Bank Rakyat: Annual Report 2021

Transcription

1. The Art of 2 2 21 21 Annual Report 2021
2. n o i s i V n o i s s i M 1 a ’s No. i s y a l a ic M e Islam v i s s e r . Prog ve Bank i t a r e p Coo ic conom e g n i c Enhan ur ing of o e b l l e ers w custom , s r e b mem tion. and na K A R T A Y Our lues a V e r o C t Respec en dge-driv Knowle ipacu n Keilmua Agile d Akas Respek ence r excell Yearn fo entasikan rori Yang be angan rl keceme table Accoun iti bil Akaunta Trust Telus The Art of Connection From a blank piece of canvas, a painting is created through a seamless merging of lines and colours. This describes the Bank Rakyat’s aspiration to add colour to lives at all levels of the community. The front cover of this report carries the theme of THE ART OF CONNECTION which is illustrated through the evolution and transformation of financial solutions as outlined by Bank Rakyat. Connections are defined as relationships, links and bonds. This year’s annual report cover design reveals how a work of art is created from the merging of vision, inspiration, drawing and colouring. The themes and narratives presented flow from this concept, starting with the front page of our report, the segment separators as well as the strategic narrative coverage for the entire report. Aware of economic trends as well as industry competition, THE ART OF CONNECTION is an inspiration to Bank Rakyat to remain connected in the hearts of our members and customers. We reach out to communities in every corner of the state, both inside and outside the city, to become a supportive partner that is able surmount differences. The bonds that have connected us to our stakeholders for six decades have been a platform for us to continue to popularise our banking services in upholding our position as the number 1 progressive Islamic cooperative bank in Malaysia.
3. PAGE 32 What ’s Inside Chairman’s Statement From the Top Overview 8 Corporate Information 8 Our Business Pillars 9 The Bank Rakyat Brand Bank Rakyat: A Snapshot 12 Five-Year Performance (Non-Financial) 13 Five-Year Performance (Financial) 14 Quarterly Performance 14 Assets 15 Segmental Analysis for Bank Earnings 15 Liabilities and Equity 16 Dividend 16 Banking Operations Performance 17 Our Members 18 Key Milestones 22 Significant Events of 2021 26 Our Presence Throughout Malaysia 28 Bank Rakyat in the Media 30 2021 Accolades 32 Our Social Efforts 164Report of the Auditor General on the Financial Statements of Bank Kerjasama Rakyat Malaysia Berhad 168 Statement by Directors 32 Chairman’s Statement 169Annual Report of Shariah Committee of Bank Rakyat 2021 42 Management Discussion and Analysis 175 Statutory Declaration 74 Bank Rakyat and the Government 176 Directors’ Report 75 Group Corporate Structure 178 Statements of Financial Position 76 Organisation Chart 179Statements of Profit or Loss and Other Comprehensive Income About Us 6 Financial Statement 180Statements of Changes In Equity 184 Statements of Cash Flows 188Notes to the Financial Statements PAGE 42 Management Discussion and Analysis Additional Information and Directory Our Leadership Team 334 Corporate Office and Branches 80 Board of Directors 339 Ar-Rahnu X’Change 82 Board of Directors Profile 340 Rakyat Xcess and Ar-Rahnu X’Change 92 Shariah Committee 341 Rakyat Xcess 94 Shariah Committee Profile 342 Bank Rakyat Service Agents 100 Management Committee 102 Management Committee Profile Corporate Governance 108 Board of Directors and Main Committees 135 Remuneration Principle 139 Audit and Examination Committee Report 146 Risk Management Committee 149 Statement of Internal Control 152 Shariah Committee Terms of Reference 157 Notice of Annual General Meeting 346 SME and Cooperative (SMEC) Business Centre
4. Solidifying connection Each intersecting line creates a link that forms a painting . Similarly, our relationships with employees and customers shapes the Bank Rakyat into a firm organisation that simultaneously contributes to the economic development of the country.
5. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Our Mantra We are the biggest We are engraved distinctly in Malaysia ’s banking history and will endeavour to remain “Your Bank of Choice” by becoming ABOUT US Islamic cooperative bank “Malaysia’s No. 1 Progressive Islamic Cooperative Bank”. Our Principal Activities Our principal activities are those of a cooperative that carries out banking activities based on Shariah principles through accepting deposits and providing financial services for retail and commercial needs. in the country and the second largest Islamic financial institution in terms of asset size. Our journey began as a pioneer cooperative bank in 1954 with the mandate to raise the social and economic status of rural communities, provide opportunities for self-improvement and to build a better future for their families as well as their communities for the stability and prosperity of our nation. We have proudly surpassed this mandate. We became known as Bank Kerjasama Rakyat Malaysia (Bank Rakyat) in 1973 and extended our membership to individuals. Governed by our by-laws and the Bank Kerjasama Rakyat (Malaysia) Berhad Act 1978, we are allowed to provide financing to non-members as well. We now serve not just our members, but also individuals, businesses, corporations, SMEs, and a whole range of others. Our Products king Personal Ban i, onal FinancingSavings-i, Pers ancing-i, Fin e m Ho i, gAuto Financin nancing-i, i, Education Fi Pawn BrokingDebit Card-i. Credit Card-i, king Business Ban Term ro Financing-i, Deposit-i, Mic ty-i, er op Pr -i, ng gi id Financing-i, Br e-i, ar Sh -i, se Purcha Contract-i, Hire orking W ri, ja Ti i gin Contract Financ and ahnu X’Change Capital for Ar-R i. eLin Cash Cooperative minar Cooperative Se Rakan KOOP, t, en pm lo ve De and Business se. ca ow Sh t ne Cabi 7 Bank Rakyat Overview Our Legacy 148 Branches Nationwide Our ongoing legacy has been one of unyielding courage, formidable spirit and commendable achievements. The numerous local, regional and international awards we have received over the years proves that we are not only a major player in the domestic Islamic banking scene but also an international leader in Islamic banking. Employees Total Assets 6,022 RM115.06 Customers Shareholders personnel billion 8.41 827,066 Profit before Taxation and Zakat Members’ Share Capital million RM1.63 billion Individuals and Cooperatives RM2.99 billion ABOUT US Bank Rakyat Overview 6
6. ANNUAL REPORT 2021 Corporate Information 8 BOARD OF DIRECTORS •Datuk Haji Abd Rani Lebai Jaafar (Chairman) • Dato’ Suriani Dato’ Ahmad • Dato’ Shamsul Azri Abu Bakar •Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan • Datin Norhamizah Mat Tahir • Mohd Jafri Kudus • Datuk Mohd Irwan Mohd Mubarak • Mohamad Rafi Shahzada •Dato’ Dr Vaseehar Hassan Abdul Razack ABOUT US BANK WEBSITE BANK SECRETARY • Aidawathy Ismail AUDITORS Auditor General of Malaysia National Audit Department Aras 9, Blok F2, Kompleks F, Lebuh Perdana Timur, Presint 1, Pusat Pentadbiran Kerajaan Persekutuan, 62000 Putrajaya. Tel : 03-8091 1000 Fax : 03-8091 1454 COOPERATIVE REGISTRATION OFFICE www.bankrakyat.com.my The Bank Rakyat Brand REGISTERED OFFICE Bank Kerjasama Rakyat Malaysia Berhad Tingkat 35, Menara 1, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, KL Sentral, 50470 Kuala Lumpur. CORPORATE OFFICE Bank Rakyat Tingkat 35, Menara 1, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, KL Sentral, 50470 Kuala Lumpur. Tel : 03-2612 9600 2192 Our Business Pillars Members To ensure continuous success by collectively directing the company’s affairs, whilst maintaining shareholders’ confidence by ensuring the appropriate interests of shareholders and stakeholders are met. Further, to deal with issues relating to business, finance, corporate governance, corporate social responsibility and corporate ethics in a transparent manner. Customers To conduct business in a fair and transparent manner by providing Shariah compliant banking services and products, to offer prompt, courteous and effective services, and to focus on sound corporate governance and responsible financing. Cooperative Movement To steer the development and advancement of the cooperative movement and contribute to making the cooperative movement a force in the economic growth of the nation. Islamic Principle To uphold an exemplary Islamic financial system by providing Shariah compliant financial services that is exceptional, recognised and trusted, with the aim of being acknowledged as a model Islamic development finance institution. Society To effect positive changes in society by providing Islamic financial services and corporate social responsibility activities that will elevate the standard of living and well-being of Malaysians. Nation To be a responsible corporate citizen that is not just driven by profit, but more notably, bringing positive changes to the economy, generating jobs and spearheading economic activities that will assist Malaysia in achieving a developed nation status with a high-income economy. NO. 1 Premiere Cooperative 2 ND 9 LARGEST ISLAMIC COOPERATIVE BANK IN MALAYSIA 100 Malaysian Cooperatives (Top 100 Malaysian by Cooperatives Socities Commission SKM) Largest Development Financial Institution in Malaysia (Assets Size) ABOUT US BANK KERJASAMA RAKYAT MALAYSIA BERHAD
7. Attentive A perfect painting is sketched thoroughly from various angles . Bank Rakyat is always concerned for the needs of the community through the comprehensive and beyond the limit of banking facilities.
8. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD ‘21 148 ‘21 8.41 ‘21 8.30 ‘20 ‘20 147 ‘20 ‘19 147 ‘19 ‘18 147 ‘18 ‘17 147 ‘17 Branches ‘19 8.16 ‘18 7.82 ‘17 7.49 Customers (Million) 126 ‘21 BANK RAKYAT: A SNAPSHOT Five-Year Performance (Financial) ‘20 121 ‘19 119 989 ‘21 ‘20 978 ‘20 ‘19 974 ‘19 ‘18 116 ‘18 974 ‘18 ‘17 113 ‘17 998 ‘17 6022 ‘21 ‘20 5855 ‘19 5752 ‘18 ‘17 5088 Employees ‘20 2,157,807 ‘19 ‘18 ‘17 306,479 1,954,326 2,114,995 Contact Centre Calls Received ‘17 1.91 82.74 ‘17 83.24 Deposits and Savings (RM Billion) 77.30 76.08 71.19 ‘21 ‘20 ‘19 Financing and Advances (RM Billion) 40.47 ‘19 312 357 304 Banking Agents (Rakyat C.A.R.E) ‘18 ‘17 37.23 34.71 32.03 Cost to Income Ratio (%) 83.83 ‘18 ‘17 ‘20 ‘18 1,345,501 1.76 39.29 85.58 ‘19 1.62 69.19 297 86.52 ‘20 1.38 ‘17 ‘20 2.05 ‘21 ‘18 ‘21 ‘19 1.86 69.00 299 1.86 Profit Before Taxation and Zakat (RM Billion) ‘18 ‘21 1.83 ‘17 7.02 ‘21 Registered i-Rakyat Customers 2,500,435 ‘21 432,020 1.44 ‘18 6.87 ‘19 574,397 1.63 ‘19 7.12 ‘20 733,125 ‘19 ‘20 6.55 Profit After Taxation and Zakat (RM Billion) 980,528 ‘20 ‘18 5178 ‘17 ATM/CDM/CICO Terminals ‘21 ‘21 Operating Income (RM Billion) ‘21 Ar- Rahnu X’Change 6.06 6.06 13 7.63 7.06 9.72 10.78 12.84 Return on Average Shareholders’ Fund (%) ‘21 1.70 ‘20 ‘19 1.94 1.93 ‘18 2.12 ‘17 2.23 Gross Impaired Financing Ratio (%) BANK RAKYAT: A SNAPSHOT Five-Year Performance (Non-Financial) 12
9. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Quarterly Performance 14 Segmental Analysis for Bank Earnings Q1 (RM Billion) Q2 (RM Billion) Q3 (RM Billion) Q4 (RM Billion) 1.44 0.53 0.91 0.41 0.46 1.42 0.54 0.88 0.39 0.41 1.42 0.55 0.87 0.47 0.53 1.43 0.57 0.86 0.36 0.46 1.60 0.78 0.82 0.39 0.37 1.51 0.70 0.81 0.40 0.32 1.43 0.62 0.81 0.49 0.53 1.53 0.56 0.97 0.16 0.17 15 2020 2021 Percentage (%) RM’000 Percentage (%) RM’000 64.1 5.2 1.7 4.3 24.3 3,845,473 314,470 103,439 255,476 1,483,202 64.8 4.6 1.61 3.8 25.2 4,229,900 302,912 101,617 250,582 1,645,479 2021 Income Expenditure Net Income Profit before Taxation and Zakat Profit after Taxation and Zakat Consumer Banking Commercial Banking Fee-Based Ar-Rahnu Others Income Expenditure Net Income Profit before Taxation and Zakat Profit after Taxation and Zakat Liabilities and Equity Assets Deposits and Placements with Financial Institutions Financing and Advances Financial Investments Portfolio Cash and Short-Term Funds 0.7% Other Assets 0.9% 28.3% Deposits from Customers Other Reserves Debt Securities Issued and Other Fund Sources Share Capital Other Liabilities Deposits and Placements from Banks and Financial Institutions 16.2% 27.6% 2021 3.2% 0.6% 68.1% 2020 2.1% 2.6% 0.7% 3.2% 0.2% 16.1% 75.2% 76.6% 1.8% 3.2% 67.2% BANK RAKYAT: A SNAPSHOT BANK RAKYAT: A SNAPSHOT 2020 2.7% 2021 2.7% 0.1% 2020
10. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Dividend (RM Million) 16 Our Members 17 Total members (Individual and Cooperative): 2017-2021 429.50 ‘20 373.23 ‘19 BANK RAKYAT: A SNAPSHOT Year 2021 2020 2019 2018 2017 405.47 ‘18 Category Total Individual Cooperative 824,806 832,055 840,592 852,618 872,202 2,260 2,247 2,257 2,237 2,178 378.97 ‘17 469.77 Total Share Capital: 2017-2021 Banking Operations Performance Ar-Rahnu Consumer Banking Others Commercial Banking Fee-based 25.2% 24.7% 5.2% 1.7% 24.7% 4.6% 2021 1.6% 64.1% 25.2% 2020 64.8% Year Total (RM’000) 2021 2020 2019 2018 2017 2,986,030 2,986,030 2,986,030 2,986,030 2,986,030 827,066 834,302 842,849 854,855 874,380 BANK RAKYAT: A SNAPSHOT ‘21
11. ANNUAL REPORT 2021 Key Milestones Introduction of services for the cooperative sector through the Special Cooperative Savings Accounts (ATKK). Approval received to use Bank Rakyat’s reserves amounting to RM96.70 million to cover losses accumulated totalling RM86.60 million.  nnouncement of the A distribution of two percent bonus to members from 1978 to 1988, a 10 percent cash dividend for the financial year 1989, and a 10 percent dividend and 20 percent bonus shares respectively for 1990 and 1991.  pproval of the Cooperative A Act 1992 by Parliament. Increase in Bank membership to 29,002 comprising 28,134 individuals and 868 cooperatives. Four main objectives of the Act: • To encourage and promote the development of cooperatives. • To transform cooperatives into a sustainable movement. • To reform cooperative administration and management. • To consolidate laws related to the cooperative movement. Increase in Bank’s total assets to RM519 million and net profit reaches RM5.9 million.  aunch of the first Education L Loan Scheme, Skim Pinjaman Menanam Budi. Launch of the second Educational Loan Scheme to assist students pursuing higher education in the country and abroad. Launch of the Shariah banking system offering facilities such as Al-Wadiah Savings Account, AlMudharabah General Investment Account, Al-Bai’ Bithaman Ajil Property Financing and Bai AlInah Personal Financing. Going back to where it all began, opening of the Bank’s 42nd branch in Bukit Mertajam, Penang, the birth place of the Bank. 1968 1967 1975 Establishment of Rakyat Trading Corporation Sdn Bhd (RTC), a supplier of construction materials such as steel and cement, and distributor of goods produced by ASEAN Chemical Fertiliser. 1977 1966 1964 1974 Launch of Nuri Savings Scheme by the Minister of National and Rural Development to encourage a savings culture among school children. Opening of Bank Kerjasama’s first branch in Sungai Petani, Kedah, after the acquisition of Bank Persatuan Berkerjasama-sama Kedah Tengah.  aunch of Collection L Department and setting up of a Complaints Bureau. Scheme (SPKS) with a maximum loan of RM20,000 to help graduates without permanent employment to set up and start their own accounting and taxation services business. 1988 1981 Signing of joint venture agreement with Deutsche Genossenchaftsbank (DG Bank), a stepping stone for Bank Rakyat to participate in the merchant banking segment. 1992 1990 White Paper on Bank Rakyat, tabled in Parliament following the tabling of Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions Bill) in Dewan Rakyat on 19 December 1977.  stablishment of Bank Rakyat’s E first subsidiary. Launch of Rakyat First Merchant Bankers Berhad (Rakyat First), Bank Rakyat’s merchant banking arm.  ecision by Bank’s Board of D Directors to change the name of Bank Agong to Bank Kerjasama Malaysia Berhad or better known as Bank Kerjasama.  aunch of Bank Rakyat’s first L mini branch in Bandar Tun Razak, Cheras, Kuala Lumpur.  aunch of Motorcycle Loan L Scheme in the effort to broaden lending activities. Introduction of the Ar-Rahnu Islamic Pawn Broking Scheme in collaboration with the Malaysian Islamic Economic Development Foundation (YaPEIM) with an initial capital of RM5 million. 1993 Bank Rakyat placed under the supervision of the Minister responsible for cooperative development. Change of name from Bank Kerjasama to Bank Kerjasama Rakyat Malaysia Berhad or Bank Rakyat at the 17th Annual General Meeting (AGM). Establishment of a cooperative company called Syarikat Kerjasama Bank Rakyat, also known as SEKATARAKYAT by Bank Rakyat employees. 1988 1986 Launch of Mobile Banking Services at the Alor Setar branch, with the Mobile Banking vehicle mainly operating at Lembaga Padi and Beras Negara Complex in conjunction with the harvesting season.  aunch of the Provident Trust L Fund Account. 1972  pening of Kota Bharu branch O by Kelantan Acting Menteri Besar, Dato’ Mohamed Nasir. Opening of the Malacca branch of Bank Kerjasama at Jalan Hang Tuah, officiated by the Chief Minister of Malacca, Dato’ Talib Karim, marking Bank Kerjasama’s initiative to expand into urban areas. Official adoption of the name Bank Rakyat after personal proposal by the then Prime Minister, Tun Abdul Razak. 1984 1983 1970 1969  pening of Kangar branch, O officiated by the Regent of Perlis, Tuan Syed Sirajuddin Ibni Tuanku Syed Putra Jamalullail. Establishment of Angkatan Kerjasama Kebangsaan Malaysia Berhad (ANGKASA) after an agreement was reached at the 2nd Malaysia Cooperative Congress chaired by the Chairman of Bank Kerjasama, Tan Sri Sheikh Ahmad Mohd Hashim. Bank Agong moves to its own building at Jalan Ipoh, Kuala Lumpur. 1973  xpansion of services to include E providing loans to members who want to venture into businesses, industries and for the purchase of assets such as houses. The Bank Kerjasama Rakyat Malaysia Berhad Act (Special Provisions 1978) came into force. 1990 1989 1979 1978 BANK RAKYAT: A SNAPSHOT Publication of Berita Bank Kerjasama, the Bank’s first newsletter, with the Editor’s Column touching on the possibility of establishing a single Cooperative Union in Malaysia. Bank Agong membership comprises 32 cooperatives with total share investment amounting to RM143,000. Commencement of construction of Bank Agong Headquarters in Jalan Ipoh, Kuala Lumpur. 1993  aunch of Bank’s Five-Year L Development Plan to raise more than RM12 million in capital over the next five years by Tan Sri Sheikh Ahmad Mohd Hashim, Chairman of the Bank. Opening of Bagan Serai branch, officiated by Menteri Besar of Perak, Dato’ Sri Ahmad Mohd Said. Opening of Muar branch, officiated by Menteri Besar of Johor, Dato’ Othman Mohd Saat. 1963 1961  elocation of Bank headquarters R to Padang Kota, Penang. 1971 First election of the Board of Directors by regional members. Relocation of Bank Agong Headquarters to Kuala Lumpur to centralise operations for services to all customers in the Peninsular. 1983 1982  lection of the Menteri Besar of E Perlis, Tan Sri Sheikh Ahmad Mohd Hashim, as the President of the Board of Sponsors. Re-election of Tan Sri Sheikh Ahmad Mohd Hashim as Chairman of the Bank. 1992 1955 1954 Official registration of Bank Agong Kampong Bekerjasama-sama Persekutuan Tanah Melayu Dengan Tanggongan Berhad with its first headquarters in Bukit Mertajam, Penang. 19 Key Milestones 1958 1955 18 Signing of memorandum of understanding for the implementation of Ar-Rahnu with YaPEIM on 11th October 1993. BANK RAKYAT: A SNAPSHOT BANK KERJASAMA RAKYAT MALAYSIA BERHAD
