years (callable in the 5th years).

The full amount of these tranches issued qualify for recognition as Tier 2 capital in the capital adequacy ratio computation of AmBank. Total outstanding
Subordinated Notes as at 31 March 2023 amounted to RM3,095,000,000 (2022: RM3,095,000,000).

27. OTHER LIABILITIES

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Trade payables (a) 295,500 761,368 - -

Other payables and accruals (b) 1,366,483 1,543,486 18,625 17,537
Interest payable on deposits and borrowings 908,679 561,674 - -
Lease deposits and advance rental 51,798 47,830 - -
Provision for commitments and contingencies (c) 3,677 3,546 - -
Allowances for ECL on loan/financing commitments and financial
guarantees (d) 225,385 303,197 - -
Lease liabilities (e) 233,845 191,465 - -
Provision for reinstatement of leased properties (f) 6,908 9,706 - -
Amount due to subsidiaries (g) - - 4,492 -
Settlement payable - 515,000 - 515,000
Provision for taxation 18,568 61,532 - 1,290
Collateral received for derivative and securities transactions 510,844 229,098 - -
Deferred income 75,870 74,960 - -
3,697,557 4,302,862 23,117 533,827

(a) Trade payables mainly relate to the stock and share-broking operations of the investment banking subsidiary and represent contra gains owing to clients
and amount payable in outstanding sales contracts.

(b) As at 31 March 2023, there was no provision for retirement benefits. As at 31 March 2022, RM17,395,000 of provision for retirement benefits of a
subsidiary was included in other payables and accruals.

123
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(b) As at 31 March 2023, there was no provision for retirement benefits. As at 31 March 2022, RM17,395,000 of provision for retirement benefits of a
subsidiary was included in other payables and accruals. (cont’d.)

Provision for retirement benefits

(i) The movements in the present value of the defined benefit obligation recognised in the statements of financial position are as follows:

Group
2023 2022
Note RM’000 RM’000

Defined benefit obligation at beginning of the financial year 17,395 18,350

Actuarial loss (ii) - 1,133
Benefits paid (561) (1,901)
Service and interest costs (iii) 809 (187)
Derecognition - disposal of subsidiary (17,643) -
Defined benefit obligation at end of the financial year - 17,395

Present value of unfunded obligation - 17,395

Recognised liability for defined benefit obligation - 17,395

(ii) Actuarial gains and losses recognised directly in other comprehensive income:

Group
2023 2022
RM’000 RM’000

Amount accumulated in retained earnings at beginning of the financial year 3,408 4,269
Actuarial loss arising from:
(i) changes in financial and demographic assumptions - 320
(ii) experience adjustments - (1,453)
Recognised up to the date of disposal of subsidiary/the financial year (Note i) - (1,133)
Tax effects thereon - 272
Derecognition - disposal of subsidiary (3,408) -
Amount accumulated in retained earnings at end of the financial year - 3,408

124 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(b) As at 31 March 2023, there was no provision for retirement benefits. As at 31 March 2022, RM17,395,000 of provision for retirement benefits of a
subsidiary was included in other payables and accruals. (cont’d.)

Provision for retirement benefits (cont’d.)

(iii) Expense recognised in the statements of profit or loss as retirement benefits cost:

Group
2023 2022
RM’000 RM’000

Service cost - (885)

Interest cost 809 698
809 (187)

(iv) Actuarial assumptions

Principal actuarial assumptions used as at 31 March 2022:

Group
2022

Discount rate (per annum) 4.33%

Fixed deposit rate (per annum) 1.55%
Withdrawal rates (per annum) 5.30%

The discount rate used was based on market yields at the end of the reporting year on high quality corporate bonds. The amount and terms of the
corporate bonds were consistent with the current and estimated future post employment benefit obligation.

The assumption regarding future mortality was based on the experience of Malaysian insured lives between 1999 to 2003 with no allowance for
improvement in mortality rate. As at 31 March 2022, the average expected future working lives had been estimated at 7.11 years.

The subsidiary operates a final salary defined retirement benefit scheme which is wholly unfunded and there is no minimum funding requirement
under the current law. The employees of the subsidiary are not required to contribute to the scheme.

Calculation of the unfunded defined retirement benefits involves the projection of the present value for unfunded obligations using certain principal
actuarial assumptions such as the rate of interest at which to discount the future retirement benefits payments at the valuation date and the assumed
rate of growth of liabilities, namely the rate of salary escalation. There are elements of significant uncertainty on the assumptions used and thus the
projected future retirement benefits payable may be different from the actual retirement benefit paid.

Under the scheme, eligible employees who have completed a minimum of 10 years of service are entitled to retire at 56 years of age or optional
retirement age of 50 years. Employees who leave before the attainment of the normal retirement age or optional retirement age, are not entitled to
the benefit.

All new employees of the subsidiary who are hired after 18 March 2011 are not entitled to the retirement benefit.

125
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(b) As at 31 March 2023, there was no provision for retirement benefits. As at 31 March 2022, RM17,395,000 of provision for retirement benefits of a
subsidiary was included in other payables and accruals. (cont’d.)

Provision for retirement benefits (cont’d.)

(iv) Actuarial assumptions (cont’d.)

The following table demonstrates the sensitivity of provision for retirement benefits to a reasonable change in the defined benefit obligation:

Impact on
defined
benefit
obligation
(decrease)/
increase
2022
RM’000

Discount rate:
Increase 100 basis points (941)
Decrease 100 basis points 1,030

Fixed deposit rate:

Increase 100 basis points 1,231
Decrease 100 basis points (1,137)

Withdrawal rate:
10% increase in the withdrawal rate (385)
10% decrease in the withdrawal rate 399

(c) The movements in provision for commitments and contingencies are as follows:

Group
2023 2022
RM’000 RM’000

Balance at beginning of the financial year 3,546 10,239

Charge/(writeback) during the financial year 131 (5,693)
Reversal of provision under impaired loans, advances and financing recovered* - (1,000)
Balance at end of the financial year 3,677 3,546

* During the previous financial year, the Group had fully reversed the provision for estimated expenditure in respect of the Group’s obligations to repurchase loans/financing
of RM1.0 million due to expiry of the repurchase obligation.

126 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(d) Movements in allowances for ECL on loan/financing commitments and financial guarantees are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL
12-month not credit Lifetime ECL
ECL impaired credit impaired Total
Group RM’000 RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 28,926 26,330 247,941 303,197
Net allowances for/(writeback of) ECL 13,579 7,475 (98,991) (77,937)
- Transfer to 12-month ECL (Stage 1) 1,166 (6,535) - (5,369)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (1,371) 10,077 - 8,706
- Transfer to Lifetime ECL credit impaired (Stage 3) (42) (485) 3,899 3,372
- New exposures originated 19,523 16,470 7,943 43,936
- Net remeasurement of allowances 3,043 (4,038) (110,421) (111,416)
- Exposures derecognised (8,740) (8,014) (412) (17,166)
Foreign exchange differences 133 11 (19) 125
Balance at end of the financial year 42,638 33,816 148,931 225,385

Stage 1 Stage 2 Stage 3

Lifetime ECL
12-month not credit Lifetime ECL
ECL impaired credit impaired Total
Group RM’000 RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 30,429 37,348 52,733 120,510
Net (writeback of)/allowances for ECL (1,516) (11,011) 195,208 182,681
- Transfer to 12-month ECL (Stage 1) 778 (8,874) - (8,096)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (1,709) 7,344 - 5,635
- Transfer to Lifetime ECL credit impaired (Stage 3) (59) (478) 190,455 189,918
- New exposures originated 12,352 11,466 5,780 29,598
- Net remeasurement of allowances (3,837) (6,337) (1,019) (11,193)
- Exposures derecognised (9,041) (14,132) (8) (23,181)
Foreign exchange differences 13 (7) - 6
Balance at end of the financial year 28,926 26,330 247,941 303,197

127
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(d) The movements in ECL during the financial year are due to the following:

(a) Overall 12-month ECL (Stage 1) increased due to new exposures originated, net remeasurement of allowances; partially offset by exposure
derecognised.

(b) Overall Lifetime ECL not credit impaired (Stage 2) increased due to new exposures originated, impacts on migration from Stage 1; partly offset by
exposures derecognised, transfer to 12-month ECL (Stage 1) and net remeasurement of allowances.

(c) Lifetime ECL credit impaired (Stage 3) decreased mainly due to net remeasurement of allowances; offset by new exposures originated and transfer
to Lifetime ECL credit impaired (Stage 3).

(e) The movements of lease liabilities are as follows:

Premises
Group RM’000

2023
At beginning of the financial year 191,465
Additions 77,460
Remeasurements 49,937
Termination (2,324)
Finance cost charged (Note 35, 57(IV)) 6,486
Payment of lease liabilities* (80,423)
Derecognition - disposal of subsidiary (8,756)
At end of the financial year 233,845

Computer
Premises equipment Total
Group RM’000 RM’000 RM’000

2022
At beginning of the financial year 269,475 3,996 273,471
Additions 11,480 - 11,480
Remeasurements (14,170) - (14,170)
Termination (1,484) - (1,484)
Finance cost charged (Note 35, 57(IV)) 7,739 76 7,815
Payment of lease liabilities* (81,575) (4,072) (85,647)
At end of the financial year 191,465 - 191,465

* Inclusive of RM45,964,000 (2022: RM36,682,000) of payment of lease liabilities to related parties during the financial year.

128 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

27. OTHER LIABILITIES (CONT’D.)

(e) The movements of lease liabilities are as follows: (cont’d.)

There were no variable lease payments, subleasing, leases with residual value guarantees, leases not yet commenced, restrictions or covenants imposed
to which the Group is committed.

The costs relating to leases for which the Group applied the practical expedient of MFRS 16 for the current financial year end amounted to RM1,600,000
(2022: RM2,000,000) for low-value assets and RM47,800 (2022: RM4,500,000) for leases with contract term of less than 12 months.

Lease liabilities analysed by undiscounted contractual payments are as follows:

Group
2023 2022
Premises RM’000 RM’000

Up to 1 month 5,987 5,524

> 1 month to 3 months 11,975 11,028
> 3 months to 6 months 17,783 13,436
> 6 months to 12 months 35,088 18,400
> 1 year to 5 years 143,647 104,097
Over 5 years 35,914 58,157
250,394 210,642

(f) The movements for provision for reinstatement of leased properties are as follows:

Group
2023 2022
RM’000 RM’000

At beginning of the financial year 9,706 8,989

Additions 219 627
Reversal of provision - (17)
Finance cost charged (Note 35) 82 107
Derecognition - disposal of subsidiary (3,099) -
At end of the financial year 6,908 9,706

As at 31 March 2023, the Group has estimated that it is contingently liable to incur restoration costs of RM14,500,000 (2022: RM13,400,000) upon
termination of lease contracts for certain properties leased from an associate.

(g) Amount due to subsidiaries are unsecured, interest-free and is repayable on demand.

129
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

28. SHARE CAPITAL

Group Company
2023 2022 2023 2022
Note Units ‘000 Units ‘000 Units ‘000 Units ‘000

No. of ordinary shares

Balance at beginning of the financial year 3,314,185 3,014,185 3,314,185 3,014,185
Issuance of shares (a) - 300,000 - 300,000
Balance at end of the financial year 3,314,185 3,314,185 3,314,185 3,314,185

RM’000 RM’000 RM’000 RM’000

Balance at beginning of the financial year 6,776,240 5,951,557 6,372,870 5,550,250
Issuance of shares - 824,683 - 822,620
Transfer to retained earnings arising from redemption of preference shares
by a subsidiary (400,000) - - -
Balance at end of the financial year 6,376,240 6,776,240 6,372,870 6,372,870

The holders of fully paid ordinary shares, are entitled to receive dividends as and when declared by the Company. All fully paid ordinary shares carry one vote per
share without restrictions and ranked equally with regards to the Company’s residual assets.

The Company has an Executives’ Share Scheme (“ESS”), details of the ESS are disclosed in Note 30. Total numbers of shares held as treasury shares for purposes
of the ESS is 7,077,000 as at 31 March 2023 (2022: 3,371,450).

Note:
(a) On 14 April 2021, the Company completed the private placement with issuance of 300 million shares at RM2.75 per share. The total share capital raised
amounted to RM824.7 million for the Group and RM822.6 million for the Company. This action was intended to accelerate the Common Equity Tier 1
(“CET1”) capital build post settlement with Ministry of Finance (“MOF”) Malaysia.

29. RESERVES

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Regulatory reserve (a) 211,707 102,920 - -

Fair value reserve (b) 511,309 499,227 - -
Cash flow hedging deficit (c) (4,258) (9,062) - -
Foreign currency translation reserve (d) 112,212 98,871 - -
ESS reserve (e) 26,425 36,472 26,425 36,472
Treasury shares (f) (28,579) (11,041) (28,579) (11,041)
Non-participating funds (g) 45,715 45,715 - -
Retained earnings (h) 10,884,274 9,220,450 4,672,100 4,655,625
11,758,805 9,983,552 4,669,946 4,681,056

130 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

29. RESERVES (CONT’D.)

(a) Regulatory reserve is maintained by the banking subsidiaries in accordance with paragraph 10.5 of the BNM’s Policy Document on Financial Reporting and
paragraph 10.9 of the BNM’s Policy Document on Financial Reporting for Islamic Banking Institutions as an additional credit risk absorbent.

(b) The fair value reserve comprises fair value gains (net of fair value losses) on financial investments measured at FVOCI. In addition, the loss allowance arising
from the recognition of expected credit losses on financial investments measured at FVOCI are accumulated in fair value reserve instead of reducing the
carrying amount of the debt instruments.

(c) Cash flow hedging deficit comprises the portion of the losses respectively on a hedging instrument in a cash flow hedge that is determined to be an
effective hedge.

(d) Foreign currency translation reserve represents foreign exchange differences arising from the translation of the financial statements of foreign operations
whose functional currencies are different from that of the Group’s presentation currency.

(e) ESS reserve represents the equity-settled scheme shares granted to employees (Note 30). The reserve is made up of the cumulative value of services
received from employees recorded over the vesting period commencing from the grant date of equity-settled scheme share, and is reduced by the expiry
of the scheme shares.

(f) Treasury shares represent the shares of the Company listed on the Main Market of Bursa Malaysia bought back from the open market. Shares bought back
are held as treasury shares in accordance with Section 127(4)(b) of the Companies Act 2016. These shares have no rights to vote, dividends and participate
in other distributions.

During the current financial year, the Company bought back 10,949,250 (2022: 5,330,700) ordinary shares of the Company for a total consideration of
RM43.7 million (2022: RM16.8 million) (including transaction costs) from the open market at an average price of RM4.00 per share (2022: RM3.15 per
share).

(g) This non-participating funds unallocated surplus is only available for distribution to shareholders based on the amount recommended by the appointed
actuary.

(h) The Company can distribute dividends out of its entire retained earnings under the single-tier system.

30. EXECUTIVES’ SHARE SCHEME (“ESS”)

On 5 October 2018, the Board of the Company approved the implementation of a new ESS. The new ESS will be in force for a maximum period of ten (10) years
from the effective date. Under the new ESS By-Laws, the award granted comprise Scheme Shares.

The awards included in the ESS are:

(i) Short term Incentive (“STI”) Award

The STI Award is a share incentive scheme for the selected executives in recognition of their services as an important contribution to the current on-going
development, growth and success of the Group. Under the Award, a selected executive is granted a specified number of shares which will be vested in him
upon the fulfilment of the service period and such other conditions (if any) imposed by the GNRC.

(ii) Long term Incentive (“LTI”) Award

The LTI Award is a share incentive scheme for the selected executives in motivating attainment of higher performance goals and exceptional achievements
by selected executives. Under the Award, a selected executive is granted a specified number of shares which will be vested in him upon fulfilment of the
service period as well as fulfilment of certain performance targets and such other conditions (if any) imposed by the GNRC.

131
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

30. EXECUTIVES’ SHARE SCHEME (“ESS”) (CONT’D.)

The salient features of the ESS are as follows:

(i) Any executive director or executive of a corporation in the Group, who meets the following criteria at date of offer of awards (“Offer Date”) shall be eligible
for consideration and selection in the ESS by GNRC (“Eligible Executives”):

(a) has attained the age of eighteen (18) years and is not an undischarged bankrupt;

(b) employed on a full time basis and is on the payroll of any corporation in the Group and has not served a notice of resignation or received a notice of
termination;

(c) employment has been confirmed in writing;

(d) in the case of an executive director of the Company, if required, the specific allocation of shares granted by the Company to him in his capacity as an
Executive Director under the ESS has been approved by the shareholders at a general meeting;

(e) if he is serving in a specific designation under an employment contract for a fixed duration but not if he is merely employed for a specific project;

(f) is not participating or entitled to participate in any other employee share or incentive scheme implemented by any other corporation which is in force
for the time being provided that he may be eligible for consideration notwithstanding his participation or entitlement to participate if the GNRC shall
so determine; and

(g) fulfils any other criteria and/or falls within such category as may be set by the GNRC from time to time.

(ii) The maximum number of shares which may be made available under the ESS shall not exceed in aggregate ten percent (10%) of the total number of issued
shares of the Company (excluding treasury shares) (“Maximum Scheme Shares Allowable”) at any point of time during the tenure of the ESS and out of which
not more than fifty percent (50%) of the shares shall be allocated, in aggregate, to executive directors and senior management. In addition, not more than
ten percent (10%) of the shares available under the ESS shall be allocated to any Eligible Executive who, either individually or collectively through persons
connected to him/her, holds twenty percent (20%) or more of the total number of issued shares of the Company.

(iii) In the event that the Company purchases or cancels its own shares in accordance with the provisions of Section 127 of the Companies Act 2016 or
otherwise howsoever or undertakes any other corporate proposal resulting in the reduction of its issued and paid-up ordinary share capital, all the Scheme
Shares granted prior to such purchase and/or the reduction/adjustment of the issued and paid-up ordinary share capital of the Company shall remain valid
as if that reduction/adjustment had not occurred.

(iv) The Share Grant Price (being the reference price which is used to determine the number of Scheme Shares to be granted under the awards) shall be at a discount
(as determined by the GNRC) of not more than ten percent (10%) of the five (5) days weighted average market price of the Company’s shares transacted on Bursa
Malaysia Securities Berhad immediately preceding the date on which an offer is made (or such basis as the relevant authorities may permit).

(v) The Scheme Shares to be allotted and issued or transferred to Scheme Participant (Eligible Executive who has accepted the Offer) pursuant to the By-Laws
are not subjected to any retention period unless otherwise stipulated by the GNRC in the offer.

(vi) The GNRC may in its discretion decide that the Scheme Shares be satisfied either by way of acquisition of existing ordinary shares including by a share
buy-back and subject to compliance with the provisions of the Companies Act 2016 and Bursa Malaysia Securities Berhad Listing Requirements.

(vii) In the event that the performance targets, performance period or other conditions stipulated in the Offer in respect of any one or more Scheme Participant
cannot be achieved/satisfied, the GNRC may in its discretion by notice in writing to such Scheme Participant(s), waive its compliance, subject to any further
conditions as the GNRC may in its discretion impose.

The Company and/or GNRC may establish a Trust administered by a Trustee for the purposes of acquiring existing ordinary shares of the Company and
transferring them to the Scheme Participants. For this purpose and to pay expenses in relation to the administration of the Trust, the Trustee is entitled from
time to time to accept funding and/or assistance, financial or otherwise from the Company and/or its subsidiaries.

132 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

30. EXECUTIVES’ SHARE SCHEME (“ESS”) (CONT’D.)

(viii) Details for Share Grants are as follows:

(a) Movements for Share Grants under STI award:

Share Grants
Number of Shares
Movements During the Financial Year
Balance at Balance at
1 April 31 March
2022 Granted Vested Forfeited 2023
Group ‘000 ‘000 ‘000 ‘000 ‘000

2020 ESS 3,143 - (3,112) (21) 10

Share Grants
Number of Shares
Movements During the Financial Year
Balance at Balance at
1 April 31 March
2021 Granted Vested Forfeited 2022
Group ‘000 ‘000 ‘000 ‘000 ‘000

2019 ESS 2,396 - (2,378) (18) -

2020 ESS 6,865 - (3,520) (202) 3,143
9,261 - (5,898) (220) 3,143

(b) Movements for Share Grants under LTI award:

Share Grants
Number of Shares
Movements During the Financial Year
Balance at Balance at
1 April 31 March
2022 Granted Vested Forfeited 2023
Group ‘000 ‘000 ‘000 ‘000 ‘000

2019 ESS 6,165 - (4,127) (2,014) 24

2020 ESS 9,538 - - (551) 8,987
2021 ESS 7,610 - - (383) 7,227
2022 ESS - 8,736 - (437) 8,299
23,313 8,736 (4,127) (3,385) 24,537

133
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NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

30. EXECUTIVES’ SHARE SCHEME (“ESS”) (CONT’D.)

The salient features of the ESS are as follows: (cont’d.)

(viii) Details for Share Grants are as follows: (cont’d.)

(b) Movements for Share Grants under LTI award: (cont’d.)

Share Grants
Number of Shares
Movements During the Financial Year
Balance at Balance at
1 April 31 March
2021 Granted Vested Forfeited 2022
Group ‘000 ‘000 ‘000 ‘000 ‘000

2018 ESS 5,398 - (2,140) (3,258) -

2019 ESS 6,617 - - (452) 6,165
2020 ESS 10,204 - - (666) 9,538
2021 ESS - 7,610 - - 7,610
22,219 7,610 (2,140) (4,376) 23,313

(c) The fair value of share grants awarded is based on the share price on grant date, adjusted the number of shares expected to vest and the time value
of money of the deferred dividend entitled by the scheme participants.

(d) The grant dates for shares granted are as follows:

2018 ESS (Grant 1) 5 October 2018

2019 ESS (Grant 2) 11 September 2019
2020 ESS (Grant 3) 17 August 2020
2021 ESS (Grant 4) 31 March 2022
2022 ESS (Grant 5) 27 July 2022

31. NON-CONTROLLING INTERESTS

Group
2023 2022
Note RM’000 RM’000

Balance at beginning of the financial year 1,199,101 949,582

Share in net results of subsidiaries (58,848) 92,257
Share in other comprehensive income - (422)
Capital reduction from a subsidiary (a) (1,075,993) -
Subscription of shares arising from conversion of redeemable cumulative convertible preference shares by a
subsidiary - 256,164
Dividends received by non-controlling interests (1,981) (98,480)
Derecognition - disposal of subsidiary (61,415) -
Balance at end of the financial year 864 1,199,101

(a) Upon sanction of the Higher Court of Malaysia on 7 July 2022, AGHB (effective equity interest of 51% by the Group prior to the completion of disposal of
AGIB) undertook SCR and capital repayment in respect of IAG’s 49% shareholding in AGHB comprising of 93,100,000 ordinary shares. IAG received a total
capital repayment amount of RM1,076 million and ceased to be a shareholder of AGHB.

134 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

32. INTEREST INCOME

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Short-term funds and deposits and placements with banks and other financial
institutions 180,121 71,452 6,418 19,327
Financial assets at fair value through profit or loss 150,596 82,033 - -
Financial investments at fair value through other comprehensive income 529,872 450,094 - -
Financial investments at amortised cost 325,096 186,668 - -
Loans and advances* 3,756,077 3,133,330 - -
Impaired loans and advances 4,164 2,796 - -
Others 30,029 15,703 - -
4,975,955 3,942,076 6,418 19,327

* Included in the interest income of loans and advances of the Group is the net loss of RM4.85 million (2022: net gain of RM28.4 million) arising from government support measures
implemented in response to COVID-19 pandemic.

33. INTEREST EXPENSE

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Deposits from customers 1,820,650 1,295,569 - -

Deposits and placements of banks and other financial institutions 201,688 82,632 - -
Senior notes 12,260 3,090 - -
Credit-Linked Notes - 3,673 - -
Securities sold under repurchase agreements 260,748 22,515 - -
Recourse obligation on loans sold to Cagamas Berhad 200,244 203,717 - -
Term loan 17,106 3,836 - -
Debt capital 151,500 148,393 - -
Other structured products and others 31,124 6,817 - -
2,695,320 1,770,242 - -

135
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

34. OTHER OPERATING INCOME

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Fee and commission income:

Fees on loans and securities 155,269 159,538 - -
Corporate advisory 21,267 15,069 - -
Guarantee fees 51,238 47,120 - -
Underwriting commission 3,746 2,174 - -
Portfolio management fees 40,050 49,577 - -
Unit trust fees, commission and charges 151,393 169,962 - -
Property trust management fees 6,671 6,821 - -
Brokerage fees and commission 29,878 44,086 - -
Bancassurance commission 28,724 12,339 - -
Wealth management fees 15,251 20,476 - -
Remittances 27,543 24,947 - -
Fees, service and commission charges 32,277 24,878 - -
Placement fees 6,248 7,227 - -
Other fees 27,428 19,509 - -
596,983 603,723 - -

Investment and trading income:

Net gain from sale of financial assets at fair value through profit or loss 42,329 3,174 - -
Net gain from sale of financial investments at fair value through other
comprehensive income 286 4,218 - -
Net (loss)/gain on revaluation of financial assets at fair value through
profit or loss (1,455) 554 - -
Net gain on redemption of financial liabilities at fair value through profit
or loss - 401 - -
Net gain on foreign exchange 263,723 84,141 - -
Net (loss)/gain on derivatives (19,486) 63,328 - -
Gain on liquidation of subsidiaries - 5 - 65
Dividend income from:
Subsidiaries - - 396,947 193,058
Financial assets at fair value through profit or loss 25,604 25,492 30 24
Financial investments at fair value through other comprehensive income 11(i) 3,139 4,206 - -
Others 1,416 5,383 - -
315,556 190,902 396,977 193,147

Other income:
Net gain on non-trading foreign exchange 263 832 - -
Net gain on disposal of property and equipment 9,047 75 - -
Rental income 30 1,018 - -
Profit from sale of goods and services 16,425 17,299 - -
Others 18,100 8,522 10,337 1,067
43,865 27,746 10,337 1,067
956,404 822,371 407,314 194,214

136 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

35. OTHER OPERATING EXPENSES

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Personnel costs
Salaries, allowances and bonuses 997,856 907,248 - -
Shares granted under ESS:
- charge/(writeback) 17,706 (1,809) - -
Contributions to Employees’ Provident Fund (“EPF”)/private retirement
schemes 159,228 147,457 - -
Social security cost 7,860 7,086 - -
Other staff related expenses 135,031 91,866 - -
1,317,681 1,151,848 - -

Establishment costs:
Depreciation of property and equipment 51,834 58,822 8 1
Depreciation of right-of-use assets 73,001 65,435 - -
Amortisation of intangible assets 78,689 88,242 - -
Computerisation costs 197,658 168,243 247 299
Cleaning, maintenance and security 31,166 28,088 - -
Finance costs:
- interest on lease liabilities 6,342 6,755 - -
- provision for reinstatement of leased properties 82 107 - -
Others 32,904 32,170 425 -
471,676 447,862 680 300

Marketing and communication expenses:

Sales commission 2,335 4,889 - -
Advertising, promotional and other marketing activities 19,151 15,688 84 1
Telephone charges 18,570 18,374 2 1
Postage 12,371 9,865 - -
Travelling and entertainment 5,839 2,631 46 15
Others 12,272 6,940 - -
70,538 58,387 132 17

Administration and general expenses:

Professional services 68,663 65,789 3,036 3,335
Travelling 2,599 1,186 9 19
Insurance 9,391 6,398 1 22
Subscriptions and periodicals 9,414 9,082 3 3
Others 49,130 48,429 3,980 700
139,197 130,884 7,029 4,079

Service transfer pricing expense, net - - 27,973 13,247

Total 1,999,092 1,788,981 35,814 17,643

137
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

35. OTHER OPERATING EXPENSES (CONT’D.)

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Included in other operating expenses are the following:

Directors’ remuneration 36 4,459 5,524 3,059 4,132
Property and equipment written off 19 33 55 - -
Auditors’ remuneration:
Audit 2,948 3,836 105 105
Regulatory and assurance related 1,356 1,478 30 30
Other services 461 1,272 - -

36. CHIEF EXECUTIVE OFFICER’S AND DIRECTORS’ REMUNERATION

The total remuneration (including benefits-in-kind) of Chief Executive Officer and Directors of the Group are as follows:

Remuneration received from the Group

Other Benefits-
Salary Emoluments1 Bonus2 in-kind3 Total
RM’000 RM’000 RM’000 RM’000 RM’000

2023
Chief Executive Officer:
Dato’ Sulaiman Mohd Tahir^
- Non-deferred payment received in FY2023 2,668 2,123 2,216 39 7,046
- Deferred STI payment received in FY2023 - 2,111 2,631 - 4,742
1
Comprised statutory contributions and vested shares for non-deferred LTI FY2019 and deferred STI FY2020.
2
Comprised bonus, deferred STI and payments due to conversion from permanent to contract employment.
3
Comprised provision of medical claims and any expenses incurred by Chief Executive Officer in performing his duties.

Remuneration received/receivable from the Group

Other Benefits-
Fees Emoluments in-kind Total
RM’000 RM’000 RM’000 RM’000

2023
Non-Executive Directors:
Tan Sri Azman Hashim 17 123 2 142
Tan Sri Md Nor bin Md Yusof 193 303 7 503
Soo Kim Wai 350 190 20 560
Voon Seng Chuan 360 375 2 737
Seow Yoo Lin 350 193 2 545
Farina binti Farikhullah Khan 350 193 5 548
Hong Kean Yong 200 110 2 312
Dato’ Kong Sooi Lin 350 165 1 516
Robert William Goudswaard 200 138 1 339
Felicity Ann Youl 192 64 1 257
2,562 1,854 43 4,459

138 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

36. CHIEF EXECUTIVE OFFICER’S AND DIRECTORS’ REMUNERATION (CONT’D.)

The total remuneration (including benefits-in-kind) of Chief Executive Officer and Directors of the Group are as follows: (cont’d.)

Remuneration received from the Group

Other Benefits-
Salary Emoluments Bonus in-kind Total
RM’000 RM’000 RM’000 RM’000 RM’000

2022
Chief Executive Officer:
Dato’ Sulaiman Mohd Tahir^ 2,541 3,139 348 33 6,061

Remuneration received/receivable from the Group

Other Benefits-
Fees Emoluments in-kind Total
RM’000 RM’000 RM’000 RM’000

2022
Non-Executive Directors:
Tan Sri Azman Hashim 210 1,480 32 1,722
Graham Kennedy Hodges 84 54 - 138
Soo Kim Wai 350 195 20 565
Voon Seng Chuan 360 404 2 766
Seow Yoo Lin 350 211 2 563
Farina binti Farikhullah Khan 350 220 4 574
Hong Kean Yong 200 123 2 325
Dato’ Kong Sooi Lin 350 178 10 538
Robert William Goudswaard 200 132 1 333
2,454 2,997 73 5,524

^ The remuneration for the CEO of the Company of RM2,921,000 (2022: RM2,000,000) was paid by AmBank and charged to the Company under Service Transfer Pricing (“STP”)
expenses.

139
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

36. CHIEF EXECUTIVE OFFICER’S AND DIRECTORS’ REMUNERATION (CONT’D.)

The total remuneration (including benefits-in-kind) of the Directors of the Company are as follows:

Remuneration received/receivable from the Company

Other Benefits-
Fees1 Emoluments2 in-kind3 Total
RM’000 RM’000 RM’000 RM’000

2023
Non-Executive Directors:
Tan Sri Azman Hashim 17 123 2 142
Tan Sri Md Nor bin Md Yusof 193 303 7 503
Soo Kim Wai 200 70 - 270
Voon Seng Chuan 200 105 - 305
Seow Yoo Lin 200 123 - 323
Farina binti Farikhullah Khan 200 103 - 303
Hong Kean Yong 200 110 2 312
Dato’ Kong Sooi Lin 200 105 - 305
Robert William Goudswaard 200 138 1 339
Felicity Ann Youl 192 64 1 257
Total remuneration 1,802 1,244 13 3,059

Remuneration received/receivable from the Company

Other Benefits-
Fees Emoluments2 in-kind3 Total
RM’000 RM’000 RM’000 RM’000

2022
Non-Executive Directors:
Tan Sri Azman Hashim 210 1,480 32 1,722
Graham Kennedy Hodges 84 54 - 138
Soo Kim Wai 200 92 1 293
Voon Seng Chuan 200 136 - 336
Seow Yoo Lin 200 143 1 344
Farina binti Farikhullah Khan 200 120 - 320
Hong Kean Yong 200 123 2 325
Dato’ Kong Sooi Lin 200 120 1 321
Robert William Goudswaard 200 132 1 333
Total remuneration 1,694 2,400 38 4,132

Notes:
1
Payable upon approval by shareholders in the Annual General Meeting of the financial year.
2
Comprised Board Committee allowances, meeting allowances and allowances to the Chairman of the Board.
3
Comprised provision of medical claims and expenses incurred by non-executive directors in performing their duties.

140 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

37. ALLOWANCES FOR IMPAIRMENT ON LOANS, ADVANCES AND FINANCING

Group
2023 2022
Note RM’000 RM’000

Impairment on loans, advances and financing:

Allowances for ECL 13(i) 732,186 554,563
Impaired loans, advances and financing recovered, net (310,340) (240,384)
421,846 314,179

38. ALLOWANCES FOR/(WRITEBACK OF) IMPAIRMENT ON FINANCIAL INVESTMENTS AND OTHER FINANCIAL ASSETS

Group
2023 2022
Note RM’000 RM’000

Financial investments
Financial investments at fair value through other comprehensive income 11 (7,041) 2,263
Financial investments at amortised cost 12 16,549 267,977
9,508 270,240

Other financial assets

Cash and short-term funds 6 (517) (60)
Deposits and placements with banks and other financial institutions 8 (1,259) 1,283
Other assets 18(c) 2,441 655
665 1,878

141
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

39. TAXATION AND ZAKAT

Group Company
2023 2022 2023 2022
Note RM’000 RM’000 RM’000 RM’000

Continuing operations
Current tax:
Estimated current tax payable 544,536 440,665 1,518 4,399
Tax effect relating to the Settlement 5.4 - (234,552) - -
Over provision in prior years (8,776) (30,584) - -
535,760 175,529 1,518 4,399
Deferred tax: 15
Origination and reversal of temporary differences (21,800) 3,277 - -
Over provision in prior years (4,686) (3,697) - -
(26,486) (420) - -

Taxation (a) 509,274 175,109 1,518 4,399

Zakat 3,789 2,168 - -
513,063 177,277 1,518 4,399

Discontinued operation
Estimated current tax payable 14,817 62,140 - -
Deferred tax (33,702) (22,006) - -
(18,885) 40,134 - -
Under/(over) provision of current taxation in respect of prior years 6 (7,605) - -
Taxation (a) (18,879) 32,529 - -

142 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

39. TAXATION AND ZAKAT (CONT’D.)

Domestic income tax is calculated at the statutory tax rate of 24.0% (2022: 24.0%) on the estimated chargeable profit for the financial year. On 13 December
2021, the Dewan Rakyat had passed the Supply Bill (“Budget for 2022”) which included Cukai Makmur, a “one-off” corporate tax of 33% on companies’ taxable
income in excess of RM100.0 million for the year of assessment 2022 (taxable income of up to RM100.0 million will continue to be taxed at 24%). The additional
tax charged for the Group for the financial year for taxable income in excess of RM100.0 million taxed at 33% was RM105.7 million. The deferred tax for the
previous financial year was not impacted by Cukai Makmur and was calculated based on the tax rate of 24%.

(a) A reconciliation of the taxation applicable to profit/(loss) before taxation and zakat at the statutory tax rate to taxation at the effective tax rate of the Group
and of the Company is as follows:

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Profit before taxation and zakat from continuing operations 2,255,441 1,543,648 380,193 195,898
(Loss)/profit before taxation from discontinued operation (84,952) 261,097 - -
Profit before taxation and zakat 2,170,489 1,804,745 380,193 195,898

Taxation at Malaysian statutory tax rate of 24.0% (2022: 24.0%) 520,917 433,139 91,246 47,016
Effect of increase in tax rate - 105,701 - -
Effect of different tax rates in Labuan (5,856) (12,216) - -
Effect of impairment of Kurnia Brand, agent relationship and other assets (31,198) - - -
Income not subject to tax (13,567) (61,705) (89,728) (46,767)
Restricted and non-deductibility of expenses for tax purposes 41,895 34,228 - 4,150
Tax recoverable recognised on income subject to tax remission (1,070) (4,489) - -
Origination and reversal of temporary differences 267 - - -
Over provision of income tax in prior years (8,770) (38,189) - -
Tax effect relating to the Settlement - (234,552) - -
Over provision of deferred tax in prior years (4,686) (3,697) - -
Tax on share in results of associates and joint ventures (7,537) (10,582) - -
Taxation for the financial year 490,395 207,638 1,518 4,399

Income tax attributable to continuing operations 509,274 175,109 1,518 4,399

Income tax attributable to discontinued operation (18,879) 32,529 - -
490,395 207,638 1,518 4,399

143
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

40. EARNINGS/(LOSS) PER SHARE

(a) Basic earnings/(loss) per share

Basic earnings/(loss) per share is calculated by dividing the net profit/(loss) attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the financial year excluding the weighted average of shares bought back held as treasury shares.

Group
2023 2022

Net profit/(loss) attributable to equity holders of the Company

Continuing operations (RM’000) 1,742,168 1,365,969
Discontinued operation (RM’000) (7,015) 136,713
1,735,153 1,502,682
Weighted average number of ordinary shares in issue (‘000) 3,310,645 3,299,721

Basic earnings/(loss) per share (sen)

Continuing operations 52.62 41.40
Discontinued operation (0.21) 4.14
52.41 45.54

(b) Diluted earnings/(loss) per share

The Group has no dilution in its earnings/(loss) per ordinary share in the current and previous financial year as there are no dilutive potential ordinary
shares.

144 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

41. DIVIDENDS

Dividends recognised and paid by the Company are as follows:

Group and Company

2023 2022
RM’000 RM’000

In respect of financial year ended 31 March 2023

Interim single-tier dividend of 6.0 sen per share 198,566 -

In respect of financial year ended 31 March 2022

Final single-tier dividend of 5.0 sen per share 165,606 -
364,172 -

Proposed but not recognised as a liability:

In respect of financial year ended 31 March 2023

Final single-tier dividend of 12.3 sen per share 406,774 -

In respect of financial year ended 31 March 2022

Final single-tier dividend of 5.0 sen per share - 165,541
406,774 165,541

(a) Dividends recognised and paid

The dividends are paid based on the number of outstanding ordinary shares in issue (net of treasury shares) on the entitlement date of dividend.

(b) Proposed final dividend

The financial statements for the current financial year do not reflect this proposed dividend. Such dividend will be accounted for in equity as an appropriation
of retained earnings in the financial year ending 31 March 2024.

Proposed final dividend is based on the number of outstanding ordinary shares in issue (net of treasury shares) as at 31 March 2023 and 31 March 2022.

(c) Dividends paid by the Company’s subsidiaries to non-controlling interests

Dividends paid by the Company’s subsidiaries to non-controlling interests amounted to RM1,981,000 during the financial year ended 31 March 2023
(2022: RM98,480,000).

145
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group has the ability, directly or indirectly,
to control the party or exercise significant influence over the party in making financial or operational decisions, vice versa, or where the Group or the Company
and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

The related parties of the Group and the Company are:

(i) Subsidiaries

Transactions between the Company and its subsidiaries have been eliminated on consolidation. Details of subsidiaries are shown in Note 16.

(ii) Associates and joint ventures

Details of associates and joint ventures are disclosed in Note 17.

(iii) Key management personnel (“KMP”)

KMP are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company,
either directly or indirectly. The KMP include Executive and Non-Executive Directors and certain members of senior management of the Group and of the
Company as well as heads of major subsidiaries of the Company (including close member of their families).

(iv) Companies in which certain Directors have substantial financial interest

These are entities in which significant voting power in such entities, either directly or indirectly, resides with certain Directors of the Company.

(v) Companies which have significant influence over the Group

These are entities who are substantial shareholders of the Company.

146 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D.)

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties
during the financial year:

Companies in which
certain directors have Companies which have
Associates and Key management substantial financial significant influence
Subsidiaries joint ventures personnel interest over the Group
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
Income
Interest on loans, advances and financing - - 12,779 11,440 278 134 169 3,246 - -
Bancassurance commission - - 30,770 15,468 - - - - - -
Fee income - - 3,703 418 3 3 - - - -
Gain on derivatives - - - - - - - - 16,068 33,188
Foreign exchange gain - - - - - - - - 3,961 4,578
Service transfer pricing recoveries - - 10,046 863 - - - - - -
- - 57,298 28,189 281 137 169 3,246 20,029 37,766

Expenses
Interest on deposits - - - 36 960 1,115 58 336 - -
Customer loyalty awards - - 4,425 2,626 - - - - - -
Other staff related expenses - - - - - - 11 - - -
Rental of premises - - - - - - 166 283 - -
Depreciation on right-of-use assets - - 44,234 34,686 - - - - - -
Interest on lease liabilities - - 2,074 1,455 - - - - - -
Storage - - 2 17 - - - - - -
Utilities and miscellaneous expenses - - - 659 - - - - - -
Insurance premium - - 28,930 32,702 - - - - - -
Advertising and marketing expenses - - 76 83 - - 263 11 - -
Training expenses - - 2 4 - - 82 140 - -
Travelling - - 41 - - - 951 18 - -
- - 79,784 72,268 960 1,115 1,531 788 - -

Company
Income
Interest on deposits 6,418 19,327 - - - - - - - -
Dividend income from subsidiaries 396,947 193,058 - - - - - - - -
Other income 22 205 261 - - - - - - -
Service transfer pricing recoveries - - 10,046 863 - - - - - -
403,387 212,590 10,307 863 - - - - - -

Expenses
Service transfer pricing expenses (net) 27,973 13,247 - - - - - - - -

147
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D.)

(b) In addition to the transactions detailed elsewhere in the financial statements, the significant outstanding balances of the Group and the Company with its
related parties are as follows:

Companies in which
certain directors have Companies which have
Associates and Key management substantial financial significant influence
Subsidiaries joint ventures personnel interest over the Group
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group
Assets
Loans, advances and financing - - 294,119 355,645 8,257 4,960 - 145,591 - -
Derivative financial assets - - - - - - - - 22,194 3,647
Other assets - - 62 158,359 - - - - - 5,888

Right-of-use assets - - 98,170 25,895 - - - - - -

- - 392,351 539,899 8,257 4,960 - 145,591 22,194 9,535

Liabilities
Deposits and placements - - 124,389 14,276 46,390 72,685 19 147,820 79,855 29,980
Derivative financial liabilities - - - - - - - - 2,719 4,202
Other liabilities - - 22,601 114,870 - - - - 19,434 -
Lease liabilities - - 100,822 28,203 - - - - - -
- - 247,812 157,349 46,390 72,685 19 147,820 102,008 34,182

Commitments and contingencies

Contingent liabilities - - 9,875 2,480 - - - - - 89,514
Commitments - - 125 34,820 5,506 6,878 - 243,500 - 210,000
Contract/notional amount for derivatives - - - - - - - - 1,477,896 632,492
- - 10,000 37,300 5,506 6,878 - 243,500 1,477,896 932,006

Company
Assets
Cash and short-term funds 208,565 717,660 - - - - - - - -
Amount due from related companies 134 11,109 1,521 205 - - - - - -
208,699 728,769 1,521 205 - - - - - -

Liabilities
Amount due to related companies 4,492 - - - - - - - - -

148 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONT’D.)

(c) There were no granting of loans/financing to the Directors of the Company other than in the normal course of business of the Group and of the Company.
Loans/financing made to Directors and other key management personnel of the Group are on similar terms and conditions generally available to other
employees within the Group. No provisions have been recognised in respect of loans/financing given to directors and key management personnel.

(d) The Company incurs intercompany charges for shared operating costs of the Group in Malaysia as disclosed under service transfer pricing expenses. The
services received relate to expenses incurred for group shared services in respect of key management personnel costs, internal audit, finance, human
resource, marketing and communications, legal, company secretarial, organisation and development and information systems.

(e) Key management personnel compensation

The remuneration of Directors of the Company and other key management personnel during the financial year are as follows:

Group Company
2023 2022 2023 2022
RM’000 RM’000 RM’000 RM’000

Directors:
Fees (Note 36) 2,562 2,454 1,802 1,694
Salary and other remuneration 1,854 2,997 1,244 2,400
Other short-term employee benefits (including estimated monetary value
of benefits-in-kind) 43 73 13 38
Total short-term employee benefits 4,459 5,524 3,059 4,132

Other key management personnel:

Salary and other remuneration 36,866 22,417 - -
Other short-term employee benefits (including estimated monetary value
of benefits-in-kind) 17,792 12,557 - -
Total short-term employee benefits 54,658 34,974 - -

149
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

43. CREDIT TRANSACTIONS AND EXPOSURES WITH CONNECTED PARTIES

Group
2023 2022

Outstanding credit exposures with connected parties (RM’000) 4,336,663 5,297,585

Percentage of outstanding credit exposures to connected parties:

as a proportion of total credit exposures (%) 2.98 3.96

The disclosure on Credit Transactions and Exposures with Connected Parties above is presented in accordance with paragraph 9.1 of Bank Negara Malaysia’s
revised Guidelines on Credit Transactions and Exposures with Connected Parties issued on 16 July 2014.

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

(i) Directors of AmBank, AmInvestment Bank and AmBank Islamic (“the Banks”) and their close relatives;

(ii) Controlling shareholder and his close relatives;

(iii) Influential shareholder and his close relatives;

(iv) Executive officer, being a member of management having authority and responsibility for planning, directing and/or controlling the activities of the Banks,
and his close relatives;

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

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

(vii) Any person for whom the persons listed in (i) to (v) above is a guarantor; or

(viii) Subsidiary of or an entity controlled by the Banks and their connected parties.

Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or commitments and contingencies
transactions that give rise to credit/counterparty risk, the underwriting and acquisition of equities and corporate bonds and/or sukuk issued by the connected
parties.

The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and conditions not more favourable than those
entered into with other counterparties with similar circumstances and credit worthiness. 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.

150 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

44. FIDUCIARY DUTY

(a) In respect of investment portfolio management

Investment portfolio funds managed by the Group on behalf of customers as at 31 March 2023 amounted to RM57,858,261,000 (2022: RM57,419,406,000).

(b) In respect of monies in trust

Monies in trust in relation to the Group’s stockbroking and futures businesses excluded from the statements of financial position in accordance with
Financial Reporting Standards Implementation Committee Consensus 18 Monies Held in Trust by Participating Organisations of Bursa Malaysia Securities
Berhad (“FRSIC 18”):

Group
2023 2022
RM’000 RM’000

Clients’ trust balances and dealers’ representative balances 534,737 643,965

Remisiers’ trust balances 34,218 35,268
568,955 679,233

Monies held in trust in relation to the Group’s fund management business excluded from the statements of financial position:

Group
2023 2022
RM’000 RM’000

Monies in trust in relation to the fund management business 13,438 19,442

45. CAPITAL COMMITMENTS

Group
2023 2022
RM’000 RM’000

Authorised and contracted for:

Purchase of computer equipment and software 33,524 36,794
Purchase of furniture and fittings, office equipment and renovation - 35
Leasehold improvements 2,931 7,721
36,455 44,550

Authorised but not contracted for:

Purchase of computer equipment and software 128,769 102,643
165,224 147,193

151
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

46. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the banking subsidiaries of the Company make various commitments and incur certain contingent liabilities with legal recourse
to their customers. No material losses are anticipated as a result of these transactions other than those where provision had been made in the financial statements.
The commitments and contingencies are not secured against the Group’s assets.

As at the reporting date, the principal amounts of commitments and contingencies and notional contracted amounts of derivatives are as follows:

Group
2023 2022
RM’000 RM’000

Commitments
Other commitments, such as formal standby facilities and credit lines, with an original maturity of up to one year 17,852,995 17,485,076
Other commitments, such as formal standby facilities and credit lines, with an original maturity of over one year 3,654,631 2,516,528
Unutilised credit card lines 5,682,369 5,126,496
Forward asset purchases 174,223 60,257
27,364,218 25,188,357

Contingent Liabilities
Direct credit substitutes 3,190,357 2,972,783
Transaction-related contingent items 4,472,380 4,295,291
Obligations under on-going underwriting agreements 210,000 130,000
Short-term self-liquidating trade-related contingencies 750,231 604,427
8,622,968 8,002,501

Derivative Financial Instruments

Interest/profit rate related contracts: 34,897,432 39,195,917
One year or less 12,307,294 12,051,408
Over one year to five years 18,662,670 20,836,522
Over five years 3,927,468 6,307,987

Foreign exchange related contracts: 52,555,959 48,628,852

One year or less 45,087,669 40,258,048
Over one year to five years 5,828,508 6,154,545
Over five years 1,639,782 2,216,259

Equity and commodity related contracts: 1,432,375 1,645,753

One year or less 1,352,573 1,570,386
Over one year to five years 79,802 75,367

88,885,766 89,470,522

124,872,952 122,661,380

152 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

46. COMMITMENTS AND CONTINGENCIES (CONT’D.)

As at the reporting date, other commitments and contingencies of the Group and of the Company are as follows:

(a) The Company has given an unsecured guarantee amounting to RM50.0 million (2022: RM50.0 million) on behalf of AmInvestment Bank Berhad
(“AmInvestment Bank”), for the payment and discharge of all monies due on trading accounts maintained by Morgan Stanley & Co. International Plc., Morgan
Stanley & Co. LLC and Morgan Stanley Capital Group Inc in respect of their respective futures trading activity with AmInvestment Bank.