12. ANNUAL REPORT 2021 Share the joy of the Eid al-Fitr celebration with autistic children through Program Sinar Aidilfitri Dari Hati Ke Hati Bank Rakyat at Mydin Hypermarket Petra Jaya , Kuching. The first local organisation to partner under the United Nations in Malaysia’s Together for Sustainable Development Goals (SDGs) programme. Named the number one in the Top 100 Malaysian Cooperatives in Malaysia by the Malaysia Co­operative Societies Commission (SKM) for the fourth consecutive year. Launch of Kad Muslimah Bank Rakyat, the first Shariahcompliant Credit Card-i for women. Memorandum of Understanding (MoU with Sarawak Islamic Council (MIS to implement the Financial Integrity Programme for Mosques (PINK Masjid) in Sarawak. Social Empowerment category at the Asia Responsible Enterprise Awards 2019 (AREA 2019). Company of the Year’ (Overall Social Responsibility Excellence) (CSR Awards Malaysia 2019). 2013 2005 2004 2003 2012 2010 2002 2009 Finance Accreditation Agency (FAA) Certificate Presentation Ceremony for Branch Managers Individual Accreditation in recognition of their competency.  aunch of inaugural issuance of L Sukuk worth RM1 billion under the Islamic Medium Term Notes Programme. Bank Rakyat placed under the Ministry of Entrepreneur and Coperative Development (MECD) following a reshuffle of government ministries. Prior to this, the Bank was placed under the Ministry of Land and Cooperative Development. Bank Rakyat becomes the first non-commercial financing institution to introduce MEPS Interbank Giro (IBG) services. Appointment as the collection agent for income tax payment through a strategic partnership with the Inland Revenue Board of Malaysia (LHDN). Opening of 145th branch in Labis, Johor, marking the Bank’s 15th branch in the state. Announcement of the issuance of Sukuk Musyarakah worth RM1 billion for the period of three and five years. 2017 Autismlympic Programme that brought together autism organisations from the Klang Valley.  akyat Run 2017, organised R by the Bank for the first time in conjunction with the 2017 Kuala Lumpur SEA Games. The bus handover to Badminton Association of Malaysia (BAM) is part of Bank Rakyat’s brandbuilding initiatives as well as efforts to support national sports activities in promoting Malaysia to the eyes of the world. Karnival Kelab Nuri was organised alongside FELDA to provide an opportunity for local micro entrepreneurs and SMEs to open up sales booth to market their products at Kompleks Sukan Komuniti Felda Palong 6, Negeri Sembilan. 2018 Inauguration of Bank Rakyat Bangsar LRT Station by Bank Rakyat Chairman as part of the bank’s corporate social responsibility programme.  rganisation of the Amazing O Heroes Programme to honour our national paralympics atheletes who won gold and bronze medals at the Rio 2016 Paralympics. Launch of strategic partnership with Tabung Haji, allowing Tabung Haji depositors to perform various transactions at all Bank Rakyat branches. 2017 Opening of Kuala Pilah branch by DYMM Yang DiPertuan Besar Negeri Sembilan. Bank Rakyat adopts the theme “Anak Kita” (Our Children) for 2016/2017 as its commitment to focus on children, in particular autistic children, by organising various activities as part of our social corporate responsibility initiatives for autism. Launch of i-Rakyat Internet Banking. 2018 Launch of Credit Card-i Platinum. First International Shariah Scholars Roundtable organised by Bank Rakyat. 2008 Launch of Electronic-Banking Centre (EBC) or eRakyat at Jalan Tangsi branch, Kuala Lumpur. Issue of and introduction into the market of first credit card based on the Shariah principle of Tawarruq in collaboration with MasterCard Worldwide. 2016 2001 2006 2000 1999  fficial announcement that all O of Bank Rakyat’s operations are fully Shariah-compliant. Inaugural Bank Rakyat Carnival for the public with the concept of games is held at Padang Dataran Pemuda Merdeka, Butterworth, Penang. A similar carnival is also held in Pasir Puteh, Kelantan, and Batu Pahat, Johor.  stablishment of Yayasan E Bank Rakyat (Bank Rakyat Foundation) aimed at developing and improving the standard of education for Malaysians, especially among the children of Bank members. Launch of Kelab Nuri Bank Rakyat by Puan Sri Wan Nafisah Nik Mohd Adeeb, wife of the Bank’s Chairman, Tan Sri Dato’ Dr. Syed Jalaludin Syed Salim. Introduction of a new mascot with the concept of an astronaut. 2020 Organising Choral Speaking Competition for the first time on 14th to 16th September in conjunction with 61st National Day celebration at Concourse, Suria KLCC.  ntry of Ar-Rahnu X’Change, E the Islamic pawnbroking franchise into the market, managed by Bank Rakyat’s subsidiary, Rakyat Management Services Sdn Bhd (RMS). 2017 Handover of sponsored bus by Bank Rakyat to Football Association of Malaysia (FAM). Tilmiz - officiated by the Land and Cooperative Development Minister, Tan Sri Kasitah Gaddam.  aunch of free advisory and L guidance services through Program Rakan Koop (Coop Partner Programme) to assist cooperatives in managing their business activities. 2019 Official launch of Menara Kembar Bank Rakyat (Bank Rakyat Twin Towers). Launch of three new products based on the Al-Mudarabah concept: Syabab, Tawfir and 2016 2015 2014 Truly a momentous year. Relocation to Menara Kembar Bank Rakyat, the Bank’s new iconic building at Jalan Rakyat and celebration of the Bank’s 60th anniversary at the new premise. Launch of the new corporate logo to replace the 20-year-old logo, in conjunction with Bank Rakyat’s 47th anniversary. 2019  aunch of the Bank Rakyat L Corporate Culture, R.A.K.Y.A.T.: R: Rajin (Diligent) A: Amanah (Trustworthy) K: Kompeten (Competent) Y: Yakin (Confident) A: Akhlak Mulia (Exemplary Behaviour) T: Takwa (God Conscious) Launch of the Tijari Contract Financing in the effort to assist dynamic and viable small businesses. 2007 2006  aunch of tele-Rakyat Call L Centre, enabling customers to perform transactions with the assistance of Call Centre Personel. 2018 BANK RAKYAT: A SNAPSHOT Launch of An-Naqlu Vehicle Financing Scheme, a financing facility for the purchase of cars. 2015 Opening of first branch outside the Peninsular in Kuching, Sarawak. Launch of the state-of-the-art Integrated Retail Banking System (IRBS) at the Pudu branch in Kuala Lumpur, allowing online management of retail banking transactions and general ledger, and supporting ATM services for speedy savings and investment account transactions. 2019 1998 1994 Establishment of Bank Rakyat’s Shariah Advisory Council. 21 Key Milestones 2014 Key Milestones Organising Anugerah Dari Hati Ke Hati for the first time on 2nd April in conjunction with Autism Awareness Day 2018. The launch of Bank Rakyat’s new vision, ‘Malaysia’s No.1 Progressive Islamic Cooperative Bank’ as well as the mission of ‘Driving the economic prosperity of members, customers and the nation’ was officiated by Datuk Seri Dr Wan Junaidi Tuanku Jaafar, Minister of KUSKOP at Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat. 2020 20 BANK RAKYAT: A SNAPSHOT BANK KERJASAMA RAKYAT MALAYSIA BERHAD
13. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Significant Events of 2021 22 February 3 January BANK RAKYAT : A SNAPSHOT t, Datuk Bank Rakya Chairman of afar ani Lebai Ja Haji Abd R e to the at d an em delivering th virtually. employees 31 March Bank Rakyat unveiled the new look of Bank RakyatBangsar station as a rebranding exercise of the the light rail transit station which located less than one kilometer from Bank Rakyat’s headquarter in Brickfields, Kuala Lumpur. 1 May uced yat introd Bank Rak for rm o platf a banking QR2E. d e ll ca eurs entrepren se to n ick Respo QR2E (Qu nline o n eur) is a y Entrepren specificall d ce u introd platform ro mic gment of for the se s and E M S , rs u e al entrepren duct digit n ves to co cooperati banking. Handing of flood relief, COVID-19 and back to school assistances amounting to RM140,000.00 to the community in Jelebu, Negeri Sembilan by YB Dato Dr Sri Hj Wan Junaidi Tuanku Jaafar, Minister of Enterpreneur Development and Cooperatives (KUSKOP). 23 Significant Events of 2021 1 March 11 March Bank Rakyat taking the next step by launching SMEC as one of the initiatives in developing the nation’s enterpreneurial sector. Launching of Skim Pembiayaan Industri Sukan, a collaboration between Ministry of Youth and Sports (KBS) and Ministry of Cooperative Development and Entrepreneur (KUSKOP) that offers financing to sports and recreation operators with RM10 milion channelled to Bank Rakyat for financing under this initiative. 12 March Bank Rakyat celebrate 141 winners from three campaigns conducted in conjunction with the Bank’s 66th Anniversary to appreciate its customer loyalty. 12 April Seminar held to encourage anti corruption and intergrity governance culture amongst the Bank’s management. Bank Rakyat announced 13 percent dividen to its members , recorded profit before tax and zakat at RM1.44 bilion. 13 April Collaboration between Bank Rakyat and Yayasan Waqaf Malaysia (YWM) as a comitment to contribute waqf fund amounting to RM1 million as a matching grant whereby every ringgit is contributed by individual to the platform provided by the Bank Rakyat. The Bank will then channeled the waqf at the same value to Dana Wakaf Tunai for social development nationwide. 8 June Bank Rakyat’s initiative in conjunction with the Kaamat an Festival celebration. This prog ram involves 13 branches in Sabah. Through this program, selected B40 families around the branch rece ived donations of basic necessities. 27 April Handing of Jangkauan Komuniti donation: Jalinan Ramadan in Johor by the Chief Marketing and Communications Officer, Nizam Sani, to asnaf from Masjid Taman Megah Ria, Masjid Al-Mihajirin and Masjid Bandar Seri Alam. This initiative is a collaborative effort between Bank Rakyat and Surau Al-Barakah which collected the donation from employees and the public. 10 June Bank Rakyat’s initiative in conjunction with the Gawai Dayak celebration. The program involves 14 branches and three Rakyat Xcess in Sarawak. Through this program, selected B40 families around the branch received donations of basic necessities. 27 April Handing of the Jangkauan Komuniti donation: Jalinan Ramadan in Johor by the Chief Marketing and Communications Officer, Nizam Sani, to the representative of the recipients of the asnaf from Masjid Saiyidina Uthman Al Affan (Masjid Pengkalan Minyak). BANK RAKYAT: A SNAPSHOT 22
14. ANNUAL REPORT 2021 24 Significant Events of 2021 31 July BANK RAKYAT : A SNAPSHOT A collaboration program between Bank Rakyat and Universiti Teknologi MARA (UiTM) to train 200 micro-entrepreneurs under Bank Rakyat with the intention of helping these microentrepreneurs to go further in their business fields through the enhancement of entrepreneurial competencies. 9 August Bank Rakyat remains committed to ensuring that every segment of the community has access to financial services with the opening of the Rakyat Xcess and Ar-Rahnu X’Change new branches that will benefit 16,373 residents in the Daerah Kecil Sebuyau, Sarawak. 25 September The 2021 Annual General Meeting was held at the Dewan Tun Abdul Razak, Menara Kembar Bank Rakyat, officiated by YB Tan Sri Noh Haji Omar, Minister of Entrepreneur Development and Cooperative (KUSKOP). 10 August 13 September Bank Rakyat donated tablets to 240 asnaf students aged between seven to 17 years old with a total value of RM105,000 to help these students from asnaf and B40 families in gaining access to home-based teaching and learning (PdPR) through the ‘BR Didik Digital’ initiative in collaboration with Yayasan Telekom Malaysia (YTM). Bank Rakyat launched the Bank Rakyat UNIpreneur Pilot Program in collaboration with local higher education institutions (IPT) to help student entrepreneurs from the asnaf to grow their businesses. Through this pilot program, 100 potential asnaf student entrepreneurs from 10 local higher education istitutions (IPT) were given an injection of funds amounting to RM200,000. 6 September Performance Award 2020 to recognise the outstanding achievements of Bank Rakyat branch employees. 26 September Bank Rakyat through the Ministry of Entrepreneur Development and Cooperatives (KUSKOP) came forward to hand over a contribution of RM168,000 to the entrepreneurs affected by the flash floods occurred in Yan, Kedah. r e b m e t p e S 7 2 d Doa itation an Yassin rec on conjuncti th Selamat in 7 6 k Rakyat by with Ban attended s a w ry a s e Annivers ploye akyat em all Bank R ion. ss se e nlin through o 18 October 30 September Bank Rakyat handed over 4,000 hand sanitisers and 400 hand sanitisers pedal to 200 selected schools nationwide in conjunction with the reopening of the school sessions. 25 Significant Events of 2021 Bank Rakyat launched the ‘Kempen Emas 2 Kilo’ with the concept of ‘Mortgage and Win’ (Gadai dan Menang) as an appreciation to the customers who supporting Ar-Rahnu’s business aside from encouraging Shariahcompliant pawning with a gift of two kilograms of gold worth more than RM500,000. 18 September Bank Rakyat through the Jalinan Bank Rakyat 67 Program continues to get across the community in need. A total of 67 recipients of various categories in each state nationwide received assistance from Bank Rakyat. 30 September Bank Rakyat launched the iRakyat online mobile banking application to expand the digital banking ecosystem to customers. 30 November 29-31 October This program is among the initiatives of Ministry of Entrepreneur Development and Cooperatives (KUSKOP) and its agencies to ensure that all entrepreneurs and cooperatives in every countries receive the exposure and guidance to continue their business in a challenging economic environment. Bank Rakyat continued its digital transformation initiative by launching a virtual banking platform, “BRICK” or ‘Bank Rakyat Quick’ as an alternative channel for customers to access its retail banking products. BANK RAKYAT: A SNAPSHOT BANK KERJASAMA RAKYAT MALAYSIA BERHAD
15. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Our Presence Throughout Malaysia Branches Ar-Rahnu X 'Change Rakyat Xcess 148 27 4 27 Our Presence Throughout Malaysia Ar-Rahnu X'Change Rakyat Xcess Rakyat Xcess and Ar-Rahnu X'Change Offers Islamic pawn broking services. Offers essential services except Ar-Rahnu X’Change. Offers Islamic pawn broking and essential services. 27 Rakyat Xcess and Ar-Rahnu X'Change Bank Rakyat Service Agents ATM/CDM/CICO Terminals 21 78 989 STATE BRANCHES AR-RAHNU X’CHANGE RAKYAT XCESS RAKYAT XCESS AND AR-RAHNU X’CHANGE BANK RAKYAT SERVICE AGENTS Selangor 22 5 - 4 11 Kuala Lumpur/Putrajaya 15 2 - - 8 Negeri Sembilan 7 1 1 2 4 Melaka 4 2 - - 1 Johor 15 5 2 2 7 Pahang 11 1 1 2 9 Kelantan 8 2 - 1 4 Terengganu 8 1 - 1 3 Perak 12 4 - 2 5 Kedah 10 3 - 3 6 Pulau Pinang 7 - - - 5 Perlis 2 - - - 2 Sabah 13 - - - 7 Sarawak 14 1 - 4 6 Total 148 27 4 21 78 4 21 BANK RAKYAT: A SNAPSHOT BANK RAKYAT: A SNAPSHOT 26 Rakyat C.A.R.E Service Agent Bank Bergerak/ ARROW Offers basic banking services, especially in rural areas in a cost effective way through the use of non-banking retail channel. A special program where cooperative is appointed as agent to market product and banking facilities of Bank Rakyat. Offers mobile basic banking services and Islamic pawn broking (Ar-Rahnu) through dedicated vehicle assigned at specific locations. 299 78 6
16. BANK RAKYAT : A SNAPSHOT 28 Bank Rakyat in the Media ANNUAL REPORT 2021 Bank Rakyat in the Media 29 BANK RAKYAT: A SNAPSHOT BANK KERJASAMA RAKYAT MALAYSIA BERHAD
17. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD 2021 Accolades 30 31 2021 Accolades COMPANY OF THE YEAR AWARD FOR OVERALL EXCELLENCE IN SOCIAL EMPOWERMENT - SUSTAINABILITY AND CSR AWARDS 2021 DRAW BANK RAKYAT : A SNAPSHOT BANK RAKYAT: A SNAPSHOT EXCELLENCE CSR - BUMIPUTERA BUSINESS EXCELLENCE AWARDS (BBEA) 2021 DRAW BEST COMPANIES TO WORK FOR IN ASIA 2021 - HR ASIA BEST COMPANIES TO WORK FOR IN ASIA 2021 BEST ECOMMERCE SPEND GROWTH PERFORMANCE – ISLAMIC BANKS – MASTERCARD ACHIEVEMENT AWARDS 20202021 BEST IMPROVEMENT IN APPROVAL RATE – MASTERCARD ACHIEVEMENT AWARDS 2020/2021
18. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Our Social Efforts 32 33 Our Social Efforts BANK RAKYAT : A SNAPSHOT BANK RAKYAT: A SNAPSHOT Core Brand •Nuri Nutrisi 45 16 Schools Universities Initiatives Key Driver 15 Students ·Educations •Kebun Nuri Nutrisi 15 7,000 Schools Students Creating Awareness – Nutrition education program in various forms to encourage students to take up nutritional food ·Entepreneurship Sustainable Fund Collection – Ensure the donation given will be turn into revolving fund that will be utilised to sustainable develop the school and underprivileged students ·Well-Beings Empowering Social Mobility – Generating income and creating financial freedom for institutions to continue helping underprivileged students. Recognition • Company of The Year Award for Overall Excellence in Social Empowerment - Sustainability and CSR Awards 2021 • Excellence CSR - Bumiputera Business Excellence Awards (BBEA) 2021
19. Preferred connection Attractive works of art require innovation and creativity from the artist . These elements are applied in our services in order to promote the economic well-being.
20. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD 36 Chairman 's Statement Chairman's Statement 37 Strengthening Stakeholders Dear Shareholders, Digital connectivity has become a buzzword in the banking industry this past year, but for Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat or the Bank), the word connection means more than just accessibility. The Bank has always prioritised forging of positive relationships with our stakeholders to ensure the economic and social well-being of the Cooperative community. This is done primarily through financial support for our members and customers in charting the nation’s economic progress and rakyat’s overall socio-economic. DATUK HAJI ABD RANI LEBAI JAAFAR Chairman of Bank Rakyat The role we play as Malaysia’s largest Development Financial Institution (DFI) and the second largest Islamic financier was never more critical than in the past year, as continued disruptions to economic activity took a heavy toll on small businesses. However, the proactive response from the government demonstrated resilient leadership, which paved a robust response. Alhamdulilah, guided by the National Entrepreneurship Policy 2030 (DKN2030), set out by the Ministry of Entrepreneur Development and Cooperatives (KUSKOP), Bank Rakyat focused on implementing the outlined remedial actions to help as many Cooperatives and MSMEs as possible to transition into the phase of recovery. On behalf of the Board of Directors (“the Board”), I am proud to present Bank Rakyat’s annual report for the financial year, which ended 31 December 2021 (FY2021). MAKING PROGRESS ON SUSTAINABLE BUSINESS AND BR25 The pandemic has tested the financial resilience of Malaysia’s financial industry and its ability to shelter customers, employees, and stakeholders, from a prolonged storm of uncertainties. While executing BR25 strategies, Bank Rakyat’s priority for the year was also to develop a greater understanding of stakeholder needs and expectations, assist and navigate them through the impacts of COVID-19, and help them recover and rebuild with resilience. This became a part of our transformative journey as the Execution Phase of our BR25 journey was put in motion. The BR25 strategic plan which was developed to ensure Bank Rakyat stays relevant as a well-governed sustainable bank amid a fast-changing, increasingly competitive landscape. 2021 was the year we began to execute key deliverables under the six established blueprints of Great Customer Experience, Digitalisation, SMEC Business, Human Capital, Sustainability, and Shariah Leadership. Highlights included the completion of 10 new SME and Cooperatives Business Centres (SMECs) nationwide as part of the Bank’s diversification strategy away from being overdependant on retail financing. This ensures Bank Rakyat is on track with the target of an outstanding balance of over RM7 billion for total SMEC financing by 2025, with about RM3 billion achieved as of 2021. The Bank has also embarked on eight key collaborations and partnerships with various agencies within the KUSKOP ecosystem, as well as communities, Cooperatives and private organisations, to support this key economic sector with targeted products and services. FROM THE TOP FROM THE TOP Connections With Our
21. 38 Chairman 's Statement With the new core banking system capabilities, digital ventures could be rolled out successively during the year. Highlights include launching the Quick Response to Entrepreneurs (QR2E) virtual banking platform for members and customers to access comprehensive, fast, and simple digital financial advisory services and product applications; and the iRakyat Mobile Banking application, which achieved 71,210 downloads in 2021. FROM THE TOP Advancing on the Human Capital blueprint, the Bank has embarked on establishing the Centre of Excellence to drive the upskilling and reskilling as well as build a culture of thinking and learning organisation. In 2021, more than 70% or 4,313 personnal, have undergone training programmes. The Bank has also participated in the Best Companies to Work for in Asia (2020 and 2021), organised by HR Asia to benchmark our performance against other industries and markets, as we target to build our brand as a desirable employer that can attract and retain top talents. Steps towards demonstrating Shariah Leadership were also taken through the active participation the Bank’s representatives in presentations at international conferences and symposiums. In addition, Bank Rakyat ventured into two strategic partnerships with the International Shariah Research Academy for Islamic Finance (ISRA) and Derassat for Research Consulting Islamic Finance, based in Doha, Qatar to enhance cooperation and knowledge-sharing efforts. Chairman's Statement Bank Rakyat’s risk management was also fortified in FY2021 by reviewing the Payment Assistance Programme following the requirements as delineated by BNM on Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (PEMULIH). All in all, good progress was made on BR25 in 2021. We are confidently on track with our BR25 strategy and intent to grow as a sustainable bank focused on our mandate to grow the Cooperatives segment and support entrepreneurship throught a holistic intervention, including financing and advisory solutions. This was timely as the Bank plays an integral role in supporting the government’s effort by introducing various funds to assist Small and Medium Enterprises (SMEs) businesses affected by the COVID-19 pandemic. Risk Management provided technical assistance to simplify the credit underwriting process with predefined parameters aligned to the minimum acceptance criteria as recommended by the regulator or fund providers to expedite the approval process. FINANCIAL PERFORMANCE IN FY2021 The pandemic has shown that prudent financial management must withstand external forces. This has strengthened our resolve to deliver sustainable shareholder returns, while creating long-term value for all stakeholders through steadfast adherence to BR25. It is heartening to see that the results achieved in 2021 maintains our position as the most profitable Cooperative Bank, and the second-largest Islamic financial institution in Malaysia. For the 23rd consecutive year, we delivered double-digit dividends provided to its members with a declaration of 15% dividends and an estimated payout of RM429.50 million, to 827,066 members. The Group continued to contribute 2% of its PBTZ to the Cooperative Education Trust Fund and 1% to the Cooperative Development Provident Fund, totalling RM48.45 million for the year. Risk-Weighted Capital Ratio and Core Capital Ratio remained strong at 25.76% and 23.35%, respectively, well above the minimum regulatory requirements and industry average. This makes the Group one of the strongest financial institutions in capital position. RAM Ratings (RAM) reaffirming the Bank’s AA2/Stable/ P1 rating is premised on its strong foothold in Personal Financing-i (PF) and robust loss-absorbing capacity. The reaffirmation is underpinned by RAM’s view of ready support from the Government if needed, given Bank Rakyat’s status as a Cooperative bank-cum-developmental financial institution. It further acknowledges that the impact of modification losses from moratoria and other assistance offered to customers is manageable given the Bank’s current solid capitalisation. 39 CONTINUOUSLY ELEVATING RISK MANAGEMENT Finally, in our quest for shared prosperity through Islamic social financing in 2021, Bank Rakyat directly distributed over RM11 million in zakat, under objectives defined by the VBI Model. This was contributed to causes in line with the Bank’s VBI principles. For the financial year ending 31 December 2021, Bank Rakyat Group posted a profit before tax and zakat (“PBTZ”) growth of 13.19% to RM1.63 billion. Shareholders’ funds increased by 3.39% or RM0.71 billion to RM21.66 billion compared to RM20.95 billion previously, arising from the Group’s net profit carried forward during the year. A significant step forward under the Sustainability blueprint was the completion of the BR Sustainability Framework and Policy in December 2021. The Bank has also contributed to the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guide on Construction and Infrastructure, as the project manager in a joint effort with BNM, Association of Islamic Banks Malaysia (AIBIM) and other financial institutions. The documents were presented by the Bank’s representative in 2nd VBIAF Sectoral Guide Townhall on 17 November 2021. ANNUAL REPORT 2021 ANCHORING GROWTH AND TRANSFORMATION ON GOOD GOVERNANCE The Board regards corporate governance as the framework that underpins the core values for running the business we all believe in, including a commitment to open and transparent communications with stakeholders. Therefore, high regard is paid to corporate governance and internal control in all aspects of our operations, in close adherence to the standards and principles specified by Bank Negara Malaysia (BNM), to achieve a solid and robust framework within which to develop and expand ever better corporate governance practices, frequently beyond the requirements. Good corporate governance is vital for the Bank’s long-term success and performance. As we grow so must we expand our commitment to governance. In 2021, in line with the BR25 plans towards regionalisation, the Bank’s Board Charter and Board Committees’ Charters were revised to catalyse a high-performance culture and reinforce group governance within the Bank by enhancing the roles and responsibilities of the Board, Senior Management and employees. These charters serve as a general statement of intent and expectation to all stakeholders on how the Bank Rakyat’s Board of Directors discharges its duties and responsibilities to achieve our mission of enhancing economic well-being of Bank Rakyat’s members, customers and nation. The revisions pertain to raising responsibilities, reaping synergies and realising the potential to accelerate the Bank’s transformative journey as Malaysia’s No. 1 Progressive Islamic Cooperative Bank. Further prudent steps were taken by ensuring the active engagement of Risk Management in the War Room Committee (WRC), by appointing the Bank’s Chief Risk Officer (CRO) as an Alternate Chairman to closely monitor payment assistance granted by the Bank. In addition, Stress Testing and Reverse Stress Testing were used as essential risk management tools to evaluate the capital adequacy of the Bank and assess the impact of a range of adverse scenarios with different probabilities and severities. The outcome has indicated that the Bank’s capital position remains strong with continued business momentum and balance sheet growth. Proactive measures were also taken to stay ahead of cyber threats by prioritising technology investment to ensure data protection and payment security are secure and up to standard. The Bank’s Chief Information Security Office (CIS Office) constantly aligns the Bank’s cyber security programme with risk strategy and upgrades capabilities to monitor and respond to threats. This includes elevating cyber security effectiveness and scalability across Information Security, Security Operations Centre as well as Threat Intelligence and Research functions. Activities such as staff awareness and cyber drills are planned, mainly focusing on increasing our employees’ familiarity and alertness on cyber threats and incidents. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
22. ANNUAL REPORT 2021 40 Chairman 's Statement SUPPORTING DEVELOPMENT THROUGH A SUSTAINABLE FOCUS FROM THE TOP For Bank Rakyat to successfully and effectively integrate sustainability across all operations, it was imperative to establish a strong sustainability governance structures, with clear roles and responsibilities for all parties. Towards this end, the Bank Rakyat Sustainability Framework and Policy (BRSFP) was developed in accordance with a regulatory requirements, as well as in reference to external initiatives, standards and guidelines such as Bank Negara Malaysia (BNM) Implementation Guide for Value-Based Intermediation (VBI), BNM Climate Change and Principle-based Taxonomy (CCPT) and Task Force for Climate-related Financial Disclosures (TCFD) recommendations. By operationalising the BRSFP, sustainability is embraced as a growth driver for the Bank and emphasis is placed on generating measurable positive and sustainable impact on the economy, community and environment in banking practices, conduct and offerings. Upon the development of BRSFP, a Sustainability Task Force was established with representatives from various business units to ensure clarity of sustainability ownership, roles, responsibilities, targets and reporting structure. We also made strides in the following initiatives under the BR25 Sustainability Blueprint agenda: Chairman's Statement Bank Rakyat Entrepreneur Leadership Series BaktiRAKYAT To ensure that Bank Rakyat can successfully integrate sustainability across its operations and effectively, it is imperative that the Bank initiate the Bank Rakyat Entrepreneur Leadership Series program namely RAKYATpreneur and Bank Rakyat UNIpreneur. The Bank Rakyat Entrepreneur Leadership Series is a philantrophic initiative which uplifts the socio-economic status from underserved background with high potential of growth to progress across the value chain. The Bank provided seed funding, capacity building and coordinated assistance to grow their business. Bank Rakyat also formalised its employees volunteerism initiatives through the BaktiRAKYAT programme. The BaktiRAKYAT Pilot programme was executed in Perak, Sabah, Johor and Pahang state on 11 December 2021. BaktiRAKYAT aims to futher strenghten rapport between the Bank and the surrounding communities, leveraging on the man power of Bank Rakyat’s personnel, with the focus on three key areas of upliftment, namely community, environment and public service. The programme is aligned with the Bank’s Sustainability Framework, namely to develop activities and initiatives that prioritise sustainable economic progress, drive profit, and contribute to the sustainable development of communities. BR Didik Digital BR Didik Digital is a philanthropic initiative to provide underprivileged students with better access to education via online learning and to improve the ecosystem of home schooling with proper tools and data connectivity. The initiative was a collaboration with Yayasan Telekom Malaysia and funded by Bank Rakyat’s Zakat funds. A total of 240 tablets were distributed among primary and secondary schools across Malaysia, and 740 units of SIM cards were provided to primary and secondary schools as well as several MARA Junior Science College (MRSM). KEY STAKEHOLDERS VALUE DELIVERY IN 2021 This year’s theme of The Art of Connection, reflects the Bank’s Commitment to serve all our stakeholders better and provide value added benefits to colour lives with greater wellbeing. For our Internal Stakeholders - Rakyat Care Training programme for 305 of the Bank’s agents. - Launch 410 certified programmes in which 234 personnel were certified. External Stakeholders -  Introduced e-Appointments for Ar-Rahnu services and branch services. -  Moratorium Programme Application on Bank Rakyat’s corporate website. - QR eApplication for Credit Card-i. - Launch of Bank Rakyat’s iRakyat Mobile Banking application. - Quick Response to Entrepreneurs (QR2E), a virtual banking platform for SMEs, micro enterprises and Cooperatives. A Positive Outlook Malaysia’s economic growth is anticipated to accelerate in 2022 after navigating a bumpy and uneven recovery in 2021. All states in Malaysia entered phase four of the National Recovery Plan in 2021, signalling a positive return to activity for many businesses and economic sectors. High vaccination coverage and active vaccine booster rollouts are expected to support consumer and business sentiment amid sizeable fiscal support and accommodative monetary policy. However, the geopolitical risk and ability of the vaccines to guard against any new COVID-19 variants remains a concern to the strength of the recovery. Enhanced risk management, continued cost discipline and implementation of further BR25 plans and initiatives will remain as our priorities to sustain growth. A key focus area would be especially to harness the potential that could be explored in business and operations through digital transformation to create long-term value for shareholders. 41 As the economy gradually recovers, digital reliability and customer centricity will drive Bank Rakyat’s focus as more touchpoints move towards digital channels. This will enable us to reach out to unserved markets as we focus on further improvements and new growth areas. Appreciation and Acknowledgements My sincere appreciation to the Board, Shariah Committee, Management Committee and all our employees who persevered with unwavering spirit despite the uncertainties of the year. Without their determination, we could not have provided the critical financial support that our customers and communities needed during the year. I take this opportunity to acknowledge, on behalf of all Bank Rakyat management and employees in thanking the unsung heroes of this pandemic: the medical frontliners and government agencies who have delivered on the nation’s high vaccination rate; businesses who have taken a lead in lending a helping hand to communities; and citizens who set-up their own support groups and initiatives to help the underserved segments of the society. You have solidified my belief that when the going gets tough, the rakyat gets going. The Board and I also commend our employees who persevered with unwavering spirit despite the uncertainties of the year. Without their determination, we could not have provided the critical financial support that our customers and communities needed during the year. Last but not least, we have worked through another year of ups and downs with our partners, suppliers, customers, and our stakeholders. Thank you for your continued support which has been invaluable to the many successes we have enjoyed to date. Let us together build better connections and a more resilient ecosystem towards a future of assured sustainability. DATUK HAJI ABD RANI LEBAI JAAFAR Independent Non-Executive Director/Chairman FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
23. ANNUAL REPORT 2021 42 Management Discussion and Analysis Management Discussion and Analysis FROM THE TOP Crude Oil Prices Averaged Higher Global Economy Uneven Recovery for Global Growth The global economy continues to recover from the global recession in 2020 and is expected to grow by 5 .5% - 6.0% YoY in 2021 (2020: -3.1% YoY). This is the first time since 1976 that global growth reached above 5.0% YoY, despite the uncertainty caused by COVID-19. The Delta variant, for example, led to another economic lockdown across the world beginning early of the year. As movement restrictions were gradually removed, the economic recovery gained momentum with the progress in COVID-19 vaccinations. As global demand continued to recover, trade activities rebounded by 9.3% YoY (2020: -8.2%YoY), especially for commodities products. For example, Bloomberg Commodity Index (BCOM), which reflects commodity futures price movements, recorded a high average index reading of 92.6 for 2021 (2020: 69.0). The environment of robust demand and rising cost pressures from commodity prices and supply chain disruptions have led to increases in inflation pressure, especially in the second half of the year. Despite the good news, due to unequal access to vaccines, advanced economies (AEs) and emerging market economies (EMEs) have recovered differently, and the lost output has been unevenly distributed. In most AEs, the recovery has occurred across manufacturing and services sectors, as containment measures were eased more quickly as vaccination rates increased. In comparison, many EMEs experienced softer recovery of domestic demand due to tighter containment measures over a longer period, given the relatively slower pace of vaccinations, which caused delays in their economic recoveries until the end of the year. Nevertheless, AEs and EMEs experienced similar challenges, a weaker recovery in labour force participation particularly among vulnerable segments. For 2022, global growth is expected to continue its recovery path, albeit at a slower rate of 4.1% to 4.4% as forecasted by International Monetary Fund (IMF) and World Bank (WB). The improvement in labour market conditions amid the gradual transition towards normalcy is expected to facilitate the recovery. However, downside risk remains caused by development of COVID-19, supply chain disruptions, financial volatility from the potential increase in central banks’ profit rates and geopolitical tension, and rising inflation. Oil prices averaged higher at USD71 per barrel (/b) in 2021 (2020: USD43/b). The demand for crude oil has soared, supported by the economic recovery in major economies such as China and U.S., against the backdrop of pandemic mitigation efforts and the recovery of industrial production. Meanwhile, on the supply side, Organisation of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) had announced in December 2020 that they would keep crude oil prices high by limiting the production in 2021. Only in June 2021, OPEC+ agreed to maintain the existing pace of moderate supply reductions in order to balance an expected upswing in demand. With demand outpacing supply since Q3 2020, this contributed to a rally in crude oil prices with Brent hitting USD86/b at the end-October 2021, the highest rate since 2018. However, the crude oil spot price dropped slightly throughout the end of the year to USD78/b, prompted by the emergence of the Omicron variant, as the market responded to the risk that oil demand could dampen in the near term. Looking forward, the Russia-Ukraine conflict and the Omicron variant would increase energy prices and have a material effect on economic activity, thus creating market uncertainties to projections for future energy consumption around the world. The US Energy Information Administration forecasts crude oil to average USD105/b in 2022. Gold Price Fluctuated on Fears of Widespread Infection Throughout 2021, gold price has followed global trends, reflecting growing concerns about the economic consequences of the spread of the Delta variant, yet averaging higher to USD1,800 per ounce in 2021 (2020: USD1,771/oz). During the first quarter of the year, when countries loosened up their COVID-19 related measurement, gold price was trending down and lost around 13% to USD1,683/oz in March, marking the lowest value for 2021. However, as the concern about the Delta variant grew, people have shifted their focus away from risky assets and towards precious gold, thus putting upward pressure on the price again and hitting a value above USD1,900/oz in the second quarter. In the second half of the year, gold price has lost some strength which saw it closed at USD 1,829/oz at the end of the year driven by outflows in gold-backed exchange-traded funds from investors and slowing central banks’ purchases. 43 For 2022, the gold price is anticipated to react to real rates in response to the profit rates at which global central banks tighten monetary policy together with their ability to contain inflation. Historically, gold price and profit rates have had a negative relationship. Rising profit rates usually make bonds and other fixed-income investments more attractive; people will tend to put money into these higher-yielding investments, which will drive down the demand and price for gold. DOMESTIC ECONOMY Malaysia Economy Rebounded in 2021 The Malaysia economy rebounded by 3.1% YoY (2020: -5.6% YoY) in 2021, underpinned by the turnaround in private sector spending. The gradual improvements in income and labour market conditions also supported household spending. Investment activity was also helped by continued capital spending, especially by export-oriented sectors, and policy support remained available for impacted households and businesses. On the supply side, the domestic economy improved unevenly since the pace of recovery varied across sectors. The strong external trade supported the robust performance of the manufacturing sector. In contrast, the services sector remained constrained by weak demand and high-touch activities (i.e., dine-ins and tourism). Meanwhile, activity in the construction sector was hampered by labour and operating capacity restrictions. Additionally, adverse weather conditions and continued foreign worker shortages affected output in the agriculture sector. In the first quarter of 2021, the Malaysian economy registered a smaller GDP growth decline of 0.5% YoY, mainly supported by improvements in domestic demand and exports performance, particularly Electrical and Electronics (E&E) sector. However, the re-imposition of the Movement Control Order (MCO) and the prolonged closure of international borders and interstate travel restrictions have weighed on economic activity. During the second-quarter, the GDP growth rebounded to 16.1% YoY (2Q’20: -17.2% YoY), driven by improved domestic demand and robust exports performance. It was worth to note that this strong growth also came from a low base effect given the big drop of GDP growth in the second quarter of 2020. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