(b) The Malaysia Competition Commission (“MyCC”)’s Proposed Decision against Persatuan Insurans Am Malaysia (“PIAM”) and its 22 members (including
AmGeneral Insurance Berhad (“AGIB”), an associate).

On 25 September 2020, AGIB received the Notice of Finding of an infringement by the Competition Commission (“the Commission”) under Section 40 of
the Competition Act 2010 (“CA 2010”).

Pursuant to Section 40 of CA 2010, the Commission has determined that PIAM and its 22 members have infringed the prohibition under section 4 of CA
2010 by participating in an agreement that significantly prevents, restricts or distorts competition in relation to PIAM Approved Repairers Scheme.

The penalty imposed of RM13.7 million was lower than the initial proposed decision by MyCC since 27 February 2017 of RM45.2 million.

AGIB has submitted:

(a) Notice of Appeal to MyCC pursuant to Section 51 of the CA 2010 on 13 October 2020;
(b) Application for Stay to the Competition Appeal Tribunal (“COMPAT”) pursuant to Section 53 of the CA 2010 on 23 October 2020; and
(c) Application for a Judicial Review at the Malaysian High Court on 24 December 2020.

On 23 March 2021, the COMPAT panel unanimously decided to grant a stay of the financial penalties pending the disposal of the appeal.

On 26 April 2021, the High Court has granted AGIB’s Application for Leave for Judicial Review and extended the interim stay which was granted on
15 March 2021 until the hearing of any objections or application by MyCC to set it aside. The grant of leave means the High Court has agreed to hear
arguments on AGIB’s application to set aside MyCC’s decision.

Judicial Review was heard on 20 October 2021 and the High Court allowed MyCC’s application to set aside the leave and stay order granted by the High
Court. Subsequently, AGIB lodged an appeal to the Court of Appeal on 18 November 2021 to preserve its rights.

On 2 September 2022, the COMPAT had unanimously allowed the PIAM’s appeal and MyCC’s decision was being set aside. As such, AGIB withdrew its
appeal on the Judicial Review to the Court of Appeal after decision by COMPAT.

The affidavit was filed with the High Court of Kuala Lumpur on 3 January 2023 and on the case management dated 16 May 2023, the High Court fixed the
hearing date of the Insurers’ Objections on 30 November 2023.

AGIB has also filed an application to bring intervener proceedings against MyCC’s judicial review application in the case between Malaysia Airlines (“MAS”)
and AirAsia. This application is now fixed for hearing on the 27 June 2023 wherein the Court will decide as to whether to allow AGIB’s application to
intervene in the said case.

153
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

47. MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled.

Up to Over
12 months 12 months Total
Group RM’000 RM’000 RM’000

2023
ASSETS
Cash and short-term funds 8,521,940 - 8,521,940
Deposits and placements with banks and other financial institutions 176,604 - 176,604
Derivative financial assets 330,960 590,149 921,109
Financial assets at fair value through profit or loss 11,964,261 806,646 12,770,907
Financial investments at fair value through other comprehensive income 8,366,669 17,244,064 25,610,733
Financial investments at amortised cost 231,855 13,237,848 13,469,703
Loans, advances and financing 33,549,992 94,692,613 128,242,605
Statutory deposits with Bank Negara Malaysia - 2,446,547 2,446,547
Deferred tax assets - 220,655 220,655
Investment in associates and joint ventures - 1,631,600 1,631,600
Other assets 2,239,775 386,261 2,626,036
Property and equipment - 161,778 161,778
Right-of-use assets - 229,770 229,770
Intangible assets - 510,644 510,644
TOTAL ASSETS 65,382,056 132,158,575 197,540,631

LIABILITIES
Deposits from customers 127,568,942 2,746,138 130,315,080
Investment accounts of customers 16,474 - 16,474
Deposits and placements of banks and other financial institutions 10,077,137 1,385,108 11,462,245
Securities sold under repurchase agreements 16,466,674 - 16,466,674
Recourse obligation on loans and financing sold to Cagamas Berhad 9,915,040 - 9,915,040
Derivative financial liabilities 404,301 560,018 964,319
Term funding 1,014,026 1,158,307 2,172,333
Debt capital - 4,395,000 4,395,000
Other liabilities 3,221,554 476,003 3,697,557
TOTAL LIABILITIES 168,684,148 10,720,574 179,404,722

154 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

47. MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONT’D.)

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled. (cont’d.)

Up to Over
12 months 12 months Total
Group RM’000 RM’000 RM’000

2022
ASSETS
Cash and short-term funds 13,221,099 - 13,221,099
Deposits and placements with banks and other financial institutions 1,301,449 - 1,301,449
Derivative financial assets 226,265 595,108 821,373
Financial assets at fair value through profit or loss 3,850,906 3,365,654 7,216,560
Financial investments at fair value through other comprehensive income 2,805,764 15,950,993 18,756,757
Financial investments at amortised cost 879,880 8,157,886 9,037,766
Loans, advances and financing 30,008,184 88,057,501 118,065,685
Statutory deposits with Bank Negara Malaysia - 376,523 376,523
Deferred tax assets - 218,551 218,551
Investment in associates and joint ventures - 604,542 604,542
Other assets 2,093,250 792,069 2,885,319
Reinsurance assets and other insurance receivables 389,061 191,644 580,705
Property and equipment - 180,968 180,968
Right-of-use assets - 189,372 189,372
Intangible assets - 1,399,912 1,399,912
Assets held for sale 2,324 - 2,324
TOTAL ASSETS 54,778,182 120,080,723 174,858,905

LIABILITIES
Deposits from customers 120,873,171 1,719,679 122,592,850
Investment accounts of customers 377,861 - 377,861
Deposits and placements of banks and other financial institutions 8,651,705 1,242,880 9,894,585
Securities sold under repurchase agreements 1,582,717 - 1,582,717
Recourse obligation on loans and financing sold to Cagamas Berhad 2,425,016 5,950,007 8,375,023
Derivative financial liabilities 221,452 582,111 803,563
Term funding 226,460 1,653,637 1,880,097
Debt capital - 4,395,000 4,395,000
Deferred tax liabilities - 8,093 8,093
Other liabilities 3,503,625 799,237 4,302,862
Insurance contract liabilities and other insurance payables 1,883,276 804,085 2,687,361
TOTAL LIABILITIES 139,745,283 17,154,729 156,900,012

155
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

47. MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONT’D.)

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled. (cont’d.)

Up to Over
12 months 12 months Total
Company RM’000 RM’000 RM’000

2023
ASSETS
Cash and short-term funds 208,565 - 208,565
Financial assets at fair value through profit or loss - 1,158 1,158
Investment in subsidiaries and other investments - 10,852,185 10,852,185
Other assets 4,005 - 4,005
Property and equipment - 20 20
TOTAL ASSETS 212,570 10,853,363 11,065,933

LIABILITIES
Other liabilities 23,117 - 23,117
TOTAL LIABILITIES 23,117 - 23,117

Up to Over
12 months 12 months Total
Company RM’000 RM’000 RM’000

2022
ASSETS
Cash and short-term funds 717,660 - 717,660
Financial assets at fair value through profit or loss - 1,128 1,128
Investment in subsidiaries and other investments - 10,857,350 10,857,350
Other assets 11,615 - 11,615
TOTAL ASSETS 729,275 10,858,478 11,587,753

LIABILITIES
Other liabilities 533,827 - 533,827
TOTAL LIABILITIES 533,827 - 533,827

156 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

48. CAPITAL MANAGEMENT

The Group’s capital management approach is focused on maintaining an optimal capital position that supports the Group’s strategic objectives and risk appetite.
In line with the Group’s annual 3-year strategy plan, a capital plan is developed to ensure that adequate level of capital and an optimum capital structure is
maintained to meet regulatory requirements, the Group’s strategic objectives and stakeholders’ expectations.

The Group uses internal models and other quantitative techniques in its internal risk and capital assessment. They help to estimate potential future losses arising
from credit, market and other material risks, and supplement the regulatory formulae to simulate the amount of capital required to support them.

Stress testing is used to ensure that the Group’s internal capital assessment considers the impact of extreme but probable scenarios on its risk profile and capital
position. They provide an insight into the potential impact of significant adverse events on the Group and how these events could be mitigated. The Group’s target
capital levels are set taking into account its risk appetite and its risk profile under future expected and stressed economic scenarios.

The Group’s assessment of risk appetite is closely integrated with the Group’s strategy, business planning and capital assessment processes, and is used to
inform senior management’s views on the level of capital required to support the Group’s business activities.

The capital that the Group is required to hold is determined by its risk exposures after applying collaterals and other risk mitigants.

The Group has in place processes and controls to monitor and manage capital adequacy across the organisation. The Group Assets and Liabilities Committee
(“GALCO”) is responsible for overseeing and managing the Group’s capital and liquidity positions.

A strong governance and process framework is embedded in the capital planning and assessment methodology. Overall responsibility for the effective
management of risk rests with the Board. The Risk Management Committee (“RMC”) is specifically delegated the task of reviewing all risk management issues
including oversight of the Group’s capital position and any actions impacting the capital levels.

On 9 December 2020, BNM issued revised policy documents, Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic
Banks (Capital Components). The key addition to the revised policy documents is the transitional arrangements for financial institutions on provisions for ECL.
Under these revised policy documents, a financial institution is allowed to add back a portion of the loss allowance for non-credit-impaired exposures (i.e. Stage
1 and Stage 2 provisions) to CET1 Capital from financial year 2021 to financial year 2024.

(a) The capital adequacy ratios of the Group and banking subsidiaries are as follows:

2023
AmBank AmInvestment
AmBank Islamic Bank Group

Under transitional arrangements, refer Note (1) below

Before deducting proposed dividends:
CET1 Capital Ratio 12.318% 12.616% 43.205% 12.844%
Tier 1 Capital Ratio 12.318% 12.616% 43.205% 12.845%
Total Capital Ratio 16.867% 17.127% 43.993% 15.983%

After deducting proposed dividends:

CET1 Capital Ratio 12.129% 12.616% 35.067% 12.515%
Tier 1 Capital Ratio 12.129% 12.616% 35.067% 12.515%
Total Capital Ratio 16.677% 17.127% 35.856% 15.653%

157
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

48. CAPITAL MANAGEMENT (CONT’D.)

(a) The capital adequacy ratios of the Group and banking subsidiaries are as follows: (cont’d.)

2022
AmBank AmInvestment
AmBank Islamic Bank Group

Before deducting proposed dividends:

CET1 Capital Ratio 11.659% 12.489% 33.393% 12.342%
Tier 1 Capital Ratio 11.659% 12.489% 33.393% 12.342%
Total Capital Ratio 16.109% 17.292% 34.077% 15.456%

After deducting proposed dividends:

CET1 Capital Ratio 11.659% 12.489% 25.771% 12.202%
Tier 1 Capital Ratio 11.659% 12.489% 25.771% 12.202%
Total Capital Ratio 16.109% 17.292% 26.456% 15.315%

Notes:

(1) Pursuant to the revised BNM policy documents, Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic
Banks (Capital Components) issued on 9 December 2020, the capital ratios of the Group and the banking subsidiaries had been computed applying
transitional arrangements on provision for ECL. Under the transitional arrangements, the Group is allowed to add back the amount of loss allowance
for non-credit-impaired exposure (i.e. Stage 1 and Stage 2 provisions) to CET1 Capital. Had the transitional arrangements not been applied, the
capital ratios of the Group and the banking subsidiaries as at 31 March 2023 and 31 March 2022 are as follows:

2023
AmBank AmInvestment
AmBank Islamic Bank Group

Before deducting proposed dividends:

CET1 Capital Ratio 11.972% 12.026% 43.205% 12.430%
Tier 1 Capital Ratio 11.972% 12.026% 43.205% 12.430%
Total Capital Ratio 16.675% 16.801% 43.993% 15.800%

After deducting proposed dividends:

CET1 Capital Ratio 11.783% 12.026% 35.067% 12.100%
Tier 1 Capital Ratio 11.783% 12.026% 35.067% 12.101%
Total Capital Ratio 16.486% 16.801% 35.856% 15.471%

158 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

48. CAPITAL MANAGEMENT (CONT’D.)

(a) The capital adequacy ratios of the Group and banking subsidiaries are as follows: (cont’d.)

(1) Pursuant to the revised BNM policy documents, Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic
Banks (Capital Components) issued on 9 December 2020, the capital ratios of the Group and the banking subsidiaries had been computed applying
transitional arrangements on provision for ECL. Under the transitional arrangements, the Group is allowed to add back the amount of loss allowance
for non-credit-impaired exposure (i.e. Stage 1 and Stage 2 provisions) to CET1 Capital. Had the transitional arrangements not been applied, the
capital ratios of the Group and the banking subsidiaries as at 31 March 2023 and 31 March 2022 are as follows: (cont’d.)

2022
AmBank AmInvestment
AmBank Islamic Bank Group

Before deducting proposed dividends:

CET1 Capital Ratio 11.168% 11.763% 33.393% 11.791%
Tier 1 Capital Ratio 11.168% 11.763% 33.393% 11.791%
Total Capital Ratio 15.967% 16.948% 34.077% 15.324%

After deducting proposed dividends:

CET1 Capital Ratio 11.168% 11.763% 25.771% 11.651%
Tier 1 Capital Ratio 11.168% 11.763% 25.771% 11.651%
Total Capital Ratio 15.967% 16.948% 26.456% 15.184%

(2) The Company, being a financial holding company (“FHC”) i.e. a financial holding company approved pursuant to Section 112(3) of the FSA or Section
124(3) of the IFSA and holds investment directly or indirectly in corporations that are engaged predominantly in banking business or Islamic banking
business, has complied with BNM guidelines on minimum capital adequacy ratios and capital buffer requirements at the consolidated level effective
1 January 2019.

For regulatory capital reporting purposes, the consolidated level comprises the consolidation of all its financial and non-financial subsidiaries,
excluding investments in insurance subsidiaries as per BNM’s guidelines on Capital Adequacy Framework (Capital Components) and Capital
Adequacy Framework for Islamic Banks (Capital Components). Under the guidelines, investments in insurance subsidiaries shall be deducted in the
calculation of CET1 Capital ratio.

(3) Pursuant to BNM’s Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic Banks (Capital Components),
financial institution is required to maintain minimum CET1 Capital Ratio of 4.5%, Tier 1 Capital Ratio of 6.0% and Total Capital Ratio of 8.0% at all times.
In addition, a financial institution is also required to maintain capital buffers which comprise the sum of the following:
(a) a Capital Conservation Buffer (“CCB”) of 2.5%;
(b) a Countercyclical Capital Buffer (“CCyB”) determined as the weighted-average of the prevailing CCyB rates applied in the jurisdictions in which
the financial institution has credit exposures. BNM will communicate any decision on the CCyB rate by up to 12 months before the date from
which the rate applies; and
(c) a Higher Loss Absorbency (“HLA”) requirement for a financial institution that is designated as a domestic systemically important bank (“D-SIB”).

159
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

48. CAPITAL MANAGEMENT (CONT’D.)

(b) The components of CET1 Capital, Additional Tier 1 Capital, Tier 2 Capital and Total Capital of the Group and banking subsidiaries are as follows:

2023
AmBank AmInvestment
AmBank Islamic Bank Group
RM’000 RM’000 RM’000 RM’000

CET1 Capital
Ordinary share capital 3,040,465 1,387,107 330,000 6,376,240
Retained earnings 7,508,139 3,022,623 126,419 10,757,582
Fair value reserve 299,138 (9,188) 2,259 492,817
Foreign exchange translation reserve 105,630 - - 112,212
Treasury shares - - - (28,579)
Regulatory reserve 201,229 - 10,478 211,707
Cash flow hedging deficit (4,259) - - (4,258)
Other remaining disclosed reserves - - - 26,425

Less: Regulatory adjustments applied on CET1 Capital

Goodwill - - - (303,492)
Other intangible assets (202,069) (298) (3,462) (207,152)
Deferred tax assets (182,451) (62,097) (5,664) (238,931)
55% of cumulative gains in fair value reserve (164,526) - (1,243) (271,049)
Cash flow hedging deficit 4,259 - - 4,258
Regulatory reserve (201,229) - (10,478) (211,707)
Investment in capital instruments of unconsolidated financial and insurance/
takaful entities (11) - (49,809) (1,334,000)
Unrealised fair value gains on financial liabilities due to changes in own credit risk (2,756) (75) - (2,727)
Other CET1 regulatory adjustments specified by BNM 300,721 212,690 1 513,022
CET1 Capital 10,702,280 4,550,762 398,501 15,892,368

Additional Tier 1 Capital

Qualifying CET1, Additional Tier 1 Capital instruments held by third parties - - - 455
Tier 1 Capital 10,702,280 4,550,762 398,501 15,892,823

Tier 2 Capital
Tier 2 Capital instruments meeting all relevant criteria for inclusion 3,095,000 1,300,000 - -
Qualifying CET1, Additional Tier 1 and Tier 2 Capital instruments held by third parties - - - 2,688,226
General provisions* 857,088 327,419 7,276 1,194,774
Tier 2 Capital 3,952,088 1,627,419 7,276 3,883,000
Total Capital 14,654,368 6,178,181 405,777 19,775,823

The breakdown of the risk-weighted assets (“RWA”) in various categories of risk are as follows:

Credit RWA 79,287,050 35,344,046 582,070 112,344,226

Less: Credit RWA absorbed by Profit Sharing Investment Account - (1,545,037) - (2,740)
Total Credit RWA 79,287,050 33,799,009 582,070 112,341,486
Market RWA 1,624,350 304,677 6,231 2,841,539
Operational RWA 5,186,909 1,969,050 334,056 7,762,466
Large exposure risk RWA for equity holdings 785,485 - - 785,485
Total RWA 86,883,794 36,072,736 922,357 123,730,976

160 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

48. CAPITAL MANAGEMENT (CONT’D.)

(b) The components of CET1 Capital, Additional Tier 1 Capital, Tier 2 Capital and Total Capital of the Group and banking subsidiaries are as follows: (cont’d.)

2022
AmBank AmInvestment
AmBank Islamic Bank Group
RM’000 RM’000 RM’000 RM’000

CET1 Capital
Ordinary share capital 3,040,465 1,387,107 330,000 6,376,240
Retained earnings 6,524,068 2,490,692 139,315 9,251,065
Fair value reserve 293,346 (3,893) 1,703 485,759
Foreign exchange translation reserve 92,301 - - 98,871
Treasury shares - - - (11,041)
Regulatory reserve 94,463 - 8,457 102,920
Cash flow hedging deficit (9,062) - - (9,062)
Other remaining disclosed reserves - - - 36,472

Less: Regulatory adjustments applied on CET1 Capital

Goodwill - - - (303,492)
Other intangible assets (221,538) (495) (2,063) (225,116)
Deferred tax assets (158,227) (61,249) (5,446) (216,855)
55% of cumulative gains in fair value reserve (161,340) - (937) (267,168)
Cash flow hedging deficit 9,062 - - 9,062
Regulatory reserve (94,463) - (8,457) (102,920)
Investment in capital instruments of unconsolidated financial and insurance/
takaful entities (8,488) - (49,809) (1,334,000)
Unrealised fair value gains on financial liabilities due to changes in own credit risk (648) (92) - (681)
Other CET1 regulatory adjustments specified by BNM 413,471 235,578 1 649,031
CET1 Capital 9,813,410 4,047,648 412,764 14,539,085

Additional Tier 1 Capital

Qualifying CET1, Additional Tier 1 Capital instruments held by third parties - - - 431
Tier 1 Capital 9,813,410 4,047,648 412,764 14,539,516

Tier 2 Capital
Tier 2 Capital instruments meeting all relevant criteria for inclusion 3,095,000 1,300,000 - -
Qualifying CET1, Additional Tier 1 and Tier 2 Capital instruments held by third parties - - - 2,752,328
General provisions* 650,081 256,523 8,460 914,980
Tier 2 Capital 3,745,081 1,556,523 8,460 3,667,308
Total Capital 13,558,491 5,604,171 421,224 18,206,824

The breakdown of the risk-weighted assets (“RWA”) in various categories of risk are as follows:
Credit RWA 75,535,958 32,508,336 891,418 106,092,293
Less: Credit RWA absorbed by Profit Sharing Investment Account - (2,075,074) - (361,288)
Total Credit RWA 75,535,958 30,433,262 891,418 105,731,005
Market RWA 2,859,665 215,113 17,652 3,973,469
Operational RWA 4,792,198 1,760,237 327,009 7,114,901
Large exposure risk RWA for equity holdings 980,771 - - 981,925
Total RWA 84,168,592 32,408,612 1,236,079 117,801,300

* Consists of Stage 1 and Stage 2 loss allowances and regulatory reserve.

161
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT

49.1 General Risk Management

The Risk Management Framework takes its lead from the Board’s Approved Risk Appetite Framework which forms the foundation of the Group to set its
risk/reward profile.

The Risk Appetite Framework is reviewed and approved annually by the Board taking into account the Group’s desired external rating and targeted
profitability/return on capital employed (“ROCE”) and is reviewed periodically throughout the financial year by both the executive management and the
Board to consider any fine tuning/enhancements taking into consideration the prevailing or in anticipation of challenges to the environment that the Group
operates in.

The Risk Appetite Framework provides portfolio limits/controls for Credit Risk, Traded Market Risk, Non-Traded Market Risk, Operational Risk and
Technology Risk incorporating, inter alia, limits/controls for countries, industries, single counterparty group, products, value at risk, stop loss, stable funding
ratio, liquidity and Operational Risk Management (“ORM”) tools.

The Group Risk Direction

The Group’s FY2021 to 2024 Strategy blueprint is to focus on 8 key areas, namely, (1) Attaining a Return on Equity (“ROE”) of ≥10%, (2) Sharpening Our
Segment Play, (3) Harnessing expertise across the Group to deliver AmBank Holistic Customer Value Proposition, (4) Offers differentiated and profitable
products, (5) Building capacity and efficiency through Digital Initiatives, (6) Retaining and Embedding Principled, Proactive, Appreciative, Collaborative and
Experimental (“P2ACE”) DNA, (7) Integrating Environmental, Social, and Governance (“ESG”) focusing on Responsible banking and (8) Exploring Digital Bank
option.

1 The Group aspires to have a minimum financial institution external rating of AA2 based on reference ratings by RAM Rating Services Berhad (“RAM”).

2 The Group aims to maintain a minimum ROCE of 12% and RWA efficiency (“CRWA/EAD”) in the range of 40% to 50%, both based on Foundation
Internal Ratings-Based (“FIRB”).

3 The Group aims to maintain its Total Capital Ratio at the Group’s Internal Capital Target under normal conditions.

4 The Group aims to maintain Available Financial Resources in excess of the capital requirements as estimated in the Internal Capital Adequacy
Assessment Process (“ICAAP”).

5 The Group recognises the importance of funding its own business. It aims to maintain the following:
a. Liquidity Coverage Ratio (“LCR”) (both consolidated and entity level) at least 10 percentage points above prevailing regulatory minimum;
b. Stressed LCR (both consolidated and entity level) above the regulatory requirement; and
c. Net Stable Funding Ratio (“NSFR”) (Financial Holding Company (“FHC”) level) above the prevailing regulatory minimum (effective July 2020).

6 The Group aims to maintain adequate controls for all key operational risks (including but not limited to regulatory, compliance, technology, conduct
and reputational risks).
a. Keep operational losses and regulatory penalties below 2% of Profit After Tax and Non-controlling interests (“PATMI”); and
b. Remain vigilant in risk identification and management to protect its reputation and business franchise.

7 The Group aims for at least 70% of its loan/financing portfolio to constitute exposures with low Environmental, Social and Governance Risk Grade
(“ESG-RG”) by FY2030.

8 The Group aims to maintain its IRRBB/RORBB Internal Capital Adequacy Assessment Programme (“ICAAP”) Pillar 2 over total capital ratio at entity
level as follows:
a. ICAAP IRRBB/RORBB at below 8.5% of its Total Capital for AmBank and AmBank Islamic (entity level);
b. ICAAP IRRBB/RORBB at below 5% of its Total Capital for AmInvestment Bank (entity level).

162 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.1 General Risk Management (cont’d.)

Risk Management Governance

The Board is ultimately accountable for the management of risks within the Group. The RMC is formed to assist the Board in discharging its duties in
overseeing the overall management of all risks including but not limited to market risk, liquidity risk, credit risk, operational risk, technology and cyber risk.

The Board has also established Management Committees to assist in managing the risks and businesses of the Group. The management committees
address all classes of risk within its Board delegated mandate: balance sheet risk, credit risk, legal risk, operational risk, technology risk, market risk, Shariah
risk, compliance risk, reputational risk, product and business risk, IT project risk and ESG risk.

The Group has an independent risk management function, headed by the Group Chief Risk Officer who:
• is responsible for establishing an enterprise wide risk management framework in all areas including financial, credit, market, operational, reputational,
security, technology, emerging risks and ESG risk;
• essentially champions and embeds a positive risk culture across the Group to ensure that risk taking activities across the Group are aligned to the
Group’s risk appetite and strategies; and
• through the RMC, has access to the Board and the Boards of the respective banking subsidiaries to facilitate suitable escalation of issues of concern
across the organisation.

Impact of Expired Payment Holiday/Repayment Assistance

There is potential emerging risk on small SMEs following the expiry of payment holiday and repayment assistance plans offered to customers during the
COVID-19 pandemic. Close monitoring is being carried out on this segment.

49.2 Credit Risk Management

The credit risk management process is depicted in the table below:

• Identify/recognise credit risk on transactions and/or positions

Identification
• Select asset and portfolio mix

• Internal credit rating system

• Probability Of Default (“PD”)
Assessment/ • Loss Given Default (“LGD”)
Measurement • Exposure At Default (“EAD”)
• Expected Loss ("EL")
• Gross Impaired Loan/Financing ("GIL")

• Portfolio Limits, Counterparty Limits

• Non-Retail Pricing and Risk-based pricing for Retail
Control/Mitigation
• Collateral and tailored facility structures (discretionary lending)
• Pre-set assessment criteria and acceptance criteria (program lending)

• Monitor and report portfolio mix

• Review Classified Accounts
Monitoring/Review • Review Rescheduled and Restructured Accounts
• Undertake post mortem credit review
• Annual refresh of customers' credit risk rating

163
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its payment obligations. Exposure to credit risk arises from
lending/financing, securities and derivative exposures. The identification of credit risk is done by assessing the potential impact of internal and external
factors on the Group’s transactions and/or positions as well as Shariah compliance risk (please refer to Note 49.9 for discussion on Shariah Governance
Structure).

The primary objective of credit risk management is to maintain accurate risk recognition - identification and measurement, to ensure that credit risk
exposure is in line with the Group’s Risk Appetite Framework (“GRAF”) and related credit policies.

For non-retail credit, risk assessment is a combination of both qualitative and quantitative assessment (including the financial standing of the customer or
counterparty using the banking subsidiaries’ credit rating model where the scores are translated into rating grade) on the customer or counterparty. The
assigned credit rating grade forms a crucial part of the credit analysis undertaken for each of the banking subsidiaries’ credit exposures and the overall
credit assessment is conducted either through a program lending or discretionary lending approach.

For retail credit, credit-scoring systems to better differentiate the quality of borrowers are being used to complement the credit assessment and approval
processes.

To support credit risk management, our rating models for major portfolios have been upgraded to facilitate:

• improvement in the accuracy of individual obligor risk ratings;

• enhancement to pricing models;
• loan/financing loss provision calculation;
• stress-testing; and
• enhancement to portfolio management.

Lending/financing activities are guided by internal credit policies and GRAF that are approved by the Board. The GRAF is refreshed at least annually and
with regard to credit risk, provides direction as to portfolio management strategies and internal limits designed to deliver the Group’s optimal portfolio mix.
Credit risk portfolio management strategies include, amongst others:

• Concentration threshold/review triggers:

- single counterparty credit exposure;
- industry sector exposure; and
- country risk exposure;
• Setting Loan/Financing to Value limits for asset backed loans/financing;
• Non-Retail Credit Policy (“NRCP”) and Retail Credit Policy (“RCP”) which set out the credit principles and requirements for managing credit risk in the
Wholesale Banking (“WB”), Business Banking (“BB”) and Retail Banking (“RB”) portfolios;
• Classified Account Management processes for identifying, monitoring and managing customers exhibiting signs of weakness and higher risk
customers;
• Rescheduled and Restructured (“R&R”) Account Management (embedded within the NRCP for WB and BB, and RCP for RB) sets out the controls in
managing R&R loans/financing;
• Setting Retail risk controls capping for higher risk segment to ensure credit approval practice is aligned with the credit policies and GRAF.

164 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Exposure outside the approval discretions of individual Credit Approval Delegation (“CAD”) holders are escalated to the Credit and Commitments Committee
(“CACC”) for approval. In the event such exposure exceeds a stipulated customer group threshold within the Group, the letter of offer shall not be issued
until the credit is reviewed by the Board Credit Committee (“BCC”). Portfolio credit risk is reported to the relevant management and board committees.

The Group Management Risk Committee (“GMRC”) regularly meets to review the quality and diversification of the Group’s loan/financing portfolio and
review the portfolio risk profile against the GRAF and recommend or approve new and amended credit risk policies or guidelines.

Group Risk Management prepares monthly Risk Reports which detail important portfolio composition and trend analysis incorporating asset growth, asset
quality, impairment, flow rates of loan/financing delinquency buckets and exposures by industry sectors are reported monthly to executive management
and to all meetings of the Board.

Maximum Credit Risk Exposure and Concentration

Credit Risk Exposure and Concentration

The Group’s concentrations of risk are managed by industry sector, risk grade asset quality and single customer limit. The Group applies Single Customer
Limits (“SCL”) to monitor the large exposures to single counterparty risk.

For financial assets recognised on the statements of financial position, the maximum exposure to credit risk before taking account of any collateral held or
other credit enhancements equals the carrying amount. For contingent exposures, the maximum exposure to credit risk is the maximum amount the Group
would have to pay if the instrument is called upon. For committed facilities which are undrawn, the maximum exposure to credit risk is the full amount of the
committed facilities.

The following tables show the maximum exposure to credit risk from financial instruments, including derivatives, by industry and by geography, before
taking into account of any collateral held or other credit enhancements.

165
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1a Industry Analysis

Wholesale
and Retail
Electricity, Trade and Transport,
Mining and Gas and Hotels and Storage and
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Subtotal
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Cash and short-term funds - - - - - - - -
Deposits and placements with banks and other
financial institutions - - - - - - - -
Derivative financial assets 28,934 32 33,571 87 79 7,286 283 70,272
Financial assets at fair value through profit or
loss
Money market securities - - - - - - - -
Quoted corporate bonds and sukuk - - - - 10,236 - - 10,236
Unquoted corporate bonds and sukuk - - 59,961 - 20,017 100,000 587,324 767,302
Financial investments at fair value through other
comprehensive income
Money market securities - - - - - - - -
Unquoted corporate bonds and sukuk 610,360 361,661 144,319 1,300,099 1,325,186 485,992 729,522 4,957,139
Financial investments at amortised cost
Money market securities - - - - - - - -
Unquoted corporate bonds and sukuk 125,028 578,844 340,000 497,249 2,544,712 1,924,698 1,116,657 7,127,188
Allowances for ECL - - - - - - - -
Total financial investments at amortised cost 125,028 578,844 340,000 497,249 2,544,712 1,924,698 1,116,657 7,127,188
Loans, advances and financing
Hire purchase 8,337 823 25,234 1,303 26,174 93,584 8,922 164,377
Mortgage 2,933 2,107 32,894 1,999 35,417 54,166 10,124 139,640
Credit card - - 300 - 25 2,852 50 3,227
Other loans, advances and financing 100,835 35,054 760,838 112,793 716,120 1,802,397 291,501 3,819,538
Corporate loans, advances and financing
Term loans and bridging loans 1,125,478 1,953,456 6,704,700 448,527 1,400,622 3,919,852 3,723,846 19,276,481
Revolving credits 1,483,080 114,267 1,762,016 549,399 895,947 490,126 704,730 5,999,565
Overdrafts 100,832 25,643 568,037 85,441 563,061 878,090 122,911 2,344,015
Trade 235,017 34,724 5,914,915 323,536 833,897 4,923,993 320,987 12,587,069
Allowances for ECL - - - - - - - -
Total loans, advances and financing 3,056,512 2,166,074 15,768,934 1,522,998 4,471,263 12,165,060 5,183,071 44,333,912
Statutory deposits with Bank Negara Malaysia - - - - - - - -
Other financial assets 1,811 14,222 14,013 37,747 47,693 1,717 75,550 192,753
Allowances for ECL - - - - - - - -
Total other financial assets 1,811 14,222 14,013 37,747 47,693 1,717 75,550 192,753
3,822,645 3,120,833 16,360,798 3,358,180 8,419,186 14,684,753 7,692,407 57,458,802

Commitments 468,662 489,176 5,523,945 458,083 4,061,884 3,035,862 732,273 14,769,885

Contingent liabilities 105,881 220,429 1,682,154 545,079 3,630,715 768,351 404,778 7,357,387
Total commitments and contingent liabilities 574,543 709,605 7,206,099 1,003,162 7,692,599 3,804,213 1,137,051 22,127,272

166 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1a Industry Analysis (cont’d.)

Subtotal
from Finance Government
previous and and Central Real Business Education Allowances
page Insurance Banks Estate Activities and Health Household Others for ECL Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Cash and short-term funds - 5,015,245 3,508,452 - - - - - (1,757) 8,521,940
Deposits and placements with banks and
other financial institutions - 176,670 - - - - - - (66) 176,604
Derivative financial assets 70,272 718,736 86 546 116,235 7,914 4,378 2,942 - 921,109
Financial assets at fair value through profit
or loss
Money market securities - - 10,169,187 - - - - - - 10,169,187
Quoted corporate bonds and sukuk 10,236 - - - - - - - - 10,236
Unquoted corporate bonds and sukuk 767,302 405,911 - 281,057 - 30,070 - 10,007 - 1,494,347
Financial investments at fair value through
other comprehensive income
Money market securities - - 12,549,882 - - - - - - 12,549,882
Unquoted corporate bonds and sukuk 4,957,139 6,132,679 - 350,080 - 38,984 - 899,111 - 12,377,993
Financial investments at amortised cost
Money market securities - - 5,454,701 - - - - - - 5,454,701
Unquoted corporate bonds and sukuk 7,127,188 425,091 75,000 75,189 25,000 10,529 - 776,778 - 8,514,775
Allowances for ECL - - - - - - - - (499,773) (499,773)
Total financial investments at amortised cost 7,127,188 425,091 5,529,701 75,189 25,000 10,529 - 776,778 (499,773) 13,469,703
Loans, advances and financing
Hire purchase 164,377 1,065 - 3,646 34,975 4,480 13,163,439 - - 13,371,982
Mortgage 139,640 3,803 - 70,782 59,076 15,234 45,107,686 - - 45,396,221
Credit card 3,227 - - - 52 219 2,806,735 52 - 2,810,285
Other loans, advances and financing 3,819,538 37,922 - 546,242 607,499 148,511 6,423,445 - - 11,583,157
Corporate loans, advances and
financing
Term loans and bridging loans 19,276,481 2,036,706 - 5,024,615 1,418,876 992,380 708,931 - - 29,457,989
Revolving credits 5,999,565 2,932,137 - 1,795,118 108,656 245,861 760,246 5,297 - 11,846,880
Overdrafts 2,344,015 85,654 - 292,324 156,129 74,531 65,080 - - 3,017,733
Trade 12,587,069 22,282 - 4,526 72,283 56,364 - - - 12,742,524
Allowances for ECL - - - - - - - - (1,984,166) (1,984,166)
Total loans, advances and financing 44,333,912 5,119,569 - 7,737,253 2,457,546 1,537,580 69,035,562 5,349 (1,984,166) 128,242,605
Statutory deposits with Bank Negara
Malaysia - - 2,446,547 - - - - - - 2,446,547
Other financial assets 192,753 1,441,128 406,919 19,247 28,468 374 68,715 179,276 - 2,336,880
Allowances for ECL - - - - - - - - (8,566) (8,566)
Total other financial assets 192,753 1,441,128 406,919 19,247 28,468 374 68,715 179,276 (8,566) 2,328,314
57,458,802 19,435,029 34,610,774 8,463,372 2,627,249 1,625,451 69,108,655 1,873,463 (2,494,328) 192,708,467

Commitments 14,769,885 355,986 153,474 656,993 353,381 691,964 10,312,925 69,610 - 27,364,218
Contingent liabilities 7,357,387 297,809 - 644,752 236,984 84,871 1,165 - - 8,622,968
Total commitments and contingent liabilities 22,127,272 653,795 153,474 1,301,745 590,365 776,835 10,314,090 69,610 - 35,987,186

167
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1a Industry Analysis (cont’d.)

Wholesale
and Retail
Electricity, Trade and Transport,
Mining and Gas and Hotels and Storage and
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Subtotal
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Cash and short-term funds - - - - - - - -
Deposits and placements with banks and other
financial institutions - - - - - - - -
Derivative financial assets 4,523 105,139 36,848 - - 1,609 547 148,666
Financial assets at fair value through profit or
loss
Money market securities - - - - - - - -
Quoted corporate bonds and sukuk - - - - - - - -
Unquoted corporate bonds and sukuk 52,031 69,858 - - 112,128 - 20,580 254,597
Financial investments at fair value through other
comprehensive income
Money market securities - - - - - - - -
Unquoted corporate bonds and sukuk - 365,965 29,364 987,234 34,123 448,251 669,519 2,534,456
Financial investments at amortised cost
Money market securities - - - - - - - -
Unquoted corporate bonds and sukuk 194,971 579,692 - 381,105 1,820,931 1,416,948 291,139 4,684,786
Allowances for ECL - - - - - - - -
Total financial investments at amortised cost 194,971 579,692 - 381,105 1,820,931 1,416,948 291,139 4,684,786
Loans, advances and financing
Hire purchase 1,694 446 10,691 974 12,970 52,231 10,960 89,966
Mortgage 4,019 2,226 38,427 2,355 47,197 65,527 11,462 171,213
Credit card - - - - - - - -
Other loans, advances and financing 106,336 35,847 718,937 89,918 678,046 1,598,827 258,933 3,486,844
Corporate loans, advances and financing
Term loans and bridging loans 1,374,342 1,932,496 6,769,062 201,582 1,155,680 3,459,035 3,783,233 18,675,430
Revolving credits 552,898 90,089 1,941,878 530,945 1,076,191 363,038 461,944 5,016,983
Overdrafts 120,396 30,642 563,689 83,572 732,171 767,512 138,373 2,436,355
Trade 214,401 38,468 5,859,977 273,284 650,338 4,228,323 177,999 11,442,790
Allowances for ECL - - - - - - - -
Total loans, advances and financing 2,374,086 2,130,214 15,902,661 1,182,630 4,352,593 10,534,493 4,842,904 41,319,581
Statutory deposits with Bank Negara Malaysia - - - - - - - -
Other financial assets 9,003 13,181 3,150 30,328 65,340 11,939 8,194 141,135
Allowances for ECL - - - - - - - -
Total other financial assets 9,003 13,181 3,150 30,328 65,340 11,939 8,194 141,135
2,634,614 3,264,049 15,972,023 2,581,297 6,385,115 12,413,240 5,832,883 49,083,221

Commitments 564,466 202,747 4,272,608 555,401 4,729,515 2,632,917 527,090 13,484,744

Contingent liabilities 267,776 343,552 1,861,892 588,649 3,175,267 500,735 279,098 7,016,969
Total commitments and contingent liabilities 832,242 546,299 6,134,500 1,144,050 7,904,782 3,133,652 806,188 20,501,713

168 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1a Industry Analysis (cont’d.)

Subtotal
from Finance Government
previous and and Central Real Business Education Allowances
page Insurance Banks Estate Activities and Health Household Others for ECL Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Cash and short-term funds - 4,962,885 8,260,459 - - - - - (2,245) 13,221,099
Deposits and placements with banks and
other financial institutions - 1,302,774 - - - - - - (1,325) 1,301,449
Derivative financial assets 148,666 660,416 - 666 2,555 159 3,795 5,116 - 821,373
Financial assets at fair value through profit
or loss
Money market securities - 99,460 2,073,581 - - - - - - 2,173,041
Quoted corporate bonds and sukuk - 13,315 - - - - - - - 13,315
Unquoted corporate bonds and sukuk 254,597 1,309,466 235,004 354,739 - - - 1,573,899 - 3,727,705
Financial investments at fair value through
other comprehensive income
Money market securities - 1,029,299 7,468,877 - - - - - - 8,498,176
Unquoted corporate bonds and sukuk 2,534,456 2,639,557 3,017,278 239,701 - - - 1,152,500 - 9,583,492
Financial investments at amortised cost
Money market securities - - 3,168,944 - - - - - - 3,168,944
Unquoted corporate bonds and sukuk 4,684,786 810,510 295,387 320,246 25,000 - - 216,117 - 6,352,046
Allowances for ECL - - - - - - - - (483,224) (483,224)
Total financial investments at amortised cost 4,684,786 810,510 3,464,331 320,246 25,000 - - 216,117 (483,224) 9,037,766
Loans, advances and financing
Hire purchase 89,966 578 - 1,098 16,623 3,702 12,575,908 - - 12,687,875
Mortgage 171,213 4,722 - 80,048 72,316 16,673 42,423,616 - - 42,768,588
Credit card - - - - 8,449 - 2,564,983 - - 2,573,432
Other loans, advances and financing 3,486,844 33,509 - 475,986 565,862 135,260 6,261,382 - - 10,958,843
Corporate loans, advances and
financing
Term loans and bridging loans 18,675,430 317,738 - 3,977,043 1,199,583 858,632 457,607 - - 25,486,033
Revolving credits 5,016,983 2,742,101 - 1,877,766 219,200 251,066 743,514 25,030 - 10,875,660
Overdrafts 2,436,355 44,856 - 198,593 127,594 95,996 69,921 - - 2,973,315
Trade 11,442,790 123,341 - 5,660 49,317 48,407 - - - 11,669,515
Allowances for ECL - - - - - - - - (1,927,576) (1,927,576)
Total loans, advances and financing 41,319,581 3,266,845 - 6,616,194 2,258,944 1,409,736 65,096,931 25,030 (1,927,576) 118,065,685
Statutory deposits with Bank Negara
Malaysia - - 376,523 - - - - - - 376,523
Other financial assets 141,135 1,212,827 303,874 21,576 40,984 33 50,992 374,107 - 2,145,528
Allowances for ECL - - - - - - - - (6,667) (6,667)
Total other financial assets 141,135 1,212,827 303,874 21,576 40,984 33 50,992 374,107 (6,667) 2,138,861
49,083,221 17,307,354 25,199,927 7,553,122 2,327,483 1,409,928 65,151,718 3,346,769 (2,421,037) 168,958,485

Commitments 13,484,744 961,333 60,257 1,356,986 374,649 308,882 8,588,336 53,170 - 25,188,357
Contingent liabilities 7,016,969 136,281 - 497,404 195,219 156,485 143 - - 8,002,501
Total commitments and contingent liabilities 20,501,713 1,097,614 60,257 1,854,390 569,868 465,367 8,588,479 53,170 - 33,190,858

169
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1a Industry Analysis (cont’d.)

Finance and
Insurance
Company RM’000

2023
Cash and short-term funds 208,565
Other financial assets 1,655
Total financial assets 210,220

2022
Cash and short-term funds 717,660
Other financial assets 11,368
Total financial assets 729,028

170 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1b Geographical Analysis

Outside
In Malaysia Malaysia Total
Group RM’000 RM’000 RM’000

2023
Cash and short-term funds 5,127,641 3,396,056 8,523,697
Less: Allowances for ECL (708) (1,049) (1,757)
Total cash and short-term funds 5,126,933 3,395,007 8,521,940
Deposits and placements with banks and other financial institutions 176,670 - 176,670
Less: Allowances for ECL (66) - (66)
Total deposits and placements with banks and other financial institutions 176,604 - 176,604
Derivative financial assets 561,657 359,452 921,109
Financial assets at fair value through profit or loss
Money market securities 10,169,187 - 10,169,187
Quoted corporate bonds and sukuk 10,236 - 10,236
Unquoted corporate bonds and sukuk 1,494,347 - 1,494,347
Financial investments at fair value through other comprehensive income
Money market securities 12,536,573 13,309 12,549,882
Unquoted corporate bonds and sukuk 12,367,702 10,291 12,377,993
Financial investments at amortised cost
Money market securities 5,454,701 - 5,454,701
Unquoted corporate bonds and sukuk 8,514,775 - 8,514,775
Less: Allowances for ECL (499,773) - (499,773)
Total financial investments at amortised cost 13,469,703 - 13,469,703
Loans, advances and financing
Hire purchase 13,371,982 - 13,371,982
Mortgage 45,396,221 - 45,396,221
Credit card 2,810,285 - 2,810,285
Other loans, advances and financing 11,583,157 - 11,583,157
Corporate loans, advances and financing
Term loans and bridging loans 29,208,462 249,527 29,457,989
Revolving credits 11,813,394 33,486 11,846,880
Overdrafts 3,017,733 - 3,017,733
Trade 12,742,524 - 12,742,524
Less: Allowances for ECL (1,984,031) (135) (1,984,166)
Total loans, advances and financing 127,959,727 282,878 128,242,605
Statutory deposits with Bank Negara Malaysia 2,446,547 - 2,446,547
Other financial assets 2,195,246 141,634 2,336,880
Less: Allowances for ECL (8,083) (483) (8,566)
Total other financial assets 2,187,163 141,151 2,328,314

Commitments 27,251,220 112,998 27,364,218

Contingent liabilities 8,600,884 22,084 8,622,968
Total commitments and contingent liabilities 35,852,104 135,082 35,987,186

171
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1b Geographical Analysis (cont’d.)

Outside
In Malaysia Malaysia Total
Group RM’000 RM’000 RM’000

2022
Cash and short-term funds 11,114,774 2,108,570 13,223,344
Less: Allowances for ECL (1,329) (916) (2,245)
Total cash and short-term funds 11,113,445 2,107,654 13,221,099
Deposits and placements with banks and other financial institutions 566,811 735,963 1,302,774
Less: Allowances for ECL (856) (469) (1,325)
Total deposits and placements with banks and other financial institutions 565,955 735,494 1,301,449
Derivative financial assets 537,976 283,397 821,373
Financial assets at fair value through profit or loss
Money market securities 2,173,041 - 2,173,041
Quoted corporate bonds and sukuk 13,315 - 13,315
Unquoted corporate bonds and sukuk 3,727,705 - 3,727,705
Financial investments at fair value through other comprehensive income
Money market securities 8,484,557 13,619 8,498,176
Unquoted corporate bonds and sukuk 9,573,069 10,423 9,583,492
Financial investments at amortised cost
Money market securities 3,168,944 - 3,168,944
Unquoted corporate bonds and sukuk 6,352,046 - 6,352,046
Less: Allowances for ECL (483,224) - (483,224)
Total financial investments at amortised cost 9,037,766 - 9,037,766
Loans, advances and financing
Hire purchase 12,687,875 - 12,687,875
Mortgage 42,768,588 - 42,768,588
Credit card 2,573,432 - 2,573,432
Other loans, advances and financing 10,958,843 - 10,958,843
Corporate loans, advances and financing
Term loans and bridging loans 24,642,842 843,191 25,486,033
Revolving credits 10,824,678 50,982 10,875,660
Overdrafts 2,973,315 - 2,973,315
Trade 11,669,515 - 11,669,515
Less: Allowances for ECL (1,915,699) (11,877) (1,927,576)
Total loans, advances and financing 117,183,389 882,296 118,065,685
Statutory deposits with Bank Negara Malaysia 376,523 - 376,523
Other financial assets 2,027,903 117,625 2,145,528
Less: Allowances for ECL (5,333) (1,334) (6,667)
Total other financial assets 2,022,570 116,291 2,138,861

Commitments 25,019,081 169,276 25,188,357

Contingent liabilities 7,981,473 21,028 8,002,501
Total commitments and contingent liabilities 33,000,554 190,304 33,190,858

172 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1b Geographical Analysis (cont’d.)

Outside
In Malaysia Malaysia Total
Company RM’000 RM’000 RM’000

2023
Cash and short-term funds 208,565 - 208,565
Other financial assets 1,655 - 1,655
210,220 - 210,220

2022
Cash and short-term funds 717,660 - 717,660
Other financial assets 11,368 - 11,368
729,028 - 729,028

Collateral and other credit enhancement

Collateral taken by the Group

Collateral is generally taken as security for credit exposures as a secondary source of repayment in case the counterparty cannot meet its contractual
repayment obligations from cash flow generation. The collateral accepted for credit risk mitigation comprises financial collateral, real estate, other physical
asset and guarantees.

In the case of the Group’s Islamic Banking operations, only Shariah approved assets can be accepted as permissible collateral.

The Credit Risk Mitigation Policy is the internally recognised collateral framework for the Group. Any collateral that does not conform to the requirements
outlined in that policy is not eligible for capital relief for regulatory capital purposes.

Processes for collateral management

The concept of legal enforceability and certainty are central to collateral management. In order to achieve legal enforceability and certainty, the Group has
standard collateral instruments, and where applicable, security interests are registered.

Guarantee support

Guarantee support for lending/financing proposals are an integral component in transaction structuring for the Group. Where a counterparty’s corporate
guarantor is rated better than the counterparty, the credit risk rating of the counterparty is able to be substituted with that of the corporate guarantor subject
to fulfilling certain stipulated conditions for Non-Retail portfolio.

Use of credit derivatives and netting for risk mitigation

Currently, the Group does not use credit derivatives and netting for risk mitigation.