24. ANNUAL REPORT 2021 44 Management Discussion and Analysis Despite the previous quarter ’s recovery in growth, the GDP declined by 4.5% YoY during the third quarter of 2021, as economic activity was affected by the re-imposition of strict containment measures under the National Recovery Plan (NRP)1. As economic activity normalised following the easing of containment measures under the NRP, the GDP growth rebounded to 3.6% YoY in the final quarter of 2021. The recovery in the labour market, continued policy support, and strong external demand also provided further lift to growth during the fourth quarter of 2021. 1  NRP replaced the Full Movement Control Order (FMCO) that was originally announced on 28 May 2021. There are four phases of the NRP, of which Phase 1 FROM THE TOP contains the most restrictive containment measures In 2021, another four economic stimulus packages were announced by government, namely PERMAI, PEMERKASA, PEMERKASA Plus and PEMULIH, to boost economic recovery, as the nation’s economy was affected by the movement restriction due to the COVID-19 pandemic. With a budget of RM400 billion (11MP: RM248.5bil), the Prime Minister announced the 12th Malaysia Plan (12MP) on 27 September 2021 to create a prosperous, inclusive, and sustainable Keluarga Malaysia. In an effort to exit the COVID-19 pandemic and transition into the endemic phase, the government tabled the National Budget 2022 on 29 October 2021 with the biggest allocation of RM332.1 billion aimed at driving economic recovery catalysing national development more inclusively and sustainably. The Budget is expected to be a catalyst for implementing the 12MP, to drive economic growth more inclusively and sustainably in the medium term, based on the Sustainable Development Goals (SDG) and Shared Prosperity Vision 2030 (WKB 2030). As for 2022, BNM expects a GDP growth of 5.3% - 6.3% YoY, lower than the Ministry of Finance (MOF)’s official forecast of 5.5% - 6.5% YoY. At the same time, the IMF and World Bank have forecasted Malaysia’s economy to grow by 5.75% and 5.8% YoY, respectively. The growth recovery will be driven by continued expansion in external demand, full upliftment of containment measures, reopening of international borders, and further improvement in labour market conditions. Additionally, the implementation of new and continued investment projects and targeted policy measures will give more support to economic activity and aggregate demand. Moderate Recovery in Labour Market Conditions The conditions in the labour market improved moderately in 2021, following significant disruptions in 2020. The labour market was in recovery in the first five months of the year, in line with the pick-up in economic activity. However, the recovery momentum slowed due to the implementation of NRP in June 2021. Overall conditions, however, remained subdued during the year, as the unemployment rate remained elevated at 4.6% YoY (2020: 4.5% YoY), while aggregate nominal wages growth in the private sector was modest at 0.4% YoY (2020: -2.4% YoY), amid an uneven recovery across labour market segments. Supportive measures continued to stay in place to enable businesses and households to withstand the impact of these shocks, support incomes, and mitigate displacements in the labour market. These comprise in large part a continuation of measures put in place in 2020, including Bantuan Prihatin Rakyat, the Targeted Repayment Assistance (TRA), and the Wage Subsidy Programme. Labour market conditions showed initial signs of recovery with a total of 558,633 people were employed through the Jamin Kerja Keluarga Malaysia initiative, in line with the pick-up in economic activity, despite the temporary weakness caused by the imposition of MCO 2.0. However, data from SOCSO indicated that jobless claims remained elevated during the third quarter of 2021 (15,753 persons; 2Q21: 14,311) following restructuring exercises by firms in the E&E and primary-related manufacturing sectors. The labour market resumed its recovery trajectory in the fourth quarter of 2021, driven by a stronger recovery in employment and encouraging labour force expansion. Moving into 2022, the labour market conditions are expected to improve gradually as economic activity picks up, with the unemployment rate expected to ease further to around 4.0%. Targeted measures remain to boost labour demand, make it easier for workers to re-skill and up-skill, and enable persons who have been out of work due to the impact of pandemic to re-enter the labour force. A sustained recovery in employment and income is expected to drive an improvement in household spending. Management Discussion and Analysis Headline Inflation was Higher in 2021 Headline inflation in 2021 increased to 2.5% YoY (2020: -1.2% YoY), reflecting mainly higher fuel inflation. Global supplyside disruptions also led to upward price pressures, though the impact on consumer prices was relatively contained as firms absorbed the higher cost. The core inflation remained subdued at 0.7% YoY in 2021 (2020: 1.1%YoY), reflecting the spare capacity in the economy amid a moderate recovery in the labour market. After turning positive to 3.4% YoY in the second quarter of 2021, mainly due to low fuel inflation and electricity tariff rebate, the headline inflation moderated to 2.2% YoY during the third quarter (2Q21: 4.1% YoY), reflecting the dissipating base effect from fuel prices, as well as the implementation of a three-month electricity bill discount, effective July 2021. The headline inflation increased to 3.2% during the fourth quarter of 2021 following the lapse effect of the three-month electricity bill discount. Moving into 2022, the headline inflation is projected to average between 2.2% to 3.2%, while core inflation is expected to be between 2.0% to 3.0% due to stronger demand conditions amid lingering cost pressures. While high input costs are projected to exert some pressure on selected fresh food prices, price controls will partly mitigate these pressures. However, the overall inflation outlook remains susceptible to upside risks, particularly cost-push factors. These include a more persistent uptrend in input costs due to higher commodity prices and and prolonged disruptions to global supply chains, geopolitical tensions, and lockdowns in China. FBMKLCI Ended Lower in 2021 The local stock market has been on a roller-coaster ride, impacted by external and domestic developments, including lengthy nation lockdowns, high COVID-19 infection rates, and travel restrictions. To recap, FBMKLCI hit a high of 1,639.83 points on 10 March, spurred by market liquidity and optimism in the economic recovery due to lower average daily domestic cases of COVID-19. The index then plunged to the lowest level in 2021 of 1,489.80 points on 6 August after Malaysia saw a record high of more than 20,000 new COVID-19 infections that day, the most since the pandemic struck the country in February 2020. While Budget 2022 may have the largest allocation for expenditure on record for the country, it has failed to excite the market. This could be due to a new tax dubbed “Cukai Makmur” proposed in Budget 2022, coupled with the absence of significant infrastructure projects in the said budget. 45 The emergence of the Omicron variant in November and the hawkish signals by the U.S. Federal Reserve (Fed) since September induced market jitters, which were exacerbated by the possibility of an interest rate hike and a faster tapering of the Fed’s bond-buying programme. The spectre of a rate increase, which could have led to an outflow from the local bourse, resulted in the FBMKLCI ending at 1,488.88 points on 12 December 2021. Overall, FBMKLCI declined by -3.7% YoY to end at 1,567.5 points (2020: 3.5% YoY, 1,627.2 points). The equity market will benefit from the broad economic recovery despite several major central banks have begun to normalise their extremely loose monetary policies. However, the downside risks linger and continue on the new COVID-19 variants and a potential delay in economic recovery. Recovery After 2020’s Record High of Fund Outflow On the equity fund flow, the announcements on Cukai Makmur and the lifting of the stamp duty cap would affect expectations on the stock market in 2022. In addition, other issues seen in 2021 could spill over into 2022, causing some possible negative impacts such as the recent discovery of the Omicron variant, the possibility of lockdowns and prolonged inflation due to supply tightness. Bursa Malaysia recorded an improvement of 86.3% YoY of net foreign outflow of RM3.4 billion, a recovery compared to 2020 data when net foreign outflow hit a record high of RM24.8 billion with -123.4% YoY. Continued Volatility for Ringgit Ringgit started 2021 strongly at RM4.02 against the US dollar, driven by optimism over the global growth recovery amid the roll-out of vaccination programmes. However, the local currency has taken a hit from rising domestic COVID-19 cases and containment measures, despite surging global commodity price, and an improving global economic outlook. Nonetheless, the downside risks from the extension to the MCO 3.0 starting from mid-May 2021 continued to dampen investors’ risk appetite as the Ringgit depreciated. This was further intensified by shifting expectations surrounding the timeline of the Fed’s tapering of its asset purchase programme and the possible interest rate hikes. For 2021, the Malaysian Ringgit depreciated by 3.6% to RM4.17 YoY (2020: -1% YoY, RM4.12). The outlook for the Ringgit in 2022 continues to be challenged by a combination of external and internal factors that will have a significant impact on its movement. On the global front, factors influencing the Ringgit include the hawkish tone of the global central banks and monetary policies, the emergence of the Omicron variant and the efficacy of the vaccines, oil price movement, geopolitical and political issues, the speed of the economic recovery, as well as the implementation of key measures in Budget 2022 and 12MP. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
25. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Management Discussion and Analysis BANKING SECTOR The Banking Industry has Shown Continued Resiliency Malaysian banks continued to display resilience in 2021 and improvement compared to the previous year despite persistent economic headwinds such as prolonged movement restrictions , extended financing moratoriums, and payment assistance. Driven by positive sentiments among businesses and consumers following the reopening of the economy in the third quarter of the year, the financial performance of the local banks has shown strong growth. FROM THE TOP Recovery in Earnings in a Challenging Environment The banking sector continued to face uncertainties in 2021 due to the resurgence of COVID-19 and the return of movement restrictions. The build-up of provisions in 2020 which enabled the banks to have moderate provision growth to 14.0% (2020: 40.3%), coupled with lower modification losses due to the transition to more targeted payment assistance programmes, supported the sector’s earnings in 2021. OPR Remained at 1.75% since July 2020 The central bank kept the OPR unchanged to foster enabling conditions to support economic recovery. Nevertheless, BNM noted that the downside risks remain, amid ongoing uncertainties surrounding the pandemic, both globally and domestically. A policy rate normalisation that could prevent risks, such as persistently high inflation or a further rise in household indebtedness, are likely to occur after mid-2022. Targeted Payment Assistance Continues Banks continued to offer payment relief assistance after the auto-moratorium ended in September 2021, but the assistance provided then was more focused. This includes a targeted extension of the moratorium as well as offering payment flexibility to help customers based on their financial needs and circumstances. In addition, the Malaysian banking industry and Agensi Kaunseling dan Pengurusan Kredit (AKPK), a BNM agency, announced the Financial Management and Resilience Programme (URUS) in October 2021, which targets to help B50 household customers who need further financial assistance due to the COVID-19 pandemic. The URUS which was initially set to run for a total of three months until 31 January 2022, had been extended to 31 July 2022 due to flood impact on households and businesses. Summary of FY2021 Development Outputs – The programme had been expected to have minimal impact on the bank’s earnings as it offers help to B50 on a targeted basis compared to the blanket moratorium in 2020. Asset Quality Improved The industry’s gross impaired financings (GIL) ratio, which had been increasing from May 2021 at 1.59% to 1.67% in July and August 2021 had subsequently declined to 1.44% in December 2021 (Dec’ 2020: 1.56%) possibly due to the effects of the ongoing financings moratorium. Notwithstanding, asset quality is anticipated to deteriorate when the payment assistance programmes are gradually unwound in 2022. Overall household impairments continued to be driven by residential property financings, with its outstanding financing balances comprising 29% of the total financing in the banking industry. Financing Growth Accelerated Financing growth for the banking industry continued to gain momentum, accelerating to 4.5% YoY in 2021 (2020: 3.4% YoY). The household sector, however, grew at a slower rate of 4.3% YoY in 2021 (2020: 5.0% YoY), attributable to moderate growth in the residential segment (2021: 6.8% YoY vs 2020: 7.1% YoY) and passenger car segment (2021: 1.2% YoY vs 2020: 5.6% YoY). Meanwhile, non-household financings registered a higher growth of 4.9% YoY in 2021 (2020: 1.0% YoY) supported by healthy growth in the working capital segment (2021: 7.1% YoY vs 2020: 0.5% YoY). Development Output 1. Financial Additionality Financing Approved Financing approved to businesses >RM430.0 million >RM50.0 million Financing approved for Government-Led initiatives >RM12.0 million Total >RM1.8 million >RM40.0 million >RM830.0 million SME Cooperative Segments Micro Amount Approved (’billion) NOA >RM 10.9 >380,000 Members >RM 3.8 >84,000 Affordable Housing >RM0.6 >3,400 B40 > RM17.8 billion NOA: >510,000 SPIS >RM140.0 million >RM84.0 million Financing approved to individuals >RM8.0 million BNM TRRF BRFlex-i Deposit Mobilisation Deposit mobilised from Deposit Growth Stayed Elevated Households and businesses continued to maintain a preference for more liquid deposits. The banking system’s total deposits grew by 6.3% YoY in 2021 (2020: 4.5% YoY). Current account and saving account (CASA) deposits continued to be the main driver of the overall growth in deposits. CASA, which has maintained its double-digit growth since March 2020 (10.3% YoY), except in October 2021 (9.4% YoY), continued to moderate to 10.9% YoY in 2021 (2020: 19.3% YoY) as depositors may have spent their cash during the prolonged lockdown. Nonetheless, the proportion of CASA to the total deposits increased to 31.6% in 2021 (2020: 30.3%), with total funds placed with Islamic banks representing 31.4% of the total banking sector deposits (2020: 31.0%). 47 Management Discussion and Analysis FROM THE TOP 46 Balance (’billion) NOA >RM17.0 >3,400.000 >RM0.3 >500,000 >RM2.2 >7,000 Cooperative >RM1.0 >18,000 SME Individuals >RM18.9 billion NOA: >4,400,000 >RM63.4 billion NOA: >4,455,000 Businesses >RM44.5 billion NOA: >55,000 Training, Outreach and Advisory services conducted 828 Participants 1,015 Training Participants conducted with businesses Cooperatives Microentrepreneurs Financial literacy conducted for individuals >230,000 Youth Youth Financial Access Point Training and advisory services conducted Access Points Agent Bank Agent Bank’s Transaction Volumes (RM) TOTAL Of Which: URBAN Of Which: RURAL 1,494 1,383 111 299 249 50 >7,100,000 >6,500,000 >600,000 * Classification of Rural are based on Agent Banking Policy Document’s unserved and undeserved mukim listing. Note: NOA = No. of Accounts B40
26. ANNUAL REPORT 2021 48 Management Discussion and Analysis FULFILLING OUR INSTITUTIONAL MANDATE Financing Approved to Businesses Deposits Mobilisation In tandem with the nation ’s focus on business resilience, social well-being and economic stability; Bank Rakyat, as a Development Financial Institution (DFI) is committed to deliver our counter-cyclical role to whether the impact of the COVID-19 pandemic crisis and provide full support in this recovery period. Bank Rakyat is mandated to facilitate the development of Cooperatives and SMEs including micro-entrepreneurs by extending financing and advisory services for their businesses to expand and thrive. As of December 2021, total financing of more than RM1.3 billion was approved to over 2,900 micro-entrepreneurs, SMEs and Cooperatives of which more than RM44.0 million was granted to new businesses (businesses operating for less than three years). The Bank has always accentuated the promotion of a saving culture amongst our customers and potential customers by way of offering attractive profit rates for our deposit products. As a result, in FY2021, total deposits mobilised exceeded RM63.4 billion, of which more than RM18.9 billion was from individual customers. Out of this amount, the deposits mobilised from targeted individuals’ segments, comprising B40 and Youth (below the age of 18), are in the balances of beyond RM17.0 billion and RM330.0 million, respectively. It is imperative for us to have a comprehensive measurement framework in effectively and efficiently discharging our mandate of positively impacting the development of various economic sectors and the well-being of the entrepreneur community. In this context, the Performance Measurement Framework (PMF) introduced by Bank Negara Malaysia (BNM) incorporates additionalities as part of the Bank’s business operations with the intention to promote greater development outcomes. FROM THE TOP Management Discussion and Analysis The Bank has steadfastly delivered on these institutional goals in FY2021 with an intensified focus on providing support to underserved Cooperatives and Micro, Small Medium Enterprises (MSMEs) to help them build resilience within a disruptive economic environment. This continuous focus on Cooperatives and MSMEs comes following the government’s launch of the National Entrepreneurship Policy 2030 (DKN2030), set out by the Ministry of Entrepreneur Development and Cooperatives (KUSKOP), under which Bank Rakyat acts as its agency. DKN2030 aims for the turnover of Cooperatives to grow to RM60.0 billion by 2030 from RM40.3 billion in 2018, and to boost MSMEs contribution to the economy to 50% from 37.4% during the same period. Currently positioned as the country’s largest DFI and the second-largest Islamic financier1 (IFI), Bank Rakyat plans to further accelerate financing to Cooperatives and MSMEs to at least RM7.0 billion by the end-2025 as outlined in the Bank Rakyat 2025’s (BR25) SMEC Business Blueprint. As a continuation of the former BRCares, a new financing programme was introduced in May 2021 called BRFlex-i to facilitate recovery for affected micro-entrepreneurs, SMEs and Cooperatives and help them withstand the post-COVID-19 pandemic crisis. With BRFlex-i, customers are provided a moratorium of payments for the first nine months, minimal documentation requirements for financing applications, cost savings for financing documentation, competitive financing rates, and no collateral requirement. The BRFlex-i financing package offers a maximum financing limit of up to RM50,000 to micro-entrepreneurs; and RM1.0 million to eligible SMEs and Cooperatives. A total amount exceeding RM136.0 million has been approved as of December 2021. Meanwhile, a total deposits balance of more than RM44.5 billion were mobilised from businesses of which over RM2.2 billion was derived from Cooperatives and an excess of RM1.0 billion was from SMEs. In 2021, BNM had announced the Targeted Relief and Recovery Facility (TRRF) to provide relief and support recovery for eligible micro-entrepreneurs and SMEs in the services sector. As of December 2021, around RM141.8 million was approved under this financing programme. Bank Rakyat also offered financing assistance to sports industry entrepreneurs affected by the COVID-19 pandemic through Skim Pembiayaan Industri Sukan (SPIS). The SPIS facility is a collaborative initiative by the Ministry of Youth and Sports and KUSKOP of which over RM8.0 million was approved as of December 2021. Financing Approved to Individuals Nuri Club Member Nuri account holders also have the opportunity to become a Nuri Club member and participate in various programmes organised by the Club as follows: •Nuri Club had conducted a Nuri Savings Contest themed Guess and Win Contest and Savings Quiz Contest in conjunction with World Savings Day in October 2021; •Nuri Club also conducted a My 1st Bank Programme whereby newborns received savings money through their Savings-i account in conjunction with the 67th Anniversary of the Bank in September 2021; and •Nuri Teenpreneurship Ramadhan Bazaar was a programme held exposing students to entrepreneurial experiences. Students at selected high schools were given funds by the Bank to open their own stalls to sell foods and beverages for breaking fast. Financial Access Points Financing Approved for Government-Led Initiatives Training, Outreach and Advisory Services Conducted Throughout 2021, the Bank has conducted various capacity-building programmes for Cooperatives and entrepreneurs which attracted participation from 1,015 Cooperatives and 828 entrepreneurs. Further details of this initiative are elaborated in Developing the Cooperative Sector section. Although Bank Rakyat embraces digital technologies, the Bank constantly reviews and improves our physical channel footprints for better community outreach, as well as increased access to financial services, particularly in rural areas. The classification of rural areas is based on BNM Agent Banking Policy Document’s Unserved and Underserved Mukim listing. Unserved refers to mukims with no access points at all, while underserved categorises mukims with less than five access points in the vicinity. Further details are elaborated in the Financial Inclusivity section. Client Resilience and Positive Spillover into the Economy Since before 2018, SME and Cooperative customers who have been granted financing by the Bank has shown promising incremental values in their sales turnover, as well as new jobs created along with the number of jobs sustained. 1  Based on December 2020 published data of DFI and IFI’s annual report in terms of Income, Profit Before Tax and Zakat (PBTZ), Total Financing and Total Deposit. As a DFI, Bank Rakyat strives to serve all segments of society including individuals. For FY2021, a total financing amount of more than RM17.8 billion was approved to targeted individuals comprising Bank Rakyat’s Members, B40 (household income of below RM4,850 monthly) and affordable housing financing applicants (market value less than RM300,000). The approved financing amounts were more than RM3.8 billion, RM10.9 billion and RM0.6 billion respectively. Financial Literacy Conducted for Individuals More than 230,000 youths have been given and exposed to financial literacy learnings by the Bank in 2021 through a number of programmes and initiatives such as: Nuri Savings-i Account The first step in managing children’s wealth should be to inculcate a savings culture from an early age. Nuri Savings-i Account is a great platform to cultivate a savings culture among children. They can start saving with a minimum deposit of RM10, and it is open to all children aged 12 years and below. 49 In 2020, the total increase of sales turnover recorded was in the excess of RM140.0 million for the Bank’s SME customers, and RM34.0 million for the Bank’s Cooperative customers. Over 2,100 jobs have also been manageably sustained by the SMEs, and more than 170 new jobs were created in the same year. A positive outcome was also recorded by the Cooperatives segment where around 1,100 jobs were sustained with addition of over 50 new jobs during the year. In terms of productivity value (i.e. total sales turnover over the number of employees), the average of around RM1.1 million per SMEs and RM0.6 million per Cooperatives have been indicated respectively. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