173
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Transaction structuring to mitigate credit risk

Besides tangible security and guarantee support described above, credit risk mitigation techniques are used in structuring transactions. These include
duration limits managing the tenure of the loan/financing, amortisation schedules and loan/financing covenants. These assist in managing credit risk and
providing early warning signals to enable pre-emptive actions to protect the quality or recoverability of loan/financing assets.

Concentrations of credit risk mitigation

The Group carefully monitors collateral concentrations via portfolio management reporting and amendments as necessary to its GRAF and related policies
governing Loan/Financing to Value metrics.

The main types of collateral undertaken by the Group are properties, motor vehicles and exchange traded shares.

Credit Quality

The credit quality of financial assets are analysed based on broad categories. Internal credit rating grades assigned to corporate and retail lending business
are currently aligned to eight rating categories (seven for non-defaulted and one for those that have defaulted) in accordance with the Capital Adequacy
Framework (Basel II – Risk-Weighted Assets) and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets). The following categories based
on the descriptions are appended below.

Description of the Categories for Retail Banking

Risk Grade Category PD ranges Description

1 to 6 Exceptionally 0.0001% to 0.0737% • Exceptionally good credit risk profile with exceptionally low PD of <0.1%.
Strong • Exceptionally strong capacity and willingness to meet its financial commitments as
evidenced by prompt repayment track record.
• Exhibits very high degree resilience to adverse development in view of its very
established employment profile and track record.
7 to 12 Very strong 0.0738% to 0.5942% • Very good credit risk profile with very low PD of <0.6%.
• Very strong capacity and willingness to meet its financial commitments as evidenced
by generally prompt repayment record.
• Exhibits high degree resilience to adverse development in view of its established
employment profile and track record.
13 to14 Strong 0.5943% to 1.0159% • Good credit risk profile with low PD of <1.1%.
• Exhibits willingness to meet its financial commitments as evidenced by good
repayment track record.
• Generally in position to withstand adverse development in view of its favourable
employment profile and track record.
15 to 16 Satisfactory 1.0160% to 2.2722% • Satisfactory credit risk profile with acceptable PD of <2.3%.
• Adequate willingness to meet its financial commitments as evidenced by satisfactory
repayment track record.
• Generally in position to resolve any apparent shortcoming within an acceptable time
frame in view of its satisfactory employment profile and track record.

174 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Credit Quality (cont’d.)

Description of the Categories for Retail Banking (cont’d.)

Risk Grade Category PD ranges Description

17 to 18- Moderate 2.2723% to 4.1028% • Moderate credit risk profile with moderate PD of up to 4.1%.
• Willingness to meet its financial commitments would be uncertain in the event of
adverse changes in circumstances and economic conditions as evidenced by generally
satisfactory repayment track record.
• Generally in position to resolve any apparent shortcoming within an acceptable time
frame in view of its moderate employment profile and track record.
19+ to 20- Marginal 4.1029% to 8.2931% • Marginal credit risk profile with higher PD of up to 8.2931%.
• Willingness to meet its financial commitments would be uncertain under normal
circumstances and economic conditions as generally evidenced by fair repayment
track record.
• Moderate employment profile and track record.
21 to 24 Substandard >=8.2932% • Substandard credit risk profile with poor PD of >=8.2932%.
• Exhibits less willingness to meet its financial commitments under normal circumstances
and economic conditions as generally evidenced by poor repayment track record.
• Unfavourable employment profile and track record.
99 Impaired 100% • Impaired account. Classified as impaired as per the prevailing policy/guidelines.

Description of the Categories for Non-Retail Banking

Credit Quality
Classification Description
Exceptionally strong Highest rating, for exceptionally strong government institutions and a small number of very large multinational institutional
clients. The key characteristics are:

- Exceptionally solid and stable operating and financial performance;

- Debt servicing capacity has been exceptionally strong over the long term;
- All available information, of which there is a substantial quantity of extremely high quality, supports the view that these
historical performance standards will be maintained for the foreseeable future; and
- Highly unlikely to be adversely affected by foreseeable events.
Very strong Strong government institutions or institutional clients, with identifiably higher, albeit modest, long term risk but still
demonstrating solid and stable operating and financial performance. The key characteristics are:

- Based on their activities, financial profile and past capacity to repay, counterparties with this rating carry a small, but clearly
identifiable degree of risk; and
- Debt servicing capacity in previous period has been substantial and solid, and is projected to continue over the medium term
but may be more vulnerable to changes in business, economic and financial conditions than is the case for stronger ratings.

175
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Credit Quality (cont’d.)

Description of the Categories for Non-Retail Banking (cont’d.)

Credit Quality
Classification Description
Strong Counterparties demonstrate medium to long-term operational and financial stability and consistency but they are identifiably
susceptible to cyclical trends or variability in earnings. The key characteristics are:

- Counterparties present an identifiable degree of generally acceptable risk, possibly expressing itself as variability in financial
and/or operating performance; and
- Debt servicing capacity is quite good but adverse changes in circumstances and economic conditions are more likely to
impair this capacity.
Satisfactory Counterparties demonstrate adequate medium term operational and financial stability. Protection factors are considered
sufficient for prudent investment. The key characteristics are:

- Counterparties present a mostly satisfactory risk that requires mitigation, possibly expressing itself as variability in financial
and/or operating performance;
- Debt servicing capacity is satisfactory but adverse changes in circumstances and economic condition may impair this capacity;
and
- Counterparty’s financial and/or non-financial profile provides a limited buffer to mitigate the negative impact of any future
adverse changes in circumstances and economic conditions.
Moderate Counterparties demonstrate limited operational and financial stability and may have a track record of fluctuating and poor
earnings and profitability evidencing their past susceptibility to cyclical trends. The key characteristics are:

- Capacity for timely fulfilment of financial obligations exists;

- Adverse economic condition or changing business environment is more likely to lead to weakened capacity to meet timely
repayment in the long run; and
- Overall credit quality may be more volatile within this category.
Marginal Counterparties demonstrate sustained operational and financial instability. The key characteristics are:

- Erratic performance with one or more recent loss periods, increased borrowings or patchy account conduct;
- Debt servicing capacity is marginal;
- Often under strong, sustained competitive pressure;
- Variability and uncertainty in profitability and liquidity is projected to continue over the short and possibly medium term; and
- Significant changes and instability in senior management may be observed.
Substandard Lowest rating for counterparties that continuously demonstrate operational and financial instability. The key characteristics are:

- Mediocre financials with consistent loss periods, increased borrowings and/or poor account conduct;
- Current and expected debt servicing capacity is inadequate;
- Financial solvency is questionable and/or financial structure is weak;
- Deteriorating state of business and require significant changes in strategies or practices to return business to sustainable
state; and
- Experiencing difficulties, which may result in default in the next one to two years.
Impaired Impaired account. The key characteristic is that the counterparty has been classified as “impaired” as per the Classified Account
Management (“CAM”) Policy for Credit Facility.

176 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Credit Quality (cont’d.)

Impairment

The relevant governance for the respective Line of Businesses are established to align with the MFRS and related BNM’s standards/guidelines. In general,
an asset is considered impaired when:

(a) the Group considers that an obligor is “unlikely to repay” in full its credit obligations to the Group;
(b) the obligor has breached its contractual payment obligations and past due for more than 90 days; or
(c) other indicators stipulated in the relevant guidelines indicating the unlikeliness to repay are hit.

Where exposures are being restructured, such restructuring is guided by the definition and requirements of R&R provided by BNM Credit Risk Policy.

Group Provisioning Methodology

The Group’s provisioning methodology complies with MFRS 9 where the Group recognises ECL at all times to reflect changes in the credit risk of a financial
instrument. The methodology incorporates historical, current and forecasted information into ECL estimation. Consequently, more timely information is
required to be provided about ECL.

MFRS 9 applies to all financial assets classified as amortised cost and FVOCI, lease receivables, trade receivables, and commitments to lend money and
financial guarantee contracts.

Under MFRS 9, financial instruments are segregated into 3 stages depending on the changes in credit quality since initial recognition. The Group calculates
12-month ECL for Stage 1 and lifetime ECL for Stage 2 and Stage 3 exposures.

(i) Stage 1: For performing financial instruments which credit risk had not been significantly increased since initial recognition.

(ii) Stage 2: For underperforming financial instruments which credit risk had significantly increased since initial recognition.

(iii) Stage 3: For financial instruments which are credit impaired.

177
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL

The following diagram summarises the impairment requirements under MFRS 9 (other than purchased or originated credit-impaired financial assets):

Changes in credit quality since initial recognition

Stage 1 Stage 2 Stage 3

(Initial recognition) (SICR since initial recognition) (Credit-impaired assets)

12-month expected credit losses Lifetime expected credit losses Lifetime expected credit losses

ECL can be assessed individually or collectively. Financial assets that are not individually significant or not individually credit impaired are collectively assessed.
For financial assets that are individually significant, an assessment is performed to determine whether objective evidence of impairment exists individually.

Individual assessment is divided into two main processes - trigger assessment and measurement of impairment loss. Financial assets which are triggered
by the impairment triggers will be measured for evidence of high likelihood of impairment, i.e. estimated recoveries (based on the discounted cash flow
projection method and taking into account economic conditions) is less than carrying value.

The key judgements and assumptions adopted by the Group in addressing the requirements of the standard are discussed below.

Significant increase in credit risk (“SICR”)

The Group considers a financial instrument to have experienced a SICR when it is more than 30 days past due on its contractual payments or when a
quantitative and qualitative analysis, based on the Group’s historical experience, expert credit assessment and forward-looking information indicates as
such. The requirement is to calculate remaining Lifetime ECL at the reporting date when the financial instrument experienced SICR, compared to 12-month
ECL calculation when exposure was initially recognised.

(i) Quantitative

Each exposure is allocated to a credit risk grade at initial recognition based on a variety of data that is determined to be predictive of the risk of
default and experienced credit judgement about the borrower. Factors determining credit risk grades vary depending on nature of exposures and
type of borrowers. Exposures are subject to ongoing monitoring, which may result in an exposure being moved to a different credit risk grade. There
are 4 risk bands i.e. low risk, medium risk, high risk and very high risk whereby movements to a poorer band may result in SICR.

(ii) Qualitative

The Group may determine that an exposure has undergone a significant increase in credit risk experiences using its expert credit risk judgement and
where possible, relevant historical experience based on qualitative indicators specified by the Group’s watchlist criteria that it considers as such and
whose effect may not otherwise be fully reflected in quantitative analysis on a timely basis.

In relation to non-retail financial instruments, where a watchlist is used to monitor credit risk, this assessment is performed at the counterparty borrower
basis. The criteria used to identify SICR are monitored and reviewed periodically for appropriateness by the Wholesale Credit Risk team and Business Credit
Risk team.

The assessment of SICR incorporates forward-looking information and is performed on a monthly basis at a portfolio level for all financial instruments held
by the Group.

178 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL (cont’d.)

Definition of default and credit-impaired assets

The Group defines a financial instrument as in default, which is fully aligned with the definition of credit-impaired, when it meets one or more of the following
criteria:

(i) Quantitative criteria

The borrower is considered in default if its contractual payments is more than 90 days past due.

(ii) Qualitative criteria

The borrower meets unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty. These include instances where:

- The borrower is in breach of non-financial covenant(s) for example guarantor is deceased or become of unsound mind or non compliance of
security ratio;
- The borrower is insolvent;
- The borrower is in breach of financial covenant(s); or
- The borrower has ceased operations due to financial distress.

The criteria above have been applied to all financial instruments held by the Group and are consistent with the definition of default used for internal credit
risk management purposes. The default definition has been applied consistently to model the EAD, PD and LGD throughout the Group’s expected loss
calculations.

An instrument is considered to no longer be in default (i.e. to have cured) when it no longer meets any of the default criteria for a consecutive period of six
months. This period of six months has been determined based on an analysis which considers the likelihood of a financial instrument returning to default
status after cure using different possible cure definitions (not applicable for retail customers).

179
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL (cont’d.)

Measuring ECL – Explanation of inputs, assumptions and estimation techniques

The key inputs into the measurement of ECL are the following variables:

- PD;
- LGD; and
- EAD
or
- Historical Loss Rates (“LR”)

These parameters are generally derived from internally developed statistical models and other historical data. They are adjusted to reflect forward-looking
information.

PD estimates are estimated at a certain date, which are calculated based on statistical rating models, and assessed using rating tools tailored to the various
categories of counterparties and exposures. These statistical models are based on internally compiled data comprising both quantitative and qualitative
factors.

Credit risk grades are a primary input in the determination of PD term structure for exposures. If a counterparty or exposure migrates between rating
grades, then this will lead to a change in associated PD. The Group collects performance and default information about its credit risk exposures analysed
by portfolio.

LGD is the magnitude of the likely loss if there is a default. The Group estimates LGD parameters based on history of recovery rates of claims against
defaulted counterparties. The LGD models consider the structure, collateral, seniority of the claim, counterparty industry, and recovery costs of any collateral
that is integral to the financial asset. They are calculated on a discounted cash flow basis using the EIR/EPR as the discount factor.

EAD represents the expected exposure in the event of default. The Group derives the EAD from the current exposure to the counterparty and potential
changes to the current amount allowed under the contract including amortisation. The EAD of an on-balance sheet asset is its gross carrying amount. For
lending commitments and financial guarantees, the EAD includes the amount drawn, and potential future amounts that may be drawn under the contract,
which are estimated based on historical observations and forward-looking forecasts.

Historical LR represents the past record of average loss experience for financial assets of similar classes.

Forward-looking information incorporated in the ECL models

The measurement of ECL also takes into account the expected credit condition over the remaining life of the financial assets. Forward-looking models are
built based on statistical relationship established between Observed Default Rate (“ODR”) and Macroeconomic Variables (“MEVs”).

This analysis includes the identification and calibration of relationships between changes in default rates and to the MEVs. Examples of key macroeconomic
indicators include Gross Domestic Product (“GDP”) growth, Consumer Price Index (“CPI”), House Price Index (“HPI”), foreign exchange (USD/MYR) and Brent
Crude Oil price.

Three scenarios are projected for forward-looking namely base case, optimistic and pessimistic which requires management judgement of the economic
situation i.e. normal, bullish or downturn. A weightage is applied to the scenarios to produce an appropriate forward-looking ECL to best reflect the forward-
looking economic outlook.

180 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL (cont’d.)

Key variables/assumptions for ECL calculations

The recognition and measurement of ECL is highly complex and involves the use of significant judgement and estimation. This involves establishing the
forward-looking macroeconomic conditions into ECL as required under MFRS 9. The allowances for ECL are sensitive to the inputs used and economic
assumptions underlying the estimate.

The following table shows the forecast of key economic variables used in forward-looking models for ECL calculations for financial year ended 31 March
2023 and 31 March 2022. (Yearly values = average of forecasted quarterly values).

31 March 2023

Forward-Looking Assigned
Macroeconomic Variable List Scenario Probabilities (%) 2023 2024 2025 2026 2027
Consumer Price Index (%) Base 60% 3.00 2.70 2.55 2.50 2.53
Optimistic 10% 3.30 2.97 2.81 2.75 2.78
Pessimistic 30% 2.55 2.30 2.17 2.13 2.15
GDP Growth (%) Base 60% 4.45 4.68 4.75 4.53 4.45
Optimistic 10% 4.90 5.14 5.23 4.98 4.90
Pessimistic 30% 3.78 3.97 4.04 3.85 3.78
House Price Index (%) Base 60% 1.03 0.93 0.66 0.82 0.93
Optimistic 10% 1.13 1.02 0.72 0.90 1.02
Pessimistic 30% 0.87 0.79 0.56 0.69 0.79
USD/MYR Exchange Rate Base 60% 4.27 4.13 4.06 4.02 4.00
Optimistic 10% 4.05 3.93 3.86 3.81 3.80
Pessimistic 30% 4.48 4.34 4.26 4.22 4.20
Brent Crude Oil Price (USD/barrel) Base 60% 84.00 76.00 68.00 61.50 60.00
Optimistic 10% 92.40 83.60 74.80 67.65 66.00
Pessimistic 30% 71.40 64.60 57.80 52.28 51.00

181
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL (cont’d.)

Key variables/assumptions for ECL calculations (cont’d.)

The following table shows the forecast of key economic variables used in forward-looking models for ECL calculations for financial year ended 31 March
2023 and 31 March 2022. (Yearly values = average of forecasted quarterly values). (cont’d.)

31 March 2022

Forward-Looking Assigned
Macroeconomic Variable List Scenario Probabilities (%) 2022 2023 2024 2025 2026
Consumer Price Index (%) Base 60% 2.78 2.21 2.00 1.78 1.85
Optimistic 10% 3.05 2.43 2.20 1.95 2.04
Pessimistic 30% 2.36 1.88 1.70 1.51 1.57
GDP Growth (%) Base 60% 5.60 4.83 4.68 4.75 4.53
Optimistic 10% 6.16 5.31 5.14 5.23 4.98
Pessimistic 30% 4.76 4.10 3.97 4.04 3.85
House Price Index (%) Base 60% 1.08 2.58 2.75 3.08 2.98
Optimistic 10% 1.20 2.83 3.03 3.38 3.27
Pessimistic 30% 0.88 2.19 2.34 2.61 2.53
USD/MYR Exchange Rate Base 60% 4.16 4.12 4.06 4.03 4.01
Optimistic 10% 3.95 3.91 3.86 3.83 3.81
Pessimistic 30% 4.37 4.32 4.26 4.23 4.21
Brent Crude Oil Price (USD/barrel) Base 60% 103.75 84.00 71.25 69.50 67.75
Optimistic 10% 114.13 92.40 78.38 76.45 74.53
Pessimistic 30% 88.19 71.40 60.56 59.08 57.59

Write-off Governance

(i) Stage 1 write-off

The Group may partially write-off financial assets where full recovery is not possible taking proceeds from value of securities or where customer has
been allowed time to repay on negotiated settlement basis. The outstanding contractual amounts of such assets written off during the financial year
ended 31 March 2023 was RM699.8 million (2022: RM536.1 million). The Group still seeks legal recovery action, as such, credit exposures for these
continue unabated.

(ii) Stage 2 write-off

The Group writes off financial assets in whole when it has exhausted all necessary recovery actions against credit exposures and there is minimal
prospect of recovery and/or further recovery is not economical, then the credit exposures will be written off from both the general ledger and
subsidiary ledger.

182 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

Impairment (cont’d.)

Measurement of ECL (cont’d.)

Modified Financial Assets

The Group sometimes modifies the terms of loans/financing provided to customers due to commercial renegotiations, or for distressed loans/financing, with
a view to maximising recovery.

Such restructuring activities include extended payment term arrangements, payment holidays and payment forgiveness. Restructuring governance and
practices are based on indicators or criteria which, in the judgement of management, indicate that payment will most likely continue. These governance are
kept under continuous review.

The risk of default of such assets after modification is assessed at the reporting date and compared with the risk under the original terms at initial recognition.
The Group then monitors the subsequent performance of modified assets. The Group may determine that the credit risk has significantly improved after
restructuring and if so, the assets are moved from Stage 2 - Lifetime ECL not credit impaired or Stage 3 - Lifetime ECL credit impaired to Stage 1 - 12-month
ECL or Stage 2 - Lifetime ECL not credit impaired as per Group’s internal SICR criteria. This is only the case for assets which have performed in accordance
with the new terms for at least six consecutive months or more.

The following table includes summary information for financial assets whose cash flows were modified during the financial year as part of the Group’s
restructuring activities and their respective effect on the Group’s financial performance:

Group
2023 2022
RM’000 RM’000

Loans, advances and financing

Amortised cost before modification 1,049,891 31,214,402
Net modification loss included under interest income (3,027) (54,847)

183
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NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system.

Cash and short-term funds

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 5,387,153 - 5,387,153
Very strong 3,134,411 - 3,134,411
Strong 1,464 - 1,464
Substandard - 669 669
Gross exposure 8,523,028 669 8,523,697
Less: Allowances for ECL (1,456) (301) (1,757)
Net exposure 8,521,572 368 8,521,940

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 9,195,689 - 9,195,689
Very strong 4,025,584 - 4,025,584
Strong 1,552 352 1,904
Substandard - 35 35
Unrated 132 - 132
Gross exposure 13,222,957 387 13,223,344
Less: Allowances for ECL (2,225) (20) (2,245)
Net exposure 13,220,732 367 13,221,099

184 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Cash and short-term funds (cont’d.)

Stage 1
12-month
ECL
Company RM’000

2023
Risk grade
Very strong 208,565
Net exposure 208,565

Stage 1
12-month
ECL
Company RM’000

2022
Risk grade
Very strong 717,660
Net exposure 717,660

185
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NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Financial investments at amortised cost

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 7,903,418 - - 7,903,418
Very strong 2,371,145 - - 2,371,145
Strong 2,739,980 - - 2,739,980
Satisfactory 280,089 - - 280,089
Moderate 96,000 - - 96,000
Impaired - - 578,844 578,844
Gross exposure 13,390,632 - 578,844 13,969,476
Less: Allowances for ECL (6,927) - (492,846) (499,773)
Net exposure 13,383,705 - 85,998 13,469,703

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 4,139,588 - - 4,139,588
Very strong 3,617,804 - - 3,617,804
Strong 608,395 - - 608,395
Satisfactory 280,124 295,387 - 575,511
Impaired - - 579,692 579,692
Gross exposure 8,645,911 295,387 579,692 9,520,990
Less: Allowances for ECL (4,497) - (478,727) (483,224)
Net exposure 8,641,414 295,387 100,965 9,037,766

186 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Financial investments at fair value through other comprehensive income

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 14,921,368 - 14,921,368
Very strong 6,912,382 - 6,912,382
Strong 1,828,054 - 1,828,054
Satisfactory 720,648 545,423 1,266,071
Gross exposure 24,382,452 545,423 24,927,875
Less: Allowances for ECL (10,282) (3,024) (13,306)
Net exposure 24,372,170 542,399 24,914,569

Stage 1 Stage 2
Lifetime ECL
12-month not credit
ECL impaired Total
Group RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 9,154,908 - 9,154,908
Very strong 6,543,051 - 6,543,051
Strong 1,650,927 - 1,650,927
Satisfactory 142,815 157,626 300,441
Moderate - 357,424 357,424
Marginal - 74,917 74,917
Gross exposure 17,491,701 589,967 18,081,668
Less: Allowances for ECL (10,494) (9,842) (20,336)
Net exposure 17,481,207 580,125 18,061,332

187
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Loans, advances and financing

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 2,818,784 38 - 2,818,822
Very strong 59,643,493 324,841 - 59,968,334
Strong 21,751,846 215,234 - 21,967,080
Satisfactory 21,780,169 1,534,282 - 23,314,451
Moderate 5,936,306 1,562,228 - 7,498,534
Marginal 2,841,558 2,297,109 - 5,138,667
Substandard 898,329 6,720,467 - 7,618,796
Unrated 5,640 - - 5,640
Impaired - - 1,896,447 1,896,447
Gross exposure 115,676,125 12,654,199 1,896,447 130,226,771
Less: Allowances for ECL (236,612) (1,160,966) (586,588) (1,984,166)
Net exposure 115,439,513 11,493,233 1,309,859 128,242,605

188 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Loans, advances and financing (cont’d.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 25,385 - - 25,385
Very strong 51,027,029 568,857 - 51,595,886
Strong 19,066,266 1,074,237 - 20,140,503
Satisfactory 22,907,875 3,156,193 - 26,064,068
Moderate 6,632,781 2,408,936 - 9,041,717
Marginal 2,665,151 3,898,989 - 6,564,140
Substandard 780,597 4,099,106 - 4,879,703
Unrated 5,815 - - 5,815
Impaired - - 1,676,044 1,676,044
Gross exposure 103,110,899 15,206,318 1,676,044 119,993,261
Less: Allowances for ECL (217,884) (1,159,616) (550,076) (1,927,576)
Net exposure 102,893,015 14,046,702 1,125,968 118,065,685

189
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Other financial assets (using simplified approach)

Lifetime ECL Lifetime ECL

not credit credit
impaired impaired Total
Group RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 459,137 - 459,137
Very strong 953,430 - 953,430
Strong 532,972 - 532,972
Satisfactory 45,611 - 45,611
Moderate 3,037 - 3,037
Marginal 24,448 - 24,448
Substandard 18,456 - 18,456
Unrated 280,870 - 280,870
Impaired - 18,919 18,919
Gross exposure 2,317,961 18,919 2,336,880
Less: Allowances for ECL (1,250) (7,316) (8,566)
Net exposure 2,316,711 11,603 2,328,314

190 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Other financial assets (using simplified approach) (cont’d.)

Lifetime ECL Lifetime ECL

not credit credit
impaired impaired Total
Group RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 386,834 - 386,834
Very strong 984,854 - 984,854
Strong 210,280 - 210,280
Satisfactory 19,718 - 19,718
Moderate 26,379 - 26,379
Marginal 1,750 - 1,750
Substandard 16,400 - 16,400
Unrated 486,412 - 486,412
Impaired - 12,901 12,901
Gross exposure 2,132,627 12,901 2,145,528
Less: Allowances for ECL (1,509) (5,158) (6,667)
Net exposure 2,131,118 7,743 2,138,861

Lifetime ECL not credit impaired

2023 2022
Company RM’000 RM’000

Risk grade
Very strong 1,655 11,368
Net exposure 1,655 11,368

191
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Loans, advances and financing commitments and financial guarantee contracts

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2023
Risk grade
Exceptionally strong 958,059 - - 958,059
Very strong 16,682,168 109,542 - 16,791,710
Strong 8,255,695 87,345 - 8,343,040
Satisfactory 5,794,188 278,346 - 6,072,534
Moderate 1,529,343 388,978 - 1,918,321
Marginal 246,891 222,701 - 469,592
Substandard 197,881 533,464 - 731,345
Impaired - - 528,362 528,362
Gross exposure 33,664,225 1,620,376 528,362 35,812,963
Less: Allowances for ECL (42,639) (33,816) (148,930) (225,385)
Net exposure 33,621,586 1,586,560 379,432 35,587,578

192 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Loans, advances and financing commitments and financial guarantee contracts (cont’d.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group RM’000 RM’000 RM’000 RM’000

2022
Risk grade
Exceptionally strong 1,604,543 - - 1,604,543
Very strong 15,882,967 66,246 - 15,949,213
Strong 6,024,564 161,174 - 6,185,738
Satisfactory 5,420,219 390,844 - 5,811,063
Moderate 1,330,350 293,604 - 1,623,954
Marginal 290,938 335,997 - 626,935
Substandard 485,089 370,087 - 855,176
Unrated 3,722 - - 3,722
Impaired - - 340,257 340,257
Gross exposure 31,042,392 1,617,952 340,257 33,000,601
Less: Allowances for ECL (28,926) (26,330) (247,941) (303,197)
Net exposure 31,013,466 1,591,622 92,316 32,697,404

193
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

The table below shows credit quality by class of asset for all financial assets exposed to credit risk, based on the Group’s internal credit rating
system. (cont’d.)

Deposits and
placements Statutory
with banks deposits
and other with Bank
financial Negara
Stage 1 institutions Malaysia
Group RM’000 RM’000

2023
Risk grade
Exceptionally strong - 2,446,547
Very strong 176,670 -
Gross exposure 176,670 2,446,547
Less: Allowances for ECL (66) -
Net exposure 176,604 2,446,547

Deposits and
placements Statutory
with banks deposits
and other with Bank
financial Negara
Stage 1 institutions Malaysia
Group RM’000 RM’000

2022
Risk grade
Exceptionally strong - 376,523
Very strong 1,218,664 -
Satisfactory 84,110 -
Gross exposure 1,302,774 376,523
Less: Allowances for ECL (1,325) -
Net exposure 1,301,449 376,523

194 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1c Credit Quality By Class of Financial Assets (cont’d.)

Maximum exposure to credit risk - financial instruments not subject to impairment

The table below shows the credit quality of financial assets measured at FVTPL:

Financial
assets at
fair value Derivative
through financial
Stage 1 profit or loss assets
Group RM’000 RM’000

2023
Risk grade
Exceptionally strong 10,379,595 318,548
Very strong 869,396 490,070
Strong 323,509 98,885
Satisfactory 101,270 8,753
Moderate - 1,758
Marginal - 99
Substandard - 2,996
Net exposure 11,673,770 921,109

Financial
assets at
fair value Derivative
through financial
Stage 1 profit or loss assets
Group RM’000 RM’000

2022
Risk grade
Exceptionally strong 5,225,349 144,357
Very strong 430,614 418,614
Strong 128,674 141,136
Satisfactory 129,424 6,782
Moderate - 99,023
Marginal - 279
Substandard - 57
Unrated - 11,125
Net exposure 5,914,061 821,373

195
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1d Estimated value of collateral for financial assets

The Group’s policies regarding obtaining collateral have not significantly changed during the financial year and there has been no significant
change in the overall quality of the collateral held by the Group since the previous financial year.

The following table summarises the financial effects of collateral received from loans, advances and financing:

Gross exposure Financial effect Unsecured portion

to credit risk of collateral of credit exposure
2023 2022 2023 2022 2023 2022
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Gross loans, advances and financing

Hire purchase 13,371,982 12,687,875 13,251,690 12,334,483 120,292 353,392
Mortgage 45,396,221 42,768,588 45,084,861 42,380,668 311,360 387,920
Credit card 2,810,285 2,573,432 52,714 46,299 2,757,571 2,527,133
Other loans, advances and financing 11,583,157 10,958,843 10,088,670 9,498,699 1,494,487 1,460,144
Corporate loans, advances and financing 57,065,126 51,004,523 28,346,413 23,889,968 28,718,713 27,114,555
Term loans and bridging loans 29,457,989 25,486,033 17,512,843 14,561,081 11,945,146 10,924,952
Revolving credits 11,846,880 10,875,660 5,099,238 3,652,938 6,747,642 7,222,722
Overdrafts 3,017,733 2,973,315 1,962,509 2,157,821 1,055,224 815,494
Trade (include factoring) 12,742,524 11,669,515 3,771,823 3,518,128 8,970,701 8,151,387

Total 130,226,771 119,993,261 96,824,348 88,150,117 33,402,423 31,843,144

49.2.1e Collateral repossessed

Group
2023 2022
RM’000 RM’000

Residential properties, net of impairment 150 150

Non-residential properties, net of impairment 2,337 2,327
2,487 2,477

The above assets are accounted for as foreclosed properties under other assets (Note 18). There were no new assets obtained for the financial
year 2023 and 2022.

196 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1f Collateral held for credit impaired financial assets

The Group closely monitors collateral held for financial assets considered to be credit-impaired, as it becomes more likely that the Group will take
possession of collateral to mitigate potential credit losses. Financial assets that are credit-impaired and related collateral held in order to mitigate
potential losses are shown below:

Gross Impairment Carrying Fair value

exposure allowance amount of collateral
Group RM’000 RM’000 RM’000 RM’000

2023
Credit-impaired financial assets
Hire purchase 117,732 38,274 79,458 113,538
Mortgage 929,726 204,241 725,485 878,640
Credit card 51,731 28,985 22,746 5
Other loans, advances and financing 242,583 33,120 209,463 173,725
Corporate loans, advances and financing
Term loans and bridging loans 333,087 155,360 177,727 241,720
Revolving credits 27,452 6,778 20,674 21,893
Overdrafts 95,350 43,531 51,819 48,337
Trade 98,786 76,299 22,487 32,991
Total credit-impaired financial assets 1,896,447 586,588 1,309,859 1,510,849

Gross Impairment Carrying Fair value

exposure allowance amount of collateral
Group RM’000 RM’000 RM’000 RM’000

2022
Credit-impaired financial assets
Hire purchase 81,221 24,847 56,374 72,242
Mortgage 614,317 138,652 475,665 508,152
Credit card 40,425 22,907 17,518 191
Other loans, advances and financing 157,508 25,627 131,881 112,236
Corporate loans, advances and financing
Term loans and bridging loans 589,155 250,328 338,827 404,696
Revolving credits 41,298 13,458 27,840 34,687
Overdrafts 83,421 33,320 50,101 68,826
Trade 68,699 40,937 27,762 25,774
Total credit-impaired financial assets 1,676,044 550,076 1,125,968 1,226,804

197
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1g Exposures to COVID-19 impacted sectors

The table below shows the gross carrying amount of loans, advances and financing by industry sectors that are most impacted by COVID-19:

Gross loans, advances

and financing
2023 2022
Group RM’000 RM’000

Retail and wholesale/trading 11,400,414 9,837,122

Accommodation 542,077 530,541
Travel agencies/tourism 11,419 13,534
Airline/aviation 521,418 525,132
Food and beverage services/restaurants 224,527 166,830
12,699,855 11,073,159

49.2.1h COVID-19 customer relief and support measures

The table below shows the relief and support measures for retail and non-retail customers as at 31 March 2023:

Retail customers as at 31 March 2023 Non-retail customers as at 31 March 2023

Hire Credit Personal

Mortgages purchase card financing SMEs Total SMEs Corporates Others Total Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Total payment moratoriums,

repayment assistances,
rescheduling and restructuring
(“R&R”) granted 33,562,242 6,485,765 322,105 1,667,046 3,129,697 45,166,855 11,828,063 11,212,548 120,000 23,160,611 68,327,466

Resumed repayments 28,610,473 4,642,755 230,495 1,565,724 2,108,431 37,157,878 9,587,926 8,407,491 90,687 18,086,104 55,243,982

Extended and/or repaying as per

revised schedules 1,307,753 329,019 15,789 28,191 486,578 2,167,330 1,644,275 2,681,805 13,196 4,339,276 6,506,606

Missed payments 3,644,016 1,513,991 75,821 73,131 534,688 5,841,647 595,862 123,252 16,117 735,231 6,576,878

As a percentage of total:

Resumed repayments 85% 72% 72% 94% 67% 82% 81% 75% 76% 78% 81%

Extended and/or repaying as per

revised schedules 4% 5% 5% 2% 16% 5% 14% 24% 11% 19% 9%

Missed payments 11% 23% 23% 4% 17% 13% 5% 1% 13% 3% 10%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

198 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.2 Credit Risk Management (cont’d.)

49.2.1h COVID-19 customer relief and support measures (cont’d.)

The table below shows the relief and support measures for retail and non-retail customers as at 31 March 2022:

Retail customers as at 31 March 2022 Non-retail customers as at 31 March 2022

Hire Credit Personal

Mortgages purchase card financing SMEs Total SMEs Corporates Others Total Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Total payment moratoriums,

repayment assistances,
rescheduling and restructuring
(“R&R”) granted 36,047,928 9,098,577 582,178 2,507,569 3,725,416 51,961,668 13,680,492 10,625,694 145,846 24,452,032 76,413,700

Resumed repayments 30,102,570 6,813,905 372,064 2,292,175 2,093,643 41,674,357 9,311,637 7,229,663 118,941 16,660,241 58,334,598

Extended and/or repaying as per

revised schedules 3,229,955 759,588 90,889 124,540 1,301,839 5,506,811 3,785,386 3,325,107 24,279 7,134,772 12,641,583

Missed payments 2,715,403 1,525,084 119,225 90,854 329,934 4,780,500 583,469 70,924 2,626 657,019 5,437,519

As a percentage of total:

Resumed repayments 83% 75% 64% 91% 56% 80% 68% 68% 81% 68% 76%

Extended and/or repaying as per

revised schedules 9% 8% 16% 5% 35% 11% 28% 31% 17% 29% 17%

Missed payments 8% 17% 20% 4% 9% 9% 4% 1% 2% 3% 7%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

49.2.1i Overlays and adjustments for expected credit losses remains, arising from COVID-19 environment

Due to the significant uncertainty as a consequence of the COVID-19 pandemic, management overlay was provided in anticipation of potential
deterioration of credit risk for loans/financing where relief assistance is provided.

The overlays adjustments involved significant level of judgement and reflect the management’s views of possible severities of the pandemic and
paths of recovery in the forward-looking assessment for ECL estimation purposes.

The borrowers and customers who have received repayment supports remain in their existing stages unless they have been individually identified
as not viable or with subsequent indicators of significant increase in credit risk from each of their pre-COVID-19 status. The overlays adjustments
were generally made at portfolio level in determining the sufficient level of ECL and remain outside the core MFRS 9 process.

The overlays adjustments continue into financial year 2024 (“FY24”) amounting to RM657.6 million as at 31 March 2023 (2022: RM738.3 million).
The overlays adjustments assume customers which opted for repayment assistance due to COVID-19 are likely to face challenges in achieving
pre-COVID19 levels of income/cashflow.

199
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk and Funding Management

Liquidity risk is the risk that the organisation either does not have sufficient financial resources available to meet all its obligations and commitments as they
fall due, or can only access these financial resources at an unreasonable cost. Liquidity risk exposure arises mainly from the deposit taking and borrowing
activities and market disruption, and to a lesser extent, significant drawdown of funds from previously contracted financing and purchase commitments.
Funding management is the ongoing ability to raise sufficient funds to finance actual and proposed business activities at a reasonable cost. Improper
funding management may lead to liquidity problem. On the other hand, insufficient liquidity risk management may also give rise to funding risk.

The liquidity risk management process is depicted in the table below:

• Identify liquidity risk within existing and new business activities

Identification • Review market-related information such as market trend and economic data
• Keep abreast with regulatory requirements

• Liquidity Coverage Ratio (“LCR”)

Assessment/ • Net Stable Funding Ratio (“NSFR”)
Measurement • Depositor Concentration Ratios
• Other Detailed Controls

• LCR Limits
• NSFR Limits/Targets
Control/Mitigation
• Depositor Concentration Ratios
• Other Detailed Limits/Triggers/Targets

• Monitor controls
Monitoring/Review
• Periodical review and reporting

The liquidity risk management of the Group is aligned to the LCR policy and NSFR policy issued by BNM. The primary objective of the Group’s liquidity
risk management is to ensure the availability of sufficient funds at a reasonable cost to honour all financial commitments when they fall due. This objective
is partly managed through maintenance of a portfolio of high-quality liquid assets to protect against adverse funding conditions and support day-to-day
operations. The secondary objective is to ensure an optimal funding structure and to balance the key liquidity risk management objectives, which includes
diversification of funding sources, customer base and maturity period.

The Board provides the liquidity risk management oversight including setting and reviewing the liquidity risk appetite and approves the Group’s liquidity
management strategy while GALCO is the core management committee established by the Board to oversee the overall liquidity management of the Group.

The Group has put in place a Contingency Funding Plan which is established by Capital and Balance Sheet Management (“CBSM”) to identify early warning
signals of possible liquidity problem. The Contingency Funding Plan also sets out the detailed responsibilities among the relevant departments in the event
of actual liquidity crises occurring to ensure orderly execution of procedures to restore the liquidity position and confidence in the organisation.

Various liquidity measurements have been put in place to support the broader strategic objectives of the Group and amongst others include the BNM LCR,
BNM NSFR, Depositor Concentration Ratio and other Liquidity Ratios. Investment Banking and Markets Risk (“IBMR”) is responsible for developing and
monitoring the controls and limits while the Group Treasury and Markets (“GTM”) and CBSM are responsible to ensure the controls and limits are within the
thresholds.

200 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk Management (cont’d.)

Stress testing is undertaken to assess and plan for the impact for various scenarios which may put the Group’s liquidity at risk. The Group further stresses
the importance of the stable funding sources to finance placement/lending and loans, advances and financing to customers. They are monitored using the
loans/financing to available fund ratio, which compares loans/financing and advances to customers as a percentage of the Group’s total available funds.

To measure the quality of the Group’s funding sources, the composition of core funds indicators is monitored on a regular basis. The core funds is defined
as deposits from retail and small business customers, operational deposits, non-financial institution deposits more than 1 year and debt instruments/long
term borrowings more than 1 year.

49.3.1a Analysis of Assets and Liabilities By Remaining Contractual Maturities as per requirement of BNM’s policy document Financial Reporting

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Assets
Cash and short-term funds 8,521,940 - - - - - - 8,521,940
Deposits and placements with banks and other
financial institutions - 176,604 - - - - - 176,604
Derivative financial assets 99,233 119,105 58,560 54,062 436,331 153,818 - 921,109
Financial assets at fair value through profit or loss 476,584 4,407,555 4,390,653 2,689,469 719,729 66,086 20,831 12,770,907
Financial investments at fair value through other
comprehensive income 924,489 3,768,664 3,009,590 663,926 12,579,062 3,921,593 743,409 25,610,733
Financial investments at amortised cost 129,562 4,995 9,993 87,305 3,525,003 9,712,845 - 13,469,703
Loans, advances and financing 2,136,629 350,196 294,989 30,768,178 18,626,558 76,066,055 - 128,242,605
Statutory deposits with Bank Negara Malaysia - - - - - 2,446,547 - 2,446,547
Deferred tax assets - - - - - - 220,655 220,655
Investments in associates and joint ventures - - - - - - 1,631,600 1,631,600
Other assets 1,617,368 227,937 105,266 289,204 183,774 202,387 100 2,626,036
Property and equipment - - - - - - 161,778 161,778
Right-of-use assets - - - - 824 - 228,946 229,770
Intangible assets - - - - - - 510,644 510,644
Total assets 13,905,805 9,055,056 7,869,051 34,552,144 36,071,281 92,569,331 3,517,963 197,540,631

Liabilities
Deposits from customers 78,701,530 20,932,195 14,801,877 13,133,340 2,746,138 - - 130,315,080
Investment accounts of customers 14,980 617 877 - - - - 16,474
Deposits and placements of banks and other
financial institutions 4,225,213 4,175,084 1,210,142 466,698 792,816 592,292 - 11,462,245
Securities sold under repurchase agreements 6,357,289 5,163,831 3,043,381 1,902,173 - - - 16,466,674
Recourse obligation on loans and financing sold to
Cagamas Berhad - 3,000,016 2,760,016 4,155,008 - - - 9,915,040
Derivative financial liabilities 128,874 105,195 101,931 68,301 431,979 128,039 - 964,319
Term funding 110,374 158,510 24,050 721,092 1,158,307 - - 2,172,333
Debt capital - - - - - 4,395,000 - 4,395,000
Other liabilities 1,784,754 877,104 226,249 333,447 357,024 118,979 - 3,697,557
Total liabilities 91,323,014 34,412,552 22,168,523 20,780,059 5,486,264 5,234,310 - 179,404,722
Net gap (77,417,209) (25,357,496) (14,299,472) 13,772,085 30,585,017 87,335,021 3,517,963 18,135,909

201
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk Management (cont’d.)

49.3.1a Analysis of Assets and Liabilities By Remaining Contractual Maturities as per requirement of BNM’s policy document Financial Reporting
(cont’d.)

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Assets
Cash and short-term funds 13,221,099 - - - - - - 13,221,099
Deposits and placements with banks and other
financial institutions - 1,301,449 - - - - - 1,301,449
Derivative financial assets 38,498 73,436 39,950 74,381 367,376 227,732 - 821,373
Financial assets at fair value through profit or loss 505,353 667,600 411,991 2,265,962 2,302,417 809,706 253,531 7,216,560
Financial investments at fair value through other
comprehensive income 1,458,081 259,215 362,393 726,075 11,492,176 3,714,002 744,815 18,756,757
Financial investments at amortised cost - 284,641 550,239 45,000 1,332,738 6,825,148 - 9,037,766
Loans, advances and financing 1,290,545 774,384 503,986 27,439,269 18,134,097 69,923,404 - 118,065,685
Statutory deposits with Bank Negara Malaysia - - - - - 376,523 - 376,523
Deferred tax assets - - - - - - 218,551 218,551
Investments in associates and joint ventures - - - - - - 604,542 604,542
Other assets 1,535,578 215,135 121,741 220,796 321,007 470,976 86 2,885,319
Reinsurance assets and other insurance
receivables 82,004 92,627 105,889 108,541 176,755 14,889 - 580,705
Property and equipment - - - - - - 180,968 180,968
Right-of-use assets - - - - 210 - 189,162 189,372
Intangible assets - - - - - - 1,399,912 1,399,912
Assets held for sale - - - 2,324 - - - 2,324
Total assets 18,131,158 3,668,487 2,096,189 30,882,348 34,126,776 82,362,380 3,591,567 174,858,905

Liabilities
Deposits from customers 70,977,138 19,799,655 14,450,588 15,645,791 1,719,678 - - 122,592,850
Investment accounts of customers 131,547 233,119 13,195 - - - - 377,861
Deposits and placements of banks and other
financial institutions 3,303,275 3,628,895 1,142,337 577,198 692,308 550,572 - 9,894,585
Securities sold under repurchase agreements 751,188 831,529 - - - - - 1,582,717
Recourse obligation on loans and financing sold to
Cagamas Berhad 725,016 - - 1,700,000 5,950,007 - - 8,375,023
Derivative financial liabilities 33,176 72,581 38,754 76,941 379,691 202,420 - 803,563
Term funding 45,267 62,511 63,582 55,100 1,653,637 - - 1,880,097
Debt capital - - - - 250,000 4,145,000 - 4,395,000
Deferred tax liabilities - - - - - - 8,093 8,093
Other liabilities 1,857,860 663,596 752,837 229,332 270,721 104,652 423,864 4,302,862
Insurance contract liabilities and other insurance
payables 331,872 472,565 523,000 555,839 742,140 61,945 - 2,687,361
Total liabilities 78,156,339 25,764,451 16,984,293 18,840,201 11,658,182 5,064,589 431,957 156,900,012
Net gap (60,025,181) (22,095,964) (14,888,104) 12,042,147 22,468,594 77,297,791 3,159,610 17,958,893

202 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk Management (cont’d.)

49.3.1a Analysis of Assets and Liabilities By Remaining Contractual Maturities as per requirement of BNM’s policy document Financial Reporting
(cont’d.)

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Assets
Cash and short-term funds 208,565 - - - - - - 208,565
Financial assets at fair value through profit or loss - - - - - - 1,158 1,158
Investments in subsidiaries and other investments - - - - - - 10,852,185 10,852,185
Other assets 4,005 - - - - - - 4,005
Property and equipment - - - - - - 20 20
Total assets 212,570 - - - - - 10,853,363 11,065,933

Liability
Other liabilities - - - 23,117 - - - 23,117
Total liability - - - 23,117 - - - 23,117

Net gap 212,570 - - (23,117) - - 10,853,363 11,042,816

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Assets
Cash and short-term funds 717,660 - - - - - - 717,660
Financial assets at fair value through profit or loss - - - - - - 1,128 1,128
Investments in subsidiaries and other investments - - - - - - 10,857,350 10,857,350
Other assets 11,615 - - - - - - 11,615
Total assets 729,275 - - - - - 10,858,478 11,587,753

Liability
Other liabilities - 11,918 515,000 6,909 - - - 533,827
Total liability - 11,918 515,000 6,909 - - - 533,827

Net gap 729,275 (11,918) (515,000) (6,909) - - 10,858,478 11,053,926

203
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk Management (cont’d.)

49.3.1b Analysis of Liabilities By Remaining Contractual Maturities on undiscounted basis

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023

Liabilities

Deposits from customers 79,536,076 21,148,926 14,954,640 13,271,766 2,775,036 - - 131,686,444

Investment accounts of customers 14,986** 623 888 - - - - 16,497

Deposits and placements of banks and other

financial institutions 4,319,494 4,222,911 1,226,986 471,758 801,755 599,313 - 11,642,217

Securities sold under repurchase agreements 6,424,137 5,229,613 3,093,006 1,966,316 - - - 16,713,072

Recourse obligation on loans and financing

sold to Cagamas Berhad 5,734 3,052,184 2,860,282 4,225,560 - - - 10,143,760

Derivative financial liabilities 137,655 111,492 122,397 193,636 392,297 32,937 - 990,414

Term funding 110,639 170,857 43,215 747,499 1,191,200 - - 2,263,410

Debt capital 16,556 33,663 50,772 100,990 806,272 4,956,586 - 5,964,839

Other liabilities* 1,784,465 859,717 100,049 270,136 222,706 51,931 - 3,289,004

Total undiscounted liabilities 92,349,742 34,829,986 22,452,235 21,247,661 6,189,266 5,640,767 - 182,709,657

Contingent liabilities 1,013,466 1,183,804 935,952 2,083,742 3,017,444 388,560 - 8,622,968

Commitments 6,592,955 1,668,307 2,196,680 3,235,830 772,253 12,898,193 - 27,364,218

Total commitments and guarantees 7,606,421 2,852,111 3,132,632 5,319,572 3,789,697 13,286,753 - 35,987,186

* The balances had included the undiscounted contractual payments for lease liabilities and excluded the non-financiai liabilities. Detailed maturity analysis for
lease commitments is disclosed in Note 27(e).
** The balance includes current accounts without maturity as the investment accounts are available for customer redemption on-demand.

204 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.3 Liquidity Risk Management (cont’d.)

49.3.1b Analysis of Liabilities By Remaining Contractual Maturities on undiscounted basis (cont’d.)

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Liabilities
Deposits from customers 71,552,380 19,952,383 14,566,845 15,768,083 1,731,829 - - 123,571,520
Investment accounts of customers 135,872** 240,968 22,062 261,620 - - - 660,522
Deposits and placements of banks and other
financial institutions 3,621,931 3,660,190 1,151,397 298,339 723,014 554,805 - 10,009,676

Securities sold under repurchase agreements 753,639 834,001 - - - - - 1,587,640

Recourse obligation on loans and financing sold
to Cagamas Berhad 738,522 69,056 36,569 1,805,935 6,071,283 - - 8,721,365
Derivative financial liabilities 51,961 75,793 80,856 149,513 412,731 64,706 - 835,560
Term funding 45,351 69,448 80,339 79,133 1,732,004 - - 2,006,275
Debt capital 16,694 33,942 51,191 250,496 1,830,250 3,411,388 - 5,593,961
Other liabilities* 1,783,908 639,810 632,618 198,001 124,961 43,905 423,864 3,847,067
Insurance contract liabilities and other
insurance payables 338,001 481,621 532,505 568,151 765,011 63,958 - 2,749,247
Total undiscounted liabilities 79,038,259 26,057,212 17,154,382 19,379,271 13,391,083 4,138,762 423,864 159,582,833

Contingent liabilities 1,138,378 851,373 883,919 1,801,752 3,198,710 128,369 - 8,002,501

Commitments 6,124,536 1,014,378 2,001,065 2,973,847 950,023 12,124,508 - 25,188,357
Total commitments and guarantees 7,262,914 1,865,751 2,884,984 4,775,599 4,148,733 12,252,877 - 33,190,858

* The balances had included the undiscounted contractual payments for lease liabilities and excluded the non-financial liabilities. Detailed maturity analysis for
lease commitments is disclosed in Note 27(e).
** The balance includes current accounts without maturity as the investment accounts are available for customer redemption on-demand.

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Liability
Other liabilities - - - 23,117 - - - 23,117
Total undiscounted liability - - - 23,117 - - - 23,117

> 1 month > 3 months > 6 months > 1 year

Up to 1 to to to to Over 5 No maturity
month 3 months 6 months 12 months 5 years years specified Total
Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Liability
Other liabilities - 11,918 515,000 6,909 - - - 533,827
Total undiscounted liability - 11,918 515,000 6,909 - - - 533,827

205
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management

Market risk is the risk of losses due to adverse changes in the level or volatility of market rates or prices, such as interest/profit rates, credit spreads, equity
prices and foreign exchange rates. The Group differentiates between two categories of market risk: Traded Market Risk (“TMR”) and Non-Traded Market
Risk (“NTMR”). Assessment, control and monitoring of these risks are the responsibilities of Investment Banking and Markets Risk (“IBMR”).

Traded Market Risk (“TMR”)

The TMR management process is depicted in the table below:

• Identify market risks within existing and new products

Identification
• Review market-related information such as market trends and economic data

• Value-at-Risk (“VaR”)
• Loss Limits
Assessment/ • Historical Stress Loss (“HSL”)
Measurement • Present Value of One Basis Point (“PV01”)
• Sensitivity to Change
• Other Detailed Controls

• VaR Limits
• Loss Limits/Triggers (Annual/Monthly/Daily)
• HSL Limits
• PV01 Limits
• Greek Limits (Delta/Gamma/Delta-Gamma/Vega/Theta)
• Concentration Limits
Control/Mitigation • Position Size Limits
• Maximum Tenor Limits
• Maximum Holding Period
• Minimum Holding Period
• Approved Portfolio Products
• Approved Countries/Currencies
• Other Detailed Limits/Triggers

• Monitor controls
Monitoring/Review • Periodical review and reporting

TMR arises from transactions in which the Group acts as principal with clients or the market. It involves taking positions in fixed income, equity, foreign
exchange, commodities and/or derivatives. The objectives of TMR management are to understand, accurately measure and work with the business to
ensure exposures are managed within the Board and Group Management Risk Committee (“GMRC”) approved limit structures and risk appetite. This is
done via robust traded market risk measurement, limit setting, limit monitoring, and collaboration and agreement with Business Units.

VaR, Loss Limits, HSL and other detailed management controls are used to measure, monitor and control TMR exposures. VaR is a quantitative measure
which the Group applies recent historical market conditions to estimate potential losses in market value, at a certain confidence level and over a specified
time horizon (i.e. holding period). Loss Limits serve to alert management on the need to take relevant and appropriate action once they are triggered.

206 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management (cont’d.)

Traded Market Risk (“TMR”) (cont’d.)

To complement VaR, HSL is used as a measure of the potential impact on portfolio values due to more extreme, albeit plausible, market movements. In
addition, HSL is used to gauge and ensure that the Group is able to absorb extreme, unanticipated market movements.

Apart from VaR, Loss Limits and HSL, additional sensitivity controls (e.g. Greek Limits/PV01 Limits) and indicators are used to monitor changes in portfolio
value due to changes in risk factors under different market conditions.

IBMR independently monitors risk exposures against limits on a daily basis. Portfolio market risk positions are independently monitored and reported by
IBMR to GMRC, RMC and the Board. Furthermore, policies and procedures are in place to ensure prompt action is taken in the event of non-adherence to
limits. Business Units exposed to traded market risk are required to maintain risk exposures within approved risk limits and to provide an explanation for
any non-adherence event to Senior Management.

The Group adopts the Standardised Approach for market risk capital charge computation. The capital charge serves as a buffer against losses from
potential adverse market movements.

IBMR is committed to on-going improvements in market risk processes and systems, and allocates substantial resources to this endeavour.

Non-Traded Market Risk (“NTMR”)

NTMR refers to interest rate risk/rate of return risk in the banking book including those arising from balance sheet management activities as covered under
the risk appetite.

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”)

The IRR/RORBB risk management process is depicted in the table below:

• Identify IRR/RORBB within existing and new products

Identification
• Review market-related information such as market trend and economic data

• PV01
Assessment/ • Earnings-at-Risk (“EaR”)
Measurement • ICAAP IRR/RORBB Economic Value of Equity (“EVE”)
• ICAAP IRR/RORBB EaR

• PV01 Triggers
• EaR Triggers
Control/Mitigation
• ICAAP IRR/RORBB EVE / Total Capital Trigger
• ICAAP IRR/RORBB EaR / Total Net Interest/Profit Income (“NII/NPI”) Trigger

• Monitor controls
Monitoring/Review
• Periodical review and reporting

207
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management (cont’d.)

Non-Traded Market Risk (“NTMR”) (cont’d.)

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”) (cont’d.)

IRR/RORBB arises from changes in market interest/profit rates that impact core net interest/profit income, future cash flows or fair values of financial
instruments. This risk arises from mismatches between repricing dates of assets and liabilities, changes in yield curves, volatilities in interest/profit margins
and implied volatilities on interest/profit rate options. The provision of retail and wholesale banking products and services (primarily lending/financing and
deposit taking activities) creates interest/profit rate-sensitive positions in the Group’s statement of financial position.

The principal objectives of balance sheet risk management are to manage interest/profit income sensitivity while maintaining acceptable levels of IRR/
RORBB and funding risk, and to manage the economic value of the Group’s capital.

The Board’s oversight of IRR/RORBB is supported by the GALCO and GMRC. The Board and GMRC are responsible for the alignment of Group-wide risk
appetite. GALCO reviews strategies to ensure a comfortable level of IRR/RORBB is maintained, taking into consideration the Group’s business strategies
and is responsible for overseeing the Group’s gapping positions, asset growth and liability mix against the interest/profit rate outlook. The Group has
successfully engaged long-term borrowings and written interest/profit rate swaps to manage IRR/RORBB, and maintained an acceptable gapping profile as
a result. In accordance with the Group’s policy, IRR/RORBB positions are monitored on a monthly basis and hedging strategies are employed to ensure risk
exposures are maintained within Management-established limits.

The Group measures the IRR/RORBB exposures using PV01. PV01 is a quantitative measure to assess the impact of an absolute change in economic value
due to 1 basis point movement in market interest/profit rates.

The Group complements PV01 by stress testing IRR/RORBB exposures to highlight potential risk that may arise from extreme market events that are rare
but plausible.

Key assumptions in the gap and sensitivity analysis relate to the behaviour of interest/profit rates and spreads, changes in loan/financing and deposit product
balances due to behavioural characteristics under different interest/profit rate environments. Material assumptions include the repricing characteristics and
the stability of indeterminate or non-maturity deposits and loans/financing.

The rate scenarios may include rapid ramping of interest/profit rates, gradual ramping of interest/profit rates, and narrowing or widening of spreads. Usually
each analysis incorporate what management deems the most appropriate assumptions about customer behaviour in an interest/profit rate scenario.
However, in certain cases, assumptions are deliberately changed to test the Group’s exposure to a specified event.

The Group’s strategy seeks to optimise exposure to IRR/RORBB within Management-approved limits. This is achieved through the ability to reposition the
interest/profit rate exposure of the statement of financial position using various product and funding strategies, supported by interest/profit rate hedging
activities using interest/profit rate swaps and other derivatives. These approaches are governed by the Group’s policies in the areas of product and liquidity
management as well as the Trading Book and Banking Book Policy, hedging policies and Non-Traded Interest/Profit Rate Risk Framework.

IRR/RORBB exposures are monitored by IBMR and positions reported to the GALCO, GMRC, RMC and Board.

208 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management (cont’d.)

Non-Traded Market Risk (“NTMR”) (cont’d.)

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”) (cont’d.)

Interbank offered rate (“IBOR”) reform

Following the decision by global regulators to phase out IBORs to replace them with alternative reference rates (or risk-free rates (“RFRs”)) as part of the
IBOR reform, the Group has established a IBOR Project Steering Committee (“PSC”) to oversee and manage the transition for any of its legacy contracts
that could be affected by the transition. The project is chaired by the Group CFO with the Deputy Managing Director of Wholesale Banking/Head of Group
Treasury Markets as his alternate Chairperson. The programme is executed by a project working group comprising 6 workstreams to comprehensively
manage and coordinate the specific LIBOR transition activities, including the identification of all products and contracts in scope of benchmark reform,
communication with customers for repricing and/or re-papering of LIBOR referenced contracts and incorporation of the relevant fallback provisions in
the contracts, upgrading of internal systems to support the alternative RFR product suite, as well as ensuring operational readiness (including Shariah
compliance). These workstreams actively participate in industry-wide working group discussions, attend seminars/conferences/briefings to ensure the
project working group members are kept informed of the latest developments and adopt consistent approaches of other market participants. Group
Management Committee, Risk Management Committee and the Board of Directors of the three banking subsidiaries of the Company are regularly briefed
on the progress of this programme.

The Group has successfully completed the enhancement of the impacted systems and have in place detailed plans, processes and procedures to support
the LIBOR transition to RFRs which ceased by 31 December 2021. The Group is confident that it has the operational capability to process the remaining
IBORs transitions to RFRs for those benchmarks rates such as USD that will cease to be available after 30 June 2023.

IBORs benchmark reform exposes the Group to various risks, which the project continues to manage and monitor closely. The project team has assessed
these risks include but are not limited to the following:

• Conduct risk arising from discussions with clients and market counterparties on the amendments of legal documentations to have adequate fallback
provisions into existing legacy contracts necessary to effect IBOR reform;

• Financial risk to the Group and its clients that markets are disrupted due to IBOR reform giving rise to financial losses;

• Pricing risk from the potential lack of market information if liquidity in IBORs reduces and RFRs are illiquid and unobservable;

• Operational risk arising from changes to the Group’s IT systems and processes, also the risk of payments being disrupted if a LIBOR ceases to be
available;

• Accounting risk if the Group’s hedging relationships fail and from unrepresentative income statement volatility as financial instruments transition to
RFRs; and

• Awareness and preparation risk by staff due to complex compounding approaches and payment conventions.

209
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management (cont’d.)

Non-Traded Market Risk (“NTMR”) (cont’d.)

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”) (cont’d.)

Interbank offered rate (“IBOR”) reform (cont’d.)

The following table is exposure that have yet to transition from IBOR to RFRs as at 31 March 2023 and 31 March 2022:

2023 2022
Non- Non-
derivatives derivatives
financial Derivatives financial Derivatives
assets nominal assets nominal
carrying value amount carrying value amount
Group RM’000 RM’000 RM’000 RM’000

USD London Interbank Offered Rate ("LIBOR") 2,455,890 7,399,008 3,160,275 9,496,668

Market Risk Sensitivity

(i) Interest Rate Risk/Rate of Return Risk

Interest rate risk/rate of return risk (“IRR/ROR”) is the risk that the value of a financial instrument will fluctuate due to changes in market interest/profit
rate and is managed through gap and sensitivity analysis. Interest/profit rate movements also affect the Group’s income and expense from assets and
liabilities as well as capital fund. The Group has adopted IRR/ROR hedging measures to cushion the interest/profit rate volatility.

The following table demonstrates the sensitivity of the Group’s profit before taxation and zakat and equity to a reasonable possible change in interest/
profit rate with all other variables remaining constant. There is no impact to the Company for interest rate risk/rate of return risk.

2023 2022
IRR/ ROR IRR/ ROR
+100 bps -100 bps +100 bps -100 bps
Group RM’000 RM’000 RM’000 RM’000

Traded market risk

Impact on profit before taxation and zakat (17,821) 17,565 (94,057) 101,304

Non-traded market risk

Impact on profit before taxation and zakat 584,246 (583,915) 808,305 (807,972)
Impact on equity 229,370 857,725 (523,034) 557,193

210 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.4 Market Risk Management (cont’d.)

Non-Traded Market Risk (“NTMR”) (cont’d.)

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”) (cont’d.)

Market Risk Sensitivity (cont’d.)

(ii) Foreign Exchange Risk

Foreign exchange risk arises from changes in foreign exchange rates to exposure on the Group’s financial instruments denominated in currencies
other than the functional currency of the transacting entity. Position limits are imposed to prevent the Group from being exposed to excessive foreign
exchange risk.

The following table demonstrates the sensitivity of the Group’s profit before taxation and zakat and equity to a reasonable possible change in
exchange rates with all other variables remaining constant. There is no impact to the Company for foreign exchange risk.

2023 2022
Currency rate Currency rate
+10% -10% +10% -10%
Group RM’000 RM’000 RM’000 RM’000

Impact on profit before taxation and zakat

USD (18,617) 18,617 (31,416) 31,416
SGD 9,584 (9,584) 6,555 (6,555)
EUR 901 (901) (1,359) 1,359
JPY 1,590 (1,590) (581) 581
GBP (113) 113 2,597 (2,597)
HKD 36,085 (36,085) 37,647 (37,647)
Others 5,977 (5,977) 2,067 (2,067)

Impact on equity
USD 28,142 (28,142) 27,196 (27,196)
EUR 75 (75) 58 (58)

(iii) Equity Price Risk

Equity price risk arises from the adverse movements in the price of equities. Equity price risk is controlled via position size, loss limits and VaR limits.

The following table demonstrates the sensitivity of the Group’s profit before taxation and zakat to a reasonable possible change in equity prices with
all other variables remaining constant. There is no impact to the Company for equity price risk.

2023 2022
Equity price Equity price
+10% -10% +10% -10%
Group RM’000 RM’000 RM’000 RM’000

Impact on profit before taxation and zakat 108,902 (108,902) 112,160 (112,160)

211
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.5 Operational Risk Management (“ORM”)

The ORM process is depicted in the table below:

• Identify and analyse risks in key processes/activities within Business and Functional Lines (including
new products)
Identification
• Review of past operational losses and incidences data
• Regulators’ and Auditors’ review and feedback

Assessment/ • Risk and Control Self Assessment (“RCSA”)

Measurement • The inherent and residual risks are assessed based on the probability and impact of activity undertaken

Several ORM tools are used to mitigate the risks identified

• Incident Management and Data Collection (“IMDC”)
• Key Risk Indicators (“KRI”)
Control/Mitigation • Key Control Testing (“KCT”)
• Root cause analysis
• Scenario Analysis
• Insurance programme

• Monitoring and reporting of loss incidents by Event Type, Portfolio and Line of Business and entity,
reporting of operational risk board and management triggers, risk profile status, key risk indicator
breaches and key control testing exceptions and operational risk framework adherence
Monitoring/Review • Challenging the periodical review or updating the RCSA (risk profile)/KRIs/KCTs of all Line of Business
and entity
• Trigger by adverse change in circumstances (trigger event review)
• Change management process review

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external incidents which
includes but is not limited to legal risk, outsourcing risk, technology (including cyber) risk and Shariah risk. (Please refer to Note 49.9 for discussion on
Shariah Governance Structure). It excludes strategic, systemic and reputational risk.

Operational Risk Appetite (“ORA”) is set as part of overall GRAF, which sets the acceptable tolerance levels of operational risk that the Group is willing to
accept, taking into consideration of the relevant financial and non-financial risk or return attributes in order to support the achievement of Group’s strategic
plan and business objectives. The ORA statements and measurements are classified based on operational risk loss event types, which are grouped into
five (5) categories as below and monitored via IMDC, KRI and KCT:

• Fraud (internal and external);

• Employment Practices and Workplace Safety;
• Client, Products and Business Practices;
• Business Disruption, System Failures and Damage to Physical Assets; and
• Execution, Delivery and Process Management

212 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.5 Operational Risk Management (“ORM”) (cont’d.)

The strategy for managing operational risk in the Group is anchored on the three (3) lines of defence concept which are as follows:

• The first line of defence (“FLOD”) is responsible for the management of operational risk in order that accountability and ownership is as close as
possible to the activity that creates the risk and ensuring that effective action is taken to manage them. Enhanced FLOD provides a business specific
focus on the implementation of operational risk management activities and supports more effective day-to-day monitoring of operational risks.

• In the second line, Group Operational Risk is responsible for exercising governance over operational risk through the management of the operational
risk framework, policy development and communication, quality assurance of internal controls, operational risk measurement, validation of FLOD
effectiveness, ORM training and reporting of operational risk triggers, breaches, KCT exceptions, operational loss incidents to GMRC, RMC and the
Board.

• GIAD acts as the third and final line of defence by providing independent assurance on the internal control effectiveness through periodic audit
programme.

Group Operational Risk maintains close working relationships with all Business and Functional Lines, continually assisting in the identification of operational
risks inherent in their respective business activities, assessing the impact and significance of these risks and ensuring that satisfactory risk mitigation
measures and controls are in place. Various tools and methods are employed to identify, measure, control and monitor/report operational risk issues within
the Group. The ORM process contains the following ORM tools:

• The IMDC module provides a common platform for reporting operational risk incidents that fall within one of the seven Event Types as stated in Basel
II. IMDC also serves as a centralised database of operational risk incidents to model the potential exposure to operational risks in future and estimate
the amount of economic capital charge.

• The RCSA is a process of continual identification, assessment of risks and controls effectiveness. By using structured questionnaires to assess and
measure key risk and its corresponding controls effectiveness, RCSA provides risk profiling across the Group.

• The KRI module provides early warning of increasing risk and/or control failures by monitoring the changes of the underlying risk measurements.

• The KCT is the test steps or assessment performed periodically to assure that the key controls are in place and they are operating as intended or
effective in managing the operational risks.

• Root cause analysis is conducted by the Operational Risk Relationship Managers within Group Operational Risk to prevent recurrence of operational
risk incidents.

• Scenario analysis is a forward-looking assessment tool to assess the severity impact on the Group’s profitability and capital adequacy should the
plausible and worse case scenarios materialise.

The GMRC, Risk Management Committee Director (“RMCD”) and Board are the main reporting and escalation committees for operational risk matters
including outsourcing risk, information technology (including cyber) risk, shariah risk, legal risk and business continuity management.

213
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.5.1 Business Continuity Management (“BCM”)

The BCM process is depicted in the table below:

Identification • Identify events that potentially threaten the business operations and areas of criticality

Assessment/ • Business Impact Analysis (“BIA”)

Measurement • Risk Assessment

• Policies governing the BCM implementation

Control/Mitigation • BCM methodologies controlling the process flow
• Implementing the Business Continuity (“BC”) plan

• BC plan testing and exercise

Monitoring/Review • Review of BC Plan
• BC site readiness and maintenance

The BCM function is an integral part of ORM. It places the importance of maintaining a BCM framework and policies to identify events that could potentially
threaten the Group’s operations and the identification of critical functions through BIA exercise, for the development of recovery strategy. BCM builds the
resilience and recovery capability to safeguard the interest of the Group’s stakeholders by protecting our brand and reputation.

The BCM process complements the effort of the recovery team units to ensure that the Group has the required critical capabilities and resources, such as
IT system disaster recovery, alternate workspace arrangements and effective communication during interruptions.

The Group is continuously reviewing the level of business operations resiliency to enhance the BCM capability throughout all critical departments and
branches across the region. Training is an integral part of the process to heighten BCM awareness and inculcate a business resiliency culture.

49.6 Cyber Risk Management

Cyber security risks remain a persistent threat for the financial industry. The constantly evolving nature and sophistication of cyber threats and attack
vectors calls for increased vigilance, readiness and ability to respond to upcoming threats. The resilience of the Group’s IT infrastructure and cyber security
capabilities are of paramount importance, especially with regards to safeguarding customers’ information.

The Group continues to enhance its cyber security controls framework, execute internal assessment reviews, build defense mechanisms and uplift
governance processes alongside the Group’s cyber risk management strategy - to identify threats in a timely manner, and build or enhance the right
defenses to mitigate risks. Creating a security mindset for employees and customers via its Cyber Security awareness programs also remains a priority.

The Group Technology Risk team acts as a second line of defence to monitor alongside the first line of defence to ensure that risks and controls are properly
managed. The Group’s technology risk management capabilities include oversight over infrastructure security risk, data leakage risk, application security
risk and third party security risk.

214 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.7 Legal Risk

In all jurisdictions that the Group conducts its business, there could be potential legal risks arising from breaches of applicable laws, unenforceability
of contracts, lawsuits, adverse judgement, failure to respond to changes in regulatory requirements and failure to protect assets (including intellectual
properties) owned by the Group which may lead to incurrence of losses, disruption or otherwise impact on the Group’s financials or reputation.

Legal risk is overseen by GMRC/Group Management Committee (“GMC”), upon advice by internal legal counsel and, where necessary, in consultation with
external legal counsel to ensure that such risks are appropriately managed.

49.8 Regulatory Compliance Risk

The Group has in place a compliance framework to promote the safety and soundness of the Group by minimising financial, reputational and operational
risks arising from regulatory non-compliance.

The Group Chief Compliance Officer has a direct reporting line to the Risk Management Committee (“RMC”) of the Board. A governance structure is in place
for escalation and reporting of compliance risks and issues through monthly compliance reports to the RMC and Board.

The compliance framework details the roles and responsibilities for compliance with regulatory guidelines and requirements. The responsible parties are
accountable for the management of compliance risks associated with the Group’s processes and increasing awareness on the role of every employee to
be compliant and safeguard the Group’s reputation against any potential legal violations and/or regulatory non-compliance. The Senior Management team
is responsible for communicating the compliance framework to all employees, as well as implementing appropriate actions for non-compliances.

The Group Management Governance and Compliance Committee (“GMGCC”), comprising the Senior Management Team from Group Compliance, Group
Risk, Group Internal Audit and the Business, meets regularly to discuss and deliberate on regulatory updates, compliance issues and areas of non-
compliance. The Group believes in and embraces a strong compliance culture to reflect a corporate culture of high ethical standards and integrity where
the Board and Senior Management lead by example. The Group has zero tolerance for any form of bribery or corruption.

The Group continues to exercise and enhance its due diligence governance process and remains vigilant towards emerging risk as well as sensitive
towards heightened regulatory surveillance and enforcement.

215
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.9 Shariah Risk Management Control

Shariah Governance Structure

AmBank Islamic Berhad AmBank Group

AmBank
Islamic Board
of Directors

Risk Audit and

Shariah
Management Examination
Committee
Committee Committee

Shariah Oversight CEO of AmBank

Committee Islamic

Group
Group Group Risk
Internal
Compliance Management
Audit
Department Department
Department

Head of
Shariah
Compliance
Management
AmBank
Department
Islamic

Shariah Shariah Risk Shariah

Review Management Audit

Legend : Direct Reporting Functional Reporting Shariah Reporting

216 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.9 Shariah Risk Management Control (cont’d.)

AmBank Islamic has established its Shariah governance structure in accordance with the requirements of the Islamic Financial Services Act 2013 (“IFSA”)
and BNM’s Policy Document on Shariah Governance. This is to ensure that the operations and business activities of AmBank Islamic comply with Shariah
principles and requirements.

Apart from the Shariah Management Department, Shariah Risk Management and Shariah Review functions which reside in AmBank Islamic, AmBank
Islamic’s Shariah governance structure leverages on the Group Internal Audit Department for the Shariah Audit function.

Board of Directors

The Board is responsible for the overall oversight on the Shariah governance and Shariah compliance, including the performance assessment, appointment
and remuneration of the Shariah Committee members. The Board performs its oversight role through various committees such as the Audit and Examination
Committee, Risk Management Committee and the Shariah Committee.

Audit and Examination Committee (“AEC”)

AEC is a Board committee responsible for assisting the Board in ensuring that AmBank Islamic’s operations are Shariah compliant through the independent
assurance from the Shariah Audit function. The reports from the Shariah Review Section are also presented to the AEC for information.

Risk Management Committee (“RMC”)

RMC is a Board committee responsible for assisting the Board in ensuring that risk management (including Shariah risk management) controls and processes
are in place.

Shariah Committee

The Shariah Committee is responsible on matters related to Shariah. This includes advising the Board and Senior Management on Shariah matters as well
as endorsing products and services, Shariah policies and the relevant documentation in relation to AmBank Islamic’s business and operations. In addition
to endorsing the zakat computation mechanism and the proposed recipients for zakat distribution, the Shariah Committee provides advice and guidance
on the management of the zakat fund, charity and other social programmes or activities.

Shariah Oversight Committee

The Shariah Oversight Committee, which is a sub-committee to the Shariah Committee, performs an oversight function via the Shariah Control Functions
(i.e. Shariah Review, Shariah Risk Management and Shariah Audit). The Shariah Oversight Committee provides guidance and advice on matters pertaining
to Shariah non-compliant incidents as well as treatment of any Shariah non-compliant income.

Senior Management

The Chief Executive Officer (“CEO”) and senior officers of AmBank Islamic and the Group are responsible to make reference to the Shariah Committee and/
or Shariah Oversight Committee on Shariah matters and to take the necessary measures for implementation. The Senior Management is also responsible in
establishing the infrastructure and adequate resources to support the Shariah governance structure. This includes putting in place adequate systems and
controls in order to ensure compliance with Shariah and to mitigate Shariah non-compliance risk.

Shariah Management Department

The Shariah Management Department is accountable to the Shariah Committee with functional reporting to the CEO and is responsible for providing
operational support for the effective functioning of the Shariah Committee including day-to-day Shariah advisory, conducting Shariah research, formulating
Shariah policies and acting as the Secretariat to the Shariah Committee and the Shariah Oversight Committee.

217
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

49. RISK MANAGEMENT (CONT’D.)

49.9 Shariah Risk Management Control (cont’d.)

Shariah Risk Management

The Shariah Risk Management (“SRM”) is accountable to the Group Risk Management Department and the CEO of AmBank Islamic and has Shariah
reporting to the Shariah Oversight Committee. SRM is a function that systematically identifies, assesses, measures, mitigates, controls, monitors and reports
any Shariah non-compliance risks to prevent any SNC incident in the businesses, operations, affairs and activities of AmBank Islamic.

The management of Shariah risk is executed through the three lines of defence which are:

● First - The Business Units/Functional Lines and Shariah Management Department

● Second - Shariah Risk Management and Shariah Review

● Third - Shariah Audit

Shariah Review

The Shariah Review Section is accountable to AmBank Islamic’s Head of Compliance with Shariah reporting to the Shariah Oversight Committee. Shariah
Review refers to a function that conducts regular assessment on the compliance of the operations, business, affairs and activities of AmBank Islamic which
are predominantly transactional in nature, with Shariah requirements.

Shariah Audit

The Shariah Audit Section is accountable to the AEC with Shariah reporting to the Shariah Oversight Committee. The Shariah Audit Section is a dedicated
team within the Group Internal Audit Department and is responsible to conduct independent assessment on the quality and effectiveness of AmBank
Islamic’s internal control, risk management systems, governance processes as well as the overall compliance of AmBank Islamic’s operations, business,
affairs and activities with Shariah requirements. The Shariah Audit’s scope includes but is not limited to activities undertaken by departments and functions
that relate to Islamic products and services.

Shariah Non-Compliant Incident

For the financial year ended 31 March 2023, there was no Shariah non-compliant (“SNC”) incident.

For the financial year ended 31 March 2022, there was no SNC incident.

218 FINANCIAL REPORT 2023

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Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. The
fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’s
length transaction, other than a forced or liquidated sale. The information presented herein represents best estimates of fair values of financial instruments at the
reporting date.

Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market prices are not available,
fair values are estimated based on a number of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates,
estimates of future cash flows and other factors. Changes in the assumptions could materially affect these estimates and the corresponding fair values.

In addition, fair value information for non-financial assets and liabilities such as investments in subsidiaries and taxation are excluded, as they do not fall within the
scope of MFRS 7 Financial Instruments: Disclosures, which requires the fair value information to be disclosed.

(a) Financial instruments not measured at fair value (excluding those financial instruments where the carrying amounts are reasonable approximation of their
fair values).

Group
Carrying Fair
Amount Value
RM’000 RM’000

2023
Financial Assets
Financial investments at amortised cost 13,469,703 14,045,473
Loans, advances and financing1 14,312,105 12,712,252
27,781,808 26,757,725

Financial Liabilities
Recourse obligation on loans and financing sold to Cagamas Berhad 9,915,040 10,005,370
Term funding 2,172,333 2,122,654
Debt capital 4,395,000 4,381,076
16,482,373 16,509,100

Group
Carrying Fair
Amount Value
RM’000 RM’000

2022
Financial Assets
Financial investments at amortised cost 9,037,766 9,538,631
Loans, advances and financing1 13,335,902 12,118,037
22,373,668 21,656,668

Financial Liabilities
Recourse obligation on loans and financing sold to Cagamas Berhad 8,375,023 8,880,674
Term funding 1,880,097 1,832,886
Debt capital 4,395,000 4,425,522
14,650,120 15,139,082
1
excluding loans, advances and financing of RM113,930.5 million (2022: RM104,729.8 million) where the carrying amounts are reasonable approximation of their fair values.

219
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D.)

(b) Financial instruments measured at fair value and for which fair values are disclosed.

Level 1 Level 2 Level 3 Total

Group RM’000 RM’000 RM’000 RM’000

2023
Financial assets measured at fair value
Derivative financial assets 60 921,049 - 921,109
Financial assets at fair value through profit or loss
- Money market securities - 10,169,187 - 10,169,187
- Shares 1,074,250 - 33 1,074,283
- Unit trusts 21,696 1,158 - 22,854
- Quoted corporate bonds and sukuk - 10,236 - 10,236
- Unquoted corporate bonds and sukuk - 1,494,347 - 1,494,347
Financial investments at fair value through other comprehensive income
- Money market securities - 12,549,882 - 12,549,882
- Shares - - 682,858 682,858
- Unquoted corporate bonds and sukuk - 12,377,993 - 12,377,993

Financial assets for which fair values are disclosed

Financial investments at amortised cost - 14,045,383 90 14,045,473
Loans, advances and financing - 12,712,252 - 12,712,252
1,096,006 64,281,487 682,981 66,060,474

Financial liabilities measured at fair value

Derivative financial liabilities 10,290 954,029 - 964,319

Financial liabilities for which fair values are disclosed

Recourse obligation on loans and financing sold to Cagamas Berhad - 10,005,370 - 10,005,370
Term funding - 2,122,654 - 2,122,654
Debt capital - 4,381,076 - 4,381,076
10,290 17,463,129 - 17,473,419

220 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D.)

(b) Financial instruments measured at fair value and for which fair values are disclosed. (cont’d.)

Level 1 Level 2 Level 3 Total

Group RM’000 RM’000 RM’000 RM’000

2022
Financial assets measured at fair value
Derivative financial assets 2,090 819,283 - 821,373
Financial assets at fair value through profit or loss
- Money market securities - 2,173,041 - 2,173,041
- Shares 1,124,249 - 31 1,124,280
- Unit trusts 177,091 1,128 - 178,219
- Quoted corporate bonds and sukuk - 13,315 - 13,315
- Unquoted corporate bonds and sukuk - 3,727,705 - 3,727,705
Financial investments at fair value through other comprehensive income
- Money market securities - 8,498,176 - 8,498,176
- Shares - - 675,089 675,089
- Unquoted corporate bonds and sukuk - 9,583,492 - 9,583,492

Financial assets for which fair values are disclosed

Financial investments at amortised cost - 9,538,541 90 9,538,631
Loans, advances and financing - 12,118,037 - 12,118,037
1,303,430 46,472,718 675,210 48,451,358

Financial liabilities measured at fair value

Derivative financial liabilities 26,965 776,598 - 803,563

Financial liabilities for which fair values are disclosed

Recourse obligation on loans and financing sold to Cagamas Berhad - 8,880,674 - 8,880,674
Term funding - 1,832,886 - 1,832,886
Debt capital - 4,425,522 - 4,425,522
26,965 15,915,680 - 15,942,645

Level 1 Level 2 Level 3 Total

Company RM’000 RM’000 RM’000 RM’000

2023
Financial assets measured at fair value
Financial assets at fair value through profit or loss
- Unit trusts - 1,158 - 1,158

221
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D.)

(b) Financial instruments measured at fair value and for which fair values are disclosed. (cont’d.)

Level 1 Level 2 Level 3 Total

Company RM’000 RM’000 RM’000 RM’000

2022
Financial assets measured at fair value
Financial assets at fair value through profit or loss
- Unit trusts - 1,128 - 1,128

Determination of fair value

The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not already recorded at fair
value in the financial statements.

(a) Financial assets and financial liabilities for which fair value approximates carrying amount

For financial assets and financial liabilities that have a short-term maturity (less than six months), the carrying amounts approximate to their fair value.

(b) Financial investments at amortised cost

Fair value of securities is based on observable mid prices at reporting date and where observable mid prices are not available, the fair value is based on
net tangible asset backing.

(c) Loans, advances and financing

The fair value of variable rate loans, advances and financing are estimated to approximate their carrying amount. For fixed rate loans, advances and
financing, the fair values are estimated based on expected future cash flows of contractual instalments discounted at prevailing indicative rates adjusted
for credit risk. For impaired loans, advances and financing, the fair values are deemed to approximate the carrying amount (net of impairment losses).

(d) Term funding and debt capital

The Group uses observable mid prices to estimate the fair values and where mid prices are not available, the fair values are estimated by discounting the
expected future cash flows using market indicative rates of instruments with similar risk profile.

(e) Recourse obligation on loans and financing sold to Cagamas Berhad

The fair value for Recourse obligation on loans and financing sold to Cagamas Berhad is determined based on the discounted cash flows of future
instalment payments at prevailing rates quoted by Cagamas Berhad as at reporting date.

Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market
transactions are assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial
assets with fair values based on broker quotes, investments in private equity funds with fair values obtained via fund managers and assets that are valued using
the Group’s own models whereby the majority of assumptions are market observable.

Non market observable inputs means that fair values are determined, in whole or in part, using a valuation technique (model) based on assumptions that are
neither supported by prices from observable current market transactions in the same instrument, nor are they based on available market data. The main asset
classes in this category are unlisted equity investments and debt instruments. Valuation techniques are used to the extent that observable inputs are not available,
thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement
objective remains the same, that is, an exit price from the perspective of the Group or the Company. Therefore, unobservable inputs reflect the Group’s and the
Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These
inputs are developed based on the best information available, which might include the Group’s and the Company’s own data, as well as financial information of
the counterparties. Unquoted equity investments at FVOCI are revalued using adjusted net assets method.

222 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D.)

Determination of fair value (cont’d.)

About 1.7% (2022: 2.5%) of the Group’s total financial assets recorded at fair value, are based on estimates and recorded as Level 3 investments. Where estimates
are used, these are based on a combination of independent third-party evidence and internally developed models, calibrated to market observable data where
possible. While such valuations are sensitive to estimates, it is believed that changing one or more of the assumptions to reasonably possible alternative
assumptions would not change the fair value significantly.

There was no transfer between Level 1 and Level 2 during the current and previous financial year for the Group and the Company.

Movements in Level 3 financial instruments measured at fair value

The level of the fair value hierarchy of financial instruments is determined at the beginning of each reporting year. The following table shows a reconciliation of
the opening and closing amounts of Level 3 financial assets and liabilities which are recorded at fair value for the financial year.

Financial Financial
investments assets
at FVOCI at FVTPL Total
Group RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 675,089 31 675,120
Total gains recognised in other comprehensive income 7,769 - 7,769
Gain on revaluation taken up in statements of profit or loss - 2 2
Balance at end of the financial year 682,858 33 682,891

Financial Financial
investments assets
at FVOCI at FVTPL Total
Group RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 686,792 34 686,826
Total gains recognised in other comprehensive income 3,148 - 3,148
Loss on revaluation taken up in statements of profit or loss - (3) (3)
Additions 6 - 6
Disposals (14,857) - (14,857)
Balance at end of the financial year 675,089 31 675,120

There were no transfers between Level 2 and Level 3 during the current financial year and previous financial year for the Group.

Total gains or losses included in the statements of profit or loss and statements of comprehensive income for financial instruments held at the end of the reporting
date:

2023 2022
Group RM’000 RM’000

Financial investments at FVOCI:

Total gains included in:
- fair value reserve in statements of comprehensive income 7,769 3,148

223
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONT’D.)

Movements in Level 3 financial instruments measured at fair value (cont’d.)

Total gains or losses included in the statements of profit or loss and statements of comprehensive income for financial instruments held at the end of the reporting
date: (cont’d.)

2023 2022
Group RM’000 RM’000

Financial assets at FVTPL:

Total gain/(loss) included in:
- investment and trading income in statements of profit or loss 2 (3)

Impact on fair value of Level 3 financial instruments measured at fair value arising from changes to key assumptions

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.

51. BUSINESS SEGMENT ANALYSIS

Segment information is presented in respect of the Group’s business segments. The business segment information is prepared based on internal management
reports, which are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to a segment and to assess its performance.

The Group comprises the following main business segments:

(a) Retail Banking

Retail Banking continues to focus on building mass affluent, affluent and small business customers. Retail Banking offers products and financial solutions
which includes auto finance, mortgages, personal loans, credit cards, small business loans, priority banking services, wealth management, remittance
services and deposits.

(b) Business Banking

Business Banking (“BB”) focuses on the small and medium sized enterprises segment, which comprises Enterprise Banking and Commercial Banking.
Solutions offered to Enterprise Banking customers encompass Capital Expenditure (“CAPEX”) financing, Working Capital financing and Cash Management
and while Commercial Banking offers the same suite of products, it also provides more sophisticated structures such as Contract Financing, Development
Loans and Project Financing.

(c) Wholesale Banking

Wholesale Banking comprises Corporate Banking and Group Treasury and Markets.

(i) Corporate Banking offers a full range of products and services of corporate lending, trade finance, offshore banking, and cash management solutions
to wholesale banking clients;

(ii) Group Treasury and Markets includes proprietary trading as well as provides full range of products and services relating to treasury activities,
including foreign exchange, derivatives, fixed income and structured warrants. It also offers customised investment solutions for customers.

(d) Investment Banking

Investment Banking provides a full range of integrated solutions and services, which include corporate finance M&A advisory, equity and debt capital
markets, private banking and stockbroking services.

224 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

51. BUSINESS SEGMENT ANALYSIS (CONT’D.)

The Group comprises the following main business segments: (cont’d.)

(e) Fund Management

Fund Management manages a broad range of investment mandates and unit trust funds across the risk-return spectrum for individuals, corporates and
institutions, and provides fund distribution support services for institutional distributors. Fund Management also manages Private Retirement Schemes and
Exchange Traded Funds.

(f) Insurance, from continuing operations

Insurance segment offers a broad range of general insurance products, namely motor, personal accident, property and household through our associates
with effective August 2022. It also offers life insurance and takaful products namely wealth protection/savings, health and medical protection and family
takaful solutions provided through our joint venture operations.

(g) Group Funding and Others

Group Funding and Others comprises activities to maintain the liquidity of the Group as well as support operations of its main business units and non-core
operations of the Group.

(h) Insurance, from discontinued operation

Insurance segment offers a broad range of general insurance products, namely motor, personal accident, property and household.

Measurement of segment performance

The segment performance is measured on income, expenses and profit basis. These are shown after allocation of certain centralised cost, funding income and
expenses directly associated with each segment. Transactions between segments are recorded within the segment as if they are third party transactions and are
eliminated on consolidation under Group Funding and Others.

Notes:

(i) The Chief Operating Decision Maker relies primarily on the net interest income information to assess the performance of, and to make decisions about
resources to be allocated to these operating segments.

(ii) The financial information by geographical segment is not presented as the Group’s activities are principally conducted in Malaysia.

(iii) The comparatives have been restated with current business realignment.

225
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

51. BUSINESS SEGMENT ANALYSIS (CONT’D.)

Discontinued
Continuing Operations Operation
Wholesale banking
Group Group
Retail Business Corporate Treasury and Investment Fund funding
banking banking banking Markets banking management Insurance and others Total Insurance Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 March 2023
External net income 2,372,908 819,204 1,395,934 128,712 214,730 147,785 63,083 (534,185) 4,608,171 129,543 4,737,714
Intersegments net income (494,942) (138,032) (578,971) 555,631 (40,600) - (6,284) 703,198 - - -
1,877,966 681,172 816,963 684,343 174,130 147,785 56,799 169,013 4,608,171 129,543 4,737,714

Net interest and funding income 1,634,776 533,664 666,467 475,813 48,219 1,538 187 137,687 3,498,351 42,389 3,540,740
Insurance and other operating income 240,392 147,508 150,496 208,530 125,911 146,247 (6,264) 27,138 1,039,958 87,154 1,127,112
Share in results of associates and joint
ventures 2,798 - - - - - 62,876 4,188 69,862 - 69,862
Net income 1,877,966 681,172 816,963 684,343 174,130 147,785 56,799 169,013 4,608,171 129,543 4,737,714
Other operating expenses (914,302) (209,475) (189,109) (80,055) (126,487) (67,658) (5,131) (406,875) (1,999,092) (101,256) (2,100,348)
of which:
Depreciation of property and equipment (15,809) (1,688) (1,248) (460) (755) (168) - (31,706) (51,834) (1,237) (53,071)
Depreciation of right-of-use assets - - - - - - - (73,001) (73,001) (4,009) (77,010)
Amortisation of intangible assets (21,169) (1,056) (6,719) (6,064) (710) (378) - (42,593) (78,689) (6,065) (84,754)

Profit/(loss) before impairment losses 963,664 471,697 627,854 604,288 47,643 80,127 51,668 (237,862) 2,609,079 28,287 2,637,366
(Allowances for)/writeback of impairment
on loans, advances and financing (286,265) (102,150) (60,408) - 167 - - 26,810 (421,846) - (421,846)
Writeback of/(allowances for) impairment
on other assets 157 - (18,303) 9,121 (893) - - (255) (10,173) (113,245) (123,418)
Provision for commitments and
contingencies
- (charge)/writeback (16,081) (20,729) 115,101 - - - - (485) 77,806 - 77,806
Other recoveries, net - - - 508 48 - - 19 575 6 581
Profit/(loss) before taxation and zakat 661,475 348,818 664,244 613,917 46,965 80,127 51,668 (211,773) 2,255,441 (84,952) 2,170,489
Taxation and zakat (158,089) (84,233) (155,798) (134,542) (10,152) (15,633) (10) 45,394 (513,063) 18,879 (494,184)
Profit/(loss) for the financial year 503,386 264,585 508,446 479,375 36,813 64,494 51,658 (166,379) 1,742,378 (66,073) 1,676,305

Other information
Total segment assets 72,436,815 20,928,109 37,543,594 63,253,361 2,813,938 130,248 1,541,736 (1,107,170) 197,540,631 - 197,540,631
Total segment liabilities 63,438,295 16,650,204 17,221,866 66,172,781 1,283,161 27,794 18,511 14,592,110 179,404,722 - 179,404,722
Cost to income ratio 48.7% 30.8% 23.1% 11.7% 72.6% 45.8% 9.0% >100.0% 43.4% 78.2% 44.3%
Gross loans, advances and financing 72,351,165 21,196,038 34,661,475 - 2,382,195 - - (364,102) 130,226,771 - 130,226,771
Net loans, advances and financing 71,204,943 20,918,196 34,102,384 - 2,382,195 - - (365,113) 128,242,605 - 128,242,605
Impaired loans, advances and financing 1,341,771 332,571 222,105 - - - - - 1,896,447 - 1,896,447
Total deposits 62,519,310 16,425,636 16,890,812 47,130,427 955,428 - - (2,144,288) 141,777,325 - 141,777,325
Additions to:
Property and equipment 13,308 774 362 97 693 125 - 41,921 57,280 230 57,510
Intangible assets 21,286 580 3,413 2,493 1,304 673 - 34,660 64,409 2,766 67,175

226 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

51. BUSINESS SEGMENT ANALYSIS (CONT’D.)

Discontinued
Continuing Operations Operation
Wholesale banking
Group Group
Retail Business Corporate Treasury and Investment Fund funding
banking banking banking Markets banking management Insurance and others Total Insurance Total
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

For the financial year ended

31 March 2022 (Restated)
External net income 2,142,617 660,255 1,055,301 311,601 224,692 150,859 23,179 (468,182) 4,100,322 564,693 4,665,015
Intersegments net income (469,608) (101,827) (371,242) 290,816 (28,201) - (16,649) 696,711 - - -
1,673,009 558,428 684,059 602,417 196,491 150,859 6,530 228,529 4,100,322 564,693 4,665,015

Net interest and funding income 1,416,825 442,604 552,099 495,379 43,351 1,325 (16,557) 215,683 3,150,709 124,537 3,275,246
Insurance and other operating income 256,892 115,824 131,960 107,038 153,140 149,534 (16,575) 7,709 905,522 440,156 1,345,678
Share in results of associates and joint
ventures (708) - - - - - 39,662 5,137 44,091 - 44,091
Net income 1,673,009 558,428 684,059 602,417 196,491 150,859 6,530 228,529 4,100,322 564,693 4,665,015
Other operating expenses (839,747) (153,041) (174,460) (79,638) (107,662) (68,439) (14,172) (351,822) (1,788,981) (305,246) (2,094,227)
of which:
Depreciation of property and equipment (17,298) (1,840) (1,373) (321) (825) (206) - (36,959) (58,822) (4,079) (62,901)
Depreciation of right-of-use assets - - - - - - - (65,435) (65,435) (12,449) (77,884)
Amortisation of intangible assets (21,902) (847) (5,545) (2,878) (635) (176) - (56,259) (88,242) (18,953) (107,195)

Profit/(loss) before impairment losses 833,262 405,387 509,599 522,779 88,829 82,420 (7,642) (123,293) 2,311,341 259,447 2,570,788
(Allowances for)/writeback of impairment
on loans, advances and financing (167,430) (43,369) (364,092) - 12,201 - - 248,511 (314,179) - (314,179)
(Allowances for)/writeback of impairment
on other assets (249) - (468,111) 4,780 (458) (306) - 192,226 (272,118) 1,681 (270,437)
Provision for commitments and
contingencies
- writeback/(charge) 9,877 (935) (185,596) - - - - (334) (176,988) - (176,988)
Other recoveries/(write-offs), net 140 - - - 47 - - 30 217 (31) 186
Impairment of investment in associate - - - - - - - (4,625) (4,625) - (4,625)
Profit/(loss) before taxation and zakat 675,600 361,083 (508,200) 527,559 100,619 82,114 (7,642) 312,515 1,543,648 261,097 1,804,745
Taxation and zakat (160,782) (82,983) 128,060 (110,427) (22,584) (16,687) 6,195 81,931 (177,277) (32,529) (209,806)
Profit/(loss) for the financial year 514,818 278,100 (380,140) 417,132 78,035 65,427 (1,447) 394,446 1,366,371 228,568 1,594,939

Other information
Total segment assets 68,443,901 18,553,355 31,974,239 46,583,841 2,780,261 140,188 543,230 353,427 169,372,442 5,486,463 174,858,905
Total segment liabilities 54,844,327 15,430,869 15,941,681 51,589,535 1,653,096 36,228 3,008 14,331,427 153,830,171 3,069,841 156,900,012
Cost to income ratio 50.2% 27.4% 25.5% 13.2% 54.8% 45.4% >100.0% >100.0% 43.6% 54.1% 44.9%
Gross loans, advances and financing 68,396,170 18,735,657 31,063,397 - 1,883,974 - - (86,330) 119,992,868 393 119,993,261
Net loans, advances and financing 67,289,770 18,541,363 30,464,461 - 1,883,919 - - (114,151) 118,065,362 323 118,065,685
Impaired loans, advances and financing 893,471 265,966 516,552 - 55 - - - 1,676,044 - 1,676,044
Total deposits 54,140,217 15,268,001 15,553,315 47,994,239 854,837 - - (1,323,174) 132,487,435 - 132,487,435
Additions to:
Property and equipment 7,043 292 544 363 800 254 - 13,086 22,382 3,043 25,425
Intangible assets 16,567 450 10,056 12,988 852 711 - 26,358 67,982 7,027 75,009

227
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS

The insurance business as at 31 March 2022 relates to AmGeneral Insurance Berhad (“AGIB”). As disclosed in Note 56, the Group has disposed AGIB on
28 July 2022.