27. ANNUAL REPORT 2021 50 Management Discussion and Analysis Management Discussion and Analysis Summary of FY2021 Development Outcomes Benefitting Customers Affected by COVID-19 through Exclusive Financing Programmes (BRCares, BRFlex-i BNM SRF and BNM TRRF Financing) Development Outcome The BRCares and BNM SRF financing programme have led to good outcomes in alleviating short-term cash flow challenges and maintaining the viability of entrepreneurs’ businesses. Out of the total number of entrepreneurs who received their financing funds from either of these financing programmes in 2020, over 83% and 85% respectively are currently recording positive business performance, and financing their financings without default. 2. Design Additionality Client Resilience and Positive Spillover Into the Economy SMEs and Cooperatives granted with financing by the Bank ≤ year 2018 Increment of sales turnover of customers In 2020 SME Cooperative Existing job sustained and new job created by customers Average Productivity >RM140.0 million >2,100 jobs sustained and >170 new jobs created >RM1.1 million >RM34.0 million >1,100 jobs sustained and >50 new jobs created >RM0.6 million FROM THE TOP Customers Affected by COVID-19 Benefiting from BRCARES, BRFlex-i, BNM SRF, BNM TRRF and SPIS Financing BRCARES recipients in 2020 which managed to sustain in their business >690 SMEs >1,740 BNM SRF recipients in 2020 which managed to sustain in their business >140 Micro Entrepreneurs >45 SMEs Cooperatives BNM TRRF (2021) recipients BRFlex-i (2021) recipients >190 >1,360 >40 >520 SMEs Micro Entrepreneurs Cooperatives >680 WOMEN owned business SMEs 30 >30 Micro Entrepreneurs SPIS (2021) recipients 40 Cooperatives Development Contributions to: Cooperative Education Trust Fund (CETF) Cooperative Development Provident Fund (CDPF) >RM32.0 million >RM16.0 million SMEs Dividend Payout Benefiting for more than 800,000 members including individuals and cooperatives >RM370.0 million Contribution To Needy Social Finance Contributions of zakat funds to asnaf entrepreneurs: RM2.3 million to WOMEN owned business 220 RAKYATpreneur 100 BR UNIpreneur Contribution of Zakat and CSR by the Bank >RM12.5 million to >88,000 recipients Out of the estimated total of 2,140 SME and Micro entrepreneurs mentioned above, around 33% or more than 710 of them are women-owned businesses that received the BRFlex-i and BNM TRRF financing assistance from the Bank. Supporting the Cooperative Ecosystem Contributing Zakat and CSR Funds for the Needy The Bank provides annual support to the Cooperative ecosystem and development through contributions made to Suruhanjaya Koperasi Malaysia (SKM) in the Cooperative Education Trust Fund (CETF) and Cooperative Development Provident Fund (CDPF). The total contributions made are based on 2% and 1% of the Bank’s annual PBTZ, respectively. This exceeded RM48.0 million in FY2021. Throughout the year under review, the Bank has been persistently contributing back to the community and society by contributing Zakat and Corporate Social Responsibility (CSR) funds totalling over RM12.5 million to more than 88,000 recipients. The Bank’s zakat fund contributions have been distributed in the form of entrepreneur support, medical treatment aid, student assistance, education programmes, shelter initiatives and disaster aid. Further details on the Bank’s other initiatives to support the Cooperative ecosystem are deliberated in developing the Cooperative Sector section. Distributing Dividends As a Cooperative, the Bank has always been prioritising our members and their economic well-being. Apart from the financial assistance in the form of financing and deposit products to suit the financial needs of our members, the Bank provides our members with an attractive dividend pay-out annually. In FY2021, the Bank have made a dividend payment in a total of more than RM370.0 million which has benefitted over 800,000 of our members, comprising both individuals and Cooperatives. Social Finance Entrepreneur support Poor Aid Student Assistance Education Program Shelter Initiatives Disaster Aid The programmes were specially designed to guide asnaf entrepreneurs who received zakat assistance from Bank Rakyat to identify their strengths and weaknesses through competency workshops, advisory services, network building, as well as followup monitoring by the Bank’s selected partners namely, INSKEN and ten local public and private universities. The main goal of both programmes is to help asnaf entrepreneurs improve their competencies to identify and seize opportunities to remain relevant in the market. As a spillover, these programmes are expected to nurture the entrepreneurs to become Bank Rakyat’s future MSME customers. Through RAKYATpreneur Pilot, RAKYATpreneur 2.0 and UNIpreneur Pilot, we have assisted 220 asnaf micro entrepreneurs and 100 asnaf student entrepreneurs during the year. In terms of profile, the selected entrepreneurs were from all states across Malaysia, including Sabah and Sarawak, with diverse businesses ranging from segments such as F&B, clothing and apparels, handicraft, workshop, agriculture, tailoring, hair dressing, and a few others. A promising number of these entrepreneurs have recorded an increase of 10% to 30% in their sales turnover for the first three months after completing the capacity building sessions. In addition, the total amount exceeding RM286.0 million approved for BRFlex-i, BNM TRRF and SPIS financing programmes in FY2021 will benefit the business survivability of more than 750 SMEs, 1,390 micro entrepreneurs and 40 Cooperatives nationwide in the coming years. Rakyatpreneur and UNIpreneur were philanthropic initiatives established by the Bank in FY2021, with the aim of elevating the potential of asnaf micro and asnaf student entrepreneurs to progress across their business value chains. 51 Policy Advice by DFIs Taken Up by Government and Impact from the Policy Advice In FY2021, Bank Rakyat was appointed as a Project Manager to lead the development of Sectoral Guide for Construction and Infrastructure, the initiative under BNM’s Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF). The Sectoral Guide provides a comprehensive guidance for implementing impact-based assessment for the particular sector. It also provides relevant sustainability metrics or indicators for a more holistic approach to the classification of economic activities. Going further, Bank Rakyat is embarking into Environmental and Social Financing, in line with the Sustainability Framework and Climate Change Principle-based Taxonomy which will lead to more environmentally friendly and ecologically responsible decisions. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
28. ANNUAL REPORT 2021 52 Management Discussion and Analysis Summary of FY2021 Development Outcomes Development Outcome 3 . Policy Additionality A)  Policy advice by DFIs taken up by Government   Bank Rakyat appointed as Project Manager to lead the development of VBIAF for Construction and Infrastructure B)  Impact from the policy advice   BNM VBIAF Sectoral Guide of Construction and Infrastructure which is to be used by the FIs   Enhancing the deadiness of FIs’ in playing a catalytic role towards realizing the Government’s aspiration and commitment as a signatory to the 2015 Paris Agreement   Bank Rakyat to embark into green products and practices which lead to more environmentally friendly and ecologically responsible decision Management Discussion and Analysis Agent Banking (Rakyat C.A.R.E.) Agent Banking is an initiative introduced by BNM to ensure that access to basic banking facilities can be enjoyed throughout Malaysia, even in areas without banking facilities. Bank Rakyat’s Agent Banking service has been established since July 2015 and is known as Rakyat C.A.R.E. Rakyat C.A.R.E offers basic banking facilities such as savings, cash withdrawals, intrabank fund transfer, bill payment and financing payment (Bank Rakyat) through appointed agents. With the availability of Rakyat C.A.R.E., customers enjoy the privilege of accessing banking services nearer to their localities, and this greatly benefits the unserved and underserved community segments. FROM THE TOP 4. Demonstration Additionality A)  Total funding amount crowded-in from the private sector for the year: RM585.6 million B)  Crowd-in efficiency : 205% Crowd-in Funding Bank Bergerak and ARROW During the year under review, the Bank participated in a number of syndicated financings by collaborating with the nation’s other DFIs. The total accumulated crowd-in amount for these financing was RM585.6 million, with the Bank’s own portion amounting to around RM285.6 million. Correspondingly, the crowd-in efficiency ratio has been recorded moderately at 205%. Bank Bergerak is a CSR initiative introduced by the Bank to ensure that customers in semi-urban and rural areas have access to banking services and facilities on-par with those provided in urban areas. FINANCIAL INCLUSIVITY Empowering Financial Inclusion Agenda In addition to the existing developmental and mandate initiatives, the Bank also consistently supports the Financial Inclusion agenda introduced by BNM with the following objectives: • The provision of suitable, affordable and quality financial services to all segments of society in contributing to balanced and sustainable economic growth and development; and •Providing the general public access to financing, financial services, financial redress and financial information. Focusing on Financial Inclusion, the Bank currently provides several service channels such as: • • • • • • Bank Bergerak and Ar-Rahnu On Wheels (ARROW) Agent Banking (Rakyat C.A.R.E.) Rakyat Xcess and Ar-Rahnu X’Change (Xcess COMBO) SME and Cooperative Business Centre Digital Platforms Card Business As of 2021, Bank Rakyat has four Bank Bergerak which are stationed at Kuala Lumpur, Temerloh, Alor Setar and Kota Bharu. Through frequent visits to surrounding community hubs such as community centres in public areas and within FELDA settlements, and morning markets, Bank Bergerak provides easy access to the underserved communities. Banking services provided by Bank Bergerak include Current Account-i and Savings Account-i opening (CASA), various banking counter services, wealth management, and financing advisory. The latest information on the Bank’s products and services are also made available to customers when they visit our Bank Bergerak. The upgraded Bank Bergerak, known as Ar-Rahnu on Wheels (ARROW), was established in 2020 to provide similar services as offered by Bank Bergerak with the inclusion of Ar-Rahnu services such as Pawn Broking-i, payment of storage fee, redemption, jewellery cleaning and jewellery testing. There are three ARROWs which are stationed at Kota Tinggi (Johor), Bintulu (Sarawak), and Sandakan (Sabah), with the last being the newest addition deployed in December 2021. As of December 2021, more than 7,000 transactions have been processed by Bank Bergerak and ARROW with the total transaction value recorded amounting to more than RM9.40 million. serving the underserved local communities at these two areas and the neighbouring localities with various banking facilities, Personal Financing-i and Ar-Rahnu services. The opening of these hubs was effectively coordinated and completed within five months as the chosen localities had been identified to be in dire need of financial services. Sebuyau and Serian are main districts serving the local communities and have a substantial population that stand to benefit from Ar-Rahnu’s easy financing service with hassle-free documentation requisites. Within a few months of their opening, both Rakyat Xcess and Ar-Rahnu X’Change have managed to capture more than 8,269 Term Deposit-i and CASA accounts with accumulated deposit amounting to more than RM90.38 million. In terms of financing assistance, over 589 accounts in total have been granted Ar-Rahnu and Personal Financing-i with disbursement of more than RM38.65 million successfully made to the Bank’s customers in these areas. SME and Cooperative Business Centres (SMEC) Several win-win benefits are unleashed by Rakyat C.A.R.E. for the unserved and underserved communities, easier access to banking services opens up more opportunities. For the Bank, appointing agents is a cheaper alternative compared to other delivery channels (i.e. branch and self-service terminal). The touch points gained also help to capture more retail deposits and enable the Bank to enter new markets. For appointed agents, this strategy offers additional income opportunities through collection of transaction fees. In FY2021, the Rakyat C.A.R.E. network reported a total of 299 active agent banking channels nationwide with the total transaction value recorded amounting to more than RM7.1 million. Rakyat Xcess and Ar-Rahnu X’Change (Xcess COMBO) The Bank has successfully opened two new Xcess COMBO in Sarawak during the year, as part of the channel expansion initiatives with KUSKOP in supporting the government’s Financial Inclusion agenda. Representing Bank Rakyat’s 21st and 22nd Xcess COMBO offering, the services were launched at Sebuyau and Serian, on 9 August 2021 and 16 August 2021 respectively; 53 In line with our BR25 goal to improve outreach towards entrepreneurs nationwide and increase access to the Bank’s financial assistance and solutions, the SME and Cooperative (SMEC) Business Centre has been established as a one-stop centre that provides holistic advisory and financing services for Micro, Small and Medium enterprises and Cooperatives. During the year under review, another seven SMEC centres have been established. This brings the current total to ten SMEC Business Centres in the following regions; Kuala Lumpur/Putrajaya, Selangor, Melaka/ Negeri Sembilan, Perak, Kedah/Perlis/Pulau Pinang, Kelantan/ Terengganu, Johor, Sarawak, Sabah and Pahang. From these SMEC Business Centres, a total of nearly RM850.0 million has been approved to over 1,000 SMEs and Cooperatives nationwide in 2021. Digital Platforms In FY2021, Bank Rakyat progressively achieved our digitalisation aspirations by offering more robust digital products and heightening customer experiences supported by an integrated Islamic banking system built upon modern technology. This is part of the Bank’s BR25 digitalisation agenda to embrace digitalisation to suit the new norm and stay competitive in the market. Bank Rakyat is compelled to advance this digital transformation journey within an enhanced, fully integrated and digital environment with diverse financing. This will enable the Bank to make a rapid technological advancement and to build a Digital Banking Eco System. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
29. ANNUAL REPORT 2021 54 Management Discussion and Analysis The digital transformation journey consists of five key on-going initiatives and the key outcomes are presented below : Quick Response to Entrepreneurs The Bank enhanced its digital service platform with ‘Quick Response to Entrepreneur’ (QR2E) in March 2021 with the key objective to enable Bank Rakyat’s business customers e.g.: micro-entrepreneurs, SMEs and Cooperatives, to seek financial assistance and business management advice conveniently at their fingertips. As of December 2021, the Bank has received more than 440 business applications and a total sum of more than RM61.0 million potential financing value. FROM THE TOP Ar-Rahnu e-Appointment Implementation In June 2021, the Bank introduced Ar-Rahnu e-Appointment platform to offer the customers a convenient way to schedule appointments for Ar-Rahnu products online. This service suits the current need and situation to alleviate congestion at the Bank’s branches and curb the spread of COVID-19. As at end-December 2021, the service has attracted more than 50,000 customers. Paperless Credit Card-i Processing for iRakyat In December 2021, we enhanced the iRakyat mobile application with functionalities to facilitate an end-to-end paperless e-application including processing for credit cards. Credit card processing is just the tip of the iceberg for the Bank’s digital customer experience initiative. Moving forward, we have an aspiration to further customer process digitalisation to include CASA on-boarding. This will ultimately result in cost-saving by the reduction of operational expenditure (OPEX), while enhancing customer experiences digitally. Aside from the regular retail banking functionalities, the application also supports Lembaga Tabung Haji and DuitNow transactions. This initiative is well aligned with the government’s intention to encourage digital spending and cashless transactions. Since its inception, the Bank has gained traction of more than 94,000 new users for the iRakyat mobile application. Bank Rakyat Quick Also in December 2021, Bank Rakyat introduced a new alternative channel for retail customers to access the Bank’s products - “Bank Rakyat Quick” or “BRICK” for short. With BRICK, customers can obtain product information via a QR scan and proceed with product applications. This technology will enables Bank Rakyat to generate and capture qualified leads from the market. Within just one month of launching, BRICK has captured almost 500 applications and continues to grow. The Bank successfully rolled out the new iRakyat mobile application in September 2021 to offer customers the ability to self-serve and manage their product holdings. DEVELOPING THE COOPERATIVE SECTOR The Bank plays a significant role in developing the Cooperative sector as we share the government’s aspiration of making the Cooperative sector a vital contributor to economic growth. We fortify the sector’s growth through facilitating Cooperative and entrepreneur development programmes that provide financial assistance and advisory services. These enhance business operations, support business expansion and build resilience in Cooperative businesses. The programmes, offered via physical and virtual platforms, include the following: • • • • Cooperative Advisory Desk (CAD) Entrepreneurship Advisory Desk (EAD) Cooperative/Entrepreneur Business Development Sales Force Effectiveness (SFE) Hassle-Free MyDebit Card Renewal In light of the pandemic situation and keeping in mind our cardholders’ health and safety, Bank Rakyat has proactively introduced online request for MyDebit card renewals through our iRakyat online banking platform. With this hassle-free process, new cards are couriered to the cardholders’ mailing addresses at no cost. Campaign: Wave and Menang @ D’Mart Outlets Bank Rakyat collaborated with Payments Network Malaysia Sdn Bhd (PayNet) and Koperasi Permodalan Felda Trading Sdn Bhd (KPFTSB) to organise the ‘Wave and Menang’ – MyDebit Campaign with D’Mart to support the national financial inclusion framework objective of serving all members of society, especially the underserved segments. Running from 1 September 2021 until 31 December 2021, the campaign has created awareness on the MyDebit card brand, as well as encouraged cashless acceptance at D’Mart outlets among the FELDA settlers and their family members. Results showed a positive change and acceptance among FELDA settlers on the cashless payment which met the aim of the financial inclusion agenda to provide lower-income segments of society with an access to quality financial services. The programmes fortify Bank Rakyat’s drive to change mindsets and deliver value to the society by: • Inculcating a Cooperative and entrepreneurship culture through prioritising developmental impact; •Enhancing Bank Rakyat’s ability to self-assess our mandated role’s relevance in an evolving economic climate; •Achieving greater socio-economic outcomes that translate into additionalities; •Nurturing Cooperatives and providing tailored solutions for targeted segments; • Collaborating amongst agencies and external parties. Cooperative Development Bank Rakyat Cooperative/Entrepreneur Program Objectives •Support the underserved cooperative segment in line with the Performance Measurement Framework (Bank Negara Malaysia) to increase economic spillover (new employment generated, increase of sales turnover and upward migration). •To assist in providing advisory services to suppport in boosting the cooperative business on learning facilities, information assistance and form an official touch-point to underserved cooperative. 1. Cooperative/Entrepreneur Program Cooperative Advisory Desk (CAD) Entrepreneur Advisory Desk (EAD) Cooperative/Entrepreneur Business Development Sales Force Effectiveness (SFE) Engagement 2021 Cooperative 1.015 Entrepreneur 828 Total: 1,843 Engagements 3. 2. Cooperative Advisory Desk (CAD) To assist cooperative by categories in terms of providing guidance and training to expand and grow their business align with government aspiration Business Diversification To enhance cooperative resilience to change in the external environment Financial Assistance To support cooperative with tailored financial products and services to operate efficiently and to grow, with a strong relationship focus Target Cooperative Segment Identified potential cooperatives for business expansion Type of Cooperative Credit Cooperative Agriculture Cooperative Consumer Cooperative Services Cooperative 55 Mindful that greater collaboration with agencies such as Suruhanjaya Koperasi Malaysia (SKM), Institut Koperasi Malaysia (IKMa), Angkatan Koperasi Kebangsaan Malaysia Berhad (ANGKASA) and Institut Keusahawanan Negara (INSKEN) need to be emphasised in order to promote sustainable Cooperative development, the Bank commits to forging longterm relationships that can lead to more business opportunities. Bank Rakyat Card Business The MyDebit Card Acceptance Campaign aims to promote the use of MyDebit cards at all 206 D’Mart convenience stores which are located within FELDA settlements throughout Malaysia. Customers were entitled to enter the campaign by paying a minimum of RM5 in a single receipt with MyDebit to stand a chance to win one of the prizes worth more than RM163,000. iRakyat Mobile Application Management Discussion and Analysis Cooperatives diversified into other business segment Outcomes Job creation by cooperative Sustainability of cooperative turnover Upward migration on upgrade Bank’s internal rating FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
30. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Management Discussion and Analysis Moving forward , focus has been intensified to steer towards a progressive and sustainable Cooperative movement in alignment with the government’s Pelan Transformasi Koperasi Malaysia 2021 – 2025 (TransKoM). Bank Rakyat will continue to facilitate the development of the Cooperative sector in strengthening the Cooperative movement and achieving the potential of the Cooperative sector as a national economic driver. BANK RAKYAT’S REVIEW OF FY2021 FINANCIAL PERFORMANCE FROM THE TOP Despite the continued economic uncertainty caused by prolonged COVID-19 challenges, the Group recorded a profit before tax and zakat (“PBTZ”) of RM1.63 billion for FY2021 against RM1.44 billion in FY2020. Net profit at RM1.86 billion was 34.78% higher from the RM1.38 billion recorded the previous year. This commendable performance was achieved through strong fundamentals and a focus on core activities, while the net profit was buoyed by lower deferred tax liabilities. The encouraging growth was mainly driven by the Group’s financing and investment activities, coupled by improved net operating income, which increased 3.2% to RM3.52 billion from RM3.41 billion previously, due to lower funding costs as a result of effective asset liability management and the low overnight policy rate. This achievement was supported by Current Accounts-i and Savings Accounts-i (CASA) which were higher at RM9.23 billion from RM8.28 billion previously. Lower impairment provision in the year, in line with industry trends, also boosted the Group’s performance. Effective cost management activities sustained a healthy cost to income ratio at below 40.0%, lower than industry average of 47.0%. As a result, the Group continued to be the most profitable Cooperative Bank, as well as the second largest Islamic financial institution in Malaysia. Despite the uncertainties during the year, total assets rose by 3% or RM3.31 billion to RM115.06 billion from RM111.75 billion as at the end of FY2020, driven by 1.6% growth in financing balance and 7% solid growth in treasury assets through steadfast commitment to set strategic initiatives throughout the year. Total deposits for the year rose 1.1% to RM86.52 billion in 2021, compared to RM85.58 billion previously, while Return On Assets improved to 1.4% in line with the industry trend. In realising its mandate to strengthen the economic wellbeing of its members and customers, the Group announced 15% dividends with an estimated pay out of RM429.50 million to 827,066 members for the year ended 31 December 2021. 57 Management Discussion and Analysis This marked a record 23 years of double-digit dividends provided to its members. Apart from that, the Group continued to contribute 2% of its PBTZ amounting RM32.30 million to the Cooperative Education Trust Fund and 1% or RM16.15 million to the Cooperative Development Provident Fund. The total contribution to these cooperative funds for the year 2021 amounted to RM48.45 million. Through the good dividends and annual commitment to support the Cooperative ecosystem, Bank Rakyat hopes to help reduce the financial burden faced by members in weathering the COVID-19 pandemic. As at 31 December 2021, Bank Rakyat had a total market capitalisation of RM21 billion. Risk-Weighted Capital Ratio and Core Capital Ratio after the proposed final dividend remained strong at 25.76% and 23.35% respectively, well above the minimum regulatory requirements and industry average. This makes the Group one of the strongest financial institutions in terms of capital position. CHANNEL MANAGEMENT Launching of iRakyat Mobile Banking The unprecedented challenges posed by COVID-19 have significantly impacted customer behaviour notably towards the shift to digital channels. In response to this, we have facilitated e-Banking and e-Payment requisites for our customers with the launch of our mobile banking application on 30 September 2021. These additional physical channels not only improves access to banking and Ar-Rahnu services, but also maintain a balanced distribution of our infrastructure capital in supporting the banking needs by the underserved areas. Ar-Rahnu On Wheel (ARROW) in Sabah The Bank’s mobile ARROW units have proven to be efficient and effective as an alternate channel to provide our customers’ accessibility to more affordable financial services without the need to invest in traditional brick-and-mortar branches. Moving forward, our team will strive to provide further improvement and enhancement towards the application features to meet our consumers’ digital lifestyles and focus on customer security with adoption towards advanced and extensive mobile banking functionalities. In December 2021, we successfully deployed our third ARROW in Sandakan, Sabah which coincided with the national aspiration of the PEMULIH recovery plan package announced earlier in the same year. The Government had allocated RM18 million for domestic financial institutions, including Bank Rakyat, to provide about 30 mobile units in totality covering almost 250 mukims in the rural and remote areas of Peninsular Malaysia, Sabah and Sarawak under the PEMULIH initiative.With proactive measures taken to ensure minimised disruptions during the pandemic, ARROW Sabah provided the local community in Sandakan (including Mukims of Kuamut, Labuk, Sukau and Sekon) a greater financial accessibility. Growing Our Physical Network in Sarawak Expanding Customer Outreach Through Rakyat X’Lite Improving banking access to the community, we focused on supporting the financial inclusion agenda to best serve all segments of customers with the latest establishment of Rakyat Xcess (Combo) in Sebuyau and Serian, Sarawak on 9 August 2021 and 16 August 2021 respectively. An alternative delivery channel was pioneered with the commencement of Rakyat X’Lite in LRT Bank Rakyat-Bangsar Station on 13 December 2021. With an attractive and intuitive or User Interface User Experience, the Bank aims to accommodate an ideal customer experience and satisfaction through quality, convenience, and personalisation. Rakyat Xcess (Combo) Sebuyau has been recognised as the first financial institution that provides the local community with access to safe and affordable branch banking and ArRahnu experience in the district. Meanwhile, our physical channel in Serian has been transformed and upgraded to provide customers in the locality with an immediate access to Ar-Rahnu services, in addition to existing banking services. Within a confined space area available for Bank Rakyat at the concourse level of the LRT Station, our Rakyat X’Lite provides two teller counters, an Automatic Teller Machine (ATM) and a Cash Deposit Machine (CDM). This concept of implementing assisted counter services outside of a traditional branch and leveraging cash transactions on the self-service terminals is the first of its kind throughout the Bank Rakyat physical channel network. RAM RATINGS Reaffirmed AA2 with Stable Outlook RAM Ratings has reaffirmed Bank Rakyat’s AA2/Stable/P1 financial institution ratings (FIRs). Ratings of the Bank’s sukuk issued through its funding conduits have also been reaffirmed as shown below: Bank Rakyat’s Sukuk Ratings Imtiaz Sukuk II Berhad RM10 billion Sukuk Wakalah Programme (2020/2050) AA2(s)/Stable RM9 billion Islamic Medium Term Notes Programme (2013/2023) AA2(s)/Stable Mumtaz Rakyat Sukuk Berhad RM5 billion Subordinated Sukuk Murabahah Programme (2016/2036) AA3(s)/Stable The reaffirmation is premised on Bank Rakyat’s strong foothold in Personal Financing-i (PF) and its robust loss absorption capacity. The Bank boasts the largest share of the Malaysian market for PF, which is mostly extended to civil servants with higher job security. RAM acknowledged that the impact of modification losses from moratoria and other forms of assistance offered to customers is manageable given its current solid capitalisation, afforded by a Basel I tier-1 capital ratio of 22.2% as at end-June 2021. The Bank’s ample loss absorption buffers will cushion further potential impairments amplified by the gradual expiration of pandemic-related relief measures. FROM THE TOP 56
31. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Management Discussion and Analysis RETAIL BANKING FROM THE TOP Gross Financing Gross financing is sustained with slight increase of 1 .95%, maintaining traction in line with the Five Years Business Plan (5YSP). Personal Financing-i Personal Financing-i continues to be the central component of the Bank’s retail banking business. The portfolio increased 1.0% in FY2020, due to our effort to control its growth at under 1% a year as we are taking steps to diversify into other areas. Retail banking strives to broaden the customer base, diversifying to other customer segment, namely the private sector and non-fixed income earners. The Personal Financing-i portfolio figure was recorded at RM60.01 billion as at the end of 2021. Home Financing-i Bank Rakyat’s Home Financing-i segment recorded substantial growth of 13.4% in 2021 with a sum of RM7.82 billion as compared to RM6.90 billion in 2020. The growth has been achieved despite a slower property market due to measures introduced by; 1. Synergy and strong collaboration between internal stakeholders in Head Office such as Mortgage Financing, Branch Sales, Regional Directors and Branches in meeting stipulated sales target. 2.The commendable financing growth is contributed by our strategy to focus on secondary market property whereby the time taken on disbursement is shorter as compared to primary market property, 3. Continuous engagement and collaboration with external stakeholders namely developers, valuer, lawyers and Real Property Negotiators and Agencies to widen the outreach to consumer. Credit Card Utilization 5.Close monitoring by stakeholders such as HQ, region and branches on performance and take necessary action to improve the outcomes. 70.00 16.00 6.Aggressive cross selling activities performed by branches to increase product holding by existing customers. 60.00 14.00 50.00 12.00 40.00 10.00 30.00 8.00 Vehicle Financing-i Bank Rakyat offers two type of Vehicle Financing products namely, Al Ijarah Thumma Al Bai (AITAB) which apply the Islamic Hire Purchase-i concept and financing under Shariah principal of Murabahah (by adopting Tawarruq practices). Financing margin are offered up to 90% for the former and 100% for the latter. Both products allow customer to finance the purchase of new vehicles with the financing tenure up to nine years. Despite the reduction in Malaysian Total Industry Volume (TIV) of 4% in 2021 compared to 2020 [TIV 2020: 529,514 units, TIV 2021: 508,911 units], Bank Rakyat managed to record the growth of 1% for its Vehicle Financing-i portfolio during the said period. The gross balance stood at RM3.13 billion compared to RM3.10 billion in the previous year. 2021 saw the growth of Vehicle Financing-i by 0.92% to RM3.13 billion compared to RM3.10 billion in the previous year. Pawn Broking-i An alternative to conventional pawn broking, Pawn Broking-i (Islamic pawnbroking or Ar-Rahnu) provides instant and easy cash of up to RM350,000 based on Shariah principles. This has been one of our most successful products since its introduction in 1993. This service is provided at 140 branches and 48 Ar-Rahnu X’Change outlets that operate from Monday to Saturday (ARX). Market share of 45% represents the Bank and RMS, and contributed RM2.02 billion of balances in 2021 (Bank only). Deposit-i In 2021, our total deposits rose by 16.15% or RM8.94 billion to RM64.28 billion as compared to RM55.35 billion in 2020. As at December 2021, our eCA-i balance was recorded at RM2.38 billion, which saw an increase of RM102.52 million from the figure in the previous year while our SA-i balance has increased to RM6.91 billion or 14.72% as compared to the figure collected in 2020. TD-i balance on the other hand recorded a 16.89% increase to RM54.99 billion. FY2021 showed CASA growth of 11.91% YoY to RM9.29 billion resulting in higher CASA ratio of 11.14% with households taking more precautions in their spending behaviour by retaining more liquid deposits. 20.00 6.00 Bank Rakyat (RM mil) Industry (RM mil) Credit Card-i Undoubtedly, 2021 was another challenging year for the credit card business when the monthly spending and balances were again affected due to the announced MCO 3.0 and additional cash extended under the PEMULIH program respectively. Consistent with the industry’s trend, Bank Rakyat Credit Card-i usage started to recover in the second half of the year under the National Recovery Plan, where it reached the highest usage amount in December 2021 of RM55.02 million. The healthy growth was contributed by the continuous promotions and programs implemented throughout the year as follows: A.8%.GOV.MY PROGRAM Affordable source of financing remains the ultimate demand from consumers whilst the economy progress towards recovery from COVID-19 pandemic. As an institution that is sensitive towards consumers demand, a new financing program was launched on 20 August 2021 targeted at existing and new Credit Card-i cardholders from the government and GLC sectors. The 8%.GOV.MY program offers profit rate as low as 8% per annum (or 0.66% monthly) on all retail outstanding balances arising from payments of goods and services. The low profit rate will be applicable for the next three years for cardholders who meets the eligibility criteria. B. “CASH NOW” CAMPAIGN This initiative was re-introduced in year 2021 where the Bank only charged a profit rate of 6% per annum (as compared to 18% per annum) for cash withdrawals performed at Bank Rakyat counters, ATMs and via call-in to our Customer Service. The campaign started on 1 August and lasted until 31 October 2021. The low profit rate is applicable up until the cash withdrawal balance is paid out. C. “BELANJA DAN MENANG” CAMPAIGN The three-months campaign was launched from 1 October 2021 to 31 December 2021 with an objective to drive the debit and credit card spending for the following categories: i.Bank Rakyat merchants that are categorised under the essential needs segment, ii. Bank Rakyat cardholders who spent at Bank Rakyat’s essential needs merchants. As purchasing habit during the pandemic shifted from cash to non-cash, this campaign focused and encouraged our customers to opt for cashless payment by offering chances to win cash prizes worth of RM500 with a minimal purchase of RM30. FROM THE TOP In view of the Bank’s overall gross impaired financing (GIF) ratio, strong GIF coverage of above 150% provides further comfort to the increase of GIF to 2.2% as at end-June 2021 (end-December 2019: 1.9%) which was primarily driven by the PF portfolio’s weaker GIF ratio of 1.2% (end-December 2019: 0.6%). Due to the current uncertain economic climate caused by COVID-19 pandemic, job losses or income cuts suffered by the customers had led to higher defaults from its non-Angkasa segment under PF portfolio. 4.Periodic customer retention program being performed by telemarketing team and branches to mitigate attrition rate. Bank Rakyat (RM mil) The rating reaffirmation also incorporates the view of ready support from the Government if needed, given Bank Rakyat’s status as a Cooperative-cum-developmental financial institution. 59 Management Discussion and Analysis Industry (RM mil) 58
32. ANNUAL REPORT 2021 60 Management Discussion and Analysis Performance Recognition Whilst the payment card industry took a knock during the COVID-19 pandemic , BR Credit Card-i and Debit Card-i managed to bag two awards from MasterCard in recognition of our performances. Our Credit Card-i was rated as the Best Improvement in Approval Rates amongst the Islamic and conventional card issuers over the course of 2020 to 2021 whilst our Debit Dard-i was awarded the Best Ecommerce Spend Growth Performance amongst the Islamic Banks. FROM THE TOP BUSINESS BANKING Established to focus on our mandated target market of cooperatives, the Bank’s Business Banking Division also looks into the needs of corporate, commercial, small and medium enterprises (SME) and micro financing customers. The division is tasked to ensure good management, engagement and service delivery across the end-to-end process of providing business financing to these customers. The main focus of the year was on SME and micro financing in line with the BR25 Strategic Plan and SME Blueprint. Bank Rakyat’s SME portfolio expansion was in line with the Ministry of Entrepreneur Development and Cooperative (KUSKOP) National Entrepreneurship Policy (NEP), which aims to elevate Malaysia into a full-fledged entrepreneurial nation by 2030 towards strengthening the economic contribution of SMEs to the country’s Gross Domestic Product (GDP) to 50% by 2030. SME Financing For the SME market, the division fully operationalisation 10 (ten) SMEC Business Centres in order to expand our reach and market share. Service improvements were targeted with the launching of Quick Response to Entrepreneur (QR2E) initiative. Together, these helped increase our SME customer base by 78%. The Bank also embarked into capacity building programmes covering both Business Banking personnel and entrepreneurs. These included the ‘Kursus Memperkasakan Bangsa Usahawan’ which attracted 1,400 entrepreneurs; Program ‘Santai Namun Sampai’ which was launched at Tanjong Karang, Selangor; and subsequent follow-up programmes held at Paya Besar Kuantan, Pahang. Management Discussion and Analysis Micro Financing Our micro financing business grew by RM23.9 million or 22% to RM131.4 million as compared to RM107.5 million in the previous year due to attractive product offerings such as BRFlex-i which focuses on helping micro businesses as well as retail-based businesses affected by the COVID-19 pandemic. Moving forward in FY2022, Business Banking will further strengthen this portfolio with a targeted financing balance of RM150.0 million and growth of 15%. The Bank provides micro financing services to entrepreneurs and extend financing from the government mandated fund. Under the latter, the active government funds distributed during the year comprised the Rural Economic Financing Scheme (SPED) and Skim ‘Pembiayaan Industri Sukan’ (SPIS). For SPED, RM194.81 million has been disbursed to 1,877 applicants; whereas for SPIS, RM5.38 million was disbursed in FY2021. Summary of FY2021 Performance Total Financing Asset Financing Income (2020: RM5.80 billion) million (2020: RM301.3 million) RM6.01 billion RM319.3 • FINANCING FOR BANK’S MANDATED ROLE Financing to Cooperatives RM2.21 billion (2020: RM2.36 billion) Number of Customers 222 (2020: 191) SME & Micro Financing RM920.61million (2020: RM656.88 million) Number of Customers 8,953 (2020: 8,670) Moving Forward With the expectation of economic recovery and better industry outlook backed by continuous support and stimulus packages from government, the main focus for FY2022 will continue to be on SMEs, micro financing and cooperative portfolio expansion. A significant number of key initiatives have been planned under Business Plan 2022 including the followings: 1. Championing entrepreneur/businesses through stronger quality financing to mandated role business, Environmental, Social, and Governance (ESG) – Green Financing and Sustainability and Contract Financing and Commercial HP. 2.Positioning of Bank Rakyat as operating bank to business financing customers. 3.Strategic coverage and efficient trade solutions to business and logistic industries. 4.High impact collaboration and vibrant products as well as services solutions. 5. Strengthening asset quality and productivity. 6. Human capital and business process improvement. TREASURY Performance Review 2021 saw countries across the globe were aiming to win at the vaccination race as its population eager to move forward pass the pandemic amid the rise of new variants. Economic activities began rebounding as movement restrictions were gradually uplifted causing commodity prices gain major traction. Malaysia’s pre-existing political pressures remained a threat of uncertainty in the local capital market, as we faced the spillover effect of the robust global economic recovery resulting to pressures in global supply chain as the pandemic prompted changes in consumption trends, heightened demand for goods and shortage of labor. Local economic data were mostly static with inflationary pressure deemed contained relative to other parts of the world while unemployment rate relatively stagnant at 4.5% although underemployment rate remained elevated caused by job mismatches due to the continued economic uncertainty during the year. This led BNM into staying dovish on its OPR stance throughout 2021 sending local’s bond market to be unwavered for the most part of the year while foreign investors adding duration risk to their portfolio recalibration exercise. Treasury continue to face disparity in its fixed rate investment yield replenishment although cushioned by prudent management of funding composition. Treasury sales strongly supported the division by boosting the division’s fee based income after showing striking increase in foreign exchange business volume taking cue on the growing money supply within the financial system. 61 Moving Forward Strong cautious mode would remain on the play until uncertainty recedes as all eyes were on the timing for first policy tightening by the major economies post steadier rebound in economic data while the world is now talking about endemic. Most major countries withdraw their concern on the emerging of new variants amid high inoculated population exhibiting less yearning for more lockdowns. Subsequently, recovery is expected to come into sight across all sectors mainly driven by accelerating private consumption. Local debt supply is expected to continue to dilate year on year to fund the proposed budget, unveiled to be at 20.3% of GDP while major corporations are sustaining healthy CAPEX and working capital requirement. Treasury will emphasis the effort in identifying high yielding remittance businesses to fully employ its remittance resources as well as new deposit streams while providing comprehensive Treasury solutions to new and existing clienteles. Effective allocation of the Bank’s assets and liabilities will be a continuous effort as the Treasury remain sensible in its sukuk replenishment despite facing stretchy valuation risk. Moving ahead, the world expects to sustain endemic watchfully considering uncertainty now relies upon a well anchored inflation expectation amid imbalance supply-demand while investors await for monetary policy in major economies responds. All in all, Treasury will essentially remain vigilant in sustaining the Bank’s strong liquidity position as we strive towards more uncertainty ahead. CUSTOMER EXPERIENCE MANAGEMENT (CXMG) As part of BR25 Great Customer Experience (GCX) Blueprint, the year heavily focused on the strategic pillar of CXMG to ensure the delivery of high quality customer service that builds customer’s trust and confidence. The year was marked with intensive investments in high caliber customer service programmes, people skills and product knowledge training to grow our capabilities on this front. • Know, Love, Use, Sell (K.L.U.S) initiative  The K.L.U.S. learning initiative was part of the Kempen Kelestarian Pelanggan 2020. It was conducted continuously from Quarter 3 (Q3) to Quarter 4 (Q4) 2021. Prior to selling the products and getting the sales lead, all employees were required to complete e-learning modules for seven core products which are Personal Financing-i, Home Financing-i, Home Financing-i (SJKP), Hire Purchase-i, Credit Card-i, Savings Account-i, as well as Pawn Broking-i. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
33. ANNUAL REPORT 2021 62 Management Discussion and Analysis A series of coaching sessions with all touchpoints related to people skills and product knowledge was conducted. The coaching sessions focused the one upskilling employees competency in delivering and promoting the Bank’s product and services, as well as communication skills in dealing with customers. This initiative had helped employees to promote and sell the Bank’s products to the customers and contributed to the Bank’s improved financial performance during the year. FROM THE TOP • Customer Service Excellence Training  As the branch is the first customer point of contact in executing physical banking transactions and ensuring great customer experience, besides Branch Manager, the Assistant Branch Manager (ABM) plays an important role in managing and portraying an excellent service culture. All Bank Rakyat’s ABMs attended customer service excellence training which was held from November 2021 to December 2021. Among the modules covered are Customer Service Mindset, Build Customer Relationship, Communication and Service Delivery as well as managing customer. • Certified Customer Experience Professional (CCXP)  The CCXP is a certification programme offered by the Western Kentucky University, USA. 7 (seven) managers from different Business Units were successfully certified for the first batch of this programme, and this was completed in November 2021. The programme offered training in many competencies including Customer Centric Culture, Voice of Customer, Customer Insight and Understanding, Organisational Adoption and Accountability, Customer Experience Strategy, Experience Design, Improvement and Innovation, as well as Metrics, Measure and Return on Investment (ROI) • Customer Experience Officer (CXO) New functions were also created for frontlines within the Bank through the exploration of the Customer Experience Officer (CXO) function at branches.  The function of a CXO was made effective, with 30 selected ABMs appointed as interim CXO from December 2021 to March 2022. This initiative will continue with the appointment of a permanent CXO at 50 branches in phase 1 and phase 2 and the remaining 48 branches in phase 3. Among the main functions of a CXO are to strategise, execute, monitor and lead the customer experience journey at branches aligned with the BR25 GCX blueprint objectives. • Experience Management (XM) Team  The establishment of XM Team was approved by the Management Committee in November 2021. The main objective of the establishment is to act as a centralised team to handle overall customer experience related matters which cover, but is not limited to, providing strategic direction and remedial action. It also encompasses creating a mitigation plan in managing customer issues or complaints, customer experience projects and cross-functional department initiatives. • Customer Experience (CX) Appreciation The Bank has continuously received compliments from customers about their satisfaction with an excellent customer experience when dealing with the Bank. It has resulted from the great service provided by the Bank’s employees. This initiative has helped boost the spirit of the recipients and other employees. • Birthday Wishes In 2021, a total of 740,400 birthday wishes have been sent to our customers. It is a way to express the Bank’s thoughtfulness and appreciation to the customers by celebrating their special month. This builds customer satisfaction which in turn ensures customer retention, richer customer experience and customer loyalty. Bank Rakyat is proud that this initiative has had good response from customers who felt valued and recognised by the annual greeting. Regular engagements to monitor the Bank’s level of customer service delivery continued to be conducted with employees and customers towards fulfilling the GCX Blueprint goals. These included: • Branch and Regional Engagements Held virtually due to the COVID-19 pandemic, these strategic engagements were held throughout the year and focused on the sharing of customer experience performance such as the strengths and weaknesses of the service performance, as well as identifying the best action plan for improvement. Improvements in branch and regional service performance were recognised with customer experience awards to the top three branches, top three regions and the best regional zone for year 2021. Management Discussion and Analysis • Bank Rakyat Customer Satisfaction Survey (BRCSS) BRCSS was conducted internally. It is aimed towards the following objectives: c) As a readiness assessment to identify the gaps and develop strategic actions in delivering a seamless customer experience towards enhancing the overall customer satisfaction level. • Gauge the current state of customer satisfaction. •Promote quality and transparency of customer services as listed in the Customer Service Charter. • Establish a year-on-year comparison. • Achieve readiness satisfaction survey. for MBICSS industry customer The results of the 2021 survey highlighted the Bank’s current strengths and weaknesses as well as customer expectations and perception of the Bank. The findings and results are summarised as follows: • Achieved a Net Promoter Score (NPS) of +42 indicates good and acceptable as it reflects our customers’ willingness to promote and recommend Bank Rakyat to their friends and families. •Current strengths that contribute to overall satisfaction are: - Existing and loyal customers that will promote the Bank to their friends and families. -Relevant products and services that meet customers’ current needs. - Friendly, helpful and accommodative employees. •To drive further recommendations by customers, the Bank needs to improve accessibility by developing Banking apps, improve on the efficiency of Contact Centre accessibility, and to continuously improve our processes. • Branch Service Rating (BSR) BSR is a yearly initiative. It is aimed towards the following objectives: a) To support the BR25 Great Customer Experience deliverables. b) To support and motivate the branches in persistently deliver the best-in-class customer experience and, develop high performance culture to achieve Bank business objectives. 63 The BSR overall score for 2021 is 80.9%. • CX Onz - Tone From The Top  (CX = Customer Experience | Onz = expression of our confirmation on enhancing customer experience and to boost customer centric culture)  CX Onz programme is a Head Office level initiative to empower customer experience leadership, increase service performance and improve overall customer satisfaction. The objectives of CX Onz are as follows: •A platform for stakeholder’s engagement with Head Office employees to share their knowledge and experience about CX. •Increase department service performance and improve overall customer satisfaction score. •Inculcate great customer experience among employees at Head Office. To improve future overall satisfaction score, and to increase awareness and embedded sufficient knowledge of CX, CXMG had implemented two programs which are Teh Tarik and Brown Beg session delivered by management level. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