(I) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2023

General Shareholders’
insurance fund funds and others Total*

2023 2022 2023 2022 2023 2022

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

ASSETS
Cash and short-term funds - 201,231 - 104,449 - 305,680
Deposits and placements with banks
and other financial institutions - 20,096 - - - 20,096
Financial assets at fair value through profit or loss - 2,435,614 - 4,532,591 - 3,551,434
Loans and advances - 323 - - - 323
Deferred tax assets - 44,264 - - - 44,264
Investment in a subsidiary - - - 1,708,733 - -
Other assets - 1,368,669 - 62,994 - 114,944
Reinsurance assets and other insurance receivables - 580,705 - - - 580,705
Property and equipment - 12,681 - (59) - 12,622
Right-of-use assets - 13,748 - - - 13,748
Intangible assets - 37,608 - 54,769 - 871,304
Assets held for sale - 1,562 - 762 - 2,324
TOTAL ASSETS - 4,716,501 - 6,464,239 - 5,517,444

LIABILITIES AND EQUITY

Deferred tax liabilities - - - 31,539 - 31,539
Other liabilities - 349,729 - 1,320,498 - 353,949
Insurance contract liabilities and other insurance payables - 2,687,361 - - - 2,687,361
Total Liabilities - 3,037,090 - 1,352,037 - 3,072,849

Share capital** - - - 6,212,949 - 2,121,931

Reserves - 1,679,411 - (1,100,747) - 322,664
Equity attributable to equity holders of the Company - 1,679,411 - 5,112,202 - 2,444,595
TOTAL LIABILITIES AND EQUITY - 4,716,501 - 6,464,239 - 5,517,444

* after elimination on consolidation

** Comprising:
2023 2022
RM’000 RM’000

Ordinary share capital - 1,721,931

Transfer from retained earnings arising from redemption of preference shares - 400,000
- 2,121,931

Note:
Shareholders’ funds and others comprise the results of AmGeneral Holdings Berhad and collective investment schemes of its insurance subsidiary.

228 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(II) INSURANCE RECEIVABLES

Group
2023 2022
RM’000 RM’000

Amount owing by reinsurance and cedants - 9,639

Due premiums including agents/brokers and co-insurers balances - 71,041
Accumulated impairment losses - (18,200)
- 62,480

The movement in accumulated impairment losses is as follows:

Balance at beginning of the financial year 18,200 18,732

Writeback for the financial year (2,736) (532)
Derecognition - disposal of subsidiary (15,464) -
Balance at end of the financial year - 18,200

(III) INSURANCE PAYABLES

Group
2023 2022
RM’000 RM’000

Amount due to agents and intermediaries - 19,136

Amount due to reinsurers and cedants - 42,941
- 62,077

229
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(IV) INSURANCE CONTRACT LIABILITIES - GENERAL INSURANCE (CONT’D.)

Gross Reinsurance Net

Note RM’000 RM’000 RM’000

2023
Provision for claims reported by policyholders - - -
Provision for incurred but not reported claims ("IBNR") - - -
Provision for risk margin for adverse deviations ("PRAD") - - -
Provision for outstanding claims (a) - - -
Less: Accumulated impairment loss on reinsurance assets (c) - - -
- - -
Provision for unearned premiums (b) - - -
- - -

(a) Provision for outstanding claims

Balance at beginning of the financial year 1,904,856 (457,845) 1,447,011
Claims incurred in the current accident period up to disposal date 386,879 (35,033) 351,846
Movements in claims incurred in prior accident years (109,339) 9,241 (100,098)
Claims incurred during the period up to disposal date (treaty inwards claims) (2,751) - (2,751)
Claims paid during the period up to disposal date (275,020) 27,887 (247,133)
Derecognition - disposal of subsidiary (1,904,625) 455,750 (1,448,875)
Balance at end of the financial year - - -

(b) Provision for unearned premiums

Balance at beginning of the financial year 720,428 (61,306) 659,122
Premiums written during the period up to disposal date 438,773 (49,187) 389,586
Premiums earned during the period up to disposal date (466,270) 51,251 (415,019)
Derecognition - disposal of subsidiary (692,931) 59,242 (633,689)
Balance at end of the financial year - - -

(c) Accumulated impairment loss on reinsurance assets

Balance at beginning of the financial year 926
Derecognition - disposal of subsidiary (926)
Balance at end of the financial year -

230 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(IV) INSURANCE CONTRACT LIABILITIES - GENERAL INSURANCE (CONT’D.)

Gross Reinsurance Net

Group Note RM’000 RM’000 RM’000

2022
Provision for claims reported by policyholders 1,147,696 (344,647) 803,049
Provision for incurred but not reported claims ("IBNR") 610,904 (76,303) 534,601
Provision for risk margin for adverse deviations ("PRAD") 146,256 (36,895) 109,361
Provision for outstanding claims (a) 1,904,856 (457,845) 1,447,011
Less: Accumulated impairment loss on reinsurance assets (c) - 926 926
1,904,856 (456,919) 1,447,937
Provision for unearned premiums (b) 720,428 (61,306) 659,122
2,625,284 (518,225) 2,107,059

(a) Provision for outstanding claims

Balance at beginning of the financial year 1,713,871 (323,935) 1,389,936
Claims incurred in the current accident year 1,237,919 (255,786) 982,133
Movements in claims incurred in prior accident years (300,182) 49,090 (251,092)
Claims incurred during the year (treaty inwards claims) (3,781) - (3,781)
Claims paid during the financial year (742,971) 72,786 (670,185)
Balance at end of the financial year 1,904,856 (457,845) 1,447,011

(b) Provision for unearned premiums

Balance at beginning of the financial year 709,104 (57,932) 651,172
Premiums written in the financial year 1,518,013 (175,215) 1,342,798
Premiums earned during the financial year (1,506,689) 171,841 (1,334,848)
Balance at end of the financial year 720,428 (61,306) 659,122

(c) Accumulated impairment loss on reinsurance assets

Balance at beginning of the financial year 2,075
Writeback for the financial year (1,149)
Balance at end of the financial year 926

231
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(V) GENERAL INSURANCE BUSINESS

Claims development table

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each
reporting date, together with cumulative payments to date as at 31 March 2022.

In setting provisions for claims, the insurance subsidiary gives consideration to the probability and magnitude of future claim experience being more
adverse than assumed and exercises a degree of caution in setting the reserves when there is considerable uncertainty. In general, the uncertainty
associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin to
provide necessary confidence in adequacy is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative
level of margin maintained should decrease.

While the information in the tables provides a historical perspective on the adequacy of the unpaid claims estimate established in previous years, users of
these financial statements are cautioned against extrapolating redundancies or deficiencies of the past on current unpaid loss balances.

The management of the insurance subsidiary believes that the estimates of total claims outstanding as of the reporting date are adequate. However, due
to the inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to be adequate.

Gross general insurance contract liabilities for 2022:

Inward
Before treaty
2015 2016 2017 2018 2019 2020 2021 2022 Subtotal and MMIP* Total
Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At the end of accident year 1,194,736 1,070,130 1,227,523 1,161,461 1,150,178 1,243,368 1,092,370 1,237,920
One year later 1,044,184 1,029,824 1,149,853 1,084,565 1,096,000 1,186,034 950,761
Two years later 998,910 1,007,382 1,098,274 1,021,983 1,044,485 1,099,976
Three years later 933,819 916,885 1,032,314 970,496 988,064
Four years later 901,251 875,653 964,732 961,220
Five years later 883,481 873,158 960,255
Six years later 869,500 869,786
Seven years later 894,260
Current estimate of accumulative claims
incurred 894,260 869,786 960,255 961,220 988,064 1,099,976 950,761 1,237,920

At the end of accident year (350,724) (362,327) (418,997) (413,497) (406,583) (454,994) (372,078) (306,934)
One year later (637,079) (631,990) (728,720) (697,415) (689,370) (714,911) (579,927)
Two years later (755,021) (743,674) (841,972) (812,808) (796,663) (818,530)
Three years later (813,229) (809,250) (891,723) (867,295) (854,377)
Four years later (834,470) (825,028) (916,406) (901,221)
Five years later (843,008) (835,583) (925,811)
Six years later (849,203) (840,833)
Seven years later (852,058)
Cumulative payments to-date (852,058) (840,833) (925,811) (901,221) (854,377) (818,530) (579,927) (306,934)

Gross general insurance claims liabilities

(direct and facultative) 42,202 28,953 34,444 59,999 133,687 281,446 370,834 930,986 1,882,551 22,305 1,904,856

* Malaysian Motor Insurance Pool (“MMIP”)

232 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(V) GENERAL INSURANCE BUSINESS (CONT’D.)

Claims development table (cont’d.)

Net general insurance claims liabilities for 2022:

Inward
Before treaty
2015 2016 2017 2018 2019 2020 2021 2022 Subtotal and MMIP Total
Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At the end of accident year 1,089,590 997,614 1,093,342 1,007,302 1,003,559 1,062,879 963,685 982,133
One year later 951,089 959,398 1,058,099 977,750 973,556 1,032,528 847,316
Two years later 907,365 924,949 1,008,222 931,761 935,655 957,604
Three years later 844,427 850,963 947,314 875,023 886,583
Four years later 809,285 809,037 886,015 874,143
Five years later 797,601 805,537 882,689
Six years later 791,601 805,472
Seven years later 799,488
Current estimate of accumulative claims
incurred 799,488 805,472 882,689 874,143 886,583 957,604 847,316 982,133

At the end of accident year (333,248) (344,191) (392,176) (385,935) (388,952) (443,656) (350,808) (294,809)
One year later (593,745) (592,213) (672,310) (644,402) (637,658) (665,818) (527,676)
Two years later (694,479) (695,841) (776,164) (747,218) (729,367) (763,630)
Three years later (746,892) (751,734) (823,773) (797,115) (782,500)
Four years later (765,158) (769,553) (845,560) (822,107)
Five years later (773,178) (779,160) (854,303)
Six years later (778,865) (785,321)
Seven years later (780,376)
Cumulative payments to-date (780,376) (785,321) (854,303) (822,107) (782,500) (763,630) (527,676) (294,809)

Net general insurance claims liabilities (direct

and facultative) 19,112 20,151 28,386 52,036 104,083 193,974 319,640 687,324 1,424,706 22,305 1,447,011

233
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

52. INSURANCE BUSINESS (CONT’D.)

(VI) REDEEMABLE CUMULATIVE CONVERTIBLE PREFERENCE SHARE

In the financial year ended 31 March 2013, AmGeneral Holdings Berhad (“AMGH”) (a 51% owned subsidiary) via AMAB Holdings Sdn Bhd (“AMABH”) had
issued RM600 million of Redeemable Cumulative Convertible Preference Share (“RCCPS”) and the salient features of the RCCPS are as follows:

(i) The RCCPS are redeemable during the redemption period from 27 September 2012 to 26 September 2027 (“maturity date”). The RCCPS will be
redeemed during the redemption period or at the maturity date with the redemption price equal to the issue price.

(ii) The RCCPS confers on the holders the right to a fixed cumulative preference dividend calculated at 1% per annum each year to be declared and paid
within six months from the end of each financial year, calculated based on the issue price of the RCCPS, in priority to any other classes of shares to
the extent that there are profits available for distribution and compliance with the capital adequacy requirements as stipulated by BNM.

(iii) The RCCPS holders are entitled at any time to convert all or any of the RCCPS held to ordinary shares in AMGH on the basis of one RCCPS for one
new ordinary share.

At Group, the RCCPS is presented net of deferred tax, and reflects only the portion issued to the non-controlling interests.

On 19 January 2022, AMGH issued a total 60 million units of ordinary shares as a result of the conversion of 60 million units of RCCPS at RM11.53 per
shares which amounted to RM691.9 million.

The effect from the conversion of RCCPS into new issuance of ordinary shares in AMGH is as follows:

No of shares Amount
‘000 RM’000

Existing ordinary shares 130,000 1,030,000

Issuance of new ordinary shares after the conversion of RCCPS 60,000 691,931
Share capital after the new issuance of ordinary shares 190,000 1,721,931

234 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

53. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial assets and financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements excluding financial assets not
subject to offset and that are only subject to collateral arrangements (e.g. loans, advances and financing) are as follows:

Gross amount Gross amounts Amounts Amount not offset in the

of recognised offset in the presented in statements of financial position
financial statements of the statements Cash collateral
assets/ financial of financial Financial received/
liabilities position position instruments pledged Net amount
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2023
Derivative financial assets 921,109 - 921,109 (308,604) (510,844) 101,661
Other assets 2,646,800 (20,764) 2,626,036 (39,963) (15,288) 2,570,785
3,567,909 (20,764) 3,547,145 (348,567) (526,132) 2,672,446

Derivative financial liabilities 964,319 - 964,319 (308,604) (467,034) 188,681

Other liabilities 3,718,321 (20,764) 3,697,557 - - 3,697,557
4,682,640 (20,764) 4,661,876 (308,604) (467,034) 3,886,238

Gross amount Gross amounts Amounts Amount not offset in the

of recognised offset in the presented in statements of financial position
financial statements of the statements Cash collateral
assets/ financial of financial Financial received/
liabilities position position instruments pledged Net amount
Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Derivative financial assets 821,373 - 821,373 (352,677) (229,098) 239,598
Other assets 2,908,343 (23,024) 2,885,319 (46,470) (14,043) 2,824,806
3,729,716 (23,024) 3,706,692 (399,147) (243,141) 3,064,404

Derivative financial liabilities 803,563 - 803,563 (352,677) (446,809) 4,077

Other liabilities 4,325,886 (23,024) 4,302,862 - - 4,302,862
5,129,449 (23,024) 5,106,425 (352,677) (446,809) 4,306,939

54. ASSETS HELD FOR SALE

Group
2023 2022
RM’000 RM’000

Assets held for sale

Proposed disposal of property - 2,324

2023 2022
Note RM’000 RM’000

Balance at beginning of the financial year 2,324 2,324

Impairment for the financial year (762) -
Derecognition - disposal of subsidiary 56 (1,562) -
Balance at end of the financial year - 2,324

235
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2023

Group
2023 2022
Note RM'000 RM'000

ASSETS
Cash and short-term funds 55(II) 2,113,367 3,599,095
Derivative financial assets 36,363 51,661
Financial assets at fair value through profit or loss 55(III) 2,576,789 986,968
Financial investments at fair value through other comprehensive income 55(IV) 6,522,124 4,450,620
Financial investments at amortised cost 55(V) 4,179,986 3,033,252
Financing and advances 55(VI) 44,961,875 38,653,868
Statutory deposit with Bank Negara Malaysia 880,000 167,000
Deferred tax assets 55(VII) 62,072 61,176
Other assets 55(VIII) 497,799 286,825
Property and equipment 55(IX) 324 363
Right-of-use assets 55(X) 2,284 2,066
Intangible assets 55(XI) 298 495
TOTAL ASSETS 61,833,281 51,293,389

LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers 55(XII) 45,252,510 37,590,250
Investment accounts of customers 55(XIII) 16,474 377,861
Deposits and placements of banks and other financial institutions 55(XIV) 4,763,220 3,634,435
Investment account due to a licensed bank 55(XV) 1,538,521 1,710,663
Recourse obligation on financing sold to Cagamas Berhad 3,315,004 1,500,000
Derivative financial liabilities 36,814 60,038
Term funding 25(a)(ii) & (c)(ii) 834,907 834,836
Subordinated Sukuk 26(a)(i) 1,300,000 1,300,000
Other liabilities 55(XVI) 375,289 411,400
TOTAL LIABILITIES 57,432,739 47,419,483

Share capital/capital funds 1,387,107 1,387,107

Reserves 3,013,435 2,486,799
TOTAL ISLAMIC BANKING FUNDS 4,400,542 3,873,906
TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 61,833,281 51,293,389
COMMITMENTS AND CONTINGENCIES 55(XXX) 14,038,732 14,702,448

The accompanying notes form an integral part of the financial statements of the operations of Islamic banking.

236 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023

Group
2023 2022
Note RM'000 RM'000

Income derived from investment of depositors' funds 55(XVII) 2,173,852 1,702,082

Income derived from investment of investment account funds 55(XVIII) 61,106 56,219
Income derived from Islamic banking funds 55(XIX) 202,441 169,510
Allowances for impairment on financing and advances - net 55(XX) (163,758) (241,871)
(Allowances for)/writeback of impairment on:
- Financial investments 55(XXI) (8,808) (255,960)
- Other financial assets 55(XXII) 143 (75)
Provision for financial commitments and contingencies - charge 55(XXIII) (7,474) (8,975)
Total distributable income 2,257,502 1,420,930
Income attributable to the depositors and others 55(XXIV) (1,089,037) (750,266)
Income attributable to investment account holders 55(XXV) (53,736) (47,845)
Total net income 1,114,729 622,819
Other operating expenses 55(XXVI) (335,200) (285,294)
Finance costs (87,469) (97,455)
Profit before taxation and zakat 692,060 240,070
Taxation and zakat 55(XXVII) (160,129) (51,676)
Profit for the financial year 531,931 188,394

STATEMENT OF COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023

Group
2023 2022
RM'000 RM'000

Profit for the financial year 531,931 188,394

Other comprehensive (loss)/income:

Items that may be reclassified subsequently to statement of profit or loss

Financial investments at FVOCI:
- Net unrealised loss for changes in fair value (86) (62,083)
- Changes in ECL (5,287) (59)
- Net loss/(gain) reclassified to profit or loss 75 (596)
- Tax effect 3 14,873
Other comprehensive loss for the financial year, net of tax (5,295) (47,865)
Total comprehensive income for the financial year 526,636 140,529

The accompanying notes form an integral part of the financial statements of the operations of Islamic banking.

237
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023

Non-
Distributable Distributable
Share capital/ Fair value Retained Total
capital funds reserve earnings Equity
Group RM'000 RM'000 RM'000 RM'000

At 1 April 2021 1,417,107 43,972 2,434,800 3,895,879

Profit for the financial year - - 188,394 188,394
Other comprehensive loss, net - (47,865) - (47,865)
Total comprehensive (loss)/income for the financial year - (47,865) 188,394 140,529

Transfer to conventional fund* (30,000) - (95,424) (125,424)

Dividend on ordinary shares:
- final, financial year ended 31 March 2021 - - (37,078) (37,078)
(30,000) - (132,502) (162,502)
At 31 March 2022 1,387,107 (3,893) 2,490,692 3,873,906

Non-
Distributable Distributable
Share capital/ Fair value Retained Total
capital funds reserve earnings Equity
Group RM'000 RM'000 RM'000 RM'000

At 1 April 2022 1,387,107 (3,893) 2,490,692 3,873,906

Profit for the financial year - - 531,931 531,931
Other comprehensive loss, net - (5,295) - (5,295)
Total comprehensive (loss)/income for the financial year - (5,295) 531,931 526,636
At 31 March 2023 1,387,107 (9,188) 3,022,623 4,400,542

* Relates to Islamic Banking of AmInvestment Bank.

In the previous financial year, AmInvestment Bank had ceased to carry out Islamic Banking business.

The existing operations of Islamic investment banking of AmInvestment Bank relating to stockbroking and capital market activities undertaken in compliance
with Shariah principles are regulated by the Securities Commission and Bursa Malaysia Berhad and not within the definition of Islamic Banking as per Islamic
Financial Services Act 2013. Hence, no disclosure required.

The accompanying notes form an integral part of the financial statements of the operations of Islamic banking.

238 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023

Group
2023 2022
RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation and zakat 692,060 240,070
Adjustments for:
Accretion of discount less amortisation of premium for securities (62,526) (48,193)
Allowances for impairment on financing and advances (Note 55(XX)) 294,473 335,811
Depreciation of right-of-use assets (Note 55(X)) 412 285
Depreciation of property and equipment (Note 55(IX)) 116 133
Amortisation of intangible assets (Note 55(XI)) 345 359
Finance cost - lease liabilities (Note 55(XVI)(a)) 88 64
Net amortisation of premium on term funding 71 70
Finance cost - provision for reinstatement of leased properties (Note 55(XVI)(b)) 2 1
(Gain)/loss on disposal of financial assets at fair value through profit or loss (3,256) 4,153
(Gain)/loss on revaluation of financial assets at fair value through profit or loss (2,109) 452
Gain on revaluation of derivatives (7,925) (9,706)
Unrealised loss on revaluation of hedged item arising from fair value hedge 7,973 9,087
Shares granted under Executives' Share Scheme - charge/(writeback) 654 (15)
Allowances for/(writeback of) ECL on:
- Financial investments (Note 55(XXI)) 8,808 255,960
- Other financial assets (Note 55(XXII)) (143) 75
- Financial commitments and contingencies (Note 55(XXIII)) 7,474 8,975
Loss/(gain) on disposal of financial investments at fair value through other comprehensive income 75 (596)
Net adjustments of COVID-19 relief measures (25,664) (54,116)
Operating profit before working capital changes 910,928 742,869
(Increase)/decrease in operating assets:
Financial assets at fair value through profit or loss (1,554,550) 1,311,863
Financing and advances (6,572,391) (4,357,066)
Statutory deposit with Bank Negara Malaysia (713,000) (54,000)
Other assets (234,590) 74,489

239
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023 (CONT’D.)

Group
2023 2022
RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D.)

Increase/(decrease) in operating liabilities:
Deposits from customers 7,662,260 (4,142,261)
Investment accounts of customers (361,387) 283,027
Deposits and placements of banks and other financial institutions 1,124,360 472,166
Investment account due to a licensed bank (172,142) 992,629
Recourse obligation on financing sold to Cagamas Berhad 1,815,004 700,000
Term funding - (200,000)
Other liabilities (45,889) 98,915
Cash generated from/(used in) operating activities 1,858,603 (4,077,369)
Zakat paid (1,747) (991)
Tax paid (134,271) (50,697)
Net cash generated from/(used in) operating activities 1,722,585 (4,129,057)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of financial investments at fair value through other comprehensive income (2,046,738) (409,847)
Purchase of financial investments at amortised cost (1,161,035) (1,102,627)
Purchase of property and equipment (72) (63)
Purchase of intangible assets (148) (136)
Net cash used in investing activities (3,207,993) (1,512,673)

240 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 MARCH 2023 (CONT’D.)

Group
2023 2022
RM'000 RM'000

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid - (37,078)
Repayment for lease liabilities (463) (313)
Issuance of Subordinated Sukuk 150,000 250,000
Repayment of Subordinated Sukuk (150,000) (250,000)
Transferred to conventional operations - (120,697)
Net cash used in financing activities (463) (158,088)

Net decrease in cash and cash equivalents (1,485,871) (5,799,818)

Cash and cash equivalents at beginning of the financial year 3,599,246 9,399,064
Cash and cash equivalents at end of the financial year 2,113,375 3,599,246

Cash and cash equivalents comprise:

Cash and short-term funds (Note 55(II)) 2,113,367 3,599,095
Add:
Allowances for ECL (Note 55(II)) 8 151
2,113,375 3,599,246

The accompanying notes form an integral part of the financial statements of the operations of Islamic banking.

241
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING

(I) ISLAMIC BANKING BUSINESS

Shariah Committee and governance

The Shariah Committee comprises six (6) members and is responsible and accountable for matters related to Shariah. This includes:

i. advising Board of Directors and Management of AmBank Islamic on Shariah matters;

ii. endorsing and validating products and services, Shariah policies and the relevant documentation in relation to Islamic Banking operation; and
iii. providing advice and guidance on management of zakat fund, charity and other social programme activities.

The Shariah Committee members also sit in the Shariah Oversight Committee, a sub-committee of the Shariah Committee performing an oversight function
from Shariah perspective to assess work carried out by Shariah review, Shariah audit, Shariah regulatory review and Shariah risk management. The Shariah
Oversight Committee is also responsible to provide guidance and advice on matters pertaining to Shariah non-compliance incidents as well as treatment
of Shariah non-compliance income.

Shariah non-compliance incident and income

There were no SNC incident for the financial year ended 31 March 2023 and 31 March 2022.

(II) CASH AND SHORT-TERM FUNDS

Group
2023 2022
RM'000 RM'000

Cash and bank balances 83,375 79,246

Less: Allowances for ECL (8) (151)
83,367 79,095

Deposits maturing within one month with original maturity of three months or less:
Bank Negara Malaysia 2,030,000 2,790,000
Licensed banks - 450,000
Other financial institutions - 280,000
2,113,367 3,599,095

242 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(II) CASH AND SHORT-TERM FUNDS (CONT'D.)

Movements in allowances for ECL are as follows:

Stage 1
12-month
ECL
Group RM’000

2023
Balance at beginning of the financial year 151
Net writeback of ECL (143)
- Financial assets derecognised (143)

Balance at end of the financial year 8

Stage 1
12-month
ECL
Group RM’000

2022
Balance at beginning of the financial year 75
Net allowances for ECL 75
- Financial assets derecognised (61)
- New financial assets originated 142
- Net remeasurement of allowances (6)
Foreign exchange differences 1
Balance at end of the financial year 151

The decrease in allowances for ECL in Stage 1 mainly due to financial assets derecognised.

243
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(III) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Group
2023 2022
RM'000 RM'000

At fair value
Money Market Instruments:
Malaysian Islamic Treasury Bills 1,354,281 636,310
Malaysian Government Investment Issues - 32,569
Bank Negara Monetary Notes 724,354 -
2,078,635 668,879

Unquoted Securities:
In Malaysia:
Sukuk 498,154 318,089
2,576,789 986,968

(IV) FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Group
2023 2022
RM'000 RM'000

At fair value
Money Market Instruments:
Malaysian Islamic Treasury Bills 1,059,413 -
Malaysian Government Investment Issues 1,653,434 1,394,227
Islamic Negotiable Instruments of Deposit - 579,298
Bank Negara Monetary Notes 247,160 -
2,960,007 1,973,525

Unquoted Securities:
In Malaysia:
Sukuk 3,562,117 2,477,095
6,522,124 4,450,620

244 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(IV) FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (CONT’D.)

Movements in allowances for ECL are as follows:

Stage 1 Stage 2
Lifetime ECL
12-month not credit
Note ECL impaired Total
Group RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 2,497 6,239 8,736
Net writeback of ECL 55(XXI) (93) (5,194) (5,287)
- Transfer to 12-month ECL (Stage 1) 443 (6,239) (5,796)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (489) 1,045 556
- New financial assets originated 1,019 - 1,019
- Financial assets derecognised (743) - (743)
- Net remeasurement of allowances (323) - (323)

Balance at end of the financial year 2,404 1,045 3,449

Stage 1 Stage 2
Lifetime ECL
12-month not credit
Note ECL impaired Total
Group RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 1,968 6,827 8,795
Net allowances for/(writeback of) ECL 55(XXI) 529 (588) (59)
- New financial assets originated 1,493 - 1,493
- Financial assets derecognised (899) (588) (1,487)
- Net remeasurement of allowances (65) - (65)

Balance at end of the financial year 2,497 6,239 8,736

The movements in allowances for ECL are mainly contributed by:

(a) Decrease in Stage 1 ECL due to financial assets derecognised, net remeasurement of allowances and change in credit risk, offset by new financial
assets originated;

(b) Decrease in Stage 2 ECL mainly due to change in credit risk transfer to 12-month ECL (Stage 1).

245
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(V) FINANCIAL INVESTMENTS AT AMORTISED COST

Group
2023 2022
RM'000 RM'000

At amortised cost
Money Market Instruments:
Malaysian Government Investment Issues 1,648,681 1,280,630

Unquoted Securities:
In Malaysia:
Sukuk 2,991,037 2,198,259
Less: Allowances for ECL (459,732) (445,637)
4,179,986 3,033,252

Movements in allowances for ECL are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 1,182 - 444,455 445,637
Net allowances for ECL 55(XXI) 987 - 13,108 14,095
- New financial assets originated 981 - - 981
- Financial assets derecognised (11) - - (11)
- Net remeasurement of allowances 17 - 13,108 13,125

Balance at end of the financial year 2,169 - 457,563 459,732

246 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(V) FINANCIAL INVESTMENTS AT AMORTISED COST (CONT’D.)

Movements in allowances for ECL are as follows: (cont’d.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 977 188,641 - 189,618
Net allowances for/(writeback of) ECL 55(XXI) 205 (188,641) 444,455 256,019
- Transfer to 12-month ECL (Stage 1) 382 (425) - (43)
- Transfer to Lifetime ECL credit impaired (Stage 3) - (10,016) 444,455 434,439
- New financial assets originated 250 - - 250
- Financial assets derecognised (13) - - (13)
- Changes in model assumptions and methodologies - (178,200) - (178,200)
- Net remeasurement of allowances (414) - - (414)

Balance at end of the financial year 1,182 - 444,455 445,637

The increase in allowances for ECL is mainly contributed by net remeasurement of allowances and new financial assets originated.

247
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(VI) FINANCING AND ADVANCES

(a) Financing and advances by type of financing and Shariah contracts are as follows:

Al-Ijarah
Bai Thummah
Bithaman Musharakah Al-Bai
Ajil Murabahah Mutanaqisah (AITAB) Bai' Inah Others Total
Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2023
At amortised cost
Cash lines - 594,352 - - 534,646 - 1,128,998
Term financing 347,700 15,538,398 7,327 - 650,409 - 16,543,834
Revolving credit 22,037 4,943,902 - - 1,049,641 - 6,015,580
Housing financing 2,418,525 10,293,397 38,815 - - - 12,750,737
Hire purchase receivables 3 - - 4,947,850 - - 4,947,853
Bills receivables - 620,200 - - - 103,537 723,737
Credit card receivables - - - - - 498,872 498,872
Trust receipts - 480,747 - - - - 480,747
Claims on customers under acceptance
credits - 2,235,072 - - - 281,933 2,517,005
Staff financing - 20,731 - - - - 20,731
Others - - - - - 12,770 12,770
Gross financing and advances* 2,788,265 34,726,799 46,142 4,947,850 2,234,696 897,112 45,640,864
Allowances for impairment on financing
and advances
- Stage 1 - 12-month ECL (74,502)
- Stage 2 - Lifetime ECL not credit
impaired (441,391)
- Stage 3 - Lifetime ECL credit
impaired (163,096)
Net financing and advances 44,961,875

248 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(VI) FINANCING AND ADVANCES (CONT’D.)

(a) Financing and advances by type of financing and Shariah contracts are as follows: (cont’d.)

Al-Ijarah
Bai Thummah
Bithaman Musharakah Al-Bai
Ajil Murabahah Mutanaqisah (AITAB) Bai' Inah Others Total
Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2022
At amortised cost
Cash lines - 617,679 - - 578,646 - 1,196,325
Term financing 439,860 12,596,186 8,806 - 1,091,129 20,160 14,156,141
Revolving credit 27,065 3,744,672 - - 1,128,326 - 4,900,063
Housing financing 2,589,646 8,540,970 43,458 - - - 11,174,074
Hire purchase receivables 3 - - 4,255,450 - - 4,255,453
Bills receivables - 630,366 - - - 40,342 670,708
Credit card receivables - - - - - 447,758 447,758
Trust receipts - 381,229 - - - - 381,229
Claims on customers under acceptance
credits - 1,784,824 - - - 353,913 2,138,737
Staff financing - 17,862 - - - - 17,862
Others - - - - - 9,102 9,102
Gross financing and advances* 3,056,574 28,313,788 52,264 4,255,450 2,798,101 871,275 39,347,452
Allowances for impairment on financing
and advances
- Stage 1 - 12-month ECL (61,592)
- Stage 2 - Lifetime ECL not credit
impaired (401,419)
- Stage 3 - Lifetime ECL credit
impaired (230,573)
Net financing and advances 38,653,868

* Included in financing and advances are exposures to the Restricted Investment Account (“RA”) arrangements between AmBank Islamic and AmBank. Under the RA
contract, the profit is shared based on a pre-agreed ratio. AmBank is exposed to the risks and rewards on the RA financing and it shall account for all allowances
for impairment arising from the RA financing.

249
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(VI) FINANCING AND ADVANCES (CONT'D.)

(b) The maturity structure of financing and advances are as follows:

Group
2023 2022
RM'000 RM'000

Maturing within one year 12,125,562 10,337,273

Over one year to three years 1,529,251 2,083,248
Over three years to five years 2,535,398 2,042,184
Over five years 29,450,653 24,884,747
45,640,864 39,347,452

(c) Gross financing and advances analysed by type of customers are as follows:

Group
2023 2022
RM'000 RM'000

Domestic non-bank financial institutions 2,263,471 2,091,347

Domestic business enterprises
- Small medium enterprises 6,830,614 7,078,754
- Others 8,942,573 7,833,699
Government and statutory bodies 2,595,851 102,813
Individuals 24,506,155 22,193,670
Other domestic entities 118 644
Foreign individuals and entities 502,082 46,525
45,640,864 39,347,452

250 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(VI) FINANCING AND ADVANCES (CONT’D.)

(d) Financing and advances analysed by profit rate sensitivity are as follows:

Group
2023 2022
RM'000 RM'000

Fixed rate:
Housing financing 164,784 159,912
Hire purchase receivables 4,883,169 4,199,966
Other financing 5,527,511 3,516,511

Variable rate:
Base rate and lending/financing rate plus 23,402,540 21,535,195
Cost-plus 11,515,903 9,796,311
Other variable rates 146,957 139,557
45,640,864 39,347,452

(e) Gross financing and advances analysed by sector are as follows:

Group
2023 2022
RM'000 RM'000

Agriculture 1,859,755 918,053

Mining and quarrying 629,375 357,563
Manufacturing 4,859,748 4,809,630
Electricity, gas and water 538,441 273,022
Construction 969,620 1,050,791
Wholesale, retail trade, restaurants and hotels 3,272,133 2,947,081
Transport, storage and communication 1,695,582 1,495,066
Finance and insurance 3,798,148 2,107,052
Real estate 2,319,010 2,184,116
Business activities 699,713 587,875
Education and health 441,731 377,008
Household of which: 24,557,608 22,240,195
- Purchase of residential properties 12,816,791 11,241,327
- Purchase of transport vehicles 4,608,460 3,915,934
- Others 7,132,357 7,082,934

Gross financing and advances 45,640,864 39,347,452

251
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(VI) FINANCING AND ADVANCES (CONT’D.)

(f) Movements in impaired financing and advances are as follows:

Group
2023 2022
RM'000 RM'000

Balance at beginning of the financial year 628,542 613,074

Additions during the financial year 819,460 718,754
Reclassified to non-impaired financing (37,363) (77,186)
Recoveries (580,374) (337,277)
Amount written off (309,110) (288,823)
Balance at end of the financial year 521,155 628,542

Gross impaired financing and advances as % of gross financing and advances 1.14% 1.60%
Financing loss coverage 136.5% 114.3%

(g) Impaired financing and advances analysed by sector are as follows:

Group
2023 2022
RM'000 RM'000

Agriculture 614 2
Mining and quarrying 38,685 162,649
Manufacturing 50,598 51,867
Electricity, gas and water 167 -
Construction 19,933 15,724
Wholesale, retail trade, restaurants and hotels 70,256 63,135
Transport, storage and communication 3,817 3,666
Real estate 498 165,929
Business activities 2,857 388
Education and health 1,645 -
Household of which: 332,085 165,182
- Purchase of residential properties 260,048 119,387
- Purchase of transport vehicles 29,710 20,139
- Others 42,327 25,656

Impaired financing and advances 521,155 628,542

252 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(VI) FINANCING AND ADVANCES (CONT’D.)

(h) Movements in allowances for ECL are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2023
Balance at beginning of the financial year 61,592 401,419 230,573 693,584
Net allowances for ECL 55(XX) 12,876 39,964 241,633 294,473
- Transfer to 12-month ECL (Stage 1) 3,671 (34,652) (910) (31,891)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (5,140) 57,705 (5,615) 46,950
- Transfer to Lifetime ECL credit impaired (Stage 3) (443) (10,078) 116,879 106,358
- New financial assets originated 22,474 33,838 3,907 60,219
- Net remeasurement of allowances 10,566 (13,883) 143,104 139,787
- Changes in model assumptions and methodologies (8,061) 31,122 (5) 23,056
- Modification of contractual cash flows of financial
assets (144) 2,279 376 2,511
- Financial assets derecognised (10,047) (26,367) (16,103) (52,517)
Foreign exchange differences 34 8 - 42
Amount written off - - (309,110) (309,110)
Balance at end of the financial year* 74,502 441,391 163,096 678,989

253
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(VI) FINANCING AND ADVANCES (CONT’D.)

(h) Movements in allowances for ECL are as follows: (cont'd.)

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM’000

2022
Balance at beginning of the financial year 143,487 401,459 101,634 646,580
Net (writeback of)/allowances for ECL 55(XX) (81,909) (42) 417,762 335,811
- Transfer to 12-month ECL (Stage 1) 2,625 (28,659) (1,070) (27,104)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (4,581) 37,018 (7,784) 24,653
- Transfer to Lifetime ECL credit impaired (Stage 3) (542) (18,470) 22,179 3,167
- New financial assets originated 20,276 16,949 1,279 38,504
- Net remeasurement of allowances (37,662) 26,473 426,783 415,594
- Changes in model assumptions and methodologies (47,158) (13,962) - (61,120)
- Modification of contractual cash flows of financial
assets (374) 3,248 (484) 2,390
- Financial assets derecognised (14,493) (22,639) (23,141) (60,273)
Foreign exchange differences 14 2 - 16
Amount written off - - (288,823) (288,823)
Balance at end of the financial year* 61,592 401,419 230,573 693,584

* As at 31 March 2023, the gross exposure (including profit receivable) relating to RA financing amounted to RM1,542.3 million (2022: RM1,713.8 million).
ECL allowances relating to the RA financing which amounted to RM1.3 million (2022: RM2.2 million) is taken up by AmBank.

The following explains how significant changes in the gross carrying amount of financing and advances during the financial year have
contributed to the changes in the allowance for ECL on financing and advances.

Overall, the total allowances for ECL on financing and advances for the Group had decreased due to the following:

(a) 12-month ECL (Stage 1) – increase of RM12.9 million mainly due to newly originated financial assets and net remeasurement of
allowances, partially offset by the impact from financial assets derecognised, changes in model assumptions and methodologies and
change in credit risk;

(b) Lifetime ECL not credit impaired (Stage 2) – increase of RM40.0 million mainly due to new financial assets originated, changes in model
assumptions, change in credit risk and modification of contractual cash flows of financial assets, offset by financial assets derecognised
and net remeasurement of allowances;

(c) Lifetime ECL credit impaired (Stage 3) – decrease of RM67.5 million mainly due to financing and advances written-off and financial assets
derecognised, offset by impact of net remeasurement of allowances, new financial assets originated and the change in credit risk.

254 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(VII) DEFERRED TAX ASSETS/(LIABILITIES)

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 fiscal authority. The following amounts are shown in the statements of financial position, after appropriate
offsetting:

Group
2023 2022
RM'000 RM'000

Deferred tax assets 62,072 61,176

Deferred tax assets and liabilities prior to offsetting are summarised as follows:
Deferred tax assets 85,384 80,813
Deferred tax liabilities (23,312) (19,637)
62,072 61,176

The components and movements of deferred tax assets/(liabilities) prior to offsetting are as follows:

Balance at Recognised
beginning in other Balance at
of the Recognised comprehensive end of the
financial year in profit or loss income financial year
Group RM'000 RM'000 RM'000 RM'000

2023
Other temporary differences 70,830 4,692 - 75,522
Fair value reserve 3,988 - 3 3,991
Deferred income 5,995 (124) - 5,871
Deferred tax assets 80,813 4,568 3 85,384

Excess of capital allowance over depreciation (106) 59 - (47)

Deferred charges (19,531) (3,734) - (23,265)
Deferred tax liabilities (19,637) (3,675) - (23,312)

255
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(VII) DEFERRED TAX ASSETS/(LIABILITIES) (CONT'D.)

The components and movements of deferred tax assets/(liabilities) prior to offsetting are as follows: (cont’d.)

Balance at Recognised
beginning in other Transfer to Balance at
of the Recognised comprehensive conventional end of the
financial year in profit or loss income fund financial year
Group RM'000 RM'000 RM'000 RM’000 RM’000

2022
Other temporary differences 87,150 (16,187) - (133) 70,830
Fair value reserve - - 3,988 - 3,988
Deferred income 5,132 863 - - 5,995
Deferred tax assets 92,282 (15,324) 3,988 (133) 80,813

Excess of capital allowance over depreciation (265) 159 - - (106)

Deferred charges (17,265) (2,266) - - (19,531)
Other temporary differences (2,371) 2,371 - - -
Fair value reserve (10,885) - 10,885 - -
Deferred tax liabilities (30,786) 264 10,885 - (19,637)

(VIII) OTHER ASSETS

Group
2023 2022
Note RM'000 RM'000

Other receivables, deposits and prepayments 90,832 104,698

Amount due from related companies (a) 206,712 -
Profit receivable 96,058 70,527
Tax recoverable 5,955 28,916
Deferred charges (b) 98,242 82,684
497,799 286,825

(a) Amount due from related companies, which related to banking operations, are unsecured, non-profit bearing and are repayable on demand.

(b) Deferred charges represent prepaid expenses for handling fees, marketing and promotion expenses relating to financing and advances.

256 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(IX) PROPERTY AND EQUIPMENT

Office
equipment,
Motor Leasehold Computer furniture and
vehicles improvements hardware fittings Total
Group RM’000 RM'000 RM'000 RM'000 RM'000

2023
Cost
At beginning of the financial year 528 446 844 173 1,991
Additions - - 72 - 72
Disposals - - (35) - (35)
Transfer from related companies - - 5 - 5
At end of the financial year 528 446 886 173 2,033

Accumulated Depreciation
At beginning of the financial year 304 438 717 169 1,628
Depreciation for the financial year 54 8 52 2 116
Disposals - - (35) - (35)
At end of the financial year 358 446 734 171 1,709

Net Book Value

As at 31 March 2023 170 - 152 2 324

257
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(IX) PROPERTY AND EQUIPMENT (CONT’D.)

Office
equipment,
Motor Leasehold Computer furniture and Work-in-
vehicles improvements hardware fittings progress Total
Group RM’000 RM'000 RM'000 RM'000 RM'000 RM'000

2022
Cost
At beginning of the financial year 528 534 817 251 20 2,150
Additions - - 58 5 - 63
Written off - - - (2) - (2)
Reclassification/adjustment - - - - (7) (7)
Transfer to conventional fund - (88) (44) (81) - (213)
Transfer from/(to) work-in-progress - - 13 - (13) -
At end of the financial year 528 446 844 173 - 1,991

Accumulated Depreciation
At beginning of the financial year 251 505 711 243 - 1,710
Depreciation for the financial year 53 21 50 9 - 133
Written off - - - (2) - (2)
Transfer to conventional fund - (88) (44) (81) - (213)
At end of the financial year 304 438 717 169 - 1,628

Net Book Value

As at 31 March 2022 224 8 127 4 - 363

258 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(X) RIGHT-OF-USE ASSETS

Group
2023 2022
Premises RM'000 RM'000

Cost
At beginning of the financial year 2,793 2,793
Additions 227 -
Remeasurement 403 -
At end of the financial year 3,423 2,793

Accumulated depreciation
At beginning of the financial year 727 442
Depreciation charged for the financial year 412 285
At end of the financial year 1,139 727

Carrying amount
At end of the financial year 2,284 2,066

The corresponding lease liabilities relating to the right-of-use assets is disclosed in Note 55(XVI)(a).

259
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XI) INTANGIBLE ASSETS

Group
2023 2022
Computer Software RM'000 RM'000

Cost
At beginning of the financial year 2,976 2,856
Additions 148 136
Transfer to conventional fund - (16)
At end of the financial year 3,124 2,976

Accumulated amortisation
At beginning of the financial year 2,481 2,138
Amortisation for the financial year 345 359
Transfer to conventional fund - (16)
At end of the financial year 2,826 2,481

Carrying amount
At end of the financial year 298 495

(XII) DEPOSITS FROM CUSTOMERS

(i) By type of deposit:

Group
2023 2022
RM'000 RM'000

Savings deposits
Commodity Murabahah 4,664,808 3,850,631
Qard 159,012 146,823
Demand deposits
Commodity Murabahah 11,178,667 9,587,153
Qard 1,782,776 861,168
Term deposits
Commodity Murabahah 27,373,974 22,994,199
Qard 93,273 150,276
45,252,510 37,590,250

260 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(XII) DEPOSITS FROM CUSTOMERS (CONT’D.)

(ii) The deposits are sourced from the following types of customers:

Group
2023 2022
RM'000 RM'000

Business enterprises 25,081,487 22,820,946

Government and statutory bodies 5,719,815 3,180,849
Individuals 13,361,210 10,600,240
Others 1,089,998 988,215
45,252,510 37,590,250

(iii) The maturity structure of term deposits are as follows:

Group
2023 2022
RM'000 RM'000

Due within six months 23,623,778 18,084,514

Over six months to one year 3,148,741 4,774,000
Over one year to three years 662,291 214,910
Over three years to five years 32,437 71,051
27,467,247 23,144,475

(XIII) INVESTMENT ACCOUNTS OF CUSTOMERS

Group
2023 2022
RM'000 RM'000

Unrestricted investment accounts:

Without maturity
- Wakalah 13,734 16,573
With maturity
- Mudarabah 2,740 361,288
16,474 377,861

261
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(XIII) INVESTMENT ACCOUNTS OF CUSTOMERS (CONT'D.)

(a) Movement in the investment accounts are as follows:

Wakalah Mudarabah
RM'000 RM'000

As at 1 April 2021 18,342 76,492

Funding inflows/(outflows)
New placements during the financial year - 1,125,826
Redemptions/withdrawals during the financial year (1,777) (844,652)
Income from investment 287 6,804

AmBank Islamic's share of profit

Profit distributed to mudarib (279) (3,182)
As at 31 March 2022 16,573 361,288

Funding inflows/(outflows)
New placements during the financial year - 12,267
Redemptions/withdrawals during the financial year (2,846) (372,279)
Income from investment 373 2,662

AmBank Islamic's share of profit

Profit distributed to mudarib (366) (1,198)
As at 31 March 2023 13,734 2,740

Investment asset:
2022
Interbank placement 16,573 -
Housing financing - 361,288
Total investment 16,573 361,288

2023
Interbank placement 13,734 -
Housing financing - 2,740
Total investment 13,734 2,740

262 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XIII) INVESTMENT ACCOUNTS OF CUSTOMERS (CONT’D.)

(a) Movement in the investment accounts are as follows: (cont’d.)

The investment accounts are sourced from the following types of customers:

2023 2022
RM'000 RM'000

Business enterprises 34 354,618

Individuals 16,440 23,243
16,474 377,861

The Group did not impose Wakalah fees to the Investment Account Holders for financial year ended 31 March 2023 and 31 March 2022.

(b) Average Profit Sharing Ratio, Average Rate of Return and Average Performance Incentive Fee for the investment accounts are as follows:

Investment account holder

Average
Average profit Average rate performance
sharing ratio of return incentive fee
(%) (%) (%)

2023
Unrestricted investment accounts:
less than 3 months 55.13 1.71 2.37
over 3 months to 1 year 54.62 2.24 -

Investment account holder

Average
Average profit Average rate performance
sharing ratio of return incentive fee
(%) (%) (%)

2022
Unrestricted investment accounts:
less than 3 months 53.12 1.92 1.75
over 3 months to 1 year 54.01 2.16 -

(c) The maturity structure of investment accounts are as follows:

Group
2023 2022
RM'000 RM'000

Unrestricted investment accounts:

- Without maturity 13,734 16,573
- With maturity
Due within six months 2,740 361,288
16,474 377,861

263
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XIV) DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

Group
2023 2022
Note RM'000 RM'000

Non-Mudarabah:
Licensed investment banks 375,519 252,836
Other financial institutions 1,386,726 1,434,174
Licensed banks (a) 2,620,016 1,519,729
Licensed Islamic banks 298,767 379,066
Bank Negara Malaysia 82,192 48,630
4,763,220 3,634,435

(a) Included in the deposit and placements of licensed banks was RM136.7 million (2022: RM136.7 million) of interbank placement from AmBank
at below market rate with six-year (6) to eight and half year (8.5) maturities. This placement was part of the fund received by AmBank under the
government financing scheme for COVID-19 relief measures, for the purpose of lending to SME at below market rate.

As a result, RM18.9 million of fair value gain arose from the difference between the concession rates received and market rates was recognised as
income attributable to deposits and placements of banks and other financial institutions in the previous financial year. Total unwinding amount of
RM4.4 million (2022: RM3.5 million) was recognised as income attributable to deposits and placements of banks and other financial institutions as
disclosed in as disclosed in Note 55(XXIV).

(XV) INVESTMENT ACCOUNT DUE TO A LICENSED BANK

Group
2023 2022
Note RM'000 RM'000

Restricted investment account ("RA")

- Mudarabah Muqayyadah (a) 1,538,521 1,710,663

(a) The RA contract is a contract based on the Shariah concept of Mudarabah between two parties, that is, capital provider and entrepreneur to finance a
business venture where the business venture is managed solely by AmBank Islamic as the entrepreneur. The profit of the business venture is shared
between both parties based on a pre-agreed ratio. Losses shall be borne solely by the capital provider. The capital provider for the RA contracts is
AmBank, a related company.

As at 31 March 2023, the tenure of the RA contracts is for a period ranging between 4 to 7 years (2022: 8 months to 8 years).

264 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XV) INVESTMENT ACCOUNT DUE TO A LICENSED BANK (CONT’D.)

(b) Movements in the investment account are as follows:

2023 2022
RM'000 RM'000

At beginning of the financial year 1,710,663 718,034

Funding (outflows)/inflows
New placements during the financial year - 1,000,000
Redemptions during the financial year, net* (172,142) (7,371)
Income attributable to investment account holders (52,264) (44,216)
Income from investment 58,071 49,128

AmBank Islamic's share of profit

Profit distributed to mudarib (5,807) (4,912)
At end of the financial year 1,538,521 1,710,663

Investment asset:
Financing 1,538,521 1,710,663
Total investment 1,538,521 1,710,663

(c) Average Profit Sharing Ratio and Average Rate of Return for the investment account based on original contractual maturity are as follows:

Investment account holder

2023 2022
Average profit Average rate Average profit Average rate
sharing ratio of return sharing ratio of return
(%) (%) (%) (%)

Maturity:
over 2 years to 5 years 90 3.19 90 2.64
more than 5 years 90 3.39 90 2.80

265
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(XVI) OTHER LIABILITIES

Group
2023 2022
Note RM'000 RM'000

Other payables and accruals 308,803 354,912

Lease liabilities (a) 2,347 2,092
Provision for reinstatement of leased properties (b) 84 82
Deferred income 15,502 16,022
Provision for zakat 4,172 2,130
Allowances for ECL on financing commitments and financial guarantees (c) 32,300 24,808
Advance rentals 12,081 11,354
375,289 411,400

(a) The movements in lease liabilities are as follows:

Group
2023 2022
Premises RM'000 RM'000

At beginning of the financial year 2,092 2,341

Additions 227 -
Remeasurement 403 -
Finance cost charged 88 64
Payment of lease liabilities (463) (313)
At end of the financial year 2,347 2,092

There were no variable lease payments, subleasing, leases with residual value guarantees, leases not yet commenced, restrictions or covenants
imposed to which the Group is committed.

The costs relating to leases for which the Group applied the practical expedient of MFRS 16 for the current financial year end amounted to
approximately RM900 (2022: RM1,000) for low-value assets. There was no lease with contract term of less than 12 months.

266 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XVI) OTHER LIABILITIES (CONT’D.)

(a) Lease liabilities analysed by undiscounted contractual payments are as follows:

Group
2023 2022
Premises RM'000 RM'000

Up to 1 month 29 26
> 1 month to 3 months 57 41
> 3 months to 6 months 85 62
> 6 months to 12 months 171 123
> 1 year to 5 years 1,433 984
Over 5 years 737 1,168
2,512 2,404

(b) The movements for provision for reinstatement of leased properties are as follows:

Group
2023 2022
RM'000 RM'000

At beginning of the financial year 82 81

Finance cost charged 2 1
At end of the financial year 84 82

267
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XVI) OTHER LIABILITIES (CONT’D.)

(c) Movements in allowances for ECL on financing commitments and financial guarantees are as follows:

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM'000

2023
Balance at beginning of the financial year 8,454 10,567 5,787 24,808
Net allowances for/(writeback of) ECL 55(XXIII) 3,115 (3,564) 7,923 7,474
- Transfer to 12-month ECL (Stage 1) 339 (1,981) - (1,642)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (477) 2,290 - 1,813
- Transfer to Lifetime ECL credit impaired (Stage 3) (14) (181) 197 2
- New exposures originated 5,299 2,609 7,943 15,851
- Net remeasurement of allowances 336 (3,706) (197) (3,567)
- Exposures derecognised (2,368) (2,595) (20) (4,983)
Foreign exchange difference 11 7 - 18
Balance at end of the financial year 11,580 7,010 13,710 32,300

Stage 1 Stage 2 Stage 3

Lifetime ECL Lifetime ECL
12-month not credit credit
ECL impaired impaired Total
Group Note RM’000 RM’000 RM’000 RM'000

2022
Balance at beginning of the financial year 9,012 6,804 15 15,831
Net (writeback of)/allowances for ECL 55(XXIII) (558) 3,761 5,772 8,975
- Transfer to 12-month ECL (Stage 1) 185 (2,533) - (2,348)
- Transfer to Lifetime ECL not credit impaired (Stage 2) (318) 1,722 - 1,404
- Transfer to Lifetime ECL credit impaired (Stage 3) (10) (77) 87 -
- New exposures originated 3,587 6,110 5,780 15,477
- Net remeasurement of allowances (1,813) (74) (87) (1,974)
- Exposures derecognised (2,189) (1,387) (8) (3,584)
Foreign exchange difference - 2 - 2
Balance at end of the financial year 8,454 10,567 5,787 24,808

268 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XVI) OTHER LIABILITIES (CONT’D.)

(c) Movements in allowances for ECL on financing commitments and financial guarantees are as follows: (cont’d.)

The movements in allowances for ECL are as follows:

(a) 12-month ECL (Stage 1) increased by RM3.1 million mainly due to new exposures originated and net remeasurement of allowances offset by
financial exposures derecognised.

(b) Lifetime ECL not credit impaired (Stage 2) decreased by RM3.6 million mainly due to net remeasurement of allowances and financial exposures
derecognised offset by new exposures originated.

(c) Lifetime ECL credit impaired (Stage 3) increased by RM7.9 million mainly due to new exposures originated.

(XVII) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS

Group
2023 2022
Premises RM'000 RM'000

Finance income and hibah:

Financing and advances* 1,690,020 1,258,163
Impaired financing and advances 966 2,567
Financial assets at fair value through profit or loss 35,586 54,421
Financial investments at amortised cost 149,333 115,684
Financial investments at fair value through other comprehensive income 179,181 147,762
Deposits and placements with banks and other financial institutions 43,969 72,805
2,099,055 1,651,402

(Loss)/gain from sale of financial investments at fair value through other comprehensive income (69) 549
Gain/(loss) from sale of financial assets at fair value through profit and loss 3,003 (3,827)
Gain/(loss) on revaluation of financial assets at fair value through profit and loss 1,945 (416)
Gain on foreign exchange 1,598 2,935
Loss on derivatives (6,822) (8,576)
Others 28 6
(317) (9,329)

Fee and commission income:

Commission 22,467 19,912
Other fee income 52,647 40,097
75,114 60,009
Total 2,173,852 1,702,082

* Included the net gain of RM79,000 (2022: net loss of RM17,098,000) arising from government support measures implemented in response to COVID-19 pandemic.

269
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XVIII) INCOME DERIVED FROM INVESTMENT OF INVESTMENT ACCOUNT FUNDS

Group
2023 2022
Premises RM'000 RM'000

Income derived from investment of:

(i) Restricted investment account 58,071 49,128
(ii) Unrestricted investment account 3,035 7,091
61,106 56,219

(i) Income derived from investment of restricted investment account

Finance income and hibah:
Financing and advances 58,071 49,128

(ii) Income derived from investment of unrestricted investment account

Finance income and hibah:
Financing and advances 2,662 6,804
Deposits and placements with banks and other financial institutions 373 287
Total finance income and hibah 3,035 7,091

270 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XIX) INCOME DERIVED FROM ISLAMIC BANKING FUNDS

Group
2023 2022
RM'000 RM'000

Finance income and hibah:

Financing and advances* 142,220 107,262
Impaired financing and advances 81 219
Financial assets at fair value through profit or loss 2,995 4,640
Financial investments at fair value through other comprehensive income 15,079 12,597
Financial investments at amortised cost 12,567 9,862
Deposits and placements with banks and other financial institutions 3,700 6,207
Others - 22
176,642 140,809

Gain/(loss) from sale of financial assets at fair value through profit and loss 253 (326)
Gain/(loss) on revaluation of financial assets at fair value through profit and loss 164 (36)
(Loss)/gain from sale of financial investments at fair value through other comprehensive income (6) 47
Gain on foreign exchange 134 250
Loss on derivatives (574) (731)
Others 2 1
(27) (795)

Fee and commission income:

Commission 15,304 17,550
Other fee income 10,522 11,946
25,826 29,496
Total 202,441 169,510

* Included the net gain of RM6,000 (2022: net loss of RM1,457,000) arising from government support measures implemented in response to COVID-19 pandemic.

271
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XX) IMPAIRMENT ON FINANCING AND ADVANCES

Group
2023 2022
RM'000 RM'000

Allowances for impairment on financing and advances:

Allowances for ECL (Note 55(VI)(h)) 294,473 335,811
Impaired financing and advances recovered, net (130,715) (93,940)
163,758 241,871

(XXI) ALLOWANCES FOR/(WRITEBACK OF) IMPAIRMENT ON FINANCIAL INVESTMENTS

Group
2023 2022
RM'000 RM'000

Financial investments at amortised cost - sukuk 14,095 256,019

Financial investments at fair value through other comprehensive income - sukuk (5,287) (59)
8,808 255,960

(XXII) (WRITEBACK OF)/ALLOWANCES FOR OTHER FINANCIAL ASSETS

Group
2023 2022
RM'000 RM'000

Cash and short-term funds (143) 75

(XXIII) PROVISION FOR FINANCIAL COMMITMENTS AND CONTINGENCIES

Group
2023 2022
RM'000 RM'000

Allowances for ECL on financial commitments and financial guarantee contracts 7,474 8,975

272 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XXIV) INCOME ATTRIBUTABLE TO THE DEPOSITORS AND OTHERS

Group
2023 2022
RM'000 RM'000

Deposits from customers:

Non-Mudarabah Fund 877,697 680,685
Deposits and placements of banks and other financial institutions:
Non-Mudarabah Fund* 143,778 40,580
Others 67,562 29,001
211,340 69,581
Total 1,089,037 750,266

* Income attributable to deposits and placements of banks and other financial institutions included the fair value gain of RM18.9 million arising from the placements by
AmBank from the funds received by AmBank under the government financing scheme for COVID-19 relief measures for previous financial year. Total unwinding amount
for the financial year of RM4.4 million (2022: RM3.5 million), as disclosed in Note 55(XIV).

(XXV) INCOME ATTRIBUTABLE TO THE INVESTMENT ACCOUNT HOLDERS

Group
2023 2022
RM'000 RM'000

Unrestricted
Customers - investment accounts 1,472 3,629
Restricted
Licensed bank - investment account 52,264 44,216
53,736 47,845

273
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(XXVI) OTHER OPERATING EXPENSES

Group
2023 2022
RM'000 RM'000

Personnel costs 27,421 21,773

Establishment costs 2,628 2,814
Marketing and communication expenses 5,957 3,826
Administration and general expenses 13,205 9,120
Service transfer pricing expense, net 285,989 247,761
335,200 285,294

(XXVII) TAXATION AND ZAKAT

Group
2023 2022
RM'000 RM'000

Taxation 156,340 49,508

Zakat 3,789 2,168
Taxation and zakat 160,129 51,676

(XXVIII) NET INCOME FROM ISLAMIC BANKING

For consolidation with the conventional business, net income from the operations of Islamic banking comprises the followings:

Group
2023 2022
RM'000 RM'000

Income derived from investment of depositors' funds 2,173,852 1,702,082

Income derived from investment of investment account funds 61,106 56,219
Income derived from Islamic banking funds 202,441 169,510
Less: Income attributable to the depositors and others (1,089,037) (750,266)
Income attributable to investment account holders (53,736) (47,845)
Income attributable to the Group 1,294,626 1,129,700
Less: Finance costs (87,469) (97,455)
1,207,157 1,032,245
Consolidation adjustments 94,113 29,781
1,301,270 1,062,026

274 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT'D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT'D.)

(XXIX) CAPITAL ADEQUACY RATIO

(a) The capital adequacy ratios under the Islamic banking operations of the Group are as follows:

Group
2023 2022

Under transitional arrangements, refer Note (1) below

Common Equity Tier 1 ("CET1") Capital Ratio 12.560% 12.302%
Tier 1 Capital Ratio 12.560% 12.302%
Total Capital Ratio 17.052% 17.033%

(1) The capital adequacy ratios of the Islamic banking operations of the Group are computed in accordance with Bank Negara Malaysia's revised
Risk Weighted Capital Adequacy Framework (Basel II) and the Capital Adequacy Framework for Islamic Banks Capital Components ("CAFIB").
The Group's Islamic banking business has adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator
Approach for Operational Risk.

Pursuant to the revised BNM policy document, Capital Adequacy Framework for Islamic Banks (Capital Components) issued on 9 December
2020, the capital ratios of the Group had been computed applying transitional arrangements on provision for ECL. Under the transitional
arrangements, the Group is allowed to add back a portion of the loss allowance for non-credit-impaired exposure (i.e. Stage 1 and Stage 2
provisions) to CET1 Capital. Had the transitional arrangements not been applied, the capital ratios of the Group are as follows:

Group
2023 2022

Common Equity Tier 1 ("CET1") Capital Ratio 11.973% 11.586%

Tier 1 Capital Ratio 11.973% 11.586%
Total Capital Ratio 16.728% 16.693%

275
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XXIX) CAPITAL ADEQUACY RATIO (CONT’D.)

(b) The components of CET1 Capital, Tier 1 and Tier 2 Capital of the Islamic banking operations of the Group are as follows:

Group
2023 2022
RM'000 RM'000

CET1 Capital
Ordinary share capital 1,387,107 1,387,107
Retained earnings 3,022,623 2,490,692
Fair value reserve (9,188) (3,893)
Less : Regulatory adjustments applied on CET1 Capital
Other intangibles (298) (495)
Deferred tax assets (62,097) (61,249)
Unrealised fair value gains and losses on financial liabilities due to changes in own credit risk (75) (92)
Other CET1 regulatory adjustments specified by BNM 212,690 235,578
CET1/Tier 1 Capital 4,550,762 4,047,648

Tier 2 Capital
Tier 2 Capital instruments meeting all relevant criteria for inclusion 1,300,000 1,300,000
General provisions* 327,419 256,523
Tier 2 Capital 1,627,419 1,556,523
Total Capital 6,178,181 5,604,171

The breakdown of the risk weighted assets ("RWA") in various categories of risk are as follows:
Credit RWA 35,344,046 32,508,336
Less : Credit RWA absorbed by Profit Sharing Investment Account (1,545,037) (2,075,074)
Total Credit RWA 33,799,009 30,433,262
Market RWA 304,677 634,019
Operational RWA 2,127,143 1,835,409
Total Risk Weighted Assets 36,230,829 32,902,690

* Consists of Stage 1 and Stage 2 loss allowances.

276 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

55. OPERATIONS OF ISLAMIC BANKING (CONT’D.)

NOTES TO THE FINANCIAL STATEMENTS OF THE OPERATIONS OF ISLAMIC BANKING (CONT’D.)

(XXX) COMMITMENTS AND CONTINGENCIES

In the normal course of business, the operations of Islamic banking of the Group makes various commitments and incur certain contingent liabilities with
legal recourse to its customers. No material losses are anticipated as a result of these transactions. The commitments and contingencies are not secured
against the Group’s assets.

As at the reporting date, the principal amounts of the commitments and contingencies and notional contracted amounts of derivatives are as follows:

2023 2022
Group RM'000 RM'000

Commitments
Other commitments, such as formal standby facilities and credit lines, with an original maturity of:
- up to one year 5,029,138 5,992,817
- over one year 1,047,668 896,617
Unutilised credit card lines 1,705,540 1,430,460
Forward asset purchases - 10,114
7,782,346 8,330,008
Contingent Liabilities
Obligations under on-going underwriting agreements 150,000 130,000
Certain transaction-related contingent items 970,420 905,845
Short-term self-liquidating trade-related contingencies 87,309 81,317
Direct credit substitutes 723,168 614,836
1,930,897 1,731,998

Derivative Financial Instruments

Profit rate related contracts:
- Over one year to five years 350,000 350,000
Foreign exchange related contracts:
- One year or less 2,882,476 2,636,545
- Over one year to five years 1,018,061 1,582,530
Commodity related contracts:
- Over one year to five years 74,952 71,367
4,325,489 4,640,442
Total 14,038,732 14,702,448

277
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

56. SIGNIFICANT EVENT

Disposal of AmGeneral Insurance Berhad to Liberty Insurance Berhad

On 19 July 2021, AmGeneral Holdings Berhad (“AGHB”), a 51%-owned subsidiary of the Company entered into an Implementation Agreement with Liberty
Insurance Berhad (“LIB”) whereby AGHB will dispose its wholly-owned subsidiary, AmGeneral Insurance Berhad (“AGIB”), to LIB for approximately RM2,290 million
(subject to adjustments), to be satisfied via a combination of cash and shares in LIB.

Upon receiving the approval from the Higher Court of Malaysia on 7 July 2022, AGHB undertook selective capital reduction (“SCR”) and capital repayment in
respect of IAG International Pty Limited’s 49% shareholding in AGHB comprising of 93,100,000 ordinary shares. IAG received a total capital repayment amount
of RM1,076 million and ceased to be a shareholder of AGHB.

The disposal completed on 28 July 2022 and has resulted in an estimated loss of RM53.9 million to the Group as shown below:

Group
RM’000 RM’000

Cash and short-term funds 187,774

Deposits and placements with banks and other financial institutions 21,486
Financial assets at fair value through profit or loss 3,695,277
Loans, advances and financing 292
Deferred tax assets 46,427
Other assets 81,628
Reinsurance assets and other insurance receivables 567,502
Property and equipment 11,582
Right-of-use assets 8,003
Intangible assets (excluding goodwill) 35,657
Assets held for sale 1,562
Other liabilities (333,765)
Insurance contract liabilities and other insurance payables (2,647,451)
Net assets disposed 1,675,974
Attributable goodwill recognised in income statement 717,070
Disposal cost incurred 15,715
Agreed ceded amount from IAG International Pty Limited ("IAG") (58,100)

Total estimated sales considerations:

Agreed proceeds settled by cash (1,351,000)
Agreed proceeds settled by shares in LIB (939,000)
Estimated adjustment to disposal proceeds settled by cash 12,381
Estimated adjustment - settled by shares in LIB (19,147) (2,296,766)
Estimated net loss on disposal to the Group 53,893

Estimated net loss on the disposal of AGIB, attributable to equity holders of the Company 6,621
Estimated net loss on the disposal of AGIB, attributable to IAG 47,272
Estimated net loss on disposal to the Group 53,893

278 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

57. DISCONTINUED OPERATION

As disclosed in Note 56, the results of AGIB for the period up to disposal date have been presented separately in the income statements as “Profit after taxation
from discontinued operation”.

Corresponding reclassifications have been made to the prior year's income statements to allow for fair comparison of operational performance of AGIB.

(I) STATEMENT OF PROFIT OR LOSS FOR THE FINANCIAL PERIOD ENDED 28 JULY 2022

1.04.2022 1.04.2021
to to
28.07.2022 31.03.2022
Group Note RM'000 RM'000

Interest income 42,389 124,537

Income from insurance business 457,976 1,334,847
Insurance claims and commissions (290,902) (858,280)
Net income from insurance business 57(II) 167,074 476,567
Other operating loss 57(III) (26,027) (36,411)
Estimated loss on disposal of subsidiary 56 (53,893) -
Net income 129,543 564,693
Other operating expenses 57(IV) (101,256) (305,246)
Operating profit 28,287 259,447
Writeback of impairment on insurance receivables 2,736 1,681
Other recoveries/(write-offs), net 6 (31)
Impairment of Kurnia Brand, agent relationship and other assets (115,981) -
(Loss)/profit before taxation from discontinued operation (84,952) 261,097
Taxation 18,879 (32,529)
(Loss)/profit for the period/year from discontinued operation (66,073) 228,568

Attributable to:
Equity holders of the Company (7,015) 136,713
Non-controlling interests (59,058) 91,855
(66,073) 228,568

279
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

57. DISCONTINUED OPERATION (CONT'D.)

(II) NET INCOME FROM INSURANCE BUSINESS

Group
1.04.2022 1.04.2021
to to
28.07.2022 31.03.2022
Note RM'000 RM'000

Income from general insurance 457,976 1,334,847

(a) 457,976 1,334,847
Insurance claims and commissions
Insurance commissions 41,905 131,020
Insurance claims (b) 248,997 727,260
290,902 858,280
167,074 476,567
(a) Income from general insurance business
Gross Premium
- insurance contract 489,157 1,518,013
- change in unearned premium provision 27,496 (11,323)
516,653 1,506,690
Premium ceded
- insurance contract (56,614) (175,215)
- change in unearned premium provision (2,063) 3,372
(58,677) (171,843)
457,976 1,334,847
(b) Insurance claims
- gross benefits and claims paid 275,020 742,971
- claims ceded to reinsurers (27,887) (72,786)
- change in contract liabilities-insurance contract (231) 190,985
- change in contract liabilities ceded to reinsurers - insurance contract 2,095 (133,910)
248,997 727,260

280 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

57. DISCONTINUED OPERATION (CONT’D.)

(III) OTHER OPERATING LOSS

Group
1.04.2022 1.04.2021
to to
28.07.2022 31.03.2022
RM'000 RM'000

Investment and trading income:

Net gain from sale of financial assets at fair value through profit or loss 405 537
Net loss on revaluation of financial assets at fair value through profit or loss (27,798) (41,604)
Gain on foreign exchange 27 3
Dividend income from financial assets at fair value through profit or loss 1,138 5,425
(26,228) (35,639)

Other income:
Net gain on disposal of property and equipment 9 -
Rental income 9 80
Others 183 (852)
201 (772)
(26,027) (36,411)

281
 AMMB HOLDINGS BERHAD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

57. DISCONTINUED OPERATION (CONT’D.)

(IV) OTHER OPERATING EXPENSES

Group
1.04.2022 1.04.2021
to to
28.07.2022 31.03.2022
RM'000 RM'000

Personnel costs:
Salaries, allowances and bonuses 41,033 127,479
Shares granted under ESS - charge/(writeback) 109 (447)
Contributions to Employees' Provident Fund ("EPF")/private retirement schemes 6,343 19,905
Social security cost 377 1,141
Other staff related expenses 6,153 10,619
54,015 158,697

Establishment costs:
Depreciation of property and equipment 1,237 4,079
Depreciation of right-of-use assets 4,009 12,449
Amortisation of intangible assets 6,065 18,953
Computerisation costs 7,731 23,347
Cleaning, maintenance and security 1,638 4,154
Finance costs:
- interest on lease liabilities 144 1,060
Others 521 1,797
21,345 65,839

Marketing and communication expenses:

Advertising, promotional and other marketing activities 13,005 42,233
Telephone charges 650 2,254
Postage 93 292
Travelling and entertainment 1,361 2,782
Others 153 1,058
15,262 48,619

Administration and general expenses:

Professional services 2,887 6,254
Travelling 173 390
Insurance 60 193
Subscriptions and periodicals 26 131
Others 7,488 25,123
10,634 32,091
Total 101,256 305,246

282 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2023

57. DISCONTINUED OPERATION (CONT’D.)

(V) STATEMENT OF CASH FLOWS DISCLOSURES

Net cash flows incurred by AGIB are as follows:

Group
1.04.2022 1.04.2021
to to
28.07.2022 31.03.2022
RM'000 RM'000

Operating activities 97,806 69,050

Investing activities (2,968) (10,066)
Financing activities (4,140) (12,944)
Net increase in cash and cash equivalents 90,698 46,040

283
 AMMB HOLDINGS BERHAD

APPENDIX

DIRECTORS OF SUBSIDIARY COMPANIES OF THE COMPANY

The following is the list of directors who have served on the boards of the subsidiary companies of the Company since the beginning of the current financial year to the
date of the Directors' Report.

No Name of Subsidiary Company Name of Director

1 AmInvestment Group Berhad Tan Sri Azman Hashim

Ling Fou-Tsong @ Jamie Ling
2 AmREIT Holdings Sdn Bhd Soo Kim Wai
Azlan Baqee bin Abdullah
Yap Huey Wen
3 AmREIT Managers Sdn Bhd Soo Kim Wai
Dato’ Wong Nam Loong
Dato’ Abdullah Thalith bin Md Thani
Azlan Baqee bin Abdullah
Raja Nazirin Shah bin Raja Mohamad (Resigned on 1 December 2022)
Yap Huey Wen
4 AmInvestment Management Sdn Bhd Pushparani a/p A Moothathamby
(Under Members’ Voluntary Liquidation) Datin Maznah binti Mahbob
Mohd Fauzi bin Mohd Tahir
5 Malaysian Ventures Management Lim Kien Hock
Incorporated Sdn Bhd Khoo Teck Beng
(Under Members’ Voluntary Liquidation)
6 AmPrivate Equity Sdn Bhd Lim Kien Hock
(Under Members’ Voluntary Liquidation) Khoo Teck Beng
7 AmSecurities Holding Sdn Bhd Khoo Teck Beng
Gan Kim Khoon
8 AMAB Holdings Sdn Bhd Tan Sri Azman Hashim
Dato’ Sulaiman Mohd Tahir
9 AmGeneral Holdings Berhad Tan Sri Azman Hashim
Dato’ Sulaiman Mohd Tahir
Daniel Francis Coman (Resigned on 28 July 2022)
10 AmBank (M) Berhad Voon Seng Chuan
Soo Kim Wai
Dato’ Sri Abdul Hamidy bin Abdul Hafiz
Dr Veerinderjeet Singh a/l Tejwant Singh
U Chen Hock
Ng Chih Kaye
Foong Pik Yee

284 FINANCIAL REPORT 2023

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Statements Disclosures

APPENDIX

DIRECTORS OF SUBSIDIARY COMPANIES OF THE COMPANY (CONT’D.)

The following is the list of directors who have served on the boards of the subsidiary companies of the Company since the beginning of the current financial year to
the date of the Directors' Report. (cont’d.)

No Name of Subsidiary Company Name of Director

11 AmLabuan Holdings (L) Ltd Datuk Iswaraan a/l Suppiah

12 MBf Information Services Sdn Bhd Khoo Teck Beng
Lim Kien Hock
13 MBf Nominees (Tempatan) Sdn Bhd Lim Kien Hock
(Under Members' Voluntary Winding Up) Khoo Teck Beng
14 MBf Trustees Berhad Lim Hock Aun
(Under Members' Voluntary Winding Up) Khoo Teck Beng
15 AmProperty Holdings Sdn Bhd Khoo Teck Beng
Lim Kien Hock
16 AmCard Services Berhad Ling Fou-Tsong @ Jamie Ling
Loo Boon Seng
17 Teras Oak Pembangunan Sendirian Berhad Lim Kien Hock
Khoo Teck Beng
18 Bougainvillaea Development Sdn Bhd Khoo Teck Beng
Lim Kien Hock
19 Malco Properties Sdn Bhd Lim Kien Hock
(Under Members' Voluntary Winding Up) Khoo Teck Beng
20 AmMortgage One Berhad Loo Boon Seng
Dato' Ng Mann Cheong
Syed Ihsanputra bin Syed Mohd Fudzan
21 AmInvestment Bank Berhad Jeyaratnam a/l Tamotharam Pillai
Lum Sing Fai
Ramesh Pillai
Chee Li Har
Seow Yoo Lin
Dato' Kong Sooi Lin
Datin Hayati Aman binti Hashim
22 AmFutures Sdn Bhd StephenNoel Kwong Yong Shian
(Under Members' Voluntary Liquidation) Hon Chu Nyaw
23 AMMB Nominees (Tempatan) Sdn Bhd Khoo Teck Beng
(Under Members' Voluntary Winding Up) Goh Wee Peng

285
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APPENDIX

DIRECTORS OF SUBSIDIARY COMPANIES OF THE COMPANY (CONT’D.)

The following is the list of directors who have served on the boards of the subsidiary companies of the Company since the beginning of the current financial year to
the date of the Directors' Report. (cont’d.)

No Name of Subsidiary Company Name of Director

24 AM Nominees (Asing) Sdn Bhd Khoo Teck Beng

Hon Chu Nyaw
25 AM Nominees (Tempatan) Sdn Bhd Khoo Teck Beng
Hon Chu Nyaw
26 AMSEC Nominees (Tempatan) Sdn Bhd Hon Chu Nyaw
Gan Kim Khoon
27 AMSEC Nominees (Asing) Sdn Bhd Hon Chu Nyaw
Gan Kim Khoon
28 AmFunds Management Berhad Jeyaratnam a/l Tamotharam Pillai
Dato' Mustafa bin Mohd Nor (Retired on 3 March 2023)
Tai Terk Lin
Ng Chih Kaye
Jas Bir Kaur a/p Lol Singh
Goh Wee Peng
29 AmIslamic Funds Management Sdn Bhd Chee Li Har
Zainal Abidin bin Mohd Kassim
Izad Shahadi bin Mohd Sallehuddin
Goh Wee Peng
Wong Weng Tuck
30 AmResearch Sdn Bhd Lee Yew Kin
(Under Members' Voluntary Liquidation) Khoo Teck Beng
31 AmBank Islamic Berhad Dato' Sri Abdul Hamidy bin Abdul Hafiz
Hajjah Rosmah binti Ismail
Farina binti Farikhullah Khan
Azlan Baqee bin Abdullah
Dr Mohd Nordin bin Mohd Zain
K. Vithyatharan a/l V Karunakaran
32 MBF Cards (M'sia) Sdn Bhd Ling Fou-Tsong @ Jamie Ling
Loo Boon Seng

286 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

1.0 SCOPE OF APPLICATION

The Risk Weighted Capital Adequacy Framework - (Basel II) Disclosure Requirements (Pillar 3) and Capital Adequacy Framework for Islamic Banks (“CAFIB”)
- Disclosure Requirements (Pillar 3) policy documents issued by Bank Negara Malaysia (“BNM”) aim to enhance the transparency of disclosures on the risk
management practices and capital adequacy of banking institutions. The two policy documents are applicable to all banking institutions licensed under the
Financial Services Act 2013 (“FSA”) and Islamic Financial Service Act 2013 (“IFSA”).

The banking subsidiaries of AMMB Holdings Berhad (“AMMB”) to which the policy documents apply are AmBank (M) Berhad (“AmBank”), AmInvestment
Bank Berhad (“AmInvestment Bank”) and AmBank Islamic Berhad (“AmBank Islamic”). AMMB is a financial holding company (“FHC”) approved pursuant to
Section 112(3) of the FSA.

The Pillar 3 Disclosure and regulatory capital ratio calculations are prepared at the consolidated AMMB Holdings Berhad level excluding investment in insurance
entities and joint ventures (“the Group”). Investment in insurance entities is deducted from the regulatory capital. The information provided in this Pillar 3
Disclosure has been verified by the Group internal auditors and certified by the Group Chief Executive Officer.

Capital Adequacy

BNM's guidelines on capital adequacy seek to ensure that risk exposures of financial institutions are supported by adequate level of capital to withstand losses
which may result from credit and other risks associated with its business operations.

The capital adequacy ratios are computed in accordance with BNM's policy document on Capital Adequacy Framework (Capital Components) and Capital
Adequacy Framework for Islamic Banks (Capital Components) issued on 9 December 2020. Pursuant to BNM's Capital Adequacy Framework (Capital Components)
and Capital Adequacy Framework for Islamic Banks (Capital Components), financial institution is required to maintain minimum Common Equity Tier 1 (“CET1”)
Capital Ratio of 4.5%, Tier 1 Capital Ratio of 6.0% and Total Capital Ratio of 8.0% at all times. In addition, a financial institution is also required to maintain capital
buffers which comprise the sum of the following:

(a) a Capital Conservation Buffer (“CCB”) of 2.5%;

(b) a Countercyclical Capital Buffer (“CCyB”) determined as the weighted-average of the prevailing CCyB rates applied in the jurisdictions in which the financial
institution has credit exposures. BNM will communicate any decision on the CCyB rate by up to 12 months before the date from which the rate applies; and
(c) a Higher Loss Absorbency (“HLA”) requirement for a financial institution that is designated as a domestic systemically important bank (“D-SIB”).

The Group and banking group subsidiaries have adopted the Standardised Approach for Credit and Market Risks and the Basic Indicator Approach for Operational
Risk, based on BNM's Guidelines on Capital Adequacy Framework (Basel II - Risk Weighted Assets) and Capital Adequacy Framework for Islamic Banks (Risk
Weighted Assets).

Frequency of Disclosure

Full disclosure requirements under the BNM guidelines are made on an annual and semi-annual basis except for disclosures under paragraph 10.1 of the
guidelines and all qualitative disclosures which are made on an annual basis if there are no material changes in the interim reporting period.

Medium and Location of Disclosure

The Pillar 3 disclosure of the Group is available on the Group’s corporate website at www.ambankgroup.com.

1.1 Basis of Consolidation

For statutory accounting purposes, the consolidated financial statements of AMMB comprise the financial statements of the Company and the financial
statements of all its controlled entities (individually referred to as “group entities”) where it is determined that there is a capacity to control. An investor
controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee.

287
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PILLAR 3 DISCLOSURES

1.0 SCOPE OF APPLICATION (CONT’D.)

1.1 Basis of Consolidation (cont’d.)

For purposes of this Pillar 3 Disclosure, the consolidation basis used is the same as that used for regulatory capital adequacy purposes except for the
exclusion of investment in insurance entities and joint ventures. The following table shows the differences between the scope of statutory and regulatory
consolidation.

Accounting treatment
Type of entity
Statutory reporting Basel III regulatory reporting

Subsidiaries licensed under FSA or IFSA or engaged in Fully consolidated Deducted from capital at the banking subsidiary entity level;
financial activities Consolidated in the calculation of capital adequacy at the banking
subsidiary consolidated level and FHC level
Subsidiaries engaged in non-financial activities Fully consolidated Risk weighted at the banking subsidiary entity level;
Consolidated in the calculation of capital adequacy at the banking
subsidiary consolidated level and FHC level
Associates and jointly controlled entities which are Equity accounted Deducted in the calculation of capital
licensed under FSA or IFSA or engaged in financial
activities
Associates and jointly controlled entities which are not Equity accounted Risk weighted
licensed under FSA or IFSA or engaged in financial
activities

Apart from regulatory requirements and statutory constraints, there is no current or foreseen material, practical or legal impediments to the transfer of funds
or regulatory capital within the Group.

Any such transfers would require the approvals of the respective Board of Directors (“Board”), as well as the concurrence of BNM.

2.0 CAPITAL MANAGEMENT

The Group’s capital management approach is focused on maintaining an optimal capital position that supports the Group’s strategic objectives and risk appetite.
In line with the Group’s annual 3-year strategy plan, a capital plan is developed to ensure that adequate level of capital and an optimum capital structure is
maintained to meet regulatory requirements, the Group’s strategic objectives and stakeholders’ expectations.

The Group uses internal models and other quantitative techniques in its internal risk and capital assessment. They help to estimate potential future losses arising
from credit, market and other material risks, and supplement the regulatory formulae to simulate the amount of capital required to support them.

Stress testing is used to ensure that the Group’s internal capital assessment considers the impact of extreme but probable scenarios on its risk profile and capital
position. They provide an insight into the potential impact of significant adverse events on the Group and how these events could be mitigated. The Group’s target
capital levels are set taking into account its risk appetite and its risk profile under future expected and stressed economic scenarios.

The Group’s assessment of risk appetite is closely integrated with the Group’s strategy, business planning and capital assessment processes, and is used to
inform senior management’s views on the level of capital required to support the Group’s business activities.

The capital that the Group is required to hold is determined by its risk exposures after applying collaterals and other risk mitigants.

The Group has in place processes and controls to monitor and manage capital adequacy across the organisation. The Group Assets and Liabilities Committee
(“GALCO”) is responsible for overseeing and managing the Group’s capital and liquidity positions.

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Statements Disclosures

PILLAR 3 DISCLOSURES

2.0 CAPITAL MANAGEMENT (CONT’D.)

A strong governance and process framework is embedded in the capital planning and assessment methodology. Overall responsibility for the effective
management of risk rests with the Board. The Risk Management Committee (“RMC”) is specifically delegated the task of reviewing all risk management issues
including oversight of the Group’s capital position and any actions impacting the capital levels.

On 9 December 2020, BNM issued revised policy documents, Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic
Banks (Capital Components). The key addition to the revised policy documents is the transitional arrangements for financial institutions on provisions for expected
credit loss (“ECL”). Under these revised policy documents, a financial institution is allowed to add back a portion of the loss allowance for non-credit-impaired
exposures (i.e. Stage 1 and Stage 2 provisions) to Common Equity Tier 1 (“CET1”) Capital from financial year 2021 to financial year 2024.

Table 2.1: Capital Adequacy Ratios

The capital adequacy ratios of the Group and banking subsidiaries are as follows:

31 March 2023
AmBank AmInvestment
AmBank Islamic Bank Group

Under transitional arrangements, refer Note (1) below

Before deducting proposed dividends:
CET1 Capital Ratio 12.318% 12.616% 43.205% 12.844%
Tier 1 Capital Ratio 12.318% 12.616% 43.205% 12.845%
Total Capital Ratio 16.867% 17.127% 43.993% 15.983%

After deducting proposed dividends:

CET1 Capital Ratio 12.129% 12.616% 35.067% 12.515%
Tier 1 Capital Ratio 12.129% 12.616% 35.067% 12.515%
Total Capital Ratio 16.677% 17.127% 35.856% 15.653%

31 March 2022
AmBank AmInvestment
AmBank Islamic Bank Group

Under transitional arrangements, refer Note (1) below

Before deducting proposed dividends:
CET1 Capital Ratio 11.659% 12.489% 33.393% 12.342%
Tier 1 Capital Ratio 11.659% 12.489% 33.393% 12.342%
Total Capital Ratio 16.109% 17.292% 34.077% 15.456%

After deducting proposed dividends:

CET1 Capital Ratio 11.659% 12.489% 25.771% 12.202%
Tier 1 Capital Ratio 11.659% 12.489% 25.771% 12.202%
Total Capital Ratio 16.109% 17.292% 26.456% 15.315%

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 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

2.0 CAPITAL MANAGEMENT (CONT’D.)

Table 2.1: Capital Adequacy Ratios (cont’d.)

Notes:
(1) Pursuant to the revised BNM policy documents, Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework for Islamic Banks
(Capital Components) issued on 9 December 2020, the capital ratios of the Group and the banking subsidiaries had been computed applying transitional
arrangements on provision for ECL. Had the transitional arrangements not been applied, the capital ratios of the Group and the banking subsidiaries as at
31 March 2023 and 31 March 2022 are as follows:

31 March 2023
AmBank AmInvestment
AmBank Islamic Bank Group

Before deducting proposed dividends:

CET1 Capital Ratio 11.972% 12.026% 43.205% 12.430%
Tier 1 Capital Ratio 11.972% 12.026% 43.205% 12.430%
Total Capital Ratio 16.675% 16.801% 43.993% 15.800%
After deducting proposed dividends:
CET1 Capital Ratio 11.783% 12.026% 35.067% 12.100%
Tier 1 Capital Ratio 11.783% 12.026% 35.067% 12.101%
Total Capital Ratio 16.486% 16.801% 35.856% 15.471%

31 March 2022
AmBank AmInvestment
AmBank Islamic Bank Group

Before deducting proposed dividends:

CET1 Capital Ratio 11.168% 11.763% 33.393% 11.791%
Tier 1 Capital Ratio 11.168% 11.763% 33.393% 11.791%
Total Capital Ratio 15.967% 16.948% 34.077% 15.324%
After deducting proposed dividends:
CET1 Capital Ratio 11.168% 11.763% 25.771% 11.651%
Tier 1 Capital Ratio 11.168% 11.763% 25.771% 11.651%
Total Capital Ratio 15.967% 16.948% 26.456% 15.184%

(2) The Company, being a financial holding company (“FHC”) i.e. a financial holding company approved pursuant to Section 112(3) of the FSA or Section 124(3)
of the IFSA and holds investment directly or indirectly in corporations that are engaged predominantly in banking business or Islamic banking business, has
complied with BNM guidelines on minimum capital adequacy ratios and capital buffer requirements at the consolidated level effective 1 January 2019.

For regulatory capital reporting purposes, the consolidated level comprises the consolidation of all its financial and non-financial subsidiaries, excluding
investments in insurance subsidiaries as per BNM's guidelines on Capital Adequacy Framework (Capital Components) and Capital Adequacy Framework
for Islamic Banks (Capital Components). Under the guidelines, investments in insurance subsidiaries shall be deducted in the calculation of CET1 Capital
ratio.

The positions of each entity as presented above and Group (where applicable) are also published at www.ambankgroup.com.

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Statements Disclosures

PILLAR 3 DISCLOSURES

2.0 CAPITAL MANAGEMENT (CONT’D.)

Table 2.2 Risk-Weighted Assets and Capital Requirements

The breakdown of RWA by exposures in major risk category of the Group is as follows:

31 March 2023
Gross
exposures/
Exposure
at default Risk
(“EAD”) before Net Weighted Total Risk Minimum
credit risk exposures/ Risk Assets Weighted capital
mitigation EAD after weighted Absorbed by Assets after requirement
(“CRM”) CRM assets PSIA effects of PSIA at 8%
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
1. Credit risk
On-balance sheet exposures:
Sovereigns/central banks 24,112,318 24,112,318 - - - -
Public Sector Entities (PSEs) 1,814 1,814 363 - 363 29
Banks, Development Financial Institutions (DFIs)
and Multilateral Development Banks (MDBs) 7,293,311 7,293,311 1,471,863 - 1,471,863 117,749
Insurance companies, Securities firms and Fund
managers 2,588 2,588 2,588 - 2,588 207
Corporates 76,143,099 73,508,757 56,421,699 - 56,421,699 4,513,736
Regulatory retail 40,465,253 35,421,351 28,003,870 2,740 28,001,130 2,240,090
Residential mortgages 30,390,626 30,387,179 11,972,145 - 11,972,145 957,772
Higher risk assets 14,182 14,182 21,274 - 21,274 1,702
Other assets 2,345,840 2,345,840 1,837,488 - 1,837,488 146,999
Securitisation exposures 90 90 1,125 - 1,125 90
Equity exposures 680,324 680,324 680,324 - 680,324 54,426
Defaulted exposures 1,415,048 1,406,735 1,315,114 - 1,315,114 105,209
Total for on-balance sheet exposures 182,864,493 175,174,489 101,727,853 2,740 101,725,113 8,138,009
Off-balance sheet exposures:
Over the counter (“OTC”) derivatives 2,118,565 1,746,958 1,220,581 - 1,220,581 97,646
Off-balance sheet exposures other than OTC
derivatives or credit derivatives 30,784,963 22,614,427 9,296,544 - 9,296,544 743,724
Defaulted exposures 88,476 77,356 99,248 - 99,248 7,940
Total for off-balance sheet exposures 32,992,004 24,438,741 10,616,373 - 10,616,373 849,310
Total on and off-balance sheet exposures 215,856,497 199,613,230 112,344,226 2,740 112,341,486 8,987,319

2. Large exposures risk requirement 785,485 - 785,485 62,839

3. Market risk Long Position Short Position

Interest rate risk/rate of return risk
- General interest rate risk/rate of return risk 100,501,838 88,928,729 1,370,454 - 1,370,454 109,636
- Specific interest rate risk/rate of return risk 11,789,528 314,545 28,264 - 28,264 2,261
Foreign currency risk 592,154 806,217 1,287,530 - 1,287,530 103,002
Equity risk
- General risk 48,687 2,692 45,995 - 45,995 3,680
- Specific risk 48,687 2,692 53,535 - 53,535 4,283
Option risk 396,694 173,720 55,761 - 55,761 4,461
Total 113,377,588 90,228,595 2,841,539 - 2,841,539 227,323

4. Operational risk 7,762,466 - 7,762,466 620,997

5. Total RWA and capital requirements 123,733,716 2,740 123,730,976 9,898,478

291
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

2.0 CAPITAL MANAGEMENT (CONT’D.)

Table 2.2 Risk-Weighted Assets and Capital Requirements (cont’d.)

The breakdown of RWA by exposures in major risk category of the Group is as follows: (cont’d.)

31 March 2022
Gross
exposures/
Exposure
at default Risk
(“EAD”) before Net Weighted Total Risk Minimum
credit risk exposures/ Risk Assets Weighted capital
mitigation EAD after weighted Absorbed by Assets after requirement
(“CRM”) CRM assets PSIA effects of PSIA at 8%
Exposure class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
1. Credit risk
On-balance sheet exposures:
Sovereigns/central banks 19,370,480 19,370,480 - - - -
Public Sector Entities (PSEs) 2,391 2,391 478 - 478 38
Banks, Development Financial Institutions (DFIs)
and Multilateral Development Banks (MDBs) 9,024,654 9,024,654 1,881,234 - 1,881,234 150,499
Corporates 64,706,105 62,344,751 51,638,720 - 51,638,720 4,131,098
Regulatory retail 40,750,084 35,823,071 28,710,853 361,288 28,349,565 2,267,965
Residential mortgages 26,550,853 26,546,213 10,339,413 - 10,339,413 827,153
Higher risk assets 692,625 692,615 1,038,922 - 1,038,922 83,114
Other assets 2,568,755 2,568,755 1,829,480 - 1,829,480 146,358
Securitisation exposures 90 90 1,125 - 1,125 90
Equity exposures 79 79 79 - 79 6
Defaulted exposures 1,242,890 1,236,743 1,228,688 - 1,228,688 98,295
Total for on-balance sheet exposures 164,909,006 157,609,842 96,668,992 361,288 96,307,704 7,704,616
Off-balance sheet exposures:
Over the counter (“OTC”) derivatives 1,860,867 1,637,225 1,096,035 - 1,096,035 87,683
Off-balance sheet exposures other than OTC
derivatives or credit derivatives 13,410,296 9,562,490 8,284,969 - 8,284,969 662,798
Defaulted exposures 36,721 28,320 42,297 - 42,297 3,384
Total for off-balance sheet exposures 15,307,884 11,228,035 9,423,301 - 9,423,301 753,865
Total on and off-balance sheet exposures 180,216,890 168,837,877 106,092,293 361,288 105,731,005 8,458,481

2. Large exposures risk requirement 981,925 - 981,925 78,554

3. Market risk
Interest rate risk/rate of return risk Long Position Short Position
- General interest rate risk/rate of return risk 94,489,381 92,045,367 1,367,905 - 1,367,905 109,432
- Specific interest rate risk/rate of return risk 2,601,300 279,488 20,208 - 20,208 1,617
Foreign currency risk 1,008,576 1,973,119 2,464,919 - 2,464,919 197,193
Equity risk
- General risk 36,868 9,928 26,939 - 26,939 2,155
- Specific risk 36,868 9,928 54,450 - 54,450 4,356
Option risk 162,356 167,677 39,048 - 39,048 3,124
Total 98,335,349 94,485,507 3,973,469 - 3,973,469 317,877

4. Operational risk 7,114,901 - 7,114,901 569,192

5. Total RWA and capital requirements 118,162,588 361,288 117,801,300 9,424,104

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Statements Disclosures

PILLAR 3 DISCLOSURES

3.0 CAPITAL STRUCTURE

Table 3.2 summarises the capital position and capital structure of the Group and its banking subsidiaries. The capital structure is made up of:

• Common Equity Tier 1 (“CET1”) Capital;

• Additional Tier 1 Capital; and
• Tier 2 Capital

3.1 CET1 Capital

CET1 Capital consists of the following:

(a) Paid-up Capital

Issued and paid-up capital that represents the most subordinated claim in liquidation of the financial institution.

(b) Retained Earnings

Retained earnings are included in CET1 Capital net of any interim and final dividend declared, and net of any interim losses. Quarterly interim profits
that are reviewed or audited by external auditors are included in the computation of CET1 Capital.

(c) Fair Value Reserve

The fair value reserve comprises fair value gains (net of fair value losses) on financial investments measured at fair value through other comprehensive
income (“FVOCI”). In addition, the loss allowance arising from the recognition of expected credit losses on financial investments measured at FVOCI
is accumulated in fair value reserve instead of reducing the carrying amount of the assets. To the extent the balance in the fair value reserve is a net
credit position, the Group can recognise 45% of the balance as part of CET1 Capital. Where the balance is a net debit position, the entire balance is
deducted from CET1 Capital.

(d) Foreign Currency Translation Reserve/(Deficit)

Foreign exchange gains and losses arising from the translation of the financial statements of foreign operations, whose functional currencies are
different from that of the Group's reporting currency.

(e) Regulatory Reserve

Regulatory reserve is maintained in accordance with paragraph 10.5 of the BNM's Policy Document on Financial Reporting and paragraph 10.9 of the
BNM's Policy Document on Financial Reporting for Islamic Banking Institutions as an additional credit risk absorbent. The amount of the regulatory
reserve is deducted from the calculation of CET1 Capital.

(f) Cash Flow Hedging Reserve/(Deficit)

Cash flow hedging reserve/(deficit) comprises the portion of the gains/(losses) on a hedging instrument in a cash flow hedge that is determined to
be an effective hedge. Cash flow hedging gains as at the reporting period is classified as cash flow hedging reserve and cash flow hedging losses is
classified as cash flow hedging deficit. The amount of the cash flow hedging reserve/(deficit) is derecognised in the calculation of CET1 Capital.

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PILLAR 3 DISCLOSURES

3.0 CAPITAL STRUCTURE (CONT’D.)

3.1 CET1 Capital (cont'd.)

(g) Other disclosed reserves comprise:

(i) Executive Share Scheme reserve

Executive Share Scheme (“ESS”) reserve represents the equity-settled scheme shares granted to employees. The reserve is made up of the
cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled
scheme shares and is reduced by the expiry of the scheme shares.

(ii) Treasury shares

Treasury shares represent the shares of the Company listed on the Main Market of Bursa Malaysia bought back from the open market. Shares
bought back are held as treasury shares in accordance with Section 127(4)(b) of the Companies Act 2016. These shares have no rights to vote,
dividends and participate in other distributions.

During the current financial year, the Company bought back 10,949,250 (2022: 5,330,700) ordinary shares of the Company for a total
consideration of RM43.7 million (2022: RM16.8 million) (including transaction costs) from the open market at an average price of RM4.00 per
share (2022: RM3.15 per share).

3.2 Additional Tier 1 Capital

No Additional Tier 1 (“AT1”) issuance was made during the financial year under review.

3.3 Tier 2 Capital

The main components of Tier 2 Capital are Basel III compliant subordinated debt capital instruments and Stage 1 and Stage 2 loss allowances and
regulatory reserve (subject to a maximum of 1.25% of total credit risk-weighted assets determined under the Standardised Approach).

Basel III Subordinated Notes

On 30 December 2013, AmBank established a Basel III compliant Subordinated Notes programme of RM4.0 billion (“Programme”) to enable the issuance
of Tier 2 capital instruments from time to time. The Programme has a tenure of 30 years from the date of the first issuance under the Programme. Each
issuance of Tier 2 Subordinated Notes under the Programme shall have a tenure of at least 5 years from the issue date, and is callable on any coupon
payment date after a minimum period of 5 years from the date of issuance.

On 19 December 2018, AmBank revised the terms of the Programme to include the non-viability trigger event referenced to the financial group. The
revision is and will be applicable to all existing and future capital instruments issued under the Programme.