34. ANNUAL REPORT 2021 64 Management Discussion and Analysis •Complaints  2021 was a challenging year as the Bank received an overwhelming high volume of complaints related to the implementation of Payment Assistance. Bank is committed to continuously enhance and strengthen the management of customer’s complaints to ensure that complaints are addressed promptly, fairly and effectively. The Bank took remedial actions to overcome this issue and resolved customers’ complaints successfully. As a result, the Bank managed to resolve 84% of complaints within 14 days and committed to ensure continuous quality of handling customers’ complaints by implementing several initiatives such as: FROM THE TOP i. Provide online training on handling complaints to selected employees. ii. Established eLearning Module on Handling Complaint which to be enrolled by all employees. In addition to day-to-day monitoring, the Bank’s Compliance Department is committed in improving the overall control environment and the compliance cultural branding by implementing comprehensive compliance policies, performing periodic compliance assessments and reviews, conducting regular engagement sessions with business units and training programmes across the Bank to ensure that all employees are kept abreast of the regulatory requirements. Key Development 1) Driving initiatives and good self-governance, Compliance Department has completed the Compliance Tour 2021 attended by representatives from 10 regions, cementing our promise in materialising Compliance’s mission and vision. Throughout this programme, a variety of topics have been covered, including data privacy, confidentiality, awareness of common non-compliance issues at branches, discussion of Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) in the Silverlake Integrated Islamic Banking System (SIIBS) and CoBRa system, as well as enriching knowledge on Shariah compliance and principles, particularly on the products offered by the Bank. 2)In the spirit of upholding the compliance values particularly in the knowledge of AML/CFT among the employees, the Compliance Department inculcates awareness and nurtures a continuous stream of highly capable talents through various conventional and virtual training programmes. Additionally, efforts to spread public awareness on the risk of mule account involvement are intensified through various awareness campaigns and materials. COMPLIANCE At Bank Rakyat, our motto is “Compliance is Everyone’s Responsibility”. We rigorously promote and instil a strong compliance culture, ensuring it is cultivated by the strong tone from the top, complemented with the momentum from the middle, and ingrained in every fibre of each employee’s being. The culture is clearly demonstrated through the Board, Senior Management and each employee’s adherence to relevant laws, rules, regulations and regulatory guidelines. In setting up the overall compliance environment, the Bank’s robust Compliance Framework provides the right platform, guidance and mechanism to identify, assess, monitor and coordinate compliance risk which includes compliance with regulatory, operational, Shariah Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. 3) Nurturing a community of lifelong learners among our employees, we commenced our effort by enrolling employees in various Compliance Certification Programmes such as Certified Anti-Money Laundering and Counter Financing of Terrorism Compliance Officer (CAMCO), Certification in Regulatory Compliance (CRC) and Associate Qualification in Islamic Finance (AQIF) which amongst others, equip the employees with the necessary skills required in enhancing Compliance’s function capabilities. 4)In the early stage of the COVID-19 pandemic, we took a proactive stance to lend a helping hand in facilitating business units with regulatory matters pertaining to the launching of payment assistance programmes for customers, offering moratorium and facilitating the Standard Operating Procedures (SOPs) for the Bank. We remain steadfast in being proactive by performing validation on the post implementation of payment assistance programmes to ensure that the Bank is always complying with the requirements imposed by the regulators. Management Discussion and Analysis 5) Solidifying the compliance culture and agenda within the Bank’s business strategies and operations, we have taken the initiative to anchor as the regulator counterparts by supporting business units in operationalising Digital Banking, e-KYC, Sustainability, Contract Management, Shariah Governance and Corporate Governance. A specific policy on Electronic-Know Your Customer (e-KYC) has been established as a guiding principle when embarking on new business opportunities through the digital environment. This ideally supports electronic means without the need of face-to-face interaction with customers. iRakyat 6)Embarking on a strategy to promote a Shariah compliance culture to increase awareness, understanding and appreciation of the underlying principles of Shariah by putting in place structured learning programmes to various government agencies and universities such as Seminar Kewangan dan Perbankan Islam. These programmes sought to emphasise the importance of having a value system based on Shariah principles and how this dictates outward conduct and behaviour. During the year, iRakyat has been enhanced with the following features to provide the convenience of online banking from the comfort of home: IT ACHIEVEMENTS 2021 Bank Rakyat continues to be innovative in keeping up with the digitisation era with key enhancements to create more efficient automation while improving customer experience. The focus on digital services is very much in line with the needs of the current scenario as well as the practice of the new standards when everything is at the fingertips of customers. In FY2021, strong stride in the Bank’s IT journey were made with milestones achieved on the fronts of new applications, enhanced infrastructure and fortified security. IT Applications 65 iRakyat mobile banking customers can access account information such as balances and statements for their Savings Account-i, Current Account-i, Credit card-i, financing, and Home Financing-i accounts at any time. They can also conduct Lembaga Tabung Haji and DuitNow transactions, alongside JomPAY. All these transactions are backed with assured safety and security, as the app has a biometric login feature which users can activate for their subsequent logins. These include the use of face identification, among others. • 24 hours Operation Mode • Ar-Rahnu Financing Payment • NURI Savings Account-i Enablement •iReward Module (point system for Credit Card-i holders to redeem their points to pay their Credit Card-i outstanding amount) • E-Apps Credit Card-i Application iRakyat Mobile Banking The iRakyat mobile banking application was launched on 30 September 2021 to expand the digital banking ecosystem for customers and elevate customer experience. The app’s launch demonstrates the Bank’s commitment in achieving its digitalisation goals, which include providing a more efficient and effective integrated Islamic banking system based on cutting-edge technology. The iRakyat app also aligns with the government’s intention in encouraging digital spending and cashless transactions. Online Moratorium 2.0 Bank Rakyat continued to offer a moratorium of up to six months including 50% deferment instalment of monthly commitment. IT Internal team once again delivered this initiative to ensure the impacted customers received the assistance in a timely manner. The moratorium assistance includes modules such as Personal Financing-i, Home Financing-i, Vehicle Financing-i, Vehicle Hire Purchase-i, Education Financing-i, Micro Financing-i and deferment of profit payments for Mortgage-i. Customers of small and medium enterprises (SMEs) may also directly contact the SME and Cooperatives (SMEC) Business Online Moratorium 2.0 Center for the moratorium assistance. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
35. 66 Management Discussion and Analysis Ar-Rahnu Appointments Apps PC and Technical Support Adapting to the new norm , a new Online Appointment Booking Application System has been deployed for Bank’s Ar-Rahnu customers at Branches in adherence to SOPs and safety measures. PC and Technical Support are essential at all times, and more so during the end of the year when unexpected flooding affected our branches at Kota Tinggi, Mentakab, Ar-Rahnu X’Change Balakong, Jalan Ipoh KL, Seksyen 23 Shah Alam, Port Klang, Bentong, Seberang Jaya, Temerloh and Bera. Immediate support was deployed to ensure all IT equipment can operate as usual. Ar-Rahnu Conversion to Tawarruq Concept As a part of regulatory requirements from Bank Negara, IT as enabler has facilitated and contributed in converting Ar-Rahnu Shariah concept to Tawarruq in order for Ar-Rahnu to become recognisable income for the Bank. FROM THE TOP MyHR website Employees of the Bank are now able to access the MyHR system anywhere and whenever necessary without having to be physically present at the Bank’s facility or having to connect to SSL VPN (Virtual Private Network). The introduction of this initiative ensures that no Bank’s domain is required to access the MyHR website. IT Infrastructure Upgraded IP VPN The Bank renewed the IP VPN Managed Services implementation which began in September 2020. It has been completed with major upgrades on the bandwidth at the main locations including Host Data Center, Disaster Recovery Centre, Menara Kembar, 100 branches sites, new router refresh at all nodes, and other value-added services to ensure the best network stability, reliability, connectivity and to support business requirements. Subscription of Microsoft Enterprise Agreement Bank Rakyat has successfully subscribed to Microsoft Enterprise Agreement (EA), a volume licensing package offered in a threeyear contract covering all software licensing, updates and comprehensive support by Microsoft through their authorised Licensing Solution Partners (LSP). Endpoint Technology Refresh Due to the significant rise of COVID-19 cases, the Bank has had to embrace and enable flexible Working from Home (WFH) requirements. An endpoint technology refresh was performed during the year to accommodate the myriad ad hoc demands and requirements. IT has successfully distributed a total of 636 notebooks as Phase 1 to Bank’s employees. These endpoints were secured with latest protection controls such as Data Leak Protection (DLP), Antivirus and others, in compliance with RMiT, to fully secure the Bank’s IT environment. ANNUAL REPORT 2021 Management Discussion and Analysis • Introduction of Multifactor Authentication (MFA)  The Bank’s SSL VPN security has been strengthened with the introduction of Multifactor Authentication (MFA) via the Microsoft Authenticator app, MFA is an authentication system that requires more than one distinct authentication factor for successful authentication. The support team were also on hand during any relocation for our branches, small and medium enterprise (SME) centres or combination relocation. Some of the relocations which needed assistance in 2021 were for our branches at Taman Melawati, Larkin Perdana, Kota Padawan, Rakyat Xcess Serian, Ranau, Sebuyau, Sungai Petani, Johor and Langkawi. PC and technical support is also dedicated to continuous monitoring and eradication of any Malware activity detected. This is conducted promptly to prevent further complications. Disaster Recovery Automation on Oracle VM Server for Solaris Operating System The Bank’s DR (Disaster Recovery) Automation uses Info Scale Availability and has a single-node cluster in both the primary Datacentre and DR centre. This acts as a standby for local clusters to take over the services in the event of a failure in both LDOM (Logical Domain) and Application. The system provides comprehensive On-premises automated DR solutions for all the Oracle VM Servers for SPARC platform, with a dedicated centralised management dashboard to automate the DR exercise with a Single Click to migrate the entire Business Unit. This ensures all mission-critical IT services can function normally during any IT infrastructure component failure, by mitigating unprecedented risks. IT Security The need to ensure safety and security in our IT services is paramount. A Minimum Baseline Security Standard (MBSS) has been implemented by establishing a hardening standard across all IT services to ensure a minimum level of assurance in security design and setup. Some of our security highlights are listed below: • Cybersecurity Technology and Services Roadmap (CTSR)  Any unauthorised access to the Bank’s Core Banking system is prevented by the integration of the Cybersecurity Technology and Services Roadmap (CTSR) File Integrity Check and Monitoring. • Established Capabilities to Extract Information from Dark Web Going further to protect customer information, the Bank has established capabilities to extract information from the Dark web for any customers’ leaked card info. This is done via a Dark Web monitoring system that continuously checks for Bank Rakyat’s info leakage on the internet. • Bring Your Own Device (BYOD) Capability  Bring Your Own Device (BYOD) Capability for the Bank’s employees has been enabled by incorporating security measures and infrastructure such as Pulse Secure VPN, Microsoft Authenticator, Kaspersky AntiVirus and Imperva Cloud WAF on our employees’s personal devices. • Implementation of Forced Change of User Password feature  The strength of Bank’s Cyber Resilience is now improved with the implementation of Forced Change of User Password feature to eliminate issues of identification (ID) and credentials theft. • Implementation of Identity Access Management System (IAMS)  An Identity Access Management System (IAMS) was successfully implemented in September 2021. IAMS improves efficiency and effectiveness of Access Management in managing user IDs and resolving security-related findings and compliance issues. IAMS also enhances security management of privileged/superuser IDs and improves regulatory compliance for security access review. 67 GIVING BACK THROUGH OUR FOCUS ON CORPORATE SOCIAL RESPONSIBILITY Bank Rakyat has always been committed to serve the people through Corporate Social Responsibility (CSR) initiatives. Our very DNA has been ingrained with the concept of serving the people since the Bank’s inception. This is imbued by our name as the Bank of the People. We are also mindful that CSR plays a pivotal role in the Bank’s ongoing success and our ability to create long-term value for our wide range of stakeholders. Contributing to society and towards the upliftment of those in need is also an important part of the Shariah principles that govern us. Today, CSR is part of the Bank’s overarching aspiration to create sustainable futures for our stakeholders. We are motivated to build a better future for underserved communities as well as the stability and prosperity of our nation. This is part of the Bank’s effort to maintain a friendly corporate image to place us on a sound footing as Your Bank of Choice. Each year, a portion of business profits are allocated for the purpose of CSR, which are conducted through a multitude of channels. These include our Yayasan Bank Rakyat outreach, flagship Nuri Nutrisi programme, annual zakat contributions, Surau Al-Barakah activities, and Rakyat Management Services Sdn. Bhd (RMS)’s (franchisor of Bank Rakyat’s Ar-Rahnu X’Change Islamic pawn broking brand) CSR programmes. The COVID-19 pandemic has had an extraordinary impact on the country and its effect will be felt for a long while especially to low income families and entrepreneurs. In the last two years, the Bank has been a supportive partner to our employees, customers, communities, and society to lend a helping hand to the needy during the pandemic challenges. Recognising that many were affected by the economic crisis because of the pandemic, in 2021, the Bank’s various CSR contributing entities focused on continued support for targeted groups in need such as B40 families, B40 students, entrepreneurs and frontliners. Through CSR, Bank Rakyat is also committed to contributing to the UN 2030 SDGs agenda by prioritising six goals that are directly connected with the Bank’s operations which has been outlined in Bank Rakyat’s five-year plan Business Plan. These six goals are focused on: i. Goal ii. Goal iii.Goal iv. Goal v. Goal vi. Goal 1: No poverty 2: Zero hunger 3: Good health and well-being 4: Quality education 6: Clean water and sanitation 17: Partnerships for the goals FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
36. ANNUAL REPORT 2021 68 Management Discussion and Analysis By incorporating sustainable practices into all aspects of our business , implementing new governance structures, and integrating environmental, social and governance (ESG) principles into the Bank’s decision-making, we aspire to continue nurturing a sustainable future for the communities we serve. Nuri Nutrisi Programme FROM THE TOP Bank Rakyat’s Nuri Nutrisi programme has been voted the winner of a number of CSR awards to date due to its holistic impact and sustainable structure. The programme is recognised for its multifold benefits in health, education and welfare of students. According to the Department of Statistics Malaysia, Malaysia has succeeded in reducing its incidence of poverty from 5.5% in 2000 to 0.4% in 2016. However, quality nutrition of Malaysians continues to be an ongoing area of concern that requires urgent attention.Thus, this CSR programme focusing on nutritional food for underprivileged school children have been one of the primary initiatives of the Corporate Communications department of Bank Rakyat since 2019. The main objective of Nuri Nutrisi is to raise nutrition, health and wellness awareness through the provision of nutritious food and safe drinking water for all students. Underprivileged students selected by their schools are provided with nutritious meals for three months during recess, and various nutrition education programmes are organised to share information and guidance with the students on healthy eating practices and nutritious food choices. Management Discussion and Analysis As part of the Nuri Nutrisi programme, the Bank funds a “Kebun Nuri Nutrisi”, working in partnership with schools and universities to install vegetable gardens and urban farms for continuous supply of nutritious food for the underprivileged students. Vegetables such as spinach, ladyfingers, mushrooms, sweet potatoes and chillies are cultivated in these farms. Once vegetables can be harvested, the programme entails educating students on entrepreneurship and agricultural business as they harvest, wash, weigh and package their vegetable produce for sale. All earned proceeds are reinvested into the programme and used to fund meals for underprivileged students. In the near future, the Bank will be embarking on larger scale projects with collaborations involving MARA Junior Science College (MRSM) and Federal Agriculture Marketing Authority (FAMA). This programme aims to commence the development of agriculture and livestock activities in selected MRSM across the country to uphold food security and safety by ensuring the availability and continuous access to safe and nutritious food for students. This project will not only allow us to help underprivileged students to have access to nutritional food supply, but also to help in fostering students’ entrepreneurial skills by allowing them to sell the surplus produce. As schools experienced extended closures due to MCO in FY2021, the Nuri Nutrisi programme could not take off as scheduled at several schools. However, impact of Kebun Nuri Nutrisi Programme has been much appreciated based on reports sent by participating schools. In 2021, Sekolah Menengah Kebangsaan Dang Anum, Merlimau, Melaka continued to upgrade their farm with over RM10,000 worth of hydrophonic hut and sets which were contributed by Bank Rakyat. Most of the farms have been prepared in readiness for continued planting once schools resume face to face classroom sessions in 2022. 2021 Zakat Contributions To date, 45 schools, three universities and 16,000 students from underprivileged backgrounds have directly benefitted from the programme; and Kebun Nuri Nutrisi have managed to impact 5,700 students. Our Bank is more than just a business, as we believe that business should serve the people and not the other way around. In line with this, we anchor our existence on supporting nation-building using our own platform and resources to uplift underserved communities and contribute positively to their lives. Our focus on the underserved upholds a commitment to social inclusion. This drives our focus on achieving the World Bank Group’s twin goals of ending extreme poverty and boosting shared prosperity. Among the key interventions include reducing gaps in education by making education more inclusive for children no matter their income or residency status, supporting financial inclusion, investing in infrastructure, and ensuring better access to clean water and sanitation. Through zakat contributions, Bank Rakyat supports and executes initiatives to ensure the underserved are provided scoial equity in education, business and living standards. A total Zakat of RM19.6 million was distributed to 111,008 recipients through the following programmes: Over and beyond the Bank’s zakat contributions, a host of other supportive programmes were organised through Yayasan Bank Rakyat and Surau Al-Barakah during the year. These spanned across educational, community welfare and festive programmes. Educational and Career Development Programmes Yayasan Bank Rakyat resumed active implementation of its educational programmes in 2021. Some of the programmes contnued to be held online and through virtual platforms for better outreach. The Tuition Rakyat programme was also ongoing in 2021. This has been held since 2015 to provide underserved students with access to tuition and extra classes and bridge the educational divide between urban and rural students. In 2021, 224 schools were provided with Tuition Rakyat classes involving 11,981 students. 69 A new educational development programme was launched during the year with RM313,418.30 invested on 121,958 students to implement the Learning Prestige Programme in the state of Selangor. This is an effort to ensure that the students’ achievements in the Sijil Pelajaran Malaysia, SPM and Sijil Tinggi Persekolahan Malaysia, STPM examinations improves even when challenges by the COVID-19 pandemic. Surau Al-Barakah also distributed RM7,098.80 in funds in collaboration with the Bank’s Department of Sustainability to help students from B40 families get access digital learning equipment such as laptops via the Tabung Didik Digital. YBR also emphasised career development during the year to help the underprivileged upgrade skills and find employment. Twenty skill-based workshops and two Certified Recovery Coach Training sessions were held during the year benefitting 828 individuals. Pandemic and Disaster Related Contributions Recognising that many were affected by the economic crisis as a result of the pandemic, the Bank’s various CSR contributing entities focused on supporting targeted groups in need with financial contributions, daily necessities, food packs, face masks and personal protective equipment (PPE). Targeting the B40 group, a food distribution programme costing RM89,872.95, was organised to aid 2,118 Malaysians of all creeds. For COVID-19 victims in the asnaf category, delivery of cash assistance and necessities were sent urgently in their time of need. At the end of the year, in response to the floods that impacted the nation, food relief support for victims was carried out through the Ministry of Entrepreneur Development and Cooperatives (KUSKOP). Asssistance for flood victims was also provided by Surau Al-Barakah during the year. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