The salient features of the Subordinated Notes issued under this programme and outstanding as at 31 March 2023 are as follows:

Nominal value
outstanding
Issue Date First Call Date Tenure Interest Rate (RM million)

15 November 2018 15 November 2023 10 years Non-Callable 5 years 4.98% per annum 1,000
30 March 2021 30 March 2026 10 years Non-Callable 5 years 4.18% per annum 400
8 March 2022 8 March 2027 10 years Non-Callable 5 years 4.30% per annum 600
12 October 2022 12 October 2027 10 years Non-Callable 5 years 5.20% per annum 745
28 March 2023 28 March 2028 10 years Non-Callable 5 years 4.58% per annum 350
Total 3, 095

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3.0 CAPITAL STRUCTURE (CONT’D.)

3.3 TIER 2 Capital (cont’d.)

Basel III Subordinated Sukuk Murabahah

On 28 February 2014, AmBank Islamic established a Basel III compliant Subordinated Sukuk Murabahah programme of RM3.0 billion (“Murabahah
Programme”) to enable the issuance of Tier 2 Capital from time to time.

The Murabahah Programme has a tenure of 30 years from the date of the first issuance under the programme. Each issuance of Tier 2 Subordinated Sukuk
under the programme shall have a tenure of at least 5 years from the issue date, and is callable on any profit payment date after a minimum period of 5
years from the date of issuance of each tranche.

On 19 December 2018, AmBank Islamic revised the terms of the Programme to include the non-viability trigger event referenced to the financial group.
The revision is and will be applicable to all existing and future capital instruments issued under the Programme.

The salient features of the Sukuk Murabahah issued under this programme and outstanding as at 31 March 2023 are as follows:

Nominal value
outstanding
Issue Date First Call Date Tenure Profit Rate (RM million)

18 October 2018 18 October 2023 10 years Non-Callable 5 years 4.88% per annum 500
8 December 2020 8 December 2025 10 years Non-Callable 5 years 3.13% per annum 400
8 March 2022 8 March 2027 10 years Non-Callable 5 years 4.25% per annum 250
28 March 2023 28 March 2028 10 years Non-Callable 5 years 4.53% per annum 150
Total 1,300

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3.0 CAPITAL STRUCTURE (CONT’D.)

Table 3.2: Capital Structure

The components of CET1 Capital, Additional Tier 1 Capital, Tier 2 Capital and Total Capital of the Group and banking subsidiaries are as follows:

31 March 2023
AmBank AmInvestment
AmBank Islamic Bank Group
RM'000 RM'000 RM'000 RM'000

CET1 Capital
Ordinary share capital 3,040,465 1,387,107 330,000 6,376,240
Retained earnings 7,508,139 3,022,623 126,419 10,757,582
Fair value reserve 299,138 (9,188) 2,259 492,817
Foreign exchange translation reserve 105,630 - - 112,212
Treasury shares - - - (28,579)
Regulatory reserve 201,229 - 10,478 211,707
Cash flow hedging deficit (4,259) - - (4,258)
Other remaining disclosed reserves - - - 26,425

Less: Regulatory adjustments applied on CET1 Capital

Goodwill - - - (303,492)
Other intangible assets (202,069) (298) (3,462) (207,152)
Deferred tax assets (182,451) (62,097) (5,664) (238,931)
55% of cumulative gains in fair value reserve (164,526) - (1,243) (271,049)
Cash flow hedging deficit 4,259 - - 4,258
Regulatory reserve (201,229) - (10,478) (211,707)
Investment in capital instruments of unconsolidated financial and insurance/takaful entities (11) - (49,809) (1,334,000)
Unrealised fair value gains on financial liabilities due to changes in own credit risk (2,756) (75) - (2,727)
Other CET1 regulatory adjustments specified by BNM 300,721 212,690 1 513,022
CET1 Capital 10,702,280 4,550,762 398,501 15,892,368

Additional Tier 1 Capital

Qualifying CET1, Additional Tier 1 Capital instruments held by third parties - - - 455
Tier 1 Capital 10,702,280 4,550,762 398,501 15,892,823

Tier 2 Capital
Tier 2 Capital instruments meeting all relevant criteria for inclusion 3,095,000 1,300,000 - -
Qualifying CET1, Additional Tier 1 and Tier 2 Capital instruments held by third parties - - - 2,688,226
General provisions* 857,088 327,419 7,276 1,194,774
Tier 2 Capital 3,952,088 1,627,419 7,276 3,883,000
Total Capital 14,654,368 6,178,181 405,777 19,775,823

The breakdown of the risk-weighted assets (“RWA”) in various categories of risk are as follows:

Credit RWA 79,287,050 35,344,046 582,070 112,344,226

Less: Credit RWA absorbed by Profit Sharing Investment Account - (1,545,037) - (2,740)
Total Credit RWA 79,287,050 33,799,009 582,070 112,341,486
Market RWA 1,624,350 304,677 6,231 2,841,539
Operational RWA 5,186,909 1,969,050 334,056 7,762,466
Large exposure risk RWA for equity holdings 785,485 - - 785,485
Total RWA 86,883,794 36,072,736 922,357 123,730,976

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3.0 CAPITAL STRUCTURE (CONT’D.)

Table 3.2: Capital Structure (cont’d.)

The components of CET1 Capital, Additional Tier 1 Capital, Tier 2 Capital and Total Capital of the Group and banking subsidiaries are as follows: (cont’d.)

31 March 2022
AmBank AmInvestment
AmBank Islamic Bank Group
RM'000 RM'000 RM'000 RM'000

CET1 Capital
Ordinary share capital 3,040,465 1,387,107 330,000 6,376,240
Retained earnings 6,524,068 2,490,692 139,315 9,251,065
Fair value reserve 293,346 (3,893) 1,703 485,759
Foreign exchange translation reserve 92,301 - - 98,871
Treasury shares - - - (11,041)
Regulatory reserve 94,463 - 8,457 102,920
Cash flow hedging deficit (9,062) - - (9,062)
Other remaining disclosed reserves - - - 36,472

Less: Regulatory adjustments applied on CET1 Capital

Goodwill - - - (303,492)
Other intangible assets (221,538) (495) (2,063) (225,116)
Deferred tax assets (158,227) (61,249) (5,446) (216,855)
55% of cumulative gains in fair value reserve (161,340) - (937) (267,168)
Cash flow hedging deficit 9,062 - - 9,062
Regulatory reserve (94,463) - (8,457) (102,920)
Investment in capital instruments of unconsolidated financial and insurance/takaful entities (8,488) - (49,809) (1,334,000)
Unrealised fair value gains on financial liabilities due to changes in own credit risk (648) (92) - (681)
Other CET1 regulatory adjustments specified by BNM 413,471 235,578 1 649,031
CET1 Capital 9,813,410 4,047,648 412,764 14,539,085

Additional Tier 1 Capital

Qualifying CET1, Additional Tier 1 Capital instruments held by third parties - - - 431
Tier 1 Capital 9,813,410 4,047,648 412,764 14,539,516

Tier 2 Capital
Tier 2 Capital instruments meeting all relevant criteria for inclusion 3,095,000 1,300,000 - -
Qualifying CET1, Additional Tier 1 and Tier 2 Capital instruments held by third parties - - - 2,752,328
General provisions* 650,081 256,523 8,460 914,980
Tier 2 Capital 3,745,081 1,556,523 8,460 3,667,308
Total Capital 13,558,491 5,604,171 421,224 18,206,824

The breakdown of the risk-weighted assets (“RWA”) in various categories of risk are as follows:

Credit RWA 75,535,958 32,508,336 891,418 106,092,293

Less: Credit RWA absorbed by Profit Sharing Investment Account - (2,075,074) - (361,288)
Total Credit RWA 75,535,958 30,433,262 891,418 105,731,005
Market RWA 2,859,665 215,113 17,652 3,973,469
Operational RWA 4,792,198 1,760,237 327,009 7,114,901
Large exposure risk RWA for equity holdings 980,771 - - 981,925
Total RWA 84,168,592 32,408,612 1,236,079 117,801,300

* Consists of Stage 1 and Stage 2 loss allowances and regulatory reserve.

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PILLAR 3 DISCLOSURES

4.0 GENERAL RISK MANAGEMENT

The Risk Management Framework takes its lead from the Board’s Approved Risk Appetite Framework which forms the foundation of the Group to set its risk/
reward profile.

The Risk Appetite Framework is reviewed and approved annually by the Board taking into account the Group’s desired external rating and targeted profitability/
return on capital employed (“ROCE”) and is reviewed periodically throughout the financial year by both the executive management and the Board to consider any
fine tuning/enhancements taking into consideration the prevailing or in anticipation of challenges to the environment that the Group operates in.

The Risk Appetite Framework provides portfolio limits/controls for Credit Risk, Traded Market Risk, Non-Traded Market Risk, Operational Risk and Technology
Risk incorporating, inter alia, limits/controls for countries, industries, single counterparty group, products, value at risk, stop loss, stable funding ratio, liquidity and
Operational Risk Management (“ORM”) tools.

The Group Risk Direction

The Group’s FY2021 to 2024 Strategy blueprint is to focus on 8 key areas, namely, (1) Attaining a Return on Equity (“ROE”) of ≥10%, (2) Sharpening Our Segment
Play, (3) Harnessing expertise across the Group to deliver AmBank Holistic Customer Value Proposition, (4) Offers differentiated and profitable products, (5)
Building capacity and efficiency through Digital Initiatives, (6) Retaining and Embedding Principled, Proactive, Appreciative, Collaborative and Experimental
(“P2ACE”) DNA, (7) Integrating Environmental, Social, and Governance (“ESG”) focusing on Responsible banking and (8) Exploring Digital Bank option.

1 The Group aspires to have a minimum financial institution external rating of AA2 based on reference ratings by RAM Rating Services Berhad (RAM).
2 The Group aims to maintain a minimum ROCE of 12% and RWA efficiency (“"CRWA/EAD"”) in the range of 40% to 50%, both based on Foundation Internal
Ratings-Based (“FIRB”).
3 The Group aims to maintain its Total Capital Ratio at the Group's Internal Capital Target under normal conditions.
4 The Group aims to maintain Available Financial Resources in excess of the capital requirements as estimated in the Internal Capital Adequacy Assessment
Process (“ICAAP”).
5 The Group recognises the importance of funding its own business. It aims to maintain the following:
a. Liquidity Coverage Ratio (“LCR”) (both consolidated and entity level) at least 10 percentage points above prevailing regulatory minimum;
b. Stressed LCR (both consolidated and entity level) above the regulatory requirement; and
c. Net Stable Funding Ratio (“NSFR”) (Financial Holding Company (“FHC”) level) above the prevailing regulatory minimum (effective July 2020).
6 The Group aims to maintain adequate controls for all key operational risks (including but not limited to regulatory, compliance, technology, conduct and
reputational risks).
a. Keep operational losses and regulatory penalties below 2% of Profit After Tax and Non-controlling interests (“PATMI”); and
b. Remain vigilant in risk identification and management to protect its reputation and business franchise.
7 The Group aims for at least 70% of its loan/financing portfolio to constitute exposures with low Environmental, Social and Governance Risk Grade (“ESG-
RG”) by FY2030.
8 The Group aims to maintain its IRRBB/RORBB Internal Capital Adequacy Assessment Programme (“ICAAP”) Pillar 2 over total capital ratio at entity level as
follows:
a. ICAAP IRRBB/RORBB at below 8.5% of its Total Capital for AmBank and AmBank Islamic (entity level);
b. ICAAP IRRBB/RORBB at below 5% of its Total Capital for AmInvestment Bank (entity level).

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PILLAR 3 DISCLOSURES

4.0 GENERAL RISK MANAGEMENT (CONT’D.)

Risk Management Governance

The Board is ultimately accountable for the management of risks within the Group. The RMC is formed to assist the Board in discharging its duties in overseeing
the overall management of all risks including but not limited to market risk, liquidity risk, credit risk, operational risk, technology and cyber risk.

The Board has also established Management Committees to assist in managing the risks and businesses of the Group. The management committees address all
classes of risk within its Board delegated mandate: balance sheet risk, credit risk, legal risk, operational risk, technology risk, market risk, Shariah risk, compliance
risk, reputational risk, product and business risk, IT project risk and ESG risk.

The Group has an independent risk management function, headed by the Group Chief Risk Officer who:

• is responsible for establishing an enterprise wide risk management framework in all areas including financial, credit, market, operational, reputational,
security, technology, emerging risks and ESG risk;
• essentially champions and embeds a positive risk culture across the Group to ensure that risk taking activities across the Group are aligned to the Group’s
risk appetite and strategies; and
• through the RMC, has access to the Board and the Boards of the respective banking subsidiaries to facilitate suitable escalation of issues of concern across
the organisation.

Impact of Expired Payment Holiday/Repayment Assistance

There is potential emerging risk on small SMEs following the expiry of payment holiday and repayment assistance plans offered to customers during the COVID-19
pandemic. Close monitoring is being carried out on this segment.

4.1 Internal Capital Adequacy Assessment Process

The core objectives of the Group’s Internal Capital Adequacy Assessment Process (“ICAAP”) Policy are:

• To protect the interests of depositors, creditors and shareholders;

• To ensure the safety and soundness of the Group’s capital position; and
• To ensure that the capital base supports the Group’s Risk Appetite and strategic business objectives, in an efficient and effective manner.

The requirements of the ICAAP Policy are consistent and calibrated with Group’s Risk Appetite as set and approved by the Board.

The following key principles underpin the ICAAP:

4.1.1 The Group shall maintain an approved, documented, risk based and auditable ICAAP. The aim is to ensure the Group maintains, on a continuous basis,
an adequate level of capitalisation which is sized following the identification, measurement, monitoring, and effective management and oversight of
material risks across the Group, consistent with:

• The Group Risk Appetite, including the Group’s target credit rating category;
• Regulatory Capital requirements;
• The Board and Management’s targeted financial performance; and
• The Group’s planned asset growth and strategic business objectives.

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4.0 GENERAL RISK MANAGEMENT (CONT’D.)

4.1 Internal Capital Adequacy Assessment Process (cont’d.)

The following key principles underpin the ICAAP: (cont’d.)

4.1.2 Board and Senior Management Oversight

The ICAAP must be subject to Board and senior management oversight, forms an integral part of the Group’s capital management and decision
making processes, and will:

• Ensure all elements of the ICAAP are established and functioning effectively and subject to independent review on a periodic basis; and
• Ensure comprehensive assessment of capital adequacy conducted annually.

4.1.3 Capital Management Framework

The ICAAP shall include an approved Capital Management Framework which contains:
• A strategy for maintaining capital resources over time;
• Measures that would be taken in the event capital falls below a targeted level; and
• Measures to ensure that the Group is in compliance with minimum regulatory standards.

4.1.4 The Group’s quality and level of capital shall commensurate with the level of risks exposures. Sufficient capital shall be maintained to:

• Meet minimum prudential requirements (including capital buffer requirements) in all jurisdictions in which the Group operates, and any
requirements that may be imposed by the stakeholders of the Group;
• Be consistent with the Group’s overall risk profile and financial positions, taking into account its strategic focus and business plan; and
• Achieve or maintain the Group's desired long term credit rating.

4.1.5 Capital allocation:

• Capital allocation shall be consistent with the Group’s regulatory capital measurement framework and risk adjusted performance requirements.

4.1.6 Material Risks

• The Group shall identify and assess the risk materiality on an annual basis;
• Risk assessments shall be conducted at banking subsidiaries' level and incorporate both quantitative and qualitative elements; and
• Methodologies to identify and determine the materiality of current risk types, changes to existing risk types and new risk types must be established.

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4.0 GENERAL RISK MANAGEMENT (CONT’D.)

4.1 Internal Capital Adequacy Assessment Process (cont’d.)

ICAAP Framework

Requirements of the Banks Requirements of the Regulators

Principal 1: Principal 2:
• Banks have an ICAAP in relation to their risk profile and a strategy for • Regulators to review and evaluate the Bank's ICAAP strategies
maintaining capital levels • Regulators to monitor and ensure Bank's compliance with
regulatory capital ratios
Principal 3: • Regulators undertake appropriate supervisory action if
• Banks are expected to operate above the minimum regulatory unsatisfactory results
capital ratios and should have the ability to hold capital in excess of
the minimum Principal 4:
• Early intervention by the Regulator to prevent capital from falling
below the required minimum levels

Internal Capital Adequacy Assessment Process

Comprehensive Risk
Board and Sound Capital Monitoring and Internal Control
Assessment and
Management Oversight Assessment Reporting and Review
Management Processes

• Material Risks identified • Identification, • Credit Risk • Level and Trend of • Independent reviews
• Material thresholds Measurement and • Market Risk Material Risks of ICAAP (internal
• Group Risk Appetite Reporting of Material • Operational Risk • Sensitivity Analysis of audit)
• Sufficient Capital Risks • Rate Risk in the key assumptions • Ongoing compliance
Adequacy • Compliance with Banking Book • Regulatory monitoring
• Targeted Financial minimum regulatory • Credit Concentration • Reporting to Board and • Stress Testing
Performance standards Risk Senior Management • Documented
• Planned Asset Growth • Clear linkage between • Large exposure risk processes/frameworks
and Strategic business risks and capital requirements
objectives • Capital Plan
• Policy/Frameworks

Overview of ICAAP process and setting Internal Capital Targets

Setting of Risk Appetite

Reporting Obligations Business/Strategic Planning

GOVERNANCE

Risk & Capital Monitoring Risk Assessment & Stress Testing

Capital Planning

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PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT

The credit risk management process is depicted in the table below:

• Identify/recognise credit risk on transactions and/or positions

Identification
• Select asset and portfolio mix

• Internal credit rating system

• Probability of default (“PD”)
Assessment/ • Loss given default (“LGD”)
Measurement • Exposure at default (“EAD”)
• Expected Loss (“EL”)
• Gross Impaired Loan/Financing (“GIL”)

• Portfolio Limits, Counterparty Limits

• Non-Retail Pricing and Risk-based pricing for Retail
Control/Mitigation • Collateral and tailored facility structures (discretionary lending)
• Pre-set assessment criteria and acceptance criteria (program lending)

• Monitor and report portfolio mix

• Review Classified Accounts
Monitoring/Review • Review Rescheduled and Restructured Accounts
• Undertake post mortem credit review
• Annual refresh of customers' credit risk rating

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its payment obligations. Exposure to credit risk arises from lending/
financing, securities and derivative exposures. The identification of credit risk is done by assessing the potential impact of internal and external factors on the
Group’s transactions and/or positions as well as Shariah compliance risk (please refer to section 14 for discussion on Shariah Governance Structure).

The primary objective of credit risk management is to maintain accurate risk recognition - identification and measurement, to ensure that credit risk exposure is
in line with the Group’s Risk Appetite Framework (“GRAF”) and related credit policies.

For non-retail credit, risk assessment is a combination of both qualitative and quantitative assessment (including the financial standing of the customer or
counterparty using the banking subsidiaries' credit rating model where the scores are translated into rating grade) on the customer or counterparty. The assigned
credit rating grade forms a crucial part of the credit analysis undertaken for each of the banking subsidiaries' credit exposures and the overall credit assessment
is conducted either through a program lending or discretionary lending approach.

For retail credit, credit-scoring systems to better differentiate the quality of borrowers are being used to complement the credit assessment and approval
processes.

To support credit risk management, our rating models for major portfolios have been upgraded to facilitate:

• improvement in the accuracy of individual obligor risk ratings;

• enhancement to pricing models;
• loan/financing loss provision calculation;
• stress-testing; and
• enhancement to portfolio management.

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5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Lending/financing activities are guided by internal credit policies and GRAF that are approved by the Board. The GRAF is refreshed at least annually and with
regard to credit risk, provides direction as to portfolio management strategies and internal limits designed to deliver the Group’s optimal portfolio mix. Credit risk
portfolio management strategies include, amongst others:

• Concentration threshold/review triggers:

- single counterparty credit exposure;
- industry sector exposure; and
- country risk exposure;
• Setting Loan/Financing to Value limits for asset backed loans/financing;
• Non-Retail Credit Policy (“NRCP”) and Retail Credit Policy (“RCP”) which sets out the credit principles and requirements for managing credit risk in the
Wholesale Banking (“WB”), Business Banking (“BB”) and Retail Banking (“RB”) portfolios;
• Classified Account Management processes for identifying, monitoring and managing customers exhibiting signs of weakness and higher risk customers;
• Rescheduled and Restructured (“R&R”) Account Management (embedded within the NRCP for WB and BB, and RCP for RB) sets out the controls in
managing R&R loans/financing;
• Setting Retail risk controls capping for higher risk segment to ensure credit approval practice is aligned with the credit policies and GRAF.

Exposure outside the approval discretions of individual Credit Approval Delegation (“CAD”) holders are escalated to the Credit and Commitments Committee
(“CACC”) for approval. In the event such exposure exceeds a stipulated customer group threshold within the Group, the letter of offer shall not be issued until the
credit is reviewed by the Board Credit Committee (“BCC”). Portfolio credit risk is reported to the relevant management and board committees.

The Group Management Risk Committee (“GMRC”) regularly meets to review the quality and diversification of the Group’s loan/financing portfolio and review the
portfolio risk profile against the GRAF and recommend or approve new and amended credit risk policies or guidelines.

Group Risk Management prepares monthly Risk Reports which detail important portfolio composition and trend analysis incorporating asset growth, asset quality,
impairment, flow rates of loan/financing delinquency buckets and exposures by industry sectors are reported monthly to executive management and to all
meetings of the Board.

5.1 Impairment

The relevant governance for the respective Line of Businesses are established to align with the Malaysian Financial Reporting Standards (“MFRS”) and
related BNM’s standards/guidelines. In general, an asset is considered impaired when:

a. the Group considers that an obligor is “unlikely to repay” in full its credit obligations to the Group;
b. the obligor has breached its contractual payment obligations and past due for more than 90 days; or
c. other indicators stipulated in the relevant guidelines indicating the unlikeliness to repay are hit.

Where exposures are being restructured, such restructuring is guided by the definition and requirements of R&R provided by BNM Credit Risk Policy.

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5.0 CREDIT RISK MANAGEMENT (CONT’D.)

5.1 Impairment (cont’d.)

5.1.1 Group Provisioning Methodology

The Group’s provisioning methodology complies with MFRS 9 where the Group recognises Expected Credit Loss (“ECL”) at all times to reflect
changes in the credit risk of a financial instrument. The methodology incorporates historical, current and forecasted information into ECL estimation.
Consequently, more timely information is required to be provided about ECL.

MFRS 9 applies to all financial assets classified as amortised cost and FVOCI, lease receivables, trade receivables, and commitments to lend money
and financial guarantee contracts.

Under MFRS 9, financial instruments are segregated into 3 stages depending on the changes in credit quality since initial recognition. The Group
calculates 12-month ECL for Stage 1 and lifetime ECL for Stage 2 and Stage 3 exposures.

i. Stage 1: For performing financial instruments which credit risk had not been significantly increased since initial recognition.
ii. Stage 2: For underperforming financial instruments which credit risk had significantly increased since initial recognition.
iii. Stage 3: For financial instruments which are credit impaired.

The following diagram summarises the impairment requirements under MFRS 9 (other than purchased or originated credit-impaired financial assets):

Changes in credit quality since initial recognition

Stage 1 Stage 2 Stage 3

(Initial recognition) (Significant increase in credit risk since initial (Credit-impaired assets)
recognition)
12-month expected credit losses Lifetime expected credit losses Lifetime expected credit losses

ECL can be assessed individually or collectively. Financial assets that are not individually significant or not individually credit impaired are collectively
assessed. For financial assets that are individually significant, an assessment is performed to determine whether objective evidence of impairment
exists individually.

Individual assessment is divided into two main processes - trigger assessment and measurement of impairment loss. Financial assets which are
triggered by the impairment triggers will be measured for evidence of high likelihood of impairment, i.e. estimated recoveries (based on the discounted
cash flow projection method and taking into account economic conditions) is less than carrying value.

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 5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.1: Distribution of gross credit exposures by sector

The distribution of credit exposures by sector of the Group is as follows:

31 March 2023

Wholesale
and Retail
Electricity, Trade and Transport, Government
Mining and Gas and Hotels and Storage and Finance and and Central Business Education
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Insurance Banks Real Estate Activities and Health Household Others 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 RM'000 RM'000 RM'000
On-balance sheet exposures
Sovereigns/Central banks - - - - - - - - 24,112,318 - - - - - 24,112,318
PSEs - - - - - - - - 1,814 - - - - - 1,814
Banks, DFIs and MDBs - - - - - - - 7,293,311 - - - - - - 7,293,311
Insurance companies, Securities
firms and Fund managers - - - - - - - 2,588 - - - - - - 2,588
Corporates 3,721,221 2,465,023 15,204,511 3,233,380 7,753,652 12,062,410 6,762,951 10,247,611 - 8,869,895 1,910,403 2,579,992 1,281,475 50,575 76,143,099
Regulatory retail 65,045 21,353 779,179 92,639 535,345 1,567,287 293,245 26,105 - 152,724 510,620 108,537 36,306,121 7,053 40,465,253
Residential mortgages - - - - - - - - - - - - 30,390,626 - 30,390,626
Higher risk assets - - - - - - - - - - - - 11,530 2,652 14,182
Other assets - 11 - - - - - 51,942 145,000 671 20,007 - 71,060 2,057,149 2,345,840
Securitisation exposures - - - - - - - 90 - - - - - - 90
Equity exposures - - - - - - - - - - - - - 680,324 680,324
Defaulted exposures 4,994 139,594 141,958 12,974 76,650 121,253 20,190 10,322 - 14,523 37,068 8,127 827,395 - 1,415,048
Total for on-balance sheet
exposures 3,791,260 2,625,981 16,125,648 3,338,993 8,365,647 13,750,950 7,076,386 17,631,969 24,259,132 9,037,813 2,478,098 2,696,656 68,888,207 2,797,753 182,864,493
Off-balance sheet exposures
OTC derivatives 5,996 198,488 348,403 895 129 12,977 5,078 1,392,042 79,581 2,861 23,983 1,909 46,223 - 2,118,565
Off-balance sheet exposures
other than OTC derivatives
or Credit derivatives 222,255 187,877 2,654,094 407,973 3,067,983 1,316,892 556,348 6,767,189 11,602,509 635,994 185,501 152,863 3,026,494 991 30,784,963
Defaulted exposures - 18,158 24,865 - 22,684 864 80 - - 3,563 81 - 18,181 - 88,476
Total for off-balance sheet
exposures 228,251 404,523 3,027,362 408,868 3,090,796 1,330,733 561,506 8,159,231 11,682,090 642,418 209,565 154,772 3,090,898 991 32,992,004
Total on and off-balance sheet
exposures 4,019,511 3,030,504 19,153,010 3,747,861 11,456,443 15,081,683 7,637,892 25,791,200 35,941,222 9,680,231 2,687,663 2,851,428 71,979,105 2,798,744 215,856,497
Statements
Financial

305
PILLAR 3 DISCLOSURES
Disclosures
Pillar 3
 5.0 CREDIT RISK MANAGEMENT (CONT’D.)

306
Table 5.1: Distribution of gross credit exposures by sector (cont’d.)

The distribution of credit exposures by sector of the Group is as follows: (cont’d.)

31 March 2022

Wholesale
and Retail
Electricity, Trade and Transport, Government
Mining and Gas and Hotels and Storage and Finance and and Central Business Education
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Insurance Banks Real Estate Activities and Health Household Others Total
PILLAR 3 DISCLOSURES

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
AMMB HOLDINGS BERHAD

On-balance sheet exposures

FINANCIAL REPORT 2023

Sovereigns/Central banks - - - - - - - - 19,370,480 - - - - - 19,370,480

PSEs - - - - - - - - 2,391 - - - - - 2,391

Banks, DFIs and MDBs - - - - - - - 9,024,654 - - - - - - 9,024,654

Corporates 2,500,161 1,944,893 14,867,468 2,507,244 5,582,485 10,046,287 6,136,010 5,114,910 - 7,645,759 2,772,775 4,670,696 912,039 5,378 64,706,105

Regulatory retail 58,442 18,252 780,335 84,358 500,487 1,370,450 269,073 26,077 - 136,852 446,861 101,726 36,956,489 682 40,750,084

Residential mortgages - - - - - - - - - - - - 26,550,853 - 26,550,853

Higher risk assets - - - - - - - - - - - - 17,501 675,124 692,625

Other assets - - - - - - - 18,315 170,000 10 31,472 - 74,342 2,274,616 2,568,755

Securitisation exposures - - - - - - - 90 - - - - - - 90

Equity exposures - - - - - - - - - - - - - 79 79

Defaulted exposures 7,969 42,733 147,358 1,928 57,454 100,891 125,374 1,144 - 181,372 22,677 5,872 548,118 - 1,242,890

Total for on-balance sheet

exposures 2,566,572 2,005,878 15,795,161 2,593,530 6,140,426 11,517,628 6,530,457 14,185,190 19,542,871 7,963,993 3,273,785 4,778,294 65,059,342 2,955,879 164,909,006

Off-balance sheet exposures

OTC derivatives 13,428 22,511 329,996 476 - 11,466 227,341 1,207,599 6,308 - 12,712 5,821 23,209 - 1,860,867

Off-balance sheet exposures

other than OTC derivatives
or Credit derivatives 304,533 105,596 2,700,600 473,331 2,857,720 1,099,771 418,776 2,020,463 - 774,923 141,155 160,709 2,351,858 861 13,410,296

Defaulted exposures - 3,012 7,891 - 10,896 133 - - - 484 81 - 14,224 - 36,721

Total for off-balance sheet

exposures 317,961 131,119 3,038,487 473,807 2,868,616 1,111,370 646,117 3,228,062 6,308 775,407 153,948 166,530 2,389,291 861 15,307,884

Total on and off-balance sheet

exposures 2,884,533 2,136,997 18,833,648 3,067,337 9,009,042 12,628,998 7,176,574 17,413,252 19,549,179 8,739,400 3,427,733 4,944,824 67,448,633 2,956,740 180,216,890
 5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.2: Impaired and past due loans, advances and financing, and impairment allowances by sector

The impaired and past due loans, advances and financing, impairment allowances, charges for individual impairment allowances and write offs during the financial
year by sector of the Group is as follows:

31 March 2023

Wholesale
and Retail
Mining Electricity, Trade and Transport, Finance Education
and Gas and Hotels and Storage and and Real Business and
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Insurance Estate Activities Health Household Others 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 RM'000 RM'000

Impaired loans,
advances and
financing 7,152 43,082 214,954 47,366 172,476 213,270 23,594 11,201 11,413 44,095 11,863 1,095,981 - 1,896,447

Past due but not

impaired loans/
financing 97,342 12,754 221,700 22,396 300,484 352,461 71,188 5,372 105,320 140,538 85,829 7,206,996 - 8,622,380

Allowances for
Expected
Credit Losses 5,817 8,112 233,099 4,516 117,473 166,114 152,902 80,683 41,760 124,839 8,065 1,040,337 449 1,984,166

Charges for/
(Writeback)
individual
allowance 510 14,886 20,620 30,399 10,039 64,827 926 1,001 (5,720) 764 184 (61) - 138,375

Net write-offs
against
individual
allowance
and other
movements - 145,496 28,480 - (26,010) 46,835 - - - 445 - - - 195,246

31 March 2022

Wholesale
and Retail
Mining Electricity, Trade and Transport, Finance Education
and Gas and Hotels and Storage and and Real Business and
Agriculture Quarrying Manufacturing Water Construction Restaurants Communication Insurance Estate Activities Health Household Others 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 RM'000 RM'000

Impaired loans,
advances and
financing 8,834 175,741 226,687 4,639 112,676 170,049 18,518 1,494 188,167 37,595 6,218 725,426 - 1,676,044

Past due but

not impaired
loans/financing 167,317 10,345 52,439 3,222 138,862 147,445 33,997 2,504 27,942 58,449 23,451 4,854,319 - 5,520,292

Allowances
for Expected
Credit Losses 11,482 139,070 314,061 11,147 86,636 132,313 146,239 60,480 36,881 29,206 7,230 948,436 4,325 1,927,506

(Writeback)/
Charges for
individual
allowance (1,532) 266,515 12,032 471 34,182 16,052 (4,456) - 13,137 2,819 264 (323)) - 339,170

Write-offs against
individual
allowance
and other
movements - 165,519 8,597 - 30,814) 55,902 - - 15,536 - - - - 276,368
Statements
Financial

307
PILLAR 3 DISCLOSURES
Disclosures
Pillar 3
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.3: Geographical distribution of credit exposures

The geographic distribution of credit exposures of the Group is as follows:

31 March 2023
Outside
In Malaysia Malaysia Total
RM’000 RM’000 RM’000

On-balance sheet exposures

Sovereigns/Central banks 24,112,318 - 24,112,318
PSEs 1,814 - 1,814
Banks, DFIs and MDBs 3,741,897 3,551,414 7,293,311
Insurance companies, Securities firms and Fund managers 2,588 - 2,588
Corporates 75,852,725 290,374 76,143,099
Regulatory retail 40,459,251 6,002 40,465,253
Residential mortgages 30,390,626 - 30,390,626
Higher risk assets 14,178 4 14,182
Other assets 2,317,788 28,052 2,345,840
Securitisation exposures 90 - 90
Equity exposures 679,563 761 680,324
Defaulted exposures 1,415,048 - 1,415,048
Total for on-balance sheet exposures 178,987,886 3,876,607 182,864,493
Off-balance sheet exposures
OTC derivatives 1,482,351 636,214 2,118,565
Off-balance sheet exposures other than OTC derivatives or Credit derivatives 30,765,446 19,517 30,784,963
Defaulted exposures 74,352 14,124 88,476
Total for off-balance sheet exposures 32,322,149 669,855 32,992,004
Total on and off-balance sheet exposures 211,310,035 4,546,462 215,856,497

308 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.3: Geographical distribution of credit exposures (cont’d.)

The geographic distribution of credit exposures of the Group is as follows: (cont’d.)

31 March 2022
Outside
In Malaysia Malaysia Total
RM’000 RM’000 RM’000

On-balance sheet exposures

Sovereigns/Central banks 19,370,480 - 19,370,480
PSEs 2,391 - 2,391
Banks, DFIs and MDBs 6,054,899 2,969,755 9,024,654
Corporates 63,803,199 902,906 64,706,105
Regulatory retail 40,743,743 6,341 40,750,084
Residential mortgages 26,550,853 - 26,550,853
Higher risk assets 691,988 637 692,625
Other assets 2,452,071 116,684 2,568,755
Securitisation exposures 90 - 90
Equity exposures 79 - 79
Defaulted exposures 1,242,862 28 1,242,890
Total for on-balance sheet exposures 160,912,655 3,996,351 164,909,006
Off-balance sheet exposures
OTC derivatives 1,330,057 530,810 1,860,867
Off-balance sheet exposures other than OTC derivatives or Credit derivatives 13,365,927 44,369 13,410,296
Defaulted exposures 36,721 - 36,721
Total for off-balance sheet exposures 14,732,705 575,179 15,307,884
Total on and off-balance sheet exposures 175,645,360 4,571,530 180,216,890

309
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.4: Geographical distribution of impaired and past due loans, advances and financing and impairment allowances

The impaired and past due loans, advances and financing and impairment allowances by geographic distribution of the Group is as follows:

31 March 2023
Outside
In Malaysia Malaysia Total
RM’000 RM’000 RM’000

Impaired loans, advances and financing 1,896,447 - 1,896,447

Past due but not impaired loans/financing 8,622,380 - 8,622,380
Allowances for Expected Credit Losses 1,984,031 135 1,984,166

31 March 2022
Outside
In Malaysia Malaysia Total
RM’000 RM’000 RM’000

Impaired loans, advances and financing 1,666,873 9,171 1,676,044

Past due but not impaired loans/financing 5,520,292 - 5,520,292
Allowances for Expected Credit Losses 1,915,629 11,877 1,927,506

310 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.5: Residual contractual maturity by major types of credit exposure

The residual contractual maturity by major types of gross credit exposures of the Group is as follows:

31 March 2023
>1 month >3 months >6 months >1 year >3 years No
Up to to to to to to maturity
1 month 3 months 6 months 12 months 3 years 5 years >5 years specified Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On-balance sheet
exposures
Sovereigns/Central
banks 3,559,653 965,972 1,820,544 883,052 4,053,754 2,279,383 10,549,960 - 24,112,318
PSEs - - - - 1,367 447 - - 1,814
Banks, DFIs and
MDBs 5,380,907 530,786 - 292,286 274,454 78,684 736,194 - 7,293,311
Insurance companies,
Securities firms and
Fund managers - - - 2,588 - - - - 2,588
Corporates 23,973,321 8,894,159 4,834,452 7,094,506 8,037,751 8,943,988 14,364,922 - 76,143,099
Regulatory retail 243,236 91,223 123,567 3,060,985 1,866,256 4,294,150 30,785,836 - 40,465,253
Residential mortgages 1,122 175 507 2,454 38,986 110,827 30,236,555 - 30,390,626
Higher risk assets 23 - 34 41 198 434 10,800 2,652 14,182
Other assets 950,219 - - - - - - 1,395,621 2,345,840
Securitisation
exposures - - - - - - 90 - 90
Equity exposures - - - - - - 1,631 678,693 680,324
Defaulted exposures 147,325 17,443 2,501 90,580 52,919 94,538 1,009,742 - 1,415,048
Total for on-balance
sheet exposures 34,255,806 10,499,758 6,781,605 11,426,492 14,325,685 15,802,451 87,695,730 2,076,966 182,864,493

Off-balance sheet
exposures
OTC derivatives 84,001 114,889 187,908 351,085 303,590 293,018 784,074 - 2,118,565
Off-balance sheet
exposures
other than OTC
derivatives or
Credit derivatives 8,823,925 6,689,150 3,952,756 9,195,618 14,682 22,761 2,086,071 - 30,784,963
Defaulted exposures 6,417 5,305 9,160 52,562 231 260 14,541 - 88,476
Total for off-balance
sheet exposures 8,914,343 6,809,344 4,149,824 9,599,265 318,503 316,039 2,884,686 - 32,992,004
Total on and off-
balance sheet
exposures 43,170,149 17,309,102 10,931,429 21,025,757 14,644,188 16,118,490 90,580,416 2,076,966 215,856,497

311
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.5: Residual contractual maturity by major types of credit exposure (cont’d.)

The residual contractual maturity by major types of gross credit exposures of the Group is as follows: (cont’d.)

31 March 2022
>1 month >3 months >6 months >1 year >3 years No
Up to to to to to to maturity
1 month 3 months 6 months 12 months 3 years 5 years >5 years specified Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On-balance sheet
exposures
Sovereigns/Central
banks 8,271,542 - 344,891 295,916 2,372,790 2,226,089 5,859,252 - 19,370,480
PSEs - - - - - 2,391 - - 2,391
Banks, DFIs and
MDBs 5,788,557 1,282,878 15,063 - 1,166,935 149,115 622,106 - 9,024,654
Corporates 20,458,725 6,208,212 3,901,574 5,821,948 7,607,240 6,599,594 14,108,812 - 64,706,105
Regulatory retail 243,742 106,633 146,143 2,694,472 1,713,959 4,222,113 31,623,022 - 40,750,084
Residential mortgages 1,173 216 1,172 4,446 53,006 152,649 26,338,191 - 26,550,853
Higher risk assets 12 5 44 18 537 562 16,323 675,124 692,625
Other assets 1,409,549 - - - - - - 1,159,206 2,568,755
Securitisation
exposures - - - - - - 90 - 90
Equity exposures - - - - - - - 79 79
Defaulted exposures 302,833 3,509 2,030 97,164 69,365 57,760 710,229 - 1,242,890
Total for on-balance
sheet exposures 36,476,133 7,601,453 4,410,917 8,913,964 12,983,832 13,410,273 79,278,025 1,834,409 164,909,006

Off-balance sheet
exposures
OTC derivatives 42,384 84,182 87,121 342,818 313,437 142,172 848,753 - 1,860,867
Off-balance sheet
exposures
other than OTC
derivatives or
Credit derivatives 2,794,241 1,852,997 650,222 6,944,903 8,867 65,554 1,093,512 - 13,410,296
Defaulted exposures 8,097 99 1,854 14,909 312 406 11,044 - 36,721
Total for off-balance
sheet exposures 2,844,722 1,937,278 739,197 7,302,630 322,616 208,132 1,953,309 - 15,307,884
Total on and off-
balance sheet
exposures 39,320,855 9,538,731 5,150,114 16,216,594 13,306,448 13,618,405 81,231,334 1,834,409 180,216,890

312 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

5.0 CREDIT RISK MANAGEMENT (CONT’D.)

Table 5.6: Reconciliation of changes to loans/financing impairment allowances

The disclosure on reconciliation of loan/financing loss allowances can be found in Note 13 of the financial statements. Charge offs and recoveries that have been
taken up directly to the statement of profit or loss are as follows:

(Charge off)/
Recoveries
Financial year ended 31 March 2023 RM’000

Bad debts written off during the financial year (38,906)

Bad debt recoveries during the financial year 349,246

(Charge off)/
Recoveries
Financial year ended 31 March 2022 RM’000

Bad debts written off during the financial year (39,770)

Bad debt recoveries during the financial year 280,154

6.0 CREDIT RISK EXPOSURE UNDER STANDARDISED APPROACH

The Group uses external ratings for credit exposures to assign risk weights under the Standardised Approach where relevant. The ratings from the following
external credit assessment institutions (ECAIs) are used:

• Moody’s Investors Service (“Moody's”)

• Fitch Rating (“Fitch”)
• RAM Rating Services Berhad (“RAM”)
• Malaysian Rating Corporation Berhad (“MARC”)

313
 6.0 CREDIT RISK EXPOSURE UNDER STANDARDISED APPROACH (CONT’D.)

314
Table 6.1: Credit exposures by risk weights under the Standardised Approach

The breakdown of credit risk exposures by risk weights of the Group is as follows:

31 March 2023
Exposures after Netting and Credit Risk Mitigation
Insurance Total
PILLAR 3 DISCLOSURES
AMMB HOLDINGS BERHAD

Companies, Exposures
Banks, Securities after Netting

FINANCIAL REPORT 2023

Sovereigns DFIs Firms and Higher and Credit Total Risk
and Central and Fund Regulatory Residential Risk Other Securitisation Equity Risk Weighted
Risk Banks PSEs MDBs Managers Corporates Retail Mortgages Assets Assets Exposures Exposures Mitigation Assets
Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 35,714,828 - 347,498 - 9,015,629 163,739 - - 432,033 - - 45,673,727 -

20% - 1,814 7,812,956 - 10,460,722 1,013,709 - - 95,400 - - 19,384,601 3,876,919
35% - - - - - - 21,545,984 - - - - 21,545,984 7,541,095
50% 79,581 - 802,756 - 403,812 26,881 9,065,000 - - - - 10,378,030 5,189,015
75% - - - - - 28,703,137 - - - - - 28,703,137 21,527,353
100% - - - 18,845 61,902,462 8,716,434 229,074 - 1,818,407 - 680,324 73,365,546 73,365,546
150% - - - - 321,574 213,169 - 27,372 - - - 562,115 843,173
1250% - - - - - - - - - 90 - 90 1,125
Total 35,794,409 1,814 8,963,210 18,845 82,104,199 38,837,069 30,840,058 27,372 2,345,840 90 680,324 199,613,230 112,344,226

31 March 2022
Exposures after Netting and Credit Risk Mitigation
Insurance Total
Companies, Exposures
Banks, Securities after Netting
Sovereigns DFIs Firms and Higher and Credit Total Risk
and Central and Fund Regulatory Residential Risk Other Securitisation Equity Risk Weighted
Risk Banks PSEs MDBs Managers Corporates Retail Mortgages Assets Assets Exposures Exposures Mitigation Assets
Weights RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

0% 19,370,480 - 355,748 - 4,981,599 125,008 - - 415,716 - - 25,248,551 -

20% - 2,391 8,823,039 - 7,883,332 1,300,457 - - 404,449 - - 18,413,668 3,682,734
35% - - - - - - 19,632,063 - - - - 19,632,063 6,871,222
50% 6,308 - 909,060 - 250,039 16,560 7,078,830 - - - - 8,260,797 4,130,399
75% - - - - - 25,919,455 - - - - - 25,919,455 19,439,591
100% - - - 8,210 57,456,268 10,822,498 119,668 - 1,748,590 - 79 70,155,313 70,155,313
150% - - - - 344,116 154,018 - 709,806 - - - 1,207,940 1,811,909
1250% - - - - - - - - - 90 - 90 1,125
Total 19,376,788 2,391 10,087,847 8,210 70,915,354 38,337,996 26,830,561 709,806 2,568,755 90 79 168,837,877 106,092,293
 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

6.0 CREDIT RISK EXPOSURE UNDER STANDARDISED APPROACH (CONT’D.)

Table 6.2: Rated Exposures according to Ratings by ECAIs

31 March 2023
Ratings of Corporate by Approved ECAIs
Moody’s Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated
Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated
RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to D Unrated
Group MARC AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated
Exposure class RM’000 RM’000- RM’000- RM’000- RM’000 RM’000

On and off-balance sheet exposures

Credit exposures (using corporate risk
weights)
PSE (applicable for entities risk weighted
based on their external ratings as
corporates) 1,814 - - - - 1,814
Insurance companies, Securities firms and
Fund managers 21,696 - - - - 21,696
Corporates 86,910,667 8,398,502 84,831 13,364 - 78,413,970
Total 86,934,177 8,398,502 84,831 13,364 - 78,437,480

31 March 2022
Ratings of Corporate by Approved ECAIs
Moody’s Aaa to Aa3 A1 to A3 Baa1 to Ba3 B1 to C Unrated
Fitch AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated
RAM AAA to AA3 A to A3 BBB1 to BB3 B1 to D Unrated
Group MARC AAA to AA- A+ to A- BBB+ to BB- B+ to D Unrated
Exposure class RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

On and off-balance sheet exposures

Credit exposures (using corporate risk
weights)
PSE (applicable for entities risk weighted
based on their external ratings as
corporates) 2,391 - - - - 2,391
Insurance companies, Securities firms and
Fund managers 8,210 - - - - 8,210
Corporates 75,423,301 5,939,373 - 13,672 - 69,470,256
Total 75,433,902 5,939,373 - 13,672 - 69,480,857

315
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

6.0 CREDIT RISK EXPOSURE UNDER STANDARDISED APPROACH (CONT’D.)

Table 6.2: Rated Exposures according to Ratings by ECAIs (cont’d.)

31 March 2023
Ratings of Sovereigns and Central Banks by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Baa1 to Baa3 Ba1 to B3 Unrated
Group Fitch AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Unrated
Exposure Class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Sovereigns and Central banks 35,794,409 2,873,938 - 32,920,471 - -
Total 35,794,409 2,873,938 - 32,920,471 - -

31 March 2022
Ratings of Sovereigns and Central Banks by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Baa1 to Baa3 Ba1 to B3 Unrated
Group Fitch AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Unrated
Exposure Class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Sovereigns and Central banks 19,376,788 - - 19,376,788 - -
Total 19,376,788 - - 19,376,788 - -

31 March 2023
Ratings of Sovereigns and Central Banks by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Baa1 to Baa3 Ba1 to B3 Unrated
Group Fitch AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Unrated
Exposure Class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Sovereigns and Central banks 15,042,596 8,908,180 2,487,567 15,280 471 3,631,098
Total 15,042,596 8,908,180 2,487,567 15,280 471 3,631,098

31 March 2022
Ratings of Sovereigns and Central Banks by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Baa1 to Baa3 Ba1 to B3 Unrated
Group Fitch AAA to AA- A+ to A- BBB+ to BBB- BB+ to B- Unrated
Exposure Class RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Sovereigns and Central banks 11,770,389 3,675,902 461,029 129,295 - 7,504,163
Total 11,770,389 3,675,902 461,029 129,295 - 7,504,163

316 FINANCIAL REPORT 2023

 Financial Pillar 3
Statements Disclosures

PILLAR 3 DISCLOSURES

6.0 CREDIT RISK EXPOSURE UNDER STANDARDISED APPROACH (CONT’D.)

Table 6.3: Securitisation according to Ratings by ECAIs

31 March 2023
Ratings of Securitisation by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Unrated
Fitch AAA to AA- A+ to A- Unrated
RAM AAA to AA3 A1 to A3 Unrated
Group MARC AAA to AA- A+ to A- Unrated
Exposure class RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Securitisation exposures 90 - - 90
Total 90 - - 90

31 March 2022
Ratings of Securitisation by Approved ECAIs
Moody's Aaa to Aa3 A1 to A3 Unrated
Fitch AAA to AA- A+ to A- Unrated
RAM AAA to AA3 A1 to A3 Unrated
Group MARC AAA to AA- A+ to A- Unrated
Exposure class RM'000 RM'000 RM'000 RM'000

On and off-balance sheet exposures

Securitisation exposures 90 - - 90
Total 90 - - 90

317
 AMMB HOLDINGS BERHAD

PILLAR 3 DISCLOSURES

7.0 CREDIT RISK MITIGATION

Collateral taken by the Group

Collateral is generally taken as security for credit exposures as a secondary source of repayment in case the counterparty cannot meet its contractual repayment
obligations from cash flow generation. The collateral accepted for credit risk mitigation comprises financial collateral, real estate, other physical asset and
guarantees.

In the case of the Group’s Islamic Banking operations, only Shariah approved assets can be accepted as permissible collateral.

The Credit Risk Mitigation Policy is the internally recognised collateral framework for the Group. Any collateral that does not conform to the requirements outlined
in that policy is not eligible for capital relief for regulatory capital purposes.

Processes for collateral management

The concept of legal enforceability and certainty are central to collateral management. In order to achieve legal enforceability and certainty, the Group has
standard collateral instruments, and where applicable, security interests are registered.

Guarantee support

Guarantee support for lending/financing proposals are an integral component in transaction structuring for the Group. Where a counterparty’s corporate guarantor
is rated better than the counterparty, the credit risk rating of the counterparty is able to be substituted with that of the corporate guarantor subject to fulfilling
certain stipulated conditions for Non-Retail portfolio.

Use of credit derivatives and netting for risk mitigation

Currently, the Group does not use credit derivatives and netting for risk mitigation.

Transaction structuring to mitigate credit risk

Besides tangible security and guarantee support described above, credit risk mitigation techniques are used in structuring transactions. These include duration
limits managing the tenure of the loan/financing, amortisation schedules and loan/financing covenants. These assist in managing credit risk and providing early
warning signals to enable pre-emptive actions to protect the quality or recoverability of loan/financing assets.

Concentrations of credit risk mitigation

The Group carefully monitors collateral concentrations via portfolio management reporting and amendments as necessary to its GRAF and related policies
governing Loan/Financing to Value metrics.

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7.0 CREDIT RISK MITIGATION (CONT’D.)

Table 7.1: Credit Risk Mitigation

The total exposures and eligible guarantees, credit derivatives and collateral of the Group are as follows:

31 March 2023
Exposures
covered
Exposures by Eligible
Exposures covered by Financial
before CRM Guarantees Collateral
Exposure Class RM'000 RM'000 RM'000

Credit risk
On-balance sheet exposures
Sovereigns/Central banks 24,112,318 - -
PSEs 1,814 - -
Banks, DFIs and MDBs 7,293,311 - -
Insurance companies, Securities firms and Fund managers 2,588 - -
Corporates 76,143,099 3,242,893 4,948,554
Regulatory retail 40,465,253 1,091,532 6,926,161
Residential mortgages 30,390,626 - 21,551
Higher risk assets 14,182 - -
Other assets 2,345,840 - -
Securitisation exposures 90 - -
Equity exposures 680,324 - -
Defaulted exposures 1,415,048 100,989 16,821
Total for on-balance sheet exposures 182,864,493 4,435,414 11,913,087

Off-balance sheet exposures

OTC derivatives 2,118,565 - 615,484
Off-balance sheet exposures other than OTC derivatives or Credit derivatives 30,784,963 162,177 9,545,392
Defaulted exposures 88,476 - 24,644
Total for off-balance sheet exposures 32,992,004 162,177 10,185,520
Total on and off-balance sheet exposures 215,856,497 4,597,591 22,098,607

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7.0 CREDIT RISK MITIGATION (CONT’D.)

Table 7.1: Credit Risk Mitigation (cont’d.)

The total exposures and eligible guarantees, credit derivatives and collateral of the Group are as follows: (cont’d.)

31 March 2022
Exposures
covered
Exposures by Eligible
Exposures covered by Financial
before CRM Guarantees Collateral
Exposure Class RM'000 RM'000 RM'000

Credit risk
On-balance sheet exposures
Sovereigns/Central banks 19,370,480 - -
PSEs 2,391 - -
Banks, DFIs and MDBs 9,024,654 - -
Corporates 64,706,105 709,117 4,716,471
Regulatory retail 40,750,084 1,381,361 6,490,947
Residential mortgages 26,550,853 - 25,577
Higher risk assets 692,625 - 10
Other assets 2,568,755 - -
Securitisation exposures 90 - -
Equity exposures 79 - -
Defaulted exposures 1,242,890 54,760 18,495
Total for on-balance sheet exposures 164,909,006 2,145,238 11,251,500

Off-balance sheet exposures

OTC derivatives 1,860,867 - 412,595
Off-balance sheet exposures other than OTC derivatives or Credit derivatives 13,410,296 382,077 4,763,881
Defaulted exposures 36,721 - 14,387
Total for off-balance sheet exposures 15,307,884 382,077 5,190,863
Total on and off-balance sheet exposures 180,216,890 2,527,315 16,442,363

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8.0 OFF-BALANCE SHEET EXPOSURES AND COUNTERPARTY CREDIT RISK

8.1 Off-Balance Sheet exposures

The Group's off-balance sheet exposures consist of 3 main categories as follows:

(1) Credit related exposures, e.g. direct credit substitute, guarantees given on behalf of customers, certain transaction-related contingent items, obligation
under underwriting agreement, short-term self-liquidating trade-related contingencies, irrevocable commitment to extend credit and unutilised credit
card line.
(2) Derivative Financial Instruments, e.g. forward exchange contracts (forward exchange contracts and cross currency swaps), interest/profit rate related
contracts (interest/profit rates futures and interest/profit rates swap), equity related contracts (option and futures) and commodity related contract
(option).
(3) Other treasury-related exposures, e.g. forward purchase commitment.

Off-balance sheet exposure is mitigated by setting of credit limit for the respective counterparty and exposure limit for industry sectors which are governed
under the GRAF.

8.2 Counterparty Credit Risk

Market related credit risk is present in market instruments (derivatives and forward contracts), and comprises counterparty risk (default at the end of
contract) and pre-settlement risk (default at any time during the life of contract). Market related credit risk requires a different method in calculating the
pre-settlement risk because actual and potential market movements impact the Group’s exposure. The markets covered by this treatment for transactions
entered by the Group include interest/profit rates, foreign exchange and equities.

For each individual contract, the pre-settlement risk exposure is normally calculated based on the sum of the marked-to-market (“MTM”) value of the
exposure, plus the notional principal multiplied by the potential credit risk exposure (“PCRE”) factor; if the sum of each individual contract is negative, the
pre-settlement risk exposure for this contract is deemed to be zero.

Pre-settlement risk exposure = MTM + PCRE factor (or known as add-on factor) x Notional Principal

• The MTM is essentially the current replacement cost of the contract, and can be positive or negative. Where it is positive, i.e. in the money, the Group
has credit exposure against the counterparty; if it is negative, i.e. out of the money, the negative value will be used.
• The PCRE factors recognise that prices change over the remaining period to maturity, and that risk increases with time. The PCRE factors are
mandated for regulatory capital purposes.
• Variation to the above generic methodology is allowed for specific product.

Maximum pay out method is used for back to back and structured products where the underlying instrument structures are dynamic i.e. not confined to a
standardised underlying instrument. Where the maximum payout is known, it is taken as the pre-settlement risk amount. However, in situations where the
maximum payout is not observable, a Monte Carlo simulation method is used.

Exposure to the counterparty is governed by the counterparty credit limit under the GRAF.

Other than credit limit setting and related duration setting of such limits, the Group’s primary tool to mitigate counterparty credit risk is by taking collateral.

For derivative exposures, collateral is generally managed via standard market documentation which governs the amount of collateral required and the re-
margining frequency between counterparties, including the impact on collateral requirements should either the banking subsidiary’s or the counterparty’s
credit risk rating be upgraded or downgraded.

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8.0 OFF-BALANCE SHEET EXPOSURES AND COUNTERPARTY CREDIT RISK (CONT’D.)

Table 8.1: Off-Balance Sheet Exposures

The off-balance sheet exposures and counterparty credit risk of the Group are as follows:

31 March 2023
Positive Fair
Value of Credit
Principal Derivative Equivalent Risk Weighted
Amount Contracts Amount Assets
RM’000 RM’000 RM’000 RM’000

Direct Credit Substitutes 3,190,357 3,083,134 2,568,637

Transaction-related contingent Items 4,472,380 2,202,022 1,728,627
Short-term self-liquidating trade-related contingencies 750,231 127,501 123,399
Forward Asset Purchases 174,223 5,118 3,069
Obligations under on-going underwriting agreements 210,000 - -
Lending of banks’ securities or the posting of securities as collateral by banks,
including instances where these arise out of repo-style transactions 17,904,209 18,045,991 139,627
Foreign exchange related contracts
One year or less 46,455,996 308,143 302,201 222,036
Over one year to five years 4,130,063 116,765 349,668 305,394
Over five years 1,041,311 1,189 127,979 112,120
Interest/Profit rate related contracts
One year or less 622,094 11,143 18,367 9,184
Over one year to five years 3,969,273 119,263 195,858 52,928
Over five years 2,048,469 129,182 282,761 73,503
Equity and commodity related contracts
One year or less 1,352,573 12,452 124,618 84,221
Over one year to five years 4,850 116 180 36
Other Commodity Contracts
One year or less - - - -
Over one year to five years 74,952 6,406 10,953 5,476
OTC Derivative transactions and credit derivative contracts subject to valid
bilateral netting agreements 29,186,185 216,450 705,980 355,683
Other commitments, such as formal standby facilities and credit lines, with an
original maturity of over one year 17,852,995 1,781,487 1,363,247
Other commitments, such as formal standby facilities and credit lines, with an
original maturity of up to one year 3,654,631 4,491,720 2,624,759
Unutilised credit card lines 5,682,369 1,136,466 844,427
Total 142,777,161 921,109 32,992,004 10,616,373

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8.0 OFF-BALANCE SHEET EXPOSURES AND COUNTERPARTY CREDIT RISK (CONT’D.)

Table 8.1: Off-Balance Sheet Exposures (cont’d.)

The off-balance sheet exposures and counterparty credit risk of the Group are as follows: (cont’d.)

31 March 2022
Positive Fair
Value of Credit
Principal Derivative Equivalent Risk Weighted
Amount Contracts Amount Assets
RM'000 RM'000 RM'000 RM'000

Direct Credit Substitutes 2,972,783 2,896,505 2,522,218

Transaction-related contingent Items 4,295,291 2,038,081 1,592,769
Short-term self-liquidating trade-related contingencies 604,427 99,199 89,086
Forward Asset Purchases 60,257 3,500 2,500
Obligations under on-going underwriting agreements 130,000 - -
Lending of banks' securities or the posting of securities as collateral by banks,
including instances where these arise out of repo-style transactions 1,687,548 1,729,929 40,560
Foreign exchange related contracts
One year or less 19,845,570 28,549 183,577 143,375
Over one year to five years 4,312,476 111,905 406,445 341,260
Over five years 1,114,259 992 144,921 126,483
Interest/Profit rate related contracts
One year or less 789,332 6,587 7,839 3,311
Over one year to five years 2,898,059 63,609 105,215 36,826
Over five years 2,346,446 97,146 280,462 137,862
Equity and commodity related contracts
One year or less 1,463,602 38,395 71,670 36,810
Over one year to five years 75,367 8,214 180 36
Other Commodity Contracts
One year or less 106,784 8,861 4,196 2,759
Over one year to five years 71,367 8,264 12,546 2,151
OTC Derivative transactions and credit derivative contracts subject to valid
bilateral netting agreements 56,447,261 448,851 643,816 265,162
Other commitments, such as formal standby facilities and credit lines, with an
original maturity of over one year 17,485,076 1,252,625 968,274
Other commitments, such as formal standby facilities and credit lines, with an
original maturity of up to one year 2,516,528 4,401,879 2,348,850
Unutilised credit card lines 5,126,496 1,025,299 763,009
Total 124,348,929 821,373 15,307,884 9,423,301

8.2: Credit Derivatives Counterparty Credit Risk (“CCR”)

The Group did not have any counterparty credit risk exposure as at 31 March 2023 and 31 March 2022.

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9.0 SECURITISATION

9.1 Objectives, roles and involvement

AMMB Banking Group has undertaken securitisations of its own originated assets, as well as advised on securitisations of third party assets as part of its
structured finance/debt capital markets services for its clients. The Group’s objectives in relation to securitisation activity include the following:

• increase the availability of different sources of funding;

• facilitate prudential balance sheet management;
• transfer of credit and market risk;
• obtain regulatory capital relief, if applicable;
• earn management fees on assets under management; and
• earn other fees for products and services provided, e.g. liquidity, funding and credit support, structuring, arranging and underwriting services.

The Group is involved in the following types of securitisation activities:

• Securitisation of assets originated by the Group. Such transactions provide diversity in the funding base for the Group entities. Such securitisations
may or may not involve the transfer of credit risk and as such, may or may not provide regulatory capital relief.
• Securitisation of third party-originated assets.
• Facilities and services provided to securitisations – the Group provides various facilities to securitisations which include liquidity, funding and credit
support as well as services such as structuring and arranging.
• Investment in securities - the Group may purchase bonds issued from securitisation programmes and also purchases such bonds in the secondary
markets.

9.2 Regulatory capital approaches used in the Group’s securitisation activities

Securitisation exposures held in the trading books of the Group are subjected to market risk capital charge using the Standardised Approach.

For securitisation exposures held in the banking books, the Group applies the Standardised Approach related to banking book exposures to determine the
credit risk capital charge.

9.3 Governance

The Group’s Capital Markets team is tasked with the structuring of securitisation transactions whilst the governance of these securitisation activities is
overseen by the Board and Executive Committees, and managed in accordance with the credit risk and market risk frameworks.

Securitisation exposures held in banking books and trading books are governed under the limits set for the banking book and trading book respectively.

9.4 Risk measurement and reporting of securitisation exposures

The Group relies on the external ratings assigned by recognised external credit assessment institutions in determining the capital charge requirement for
rated securitisation exposures. The Group also assesses the performance information of the underlying pool on an ongoing basis e.g. 30/60/90 days past
due, default rates, prepayment rates, etc, to gauge the stability of the model parameters to determine sufficiency of the buffers. The reporting for such
exposures is dependent on the Group’s ultimate position, whether acting as a third party investor to both on or off-balance sheet exposures.

9.5 Special Purpose Vehicle (“SPV”) used in securitisation exercises

Third party exposures that have been securitised via SPVs include civil servant loans/financing, personal loans/financing and government-linked companies’
staff housing loans.

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9.0 SECURITISATION (CONT’D.)

9.6 Accounting Policies for Securitisation

The Group has sponsored SPVs involving assets of the Group. Such SPVs are consolidated where the Group has control as determined in accordance with
MFRS 10 Consolidated Financial Statements.

Assets that have been transferred wholly or proportionately to an unconsolidated entity remain on the Group’s statement of financial position, with a liability
recognised for the proceeds received, unless:

(a) substantially all risks and rewards associated with the assets have been transferred, in which case, they are derecognised in full; or
(b) if a significant portion, but not all, of the risks and rewards have been transferred, the asset is derecognised entirely if the transferee has the ability
to sell the financial asset, otherwise the asset continues to be recognised to the extent of the Group’s continuing involvement.

9.7 Use of external rating agencies

The Group uses the services of both RAM and MARC and where applicable, international rating agency for securitisation transactions purposes.

Table 9.1: Securitisation (Trading and Banking Book)

The securitised exposures of the Group are as follows:

31 March 2023
Gains/Losses
recognised
Total Exposures during the
Securitised Past Due Impaired financial year
Underlying Asset RM’000 RM’000 RM’000 RM’000

Traditional Securitisation
Originated by the Group
Banking Book
Mortgage loans 1,123,518 - 1,112,256 -
Total Traditional Securitisation 1,123,518 - 1,112,256 -

31 March 2022
Gains/Losses
recognised
Total Exposures during the
Securitised Past Due Impaired financial year
Underlying Asset RM’000 RM’000 RM’000 RM’000

Traditional Securitisation
Originated by the Group
Banking Book
Mortgage loans 1,078,947 - 1,069,023 -
Total Traditional Securitisation 1,078,947 - 1,069,023 -

The Group did not have any exposures under synthetic securitisation as at 31 March 2023 and 31 March 2022.

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9.0 SECURITISATION (CONT’D.)

Table 9.2: Securitisation under the Standardised Approach for Banking Book Exposures

31 March 2023
Distribution of Exposures after CRM according to
Exposure Applicable Risk Weights
Group Value of Rated Securitisation Exposures or Risk Weights of
Positions Exposures Guarantees/Credit Derivatives Risk
Securitisation Purchased or Exposure subject to Weighted
Exposures by Retained after CRM deduction 20% 50% 1250% Assets
Exposure Type RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Traditional Securitisation
Originated by Third
Party
On-Balance Sheet
Exposures - - - - - - -
Originated by the Group
On-Balance Sheet
Exposures 90 90 - - - 90 1,125
Total Traditional
Securitisation 90 90 - - - 90 1,125

31 March 2022
Distribution of Exposures after CRM according to
Exposure Applicable Risk Weights
Group Value of Rated Securitisation Exposures or Risk Weights of
Positions Exposures Guarantees/Credit Derivatives Risk
Securitisation Purchased or Exposure subject to Weighted
Exposures by Retained after CRM deduction 20% 50% 1250% Assets
Exposure Type RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Traditional Securitisation
Originated by Third
Party
On-Balance Sheet
Exposures - - - - - - -
Originated by the Group
On-Balance Sheet
Exposures 90 90 - - - 90 1,125
Total Traditional
Securitisation 90 90 - - - 90 1,125

There is no securitisation exposure under trading book as at 31 March 2023 and 31 March 2022.

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10.0 OPERATIONAL RISK

The operational risk management process is depicted in the table below:vw

• Identify and analyse risks in key processes/activities within Business and Functional Lines (including new products)
Identification • Review of past operational losses and incidences data
• Regulators’ and Auditors’ review and feedback

Assessment/ • Risk and Control Self Assessment (“RCSA”)

Measurement • The inherent and residual risks are assessed based on the probability and impact of activity undertaken

Several Operational Risk Management tools are used to mitigate the risk identified
• Incident Management and Data Collection (“IMDC”)
• Key Risk Indicators (“KRI”)
Control/Mitigation • Key Control Testing (“KCT”)
• Root cause analysis
• Scenario Analysis
• Insurance programme

• Monitoring and reporting of loss incidents by Event Type, Portfolio and Line of Business and entity, reporting of
operational risk board and management triggers, risk profile status, key risk indicator breaches and key control testing
exceptions and operational risk framework adherence
Monitoring/Review
• Challenging the periodical review or updating the RCSA (risk profile)/KRIs/KCTs of all Line of Business and entity
• Trigger by adverse change in circumstances (trigger event review)
• Change management process review

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external incidents which includes
but is not limited to legal risk, outsourcing risk, technology (including cyber) risk and Shariah risk (Please refer to section 14 for discussion on Shariah Governance
Structure). It excludes strategic, systemic and reputational risk.

Operational Risk Appetite (“ORA”) is set as part of overall GRAF, which sets the acceptable tolerance levels of operational risk that the Group is willing to accept,
taking into consideration of the relevant financial and non-financial risk or return attributes in order to support the achievement of the Group’s strategic plan and
business objectives. The ORA statements and measurements are classified based on operational risk loss event types, which are grouped into five (5) categories
as below and monitored via IMDC, KRI and KCT:

• Fraud (internal and external);

• Employment Practices and Workplace Safety;
• Client, Products and Business Practices;
• Business Disruption, System Failures and Damage to Physical Assets; and
• Execution, Delivery and Process Management

The strategy for managing operational risk in the Group is anchored on the three (3) lines of defence concept which are as follows:

• The first line of defence (“FLOD”) is responsible for the management of operational risk in order that accountability and ownership is as close as possible
to the activity that creates the risk and ensuring that effective action is taken to manage them. Enhanced FLOD provides a business specific focus on the
implementation of operational risk management activities and supports more effective day-to-day monitoring of operational risks.
• In the second line, Group Operational Risk is responsible for exercising governance over operational risk through the management of the operational risk
framework, policy development and communication, quality assurance of internal controls, operational risk measurement, validation of FLOD effectiveness,
ORM training and reporting of operational risk triggers, breaches, KCT exceptions, operational loss incidents to GMRC, RMC and the Board.
• GIAD acts as the third and final line of defence by providing independent assurance on the internal control effectiveness through periodic audit programme.

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10.0 OPERATIONAL RISK (CONT'D.)

Group Operational Risk maintains close working relationships with all Business and Functional Lines, continually assisting in the identification of operational risks
inherent in their respective business activities, assessing the impact and significance of these risks and ensuring that satisfactory risk mitigation measures and
controls are in place. Various tools and methods are employed to identify, measure, control and monitor/report operational risk issues within the Group. The ORM
process contains the following ORM tools:

• The IMDC module provides a common platform for reporting operational risk incidents that fall within one of the seven Event Types as stated in Basel II.
IMDC also serves as a centralised database of operational risk incidents to model the potential exposure to operational risks in future and estimate the
amount of economic capital charge.
• The RCSA is a process of continual identification, assessment of risks and controls effectiveness. By using structured questionnaires to assess and measure
key risk and its corresponding controls effectiveness, RCSA provides risk profiling across the Group.
• The KRI module provides early warning of increasing risk and/or control failures by monitoring the changes of the underlying risk measurements.
• The KCT is the test steps or assessment performed periodically to assure that the key controls are in place and they are operating as intended or effective
in managing the operational risks.
• Root cause analysis is conducted by the Operational Risk Relationship Managers within Group Operational Risk to prevent recurrence of operational risk
incidents.
• Scenario analysis is a forward-looking assessment tool to assess the severity impact on the Group's profitability and capital adequacy should the plausible
and worse case scenarios materialise.

The GMRC, Risk Management Committee Director (“RMCD”) and Board are the main reporting and escalation committees for operational risk matters including
outsourcing risk, information technology (including cyber) risk, shariah risk, legal risk and business continuity management.

10.1 Business Continuity Management (“BCM”)

The BCM process is depicted in the table below:

Identification • Identify events that potentially threaten the business operations and areas of criticality

Assessment/ • Business Impact Analysis (“BIA”)

Measurement • Risk Assessment

• Policies governing the BCM implementation

Control/Mitigation • BCM methodologies controlling the process flow
• Implementing the Business Continuity (“BC”) plan

• BC plan testing and exercise

Monitoring/Review • Review of BC Plan
• BC site readiness and maintenance

The BCM function is an integral part of ORM. It places the importance of maintaining a BCM framework and policies to identify events that could potentially
threaten the Group’s operations and the identification of critical functions through BIA exercise, for the development of recovery strategy. BCM builds the
resilience and recovery capability to safeguard the interest of the Group’s stakeholders by protecting our brand and reputation.

The BCM process complements the effort of the recovery team units to ensure that the Group has the required critical capabilities and resources, such as
IT system disaster recovery, alternate workspace arrangements and effective communication during interruptions.

The Group is continuously reviewing the level of business operations resiliency to enhance the BCM capability throughout all critical departments and
branches across the region. Training is an integral part of the process to heighten BCM awareness and inculcate a business resiliency culture.

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10.0 OPERATIONAL RISK (CONT’D.)

10.2 Cyber Risk Management

Cybersecurity risks remain a persistent threat for the financial industry. The constantly evolving nature and sophistication of cyber threats and attack
vectors calls for increased vigilance, readiness and ability to respond to upcoming threats. The resilience of the Group’s IT infrastructure and cyber security
capabilities are of paramount importance, especially with regards to safeguarding customers’ information.

The Group continues to enhance its cyber security controls framework, execute internal assessment reviews, build defense mechanisms and uplift
governance processes alongside the Group’s cyber risk management strategy - to identify threats in a timely manner, and build or enhance the right
defenses to mitigate risks. Creating a security mindset for employees and customers via its Cyber Security awareness programs also remains a priority.

The Group Technology Risk team acts as a second line of defence to monitor alongside the first line of defence to ensure that risks and controls are properly
managed. The Group's technology risk management capabilities include oversight over infrastructure security risk, data leakage risk, application security
risk and third party security risk.

10.3 Legal Risk

In all jurisdictions that the Group conducts its business, there could be potential legal risks arising from breaches of applicable laws, unenforceability
of contracts, lawsuits, adverse judgement, failure to respond to changes in regulatory requirements and failure to protect assets (including intellectual
properties) owned by the Group which may lead to incurrence of losses, disruption or otherwise impact on the Group’s financials or reputation.

Legal risk is overseen by GMRC/Group Management Committee (“GMC”), upon advice by internal legal counsel and, where necessary, in consultation with
external legal counsel to ensure that such risks are appropriately managed.

10.4 Regulatory Compliance Risk

The Group has in place a compliance framework to promote the safety and soundness of the Group by minimising financial, reputational and operational
risks arising from regulatory non-compliance.

The Group Chief Compliance Officer has a direct reporting line to the Risk Management Committee (“RMC”) of the Board. A governance structure is in place
for escalation and reporting of compliance risks and issues through monthly compliance reports to the RMC and Board.

The compliance framework details the roles and responsibilities for compliance with regulatory guidelines and requirements. The responsible parties are
accountable for the management of compliance risks associated with the Group’s processes and increasing awareness on the role of every employee to
be compliant and safeguard the Group’s reputation against any potential legal violations and/or regulatory non-compliance. The Senior Management team
is responsible for communicating the compliance framework to all employees, as well as implementing appropriate actions for non-compliances.

The Group Management Governance and Compliance Committee (“GMGCC”), comprising the Senior Management Team from Group Compliance, Group
Risk, Group Internal Audit and the Business, meets regularly to discuss and deliberate on regulatory updates, compliance issues and areas of non-
compliance. The Group believes in and embraces a strong compliance culture to reflect a corporate culture of high ethical standards and integrity where
the Board and Senior Management lead by example. The Group has zero tolerance for any form of bribery or corruption.

The Group continues to exercise and enhance its due diligence governance process and remains vigilant towards emerging risk as well as sensitive
towards heightened regulatory surveillance and enforcement.

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11.0 MARKET RISK MANAGEMENT

Market risk is the risk of losses due to adverse changes in the level or volatility of market rates or prices, such as interest/profit rates, credit spreads, equity prices
and foreign exchange rates. The Group differentiates between two categories of market risk: Traded Market Risk (“TMR”) and Non-Traded Market Risk (“NTMR”).
Assessment, control and monitoring of these risks are the responsibilities of Investment Banking and Markets Risk (“IBMR”).

11.1 Traded Market Risk (“TMR”)

The TMR management process is depicted in the table below.

• Identify market risks within existing and new products

Identification
• Review market-related information such as market trends and economic data

• Value-at-Risk (“VaR”) • Present Value of One Basis Point (“PV01”)

Assessment/
• Loss Limit • Sensitivity to Change
Measurement
• Historical Stress Loss (“HSL”) • Other Detailed Controls

• VaR Limit • Position Size Limits

• Loss Limits/Triggers (Annual/Monthly/Daily) • Maximum Tenor Limits
• HSL Limit • Maximum Holding Period
Control/Mitigation • PV01 Limits • Minimum Holding Period
• Greek Limits (Delta/Gamma/Delta-Gamma/Vega/ • Approved Portfolio Products
Theta) • Approved Countries/Currencies
• Concentration Limits • Other Detailed Limits/Triggers

• Monitor controls
Monitoring/Review
• Periodical review and reporting

TMR arises from transactions in which the Group acts as principal with clients or the market. It involves taking positions in fixed income, equity, foreign
exchange, commodities and/or derivatives. The objectives of TMR management are to understand, accurately measure and work with the business to
ensure exposures are managed within the Board and Group Management Risk Committee (“GMRC”) approved limit structures and risk appetite. This is
done via robust traded market risk measurement, limit setting, limit monitoring, and collaboration and agreement with Business Units.

VaR, Loss Limits, HSL and other detailed management controls are used to measure, monitor and control TMR exposures. VaR is a quantitative measure
which the Group applies recent historical market conditions to estimate potential losses in market value, at a certain confidence level and over a specified
time horizon (i.e. holding period). Loss Limits serve to alert management on the need to take relevant and appropriate action once they are triggered.

To complement VaR, HSL is used as a measure of the potential impact on portfolio values due to more extreme, albeit plausible, market movements. In
addition, HSL is used to gauge and ensure that the Group is able to absorb extreme, unanticipated market movements.

Apart from VaR, Loss Limits and HSL, additional sensitivity controls (e.g. Greek Limits/PV01 Limits) and indicators are used to monitor changes in portfolio
value due to changes in risk factors under different market conditions.

IBMR independently monitors risk exposures against limits on a daily basis. Portfolio market risk positions are independently monitored and reported by
IBMR to GMRC, RMC and the Board. Furthermore, policies and procedures are in place to ensure prompt action is taken in the event of non-adherence to
limits. Business Units exposed to traded market risk are required to maintain risk exposures within approved risk limits and to provide an explanation for
any non-adherence event to Senior Management.

The Group adopts the Standardised Approach for market risk capital charge computation. The capital charge serves as a buffer against losses from
potential adverse market movements.

IBMR is committed to on-going improvements in market risk processes and systems, and allocates substantial resources to this endeavour.

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11.0 MARKET RISK MANAGEMENT (CONT’D.)

11.2 Non-Traded Market Risk (“NTMR”)

NTMR refers to interest rate risk/rate of return risk in the banking book including those arising from balance sheet management activities as covered under
the risk appetite.

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”)

The IRR/RORBB risk management process is depicted in the table below:

• Identify IRR/RORBB within existing and new products

Identification
• Review market-related information such as market trend and economic data

• PV01
Assessment/ • Earnings-at-Risk (“EaR”)
Measurement • ICAAP IRR/RORBB Economic Value of Equity (“EVE”)
• ICAAP IRR/RORBB EaR

• PV01 Triggers
• EaR Triggers
Control/Mitigation
• ICAAP IRR/RORBB EVE / Total Capital Trigger
• ICAAP IRR/RORBB EaR / Total Net Interest/Profit Income (“NII/NPI”) Trigger

• Monitor controls
Monitoring/Review
• Periodical review and reporting

IRR/RORBB arises from changes in market interest/profit rates that impact core net interest/profit income, future cash flows or fair values of financial
instruments. This risk arises from mismatches between repricing dates of assets and liabilities, changes in yield curves, volatilities in interest/profit margins
and implied volatilities on interest/profit rate options. The provision of retail and wholesale banking products and services (primarily lending/financing and
deposit taking activities) creates interest/profit rate-sensitive positions in the Group’s statement of financial position.

The principal objectives of balance sheet risk management are to manage interest/profit income sensitivity while maintaining acceptable levels of IRR/
RORBB and funding risk, and to manage the economic value of the Group’s capital.

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11.0 MARKET RISK MANAGEMENT (CONT’D.)

11.2 Non-Traded Market Risk (“NTMR”) (cont'd.)

Interest Rate Risk/Rate of Return Risk in the Banking Book (“IRR/RORBB”) (cont'd.)

The Board’s oversight of IRR/RORBB is supported by the GALCO and GMRC. The Board and GMRC are responsible for the alignment of Group-wide risk
appetite. GALCO reviews strategies to ensure a comfortable level of IRR/RORBB is maintained, taking into consideration the Group's business strategies
and is responsible for overseeing the Group's gapping positions, asset growth and liability mix against the interest/profit rate outlook. The Group has
successfully engaged long-term borrowings and written interest/profit rate swaps to manage IRR/RORBB, and maintained an acceptable gapping profile as
a result. In accordance with the Group’s policy, IRR/RORBB positions are monitored on a monthly basis and hedging strategies are employed to ensure risk
exposures are maintained within Management-established limits.

The Group measures the IRR/RORBB exposures using PV01. PV01 is a quantitative measure to assess the impact of an absolute change in economic value
due to 1 basis point movement in market interest/profit rates.

The Group complements PV01 by stress testing IRR/RORBB exposures to highlight potential risk that may arise from extreme market events that are rare
but plausible.

Key assumptions in the gap and sensitivity analysis relate to the behaviour of interest/profit rates and spreads, changes in loan/financing and deposit product
balances due to behavioural characteristics under different interest/profit rate environments. Material assumptions include the repricing characteristics and
the stability of indeterminate or non-maturity deposits and loans/financing.

The rate scenarios may include rapid ramping of interest/profit rates, gradual ramping of interest/profit rates, and narrowing or widening of spreads. Usually
each analysis incorporate what management deems the most appropriate assumptions about customer behaviour in an interest/profit rate scenario.
However, in certain cases, assumptions are deliberately changed to test the Group’s exposure to a specified event.

The Group’s strategy seeks to optimise exposure to IRR/RORBB within Management-approved limits. This is achieved through the ability to reposition the
interest/profit rate exposure of the statement of financial position using various product and funding strategies, supported by interest/profit rate hedging
activities using interest/profit rate swaps and other derivatives. These approaches are governed by the Group’s policies in the areas of product and liquidity
management as well as the Trading Book and Banking Book Policy, hedging policies and Non-Traded Interest/Profit Rate Risk Framework.

IRR/RORBB exposures are monitored by IBMR and positions reported to the GALCO, GMRC, RMC and Board.

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11.0 MARKET RISK MANAGEMENT (CONT’D.)

11.2 Non-Traded Market Risk (“NTMR”) (cont’d.)

Table 11.2: Interest Rate Risk/Rate of Return Risk Sensitivity in the Banking Book

The IRR/RORBB sensitivity for the Group is as follows:

31 March 2023
Interest Rate/ Interest Rate/
Rate of Return Rate of Return
+100 bps -100 bps
RM’000 RM’000

Impact on Profit Before Zakat and Taxation (4,090) 4,090

Impact on Equity (1,668,316) 1,836,495

31 March 2022
Interest Rate/ Interest Rate/
Rate of Return Rate of Return
+100 bps -100 bps
RM’000 RM’000

Impact on Profit Before Zakat and Taxation 197,177 (197,177)

Impact on Equity (1,060,900) 1,178,793

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12.0 EQUITIES (BANKING BOOK POSITIONS)

Equity risk is the potential loss that may be incurred on equity investments in the banking book. The Group’s equity exposures in the banking book are equity
investments that are taken for strategic and other objectives. Where an equity investment is undertaken for a strategic purpose, such investment will be made
only after extensive analysis and due diligence. Equity investments undertaken for other business objectives are principally in conjunction with initiatives or
measures promoted by the relevant regulatory authorities or trade bodies in which the Group will jointly with other financial institutions invest in such entities to
attain various objectives, such as socio-economic development, promoting the further development of the financial market, the provision of facilities to improve
customer service, and support for human capital development for the betterment of the Malaysian banking industry. The Board’s approvals are required prior to
committing to all forms of equity investment under this category and, where relevant, the necessary regulatory approval or notification will be obtained or met.

12.1 Valuation for and accounting of equity investments in the banking book

Measurement of equity securities - Upon adoption of MFRS 9, management has elected at initial recognition to irrevocably designate certain equity
investment not held for trading at financial assets at fair value through profit or loss (“FVTPL”) and FVOCI. When this election is used, fair value gains and
losses for equity investment at FVTPL are recognised in profit or loss and equity investment at FVOCI are recognised in other comprehensive income.

Table 12.1: Equity investments and capital requirement

An analysis of equity investments by appropriate equity groupings and risk weighted assets of the Group is as follows:

31 March 31 March
2023 2022
RM’000 RM’000

Non-traded equity investments

Value of quoted (publicly traded) equities 1,238 1,207
Value of unquoted (privately held) equities 682,895 675,124
Total 684,133 676,331

Net realised and unrealised gains

Cumulative realised gains from sales and liquidations - 8,871
Total unrealised gains 7,773 3,151
Total 7,773 12,022

Risk Weighted Assets

Equity investments subject to a 100% risk weight 681,481 1,207
Equity investments subject to a 150% risk weight 3,978 1,012,686
Total 685,459 1,013,893

Total minimum capital requirement (8%) 54,837 81,111

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13.0 LIQUIDITY RISK AND FUNDING MANAGEMENT

Liquidity risk is the risk that the organisation either does not have sufficient financial resources available to meet all its obligations and commitments as they
fall due, or can only access these financial resources at an unreasonable cost. Liquidity risk exposure arises mainly from the deposit taking and borrowing
activities and market disruption, and to a lesser extent, significant drawdown of funds from previously contracted financing and purchase commitments. Funding
management is the ongoing ability to raise sufficient funds to finance actual and proposed business activities at a reasonable cost. Improper funding management
may lead to liquidity problem. On the other hand, insufficient liquidity risk management may also give rise to funding risk.

The liquidity risk management process is depicted in the table below:

• Identify liquidity risk within existing and new business activities

Identification • Review market-related information such as market trend and economic data
• Keep abreast with regulatory requirements

• Liquidity Coverage Ratio (“LCR”)

Assessment/ • Net Stable Funding Ratio (“NSFR”)
Measurement • Depositor Concentration Ratios
• Other Detailed Controls

• LCR Limits
• NSFR Limits/Targets
Control/Mitigation
• Depositor Concentration Ratios
• Other Detailed Limits/Triggers/Targets

• Monitor controls
Monitoring/Review
• Periodical review and reporting

The liquidity risk management of the Group is aligned to the LCR policy and NSFR policy issued by BNM. The primary objective of the Group’s liquidity risk
management is to ensure the availability of sufficient funds at a reasonable cost to honour all financial commitments when they fall due. This objective is partly
managed through maintenance of a portfolio of high-quality liquid assets to protect against adverse funding conditions and support day-to-day operations. The
secondary objective is to ensure an optimal funding structure and to balance the key liquidity risk management objectives, which includes diversification of
funding sources, customer base and maturity period.

The Board provides the liquidity risk management oversight including setting and reviewing the liquidity risk appetite and approves the Group’s liquidity
management strategy while GALCO is the core management committee established by the Board to oversee the overall liquidity management of the Group.

The Group has put in place a Contingency Funding Plan which is established by Capital and Balance Sheet Management (“CBSM”) to identify early warning signals
of possible liquidity problem. The Contingency Funding Plan also sets out the detailed responsibilities among the relevant departments in the event of actual
liquidity crises occurring to ensure orderly execution of procedures to restore the liquidity position and confidence in the organisation.

Various liquidity measurements have been put in place to support the broader strategic objectives of the Group and amongst others include the BNM LCR,
BNM NSFR, Depositor Concentration Ratio and other Liquidity Ratios. IBMR is responsible for developing and monitoring the controls and limits while the Group
Treasury and Markets (“GTM”) and CBSM are responsible to ensure the controls and limits are within the thresholds.

Stress testing is undertaken to assess and plan for the impact for various scenarios which may put the Group’s liquidity at risk. The Group further stresses the
importance of the stable funding sources to finance placement/lending and loans, advances and financing to customers. They are monitored using the loans/
financing to available fund ratio, which compares loans/financing and advances to customers as a percentage of the Group’s total available funds.

To measure the quality of the Group’s funding sources, the composition of core funds indicators is monitored on a regular basis. The core funds is defined as
deposits from retail and small business customers, operational deposits, non-financial institution deposits more than 1 year and debt instruments/long term
borrowings more than 1 year.

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14.0 SHARIAH GOVERNANCE STRUCTURE

AmBank Islamic Berhad AmBank Group

AmBank
Islamic Board
of Directors

Risk Audit and

Shariah
Management Examination
Committee
Committee Committee

Shariah Oversight
CEO of AmBank
Committee
Islamic

Group
Group Group Risk
Internal
Compliance Management
Audit
Department Department
Department

Head of
Shariah
Compliance
Management
AmBank
Department
Islamic

Shariah Shariah Risk Shariah

Review Management Audit

Legend : Direct Reporting Functional Reporting Shariah Reporting

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14.0 SHARIAH GOVERNANCE STRUCTURE (CONT'D.)

AmBank Islamic has established its Shariah governance structure in accordance with the requirements of the Islamic Financial Services Act 2013 (“IFSA”) and
BNM’s Policy Document on Shariah Governance. This is to ensure that the operations and business activities of AmBank Islamic comply with Shariah principles
and requirements.

Apart from the Shariah Management Department, Shariah Risk Management and Shariah Review functions which reside in AmBank Islamic, AmBank Islamic’s
Shariah governance structure leverages on the Group Internal Audit Department for the Shariah Audit function.

Board of Directors

The Board is responsible for the overall oversight on the Shariah governance and Shariah compliance, including the performance assessment, appointment
and remuneration of the Shariah Committee members. The Board performs its oversight role through various committees such as the Audit and Examination
Committee, Risk Management Committee and the Shariah Committee.

Audit and Examination Committee (“AEC”)

AEC is a Board committee responsible for assisting the Board in ensuring that AmBank Islamic's operations are Shariah compliant through the independent
assurance from the Shariah Audit function. The reports from the Shariah Review Section are also presented to the AEC for information.

Risk Management Committee (“RMC”)

RMC is a Board committee responsible for assisting the Board in ensuring that risk management (including Shariah risk management) controls and processes are
in place.

Shariah Committee

The Shariah Committee is responsible on matters related to Shariah. This includes advising the Board and Senior Management on Shariah matters as well
as endorsing products and services, Shariah policies and the relevant documentation in relation to AmBank Islamic's business and operations. In addition to
endorsing the zakat computation mechanism and the proposed recipients for zakat distribution, the Shariah Committee provides advice and guidance on the
management of the zakat fund, charity and other social programmes or activities.

Shariah Oversight Committee

The Shariah Oversight Committee, which is a sub-committee to the Shariah Committee, performs an oversight function via the Shariah Control Functions (i.e.
Shariah Review, Shariah Risk Management, and Shariah Audit). The Shariah Oversight Committee provides guidance and advice on matters pertaining to Shariah
non-compliant incidents as well as treatment of any Shariah non-compliant income.

Senior Management

The Chief Executive Officer (“CEO”) and senior officers of AmBank Islamic and the Group are responsible to make reference to the Shariah Committee and/
or Shariah Oversight Committee on Shariah matters and to take the necessary measures for implementation. The Senior Management is also responsible in
establishing the infrastructure and adequate resources to support the Shariah governance structure. This includes putting in place adequate systems and controls
in order to ensure compliance with Shariah and to mitigate Shariah non-compliance risk.

Shariah Management Department

The Shariah Management Department is accountable to the Shariah Committee with functional reporting to the CEO and is responsible for providing operational
support for the effective functioning of the Shariah Committee including day-to-day Shariah advisory, conducting Shariah research, formulating Shariah policies
and acting as the Secretariat to the Shariah Committee and the Shariah Oversight Committee.

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14.0 SHARIAH GOVERNANCE STRUCTURE (CONT'D.)

Shariah Risk Management

The Shariah Risk Management (“SRM”) is accountable to the Group Risk Management Department and the CEO of AmBank Islamic, and has Shariah reporting to
the Shariah Oversight Committee. SRM is a function that systematically identifies, assesses, measures, mitigates, control, monitors and reports any Shariah non-
compliance risks to prevent any SNC incident in the businesses, operations, affairs and activities of AmBank Islamic.

The management of Shariah risk is executed through the three lines of defence, which are: 1st - The Business Units/Functional Lines and Shariah Management
Department; 2nd - Shariah Risk Management and Shariah Review; 3rd - Shariah Audit.

Shariah Review

The Shariah Review Section is accountable to AmBank Islamic's Head of Compliance with Shariah reporting to the Shariah Oversight Committee. Shariah
Review refers to a function that conducts regular assessment on the compliance of the operations, business, affairs and activities of AmBank Islamic which are
predominantly transactional in nature, with Shariah requirements.

Shariah Audit

The Shariah Audit Section is accountable to the Audit and Examination Committee with Shariah reporting to the Shariah Oversight Committee. The Shariah Audit
Section is a dedicated team within the Group Internal Audit Department, and is responsible to conduct independent assessment on the quality and effectiveness of
AmBank Islamic’s internal control, risk management systems, governance processes as well as the overall compliance of AmBank Islamic’s operations, business,
affairs and activities with Shariah requirements. The Shariah Audit's scope includes but is not limited to activities undertaken by departments and functions that
relate to Islamic products and services.

14.1 Shariah Non-Compliant Incident

There were no Shariah non-compliant (“SNC”) incidents for the financial year ended 31 March 2023 and 31 March 2022.

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15.0 PROFIT SHARING INVESTMENT ACCOUNT (“PSIA”)

Investment Account (“IA”)

The Group via AmBank Islamic offers two types of Investment Account (“IA”) namely, Restricted Investment Account (“RA”) which refers to an IA where the
Investment Account Holder (“IAH”) provides a specific investment to AmBank Islamic and Unrestricted Investment Account (“UA”) which refers to an IA where the
customer provides AmBank Islamic with mandate to make the ultimate investment decision without specifying any particular restriction or condition. Both RA and
UA are based on Shariah concept of Mudarabah. Currently, the RA arrangement undertaken by AmBank Islamic is with a subsidiary of the Group and is eliminated
upon consolidation.

Mudarabah means a profit sharing contract between the IAH as the fund provider and AmBank Islamic as the fund manager in which the IAH provides capital to
be managed by AmBank Islamic. Any profit generated from the capital is shared between the IAH and AmBank Islamic in accordance with a mutually agreed Profit
Sharing Ratio (“PSR”), whilst financial losses (if any) are solely borne by the IAH provided that such losses are not due to AmBank Islamic’s misconduct, negligence
or breach of specified terms. The IA is not covered by PIDM.

As part of the measures to further enhance financing capacity of AmBank Islamic, AmBank Islamic is allowed to recognise the placement of Investment accounts
for the purpose of:

a. Computation of Single Customer Exposure (“SCEL”); where the RA placement maintained by AmBank Islamic shall be captured via look-through approach
whereby the exposure to the counterparty in relation to the underlying asset invested by AmBank Islamic. The exposure shall be aggregated with all other
exposure to such counterparty which in this case AmBank (M) Berhad;
b. Credit and market risk weighted assets funded by RA and UA are allowed to be excluded from AmBank Islamic’s calculation of Risk Weighted Capital Ratio
(“RWCR”). Hence, allowing AmBank Islamic to enhance its financing capacity.

The IA are structured based on application of Shariah contracts on terms which do not create an obligation on the bank to repay in full the money accepted from
the IAH. The structure and term of the IA provide sufficient legal enforceability to affect the loss bearing or loss transfer arrangement to IAH in accordance with
Shariah.

Although the risk will be borne by the investor, AmBank Islamic will ensure the assets portfolio tagged to the investment accounts are being monitored diligently
by specific team set up by AmBank Islamic. For RA, the selection of financing assets among others will take into considerations the Risk Grade (“RG”), arrears
position, tenor of the facility and also collateral value. The return will also be determined based on the Investment account holders risk appetite. For UA, AmBank
Islamic will invest in low risk investment portfolio comprised of pool of good quality mortgages accounts which are limited to only performing accounts.

Restricted Investment Account (“RA”)

The RA is an arrangement between AmBank Islamic and AmBank to finance a specific business venture whereby AmBank solely provides capital and the
business ventures are managed solely by AmBank Islamic as the fund manager. AmBank records its exposure in the arrangement as "Investment Account",
whereas AmBank Islamic records its exposure as "financing and advances".

The RA exposes AmBank to the risks and rewards of the financing, and accordingly, AmBank accounts for all impairment allowances and risk weighted assets
arising from the RA arrangement.

The RA placement will be limited to a cap agreed and approved by the management and Board of Directors for both AmBank Islamic and AmBank. In addition,
the identified assets funded by RA shall be based on the criteria that has been agreed and approved by the relevant committees of AmBank Islamic and AmBank.

AmBank Islamic conducts regular review of the disclosure policies to ensure reliable, relevant and timely information to AmBank Islamic to facilitate the evaluation
of RA performance and the risks associated with the assets portfolio.

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15.0 PROFIT SHARING INVESTMENT ACCOUNT (“PSIA”) (CONT’D.)

Restricted Investment Account (“RA”) (cont’d.)

The contract or Aqad encompassed terms and conditions including but not limited to the followings:

i. The description of the shariah concept used the RA arrangement

ii. Placement amount
iii. Tenor in months or days (whichever applicable)
iv Profit Sharing Ratio (“PSR”) for Mudarabah
v Description of Assets/Investments matched with the funding

In managing the liquidity risk for RA, the redemption conditions imposed on AmBank would significantly mitigate the liquidity risk exposure of AmBank Islamic.

Mudarabah Term Investment Account (“MTIA”)

AmBank Islamic has widened the scope of business beyond credit intermediation by acting as an investment intermediation role via the introduction of UA
product.

The investment mandate, strategy and parameters for UA are in accordance with the governance set up by AmBank Islamic to ensure effective and efficient
oversight on business activities and operations of UA in safeguarding the IAH’s interest.

AmBank Islamic had established proper governance to facilitate effective monitoring and control of the overall management and conduct of the investment
account. A dedicated unit was established to ensure management, development and implementation of operational policies that govern the conduct of IA are
observed. On a periodic basis, a Fund Performance Report shall be made available in AmBank Islamic's website disclosing the performance of the underlying
assets which in turn facilitates the IAH in making their investment decision.

MTIA fund is invested in investment asset with competitive pricing and good asset quality. The investment asset subscribes to AmBank Islamic’s internal credit
controls as regulated by Bank Negara Malaysia. Investment asset allocated is Shariah compliant retail mortgage portfolio of AmBank Islamic. AmBank Islamic
manages the investment return in a manner consistent with IAH investment objective and the related governing rules and regulations.

Valuation methodology employed is in accordance with sound industry practice and consistent with the Malaysian Financial Reporting Standards. AmBank Islamic
monitored the performance of the investment asset on monthly basis. The net return/loss on the MTIA are displayed at our branches and published on AmBank
Islamic website.

Mudarabah Term Investment Account (“MTIA”) Performance

As at 31 March 2023, balance of MTIA stood at RM2.7 million (31 March 2022: RM361.3 million). The performance of MTIA is as described in the table below:

As at 31 March 2023 %
Return on Assets (“ROA”) 4.05
Average Net Distributable Income Attributable to IAH 2.23
Average Profit Sharing Ratio to IAH 55.01

As at 31 March 2022 %
Return on Assets (“ROA”) 4.00
Average Net Distributable Income Attributable to IAH 2.12
Average Profit Sharing Ratio to IAH 53.23

340 FINANCIAL REPORT 2023

 AMMB Holdings Berhad
Registration No. 199101012723 (223035-V)
(Incorporated in Malaysia)

22nd Floor, Bangunan AmBank Group

No. 55, Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia

Tel: 603 2036 2633 Fax: 603 2031 6453