37. ANNUAL REPORT 2021 70 ManagementDiscussion Discussion andand Analysis Management Analysis Festive Contributions Corporate Sponsorship and Contributions Ar-Rahnu X ’Change We Care 2 Great Customer Experience Blueprint During the festive months of Ramadan, Eid and Aidiladha, Bank Rakyat celebrates with the underprivileged and selected target groups through Surau Al-Barakah CSR initiatives. Through two budget sources, namely corporate expenditure and the National Marketing Fund, RMS allocated RM150,000.00 in FY2021 for the implementation of CSR programmes. Expenditure was utilised with sponsorship activities and donations to various groups of individuals and institutions. These includes: The marketing direction of the Ar-Rahnu X’Change brand as a caring brand through the ‘Ar-Rahnu X’Change We Care’ campaign since 2020 continued in FY2021, with the ‘Ar-Rahnu X’Change We Care 2’ campaign. The campaign, which started in May 2021, provided a bit of a twist as Ar-Rahnu X’Change customers were given the opportunity to be involved in the success of this campaign by suggesting the types of activities and target groups for the CSR programmes implemented. This blueprint identifies Great Customer Experience as a commodity and aims to make customer centricity a part of the Bank’s culture and DNA. Its core focus is to ensure improved branding and reputation, build customer loyalty and make available a seamless banking experience via all banking channels. Towards meeting expectations of this “Banking for Future” goal, the Bank has launched e-Appointments for Ar-Rahnu services in July 2021 and for branch services on 28 August 2021. The timely completion of this convenient service has seen total bookings for Ar-Rahnu services rising, accompanied by a significant increase in income. Over RM56,000 was spent on Ramadan Iftar and Bubur Lambuk Sponsorhip whereby 80 sets of iftar food were provided daily to frontliners who had to work through the breaking of fast time; and 80 packs of bubur lambuk were distributed from Bank Rakyat headquarters twice a week during the month of Ramadan. The Ambang Ramadan programme provided contributions in cash and kind to 16 underprivileged families in Jerantut, Pahang, helping to alleviate their burdens. In collaboration with the Bank’s Corporate Communications Department, Surau Al-Barakah also executed a Jalinan Ramadhan community support event whereby an estimated RM60,000 of contributions were delivered to the asnaf through 11 of the Bank’s branches. FROM THE TOP Management Management Discussion and Analysis •RM20,000 to the Pahang State Flood Disaster Special Fund in aid of flood victims; • Sponsorship of hand sanitisers to security personnel, hospitals and Vaccination Centers (PPV) to support frontliners working to curb the spread of the pandemic. The handover to PPV Universiti Kebangsaan Malaysia (UKM) was held on 16 July 2021. •Sponsorship of the Sinar Aidiladha Bank Rakyat programme organised by Surau Al-Barakah amounting to RM27,000.00. On the onset of Raya, the Cakna Aidilfitri 2021 programme provided RM30,000 cash in festive contributions to six selected welfare and care homes across Selangor. •Supports healthy lifestyle promotion activities through the sponsorship of Teachers Day Virtual Run Malaysia 2021 organised by Pertubuhan Nadi Sihat on 24 April 2021. During Aidiladha, a series of Jalinan Aidiladha programmes were implemented to provide contributions of sacrificial cows vacuum-packed beef portions, rice, oil and cash were made to selected institutions, organisations, frontliners and asnaf families. Up to December 2021, a total of RM433,000.00 has been allocated for asnaf contribution activities involving various categories (asnaf). For asnaf fisabilillah, several institutions such as mosques, madrasahs, organisations and schools, such as Sahabat Pendidik Islam Selangor, Masjid Al-Falah Bendang Tok Leh (Changloon, Kedah), Surau Al-Khairiah (Tapah, Perak), SMK Sungai Buaya (Rawang, Selangor), were listed as recipients of donations. RMS CSR Programme Rakyat Management Services Sdn. Bhd. (RMS), a wholly-owned subsidiary of Bank Rakyat is the franchisor of the Ar-Rahnu X’Change Islamic pawn franchise brand. Like Bank Rakyat, RMS allocates a part of its profits for the implementation of CSR programmes that help the needy in our community, regardless of background. To ensure an effective and integrated programme structure, RMS has outlined its CSR initiatives under the Ar-Rahnu X’Change 2021 Product and Brand Marketing Plan, through three main approaches of Corporate Sponsorship and Contributions, Asnaf Contributions and the ‘Ar-Rahnu X’Change We Care’ franchise initiative. On 25 January 2021, RM50,000.00 was contributed to Pertubuhan Kegiatan Dakwah Islamiah Sekolah-Sekolah Malaysia (PEKDIS) for distribution to 500 underprivileged students around Selangor. Following that, the An Nur Puncak Alam Women’s Micro Independent Mothers Association is one of the earliest Non-Governmental Organisations (NGOs) to receive asnaf contributions amounting to RM10,000.00 for the school preparation expenses of members’ children. A total of 2,639 poor students from various schools also received asnaf contributions amounting to RM259,800.00. The donation involved 18 schools, including students from Sekolah Kebangsaan Lembah Subang, Sekolah Menengah Kebangsaan Khir Johari, Perak, Sekolah Menengah Kebangsaan Pangkal Kalong, Kelantan, Sekolah Kebangsaan Batu Yon, Kuala Lipis, Pahang and Sekolah Kebangsaan Kelana Jaya, Petaling Jaya, Selangor. Environmental Sustainability In 2020, RMS had allocated funds for the implementation of environmental sustainability programmes with the agenda to provide exposure to the community, especially the younger generation, on the importance of mangrove forests to the ecosystem. The activities were designed to involve the local community, NGOs, and students. This is to support the ‘Sustainable Development Goal’ initiative which has been outlined in Bank Rakyat’s five-year Business Plan (BR25). BANK RAKYAT 2025: EXECUTION AND MONITORING OF OUR BLUEPRINTS On track with our new Vision to be ‘Malaysia’s No.1 Progressive Islamic Cooperative Bank’ and Mission of ‘Enhancing economic well-being of our members, customers and nation’, Bank Rakyat has made good headway in our BR25 journey in 2021. The year unlocked the exciting Phase 3 of BR25 which focused on execution and implementation of deliverables in the six established blueprints under: - Great Customer Experience -Digitalisation - SMEC Business - Human Capital -Sustainability - Shariah Leadership 71 In ensuring enhanced service levels, the Bank has also completed the Rakyat Care Training programme for 305 of the Bank’s agents in August 2021. The refresher training covered modules on withdrawal, deposit, bill payment, payment and transfer transactions. The provision of well-trained Bank agents supports Bank Negara Malaysia (BNM)’s financial inclusion mandate to reach out and provide services for the overall well-being of isolated communities. While primarily serving as a community service to underserved and unserved areas, the provision of Bank agents also serves as a marketing tool to increase deposits in Current Accounts-i and Saving Accounts-i (CASA). Digitalisation Blueprint The Bank’s digitalisation blueprint targets sales effectiveness and service excellence through strategic digital transformation. This requires the Bank to willingly disrupt current processes by displacing existing manual processes and embarking on digital platforms. At the same time, the Bank is expected to leverage on digital capabilities to shape delightful customer experiences through new programme applications. On 5 April 2021, Bank Rakyat launched the Moratorium Programme Application. The application was made available on Bank Rakyat’s corporate website to enable easy application and refund inquiries. Soon after, the QR e-Application for Credit Card-i was launched on 27 April 2021. This revitalised the demand for Bank Rakyat’s Credit Card-i with 2,404 applications received by December 2021. The highlight of the year however was the launch of Bank Rakyat’s iRakyat Mobile Banking application which was launched on 30 September 2021 and has achieved 71,210 downloads in 2021. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
38. ANNUAL REPORT 2021 72 Management Discussion and Analysis 4 . PUNB - Collaboration with PUNB on providing property financing for entrepreneurs to purchase PUNB’s property assets. 5. TELEKOM - Collaboration on the programme for Telekom vendors. Vendor Financing 6. SARAWAK STATE GOVERNMENT - Collaboration with Sarawak State Government in enrolling Sarawak based entrepreneurs for a profit subsidy programme to cover 3.5% of profit charge for 3.5 years of the financing period. FROM THE TOP SMEC Business Blueprint Bank Rakyat’s new vision and mission coincide with the objectives of our mandate that aims to improve the economic status and development of communities as well as drive growth in the Cooperative and entrepreneurship sector for the benefit of members and customers. Focusing on this mandated role as well as new growth areas to create long-term value for members, Bank Rakyat’s 2025 strategic plan includes the establishment of 10 Small and Medium Enterprises and Cooperatives (SMEC) business centres nationwide, including in Sabah and Sarawak. This was completed in 2021. Through the SMECs, the Bank is able to foster and build loyalty with Cooperative businesses at micro to SME to preIPO levels; play a role as a strategic enabler through alliances within the SME ecosystem; and reach out to unserved and underserved Cooperatives. This serves the KUSKOP’s National Entrepreneurship Policy 2030 agenda which is to establish Malaysia as a full-fledged entrepreneurial nation by 2030. To ensure the effectiveness of the Bank’s SMECs, Bank Rakyat also partners and collaborates with various agencies within the KUSKOP ecosystem, as well as communities, Cooperatives and private organisations to ensure a system of shared prosperity. In 2021, Bank Rakyat has embarked on eight key collaborations and partnerships to support this key economic sector with targeted products and services. These includes: 1. TEKUN - Collaboration with Tekun in providing business financing for entrepreneurs that have graduated from Tekun. 2.INSKEN - Bank Rakyat provides free Entrepreneurship 101 training to Rakyat2E customers. 3. PETRONAS - Collaboration on the PETRONAS-Vendor Financing programme. 73 Management Discussion and Analysis 7.KUSKOP and KBS - Collaboration with KUSKOP and KBS in providing business financing for sports industry players in the market. Bank Rakyat also launched the Quick Response to Entrepreneurs (QR2E), a virtual banking platform for SMEs, micro enterprises and Cooperatives that is specifically designed to provide comprehensive, fast, and simple digital financial advisory services and product application as part of its Banker to Entrepreneur (B2E) initiative. QR2E, allows the Bank to engage with potential customers and expand the Bank’s outreach which can be done via QR Code scanning. As of 2021, total applications for financing received via QR2E was 438. Human Capital Blueprint Bank Rakyat is actively committed to be an Employer of Choice to attract a growing talent pool. To boost our repute, the Bank participated in the Best Companies to Work for in Asia 2020 and 2021 organised by HR Asia. This is a reputed awards recognition programme for organisations that have been identified by their employees as one of Asia’s employers of choice and ascertains the best employers to work for. It allows for benchmarking of results across industries and markets, allowing winners to build their brand as a desirable employer that can attract and retain top talents. The award recognises companies with the best HR practices and which demonstrate high levels of employee engagement and excellent workplace cultures, thus attracts applications from Fortune 500 companies, as well as multinational corporations and government-linked companies. Entry to the HR Asia Best Companies to Work for in Asia Awards also entitles the nominee company to a holistic and informative assessment of the applicant’s HR practices and employees, via a proprietary TEAM assessment. For Bank Rakyat, the assessment yielded that Bank Rakyat scored higher than Industry Average for all the scoring i.e. Core, Self and Group. In nurturing the potential of its human capital, Bank Rakyat also took the opportunity to launch 410 programmes conducted to train 4,313 personnel in 2021. At the end of the programme, 234 personnel were certified. Sustainability Blueprint Key Conferences and Symposiums This blueprint serves to ensure that customers and community are at the heart of the Bank’s strategy. Through adoption of Value-Based Intermediation (VBI), Bank Rakyat is going beyond Shariah compliant practices, products, and services to positively contribute to the community, environment as well as national aspirations. 1. Presentation on Shariah Sources and Legal Deductions, organised by International Research Centre of Islamic Economics and Finance (INCEIF). A significant step forward was achieved in 2021 with the completion of the BR Sustainability Framework and Policy in December 2021. Engagement with the management committee and endorsement by PSC members followed soon after and the framework underwent the final approval process in January 2022. 3. Hibah Wasiat: Pengurusan Harta untuk yang Hidup dan yang akan mati, organised by Usrah Gabungan Qatar. The Bank has also completed its contribution to the VBIAF Sectoral Guide on Construction and Infrastructure, as the project manager in a joint effort with BNM, Association of Islamic Banks Malaysia (AIBIM) and other financial institutions. The documents were presented by the Bank’s representative in the 2nd VBIAF Sectoral Guide Townhall on 17 November 2021. Efforts to manage our environmental footprint were also ongoing. The Bank’s procurement team were committed to reducing electricity usage and sustaining a low carbon footprint. Some of the initiatives performed internally within Menara Bank Rakyat during the year included: - Upgrade to LED lighting. -Change to more sustainable IT equipment i.e. distributed 636 notebooks that produces less carbon compared to desktop. - Cold water piping upgrade. Main pipe T1. -Appointed Green Building Consultant to assist the Bank to identify green initiatives to achieve Certified Green Building Index (GBI). - Fire protection system upgrading. - Vertical Garden upgrading. Shariah Leadership Blueprint By demonstrating “Exemplary Shariah Banking”, Bank Rakyat aims to be a reference model and leader in Islamic Banking, not just locally but also internationally. This entails initiatives towards gaining thought leadership in Islamic finance, widening the current base of Shariah knowledge and ushering financial inclusion and shared prosperity through zakat and waqf platforms. Advancing our quest for thought leadership, Bank Rakyat’s representatives actively participated in presentations at international conferences and symposiums. The topics were diverse and comprised current issues and challenges that impacts Islamic finance. 2. Forum Siri Kerjaya Perundangan: Perbankan Kewangan organised by University Of Malaya. dan 4. Presentation on Journal entitled: Penggunaan e-Wallet di Malaysia: Analisa dan Pandangan Menurut Perspektif Syariah at International Conference on Contemporary Islamic Studies Kedah. 5.Malaysian Technical Cooperation Programme (Islamic Micro Finance Product). 6.Key Note Speaker – Enhancing Islamic Financial Literacy For Financial Inclusion – ICIFIL. 7. Young Scholar Young Scholar Discourse Series: Islamic Banking and Finance Series. 8. Implementation of Moratorium by Islamic Bank During the COVID-19 Pandemic: Maqasid Shariah Perspective – 5th International Conference on Business and Economic (ICBE). Two strategic partnerships were also ventured into by Bank Rakyat in enhancing cooperation and knowledge sharing efforts. These were with the International Shariah Research Academy For Islamic Finance (ISRA) and Derassat for Research Consulting Islamic Finance, based in Doha Qatar. Finally, in our quest for shared prosperity in 2021, Bank Rakyat distributed over RM11 million in zakat, , and collection of waqf related transaction amounted to over RM1 million. This was contributed to causes in line with the Bank’s VBI principles. All in all, good progress was made on BR25 in 2021. Going forward, Bank Rakyat will continue to be guided by the BR25 strategic framework to focus on further improvements and new growth areas. A key focus area would be especially to harness the potential that could be explored in business and operations through digital transformation to create long-term value for shareholders. FROM THE TOP BANK KERJASAMA RAKYAT MALAYSIA BERHAD
39. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Group Corporate Structure Management 100 % RAKYAT MANAGEMENT SERVICES SDN BHD Nominees 100% RAKYAT NOMINEES SDN BHD Holdings 100% RAKYAT HOLDINGS SDN BHD Travel 100% RAKYAT TRAVEL SDN BHD Hartanah 100% RAKYAT HARTANAH SDN BHD Asset 100% RAKYAT ASSET MANAGEMENT SDN BHD Niaga 100% RAKYAT NIAGA SDN BHD Facility 100% RAKYAT FACILITY MANAGEMENT SDN BHD* Bank Rakyat and the Government 75 (Ar-Rahnu X’Change Franchise & Gold Management) (Shares Trading) (Investment Holding, Property Management & Management Services) MINISTRY OF FINANCE Bank Kerjasama Rakyat Malaysia Berhad Act (Special Provision) 1978 MINISTRY OF ENTREPRENEUR DEVELOPMENT AND COOPERATIVES (Umrah & Travel Services) (Property Development & Project Management) (Investment in Real Property) (General Trading & Supplies) (Building Management & Maintenance) Cooperative Act 1993 CENTRAL BANK OF MALAYSIA The Development Financial Institutions Act 2002 FROM THE TOP FROM THE TOP 74
40. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Organisation Chart 76 77 Organisation Chart BOARD OF DIRECTORS DEPUTY CHIEF EXECUTIVE OFFICER - BUSINESS DEPUTY CHIEF EXECUTIVE OFFICER - OPERATIONS CHIEF FINANCE OFFICER CHIEF LEGAL & BANK SECRETARY FROM THE TOP FROM THE TOP CHIEF EXECUTIVE OFFICER CHIEF RETAIL BANKING OFFICER CHIEF INFORMATION TECHNOLOGY OFFICER CHIEF HUMAN CAPITAL OFFICER CHIEF CREDIT OFFICER CHIEF BUSINESS BANKING OFFICER CORPORATE SERVICES CHIEF STRATEGY & TRANSFORMATION OFFICER CHIEF RISK OFFICER CHIEF TREASURY OFFICER MEMBERS & COOPERATIVE DEVELOPMENT & PROCESS IMPROVEMENT CHIEF MARKETING & COMMUNICATIONS OFFICER CHIEF COMPLIANCE & GOVERNANCE BOARD RISK COMMITTEE CARD & CHANNEL MANAGEMENT CUSTOMER EXPERIENCE MANAGEMENT CHIEF RECOVERY & COLLECTION OFFICER SHARIAH COMPLIANCE SHARIAH COMMITTEE PRODUCT DEVELOPMENT & INNOVATION CHIEF INTERNAL AUDITOR AUDIT & EXAMINATION COMMITTEE FRAUD & CORPORATE INTEGRITY BOARD INTEGRITY & GOVERNANCE COMMITTEE TRANSACTION OPERATIONAL SUPPORT BANKING OPERATIONAL SUPPORT CORE BANKING PROJECT CONTRACT MANAGEMENT CORPORATE DATA ANALYTICS & INSIGHT
41. Coloring connection From a blank canvas , there sketched a beautiful painting. That is how we implicate the color of lives that we fill throughout the corners of society.
42. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors 80 9 81 Board of Directors 7 8 5 6 3 4 OUR LEADERSHIP TEAM 2 OUR LEADERSHIP TEAM 1 10 1 . DATUK HAJI ABD RANI LEBAI JAAFAR Independent Non-Executive Director/Chairman 2. DATO’ SURIANI DATO’ AHMAD Non-Independent Non-Executive Director 3. DATO’ SHAMSUL AZRI ABU BAKAR Non-Independent Non-Executive Director 5.DATIN NORHAMIZAH MAT TAHIR Independent Non-Executive Director 6. MOHD JAFRI KUDUS Independent Non-Executive Director 4.TUNKU DATO’ AHMAD BURHANUDDIN TUNKU DATUK SERI ADNAN 7.DATUK MOHD IRWAN MOHD MUBARAK Independent Non-Executive Director Independent Non-Executive Director 8. MOHAMAD RAFI SHAHZADA Independent Non-Executive Director 9.DATO’ DR. VASEEHAR HASSAN ABDUL RAZACK Independent Non-Executive Director 10. AIDAWATHY ISMAIL Relief Bank Secretary/Head, Board Secretarial Services
43. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 82 Board of Directors Profile DATUK HAJI ABD RANI LEBAI JAAFAR Independent Non-Executive Director /Chairman APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 1 January 2018 - 31 December 2019 •Re-appointment as Board of Director: 1 January 2020 - 31 December 2020 •Appointment as Acting Chairman: 28 July 2020 - 31 December 2020 •Appointment as Chairman: 1 January 2021 - 31 December 2022 EDUCATION •Member, Chartered Institute of Islamic Finance Professionals (CIIF) •Financial Institutions Directors’ Education Programme (FIDE), Bank Negara Malaysia •Leadership Development Summer Program (GLDP), Harvard University Boston, Massachusetts, United States of America •Charter Member of Certified Risk Professional, Operation and Credit (CRP) BAI Centre for Certification, United States of America •Member, Institute of Bankers Malaysia (MIBM) •Master of Business Administration Finance and Marketing, University of New Haven, Connecticut, United States of America •Bachelor of Science in Business Finance, Indiana University Bloomington, Bloomington, Indiana, United States of America •Diploma in Accountancy, MARA Institute of Technology (UiTM) Board of Directors Profile DATO’ SURIANI DATO’ AHMAD Non-Independent Non-Executive Director MEMBERSHIP OF BOARD COMMITTEES • Member, Board Nomination and Remuneration Committee • Member, Board Financing Committee APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 19 January 2021 - 18 January 2023 OTHER POSITIONS HELD IN BANK RAKYAT GROUP • Chairman, Rakyat Holdings Sdn Bhd EDUCATION •Master of Arts, Strategy and Diplomacy, Universiti Kebangsaan Malaysia (UKM), Malaysia •Diploma in Public Management, National Institute of Public Administration (INTAN), Malaysia •Bachelor of Communication, Universiti Sains Malaysia (USM), Malaysia OTHER POSITIONS HELD •Board Member, Federation of Financial Services Cooperatives Malaysia Berhad • Adjunct Professor, Management and Science University (MSU) • Adjunct Professor, School of Management, Asia University PREVIOUS EXPERIENCE •Board Member, Leadership and Entrepreneurship Advance Institute (LEAD), Management and Science University (MSU) •Chairman and Director, Zikay Factoring Sdn Bhd •Director, Public Sector and Business Development, RHB Capital •Chief Executive Officer/Managing Director, RHB Islamic Bank •Deputy Chief Executive Officer, Affin Islamic Bank •Senior Vice President, Contract Financing and SME Department, Affin Bank Berhad •First Vice President, Enterprise Banking, Affin Bank Berhad •Deputy General Manager, Banking Division, Affin Bank Berhad •Head of Operations Division, Affin Bank Berhad •Branch Manager, Affin Bank Berhad •Account Relationship Manager, Corporate Banking, Standard Chartered Bank MEMBERSHIP OF BOARD COMMITTEES •Member, Board Nomination and Remuneration Committee • Member, Board Integrity and Governance Committee OTHER POSITIONS HELD •Secretary General, Ministry of Entrepreneur Development and Cooperatives (KUSKOP) • Board of Director (UDA) • Board of Director (PERNAS) •Adjunct Professor, School of Multimedia Technology and Communication (SMMTC), Universiti Utara Malaysia (UUM) PREVIOUS EXPERIENCE •Secretary General, Ministry of Communications and Multimedia Malaysia (KKMM) •Director, National Institute of Public Administration (INTAN) •Secretary General, Ministry of Women, Family and Community Development (KPWKM) •Deputy Secretary General (Policy and Control), Ministry of Home Affairs (KDN) •Deputy Secretary General (Policy), Ministry of Defense •Undersecretary, Policy Division, Ministry of Defense •Manager, Corporate Planning Division, Proton Holdings, under the Public and Private Sector Cross Fertilisation Program •Director, Free Trade Agreements, Policy and Negoti0ations Coordination Division, Ministry of International Trade and Industry (MITI) •Director, Multilateral Trade and Policy Division (MITI) •Principal Assistant Director, Multilateral Trade and Policy Division (MITI) •Special Officer to the Honorable Minister of International Trade and Industry •Chief Assistant Director, ASEAN Economic Cooperation Division (MITI) •Assistant Director and Chief Assistant Director, Bilateral and Regional Division (MITI) •PTD Grade M3 in Malaysian Administrative Modernisation and Management Planning Unit, (MAMPU), Prime Minister’s Department • Editorial Executive, BERNAMA PR 83 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
44. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 84 Board of Directors Profile Board of Directors Profile DATO ’ SHAMSUL AZRI ABU BAKAR Non-Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 4 November 2020 - 3 November 2022 EDUCATION •Bachelor of Science in Business Administration (Hons), University of Tulsa, Oklahoma, United States of America •Professional Course: Cambridge Management Programme, Judge Business School, University of Cambridge MEMBERSHIP OF BOARD COMMITTEES •Member, Board Nomination and Remuneration Committee • Member, Board Investment Committee • Member, Board Tender Committee OTHER POSITIONS HELD •Under Secretary, Government Investment Company, Ministry of Finance, March 2021 - present • Board of Directors, Universiti Pendidikan Sultan Idris (UPSI) • Board of Directors, Malaysia Development Holding Sdn Bhd • Board of Directors, Danainfra Nasional Berhad • Board of Directors, Johor Port Berhad • Board of Directors, Prokhas Sdn Bhd • Board of Directors, Urusharta Jamaah Sdn Bhd • Board of Directors, Penjana Kapital Sdn Bhd • Board of Directors, Suria Strategic Energy Resources Sdn Bhd • Board of Directors, 1Malaysia Development Berhad PREVIOUS EXPERIENCE •Under Secretary, Remuneration Policy and Management Division, Ministry of Finance •Deputy Under Secretary, Remuneration Policy and Management Division, Ministry of Finance •Budget Review Officer, Social Sector, National Budget Office, Ministry of Finance •Deputy State Finance Officer, Selangor State Treasury •Secretary, Selangor State Legislative Assembly •Deputy Director, Selangor State Economic Planning Unit •Chief Assistant District Officer, District/Land Office Sepang •Assistant District Officer, District/Land Office Klang, Selangor •Assistant District Officer, District/Land Office Gombak, Selangor •Assistant Director, Service Division, Public Service Department TUNKU DATO’ AHMAD BURHANUDDIN TUNKU DATUK SERI ADNAN Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 1 October 2019 - 30 September 2021 • Re-appointment as Board of Director: 1 October 2021 - 30 September 2023 EDUCATION •Fellowship, Association of Chartered Certified Accountants, United Kingdom •Associate, Association of Chartered Certified Accountants, United Kingdom •Associate, Malaysian Institute of Accountants, Malaysia •Graduate, Association of Chartered Certified Accountants, United Kingdom •Certificate and Diploma, Luton College of Higher Education, United Kingdom •Graduate, Brighton Technical College, United Kingdom •Certificate, The Malay College Kuala Kangsar (MCKK), Malaysia MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Audit and Examination Committee • Chairman, Board Financing Committee • Member, Board Risk Committee • Member, Board Integrity and Governance Committee • Member, Board Tender Committee OTHER POSITIONS HELD • Director, MAA Group Berhad and MAA Group of Subsidiaries •Director, Jaya Raya Sdn Bhd and Jaya Raya Group of Subsidiaries •Director, International Paint Sdn Bhd • Director, MyMy Payments Malaysia Sdn Bhd •Director, Tabs Agro Business Services Sdn Bhd PREVIOUS EXPERIENCE •Group Managing Director and Group Chief Executive Officer, Themed Attractions Resorts and Hotels Sdn Bhd •Managing Director/Chief Executive Officer, Themed Attractions and Resorts Sdn Bhd •Executive Director CIMB Bank Berhad •Executive Director, CEO’s Office, CIMB Bank Berhad Group and CIMB Investment Bank Berhad •Group Chief Internal Auditor, Bumiputra-Commerce Bank Berhad •Head - Retail Financial Services, Bumiputra-Commerce Bank Berhad •Strategic Corporate Planner, Bumiputra-Commerce Bank Berhad •Executive Director and Chief Executive Officer, Commerce Asset Fund Managers Sdn Bhd •Financial Controller, Commerce Asset-Holding Berhad •Group General Manager and Company Secretary, Lenggang Holdings Sdn Bhd •Senior Bank Officer, Bank of Commerce Berhad 85 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
45. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 86 Board of Directors Profile Board of Directors Profile DATIN NORHAMIZAH MAT TAHIR Independent Non-Executive Director MOHD JAFRI KUDUS Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 13 July 2020 - 12 July 2022 OTHER POSITIONS HELD • Managing Director, Norhamizah Tahir Associate Sdn Bhd • Director, DSDM Rezki Sdn Bhd APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 13 July 2020 - 12 July 2022 EDUCATION •Bachelor in Town and Regional Planning (Hons), MARA Institute of Technology (UiTM) •Diploma in Town and Regional Planning (UiTM) PREVIOUS EXPERIENCE • Director, Liberty Triangle Sdn Bhd • Special Assistant to Minister, Ministry of Youth and Sports • Marketing Executive, Media Prima (Formerly known as TV3) •Practical Trainer, MAG Technical and Transportation Consultant EDUCATION •Diploma in Computer Science, MARA Institute of Technology (UiTM) •Certificate in Multimedia Technology, Institute of Systems Science, National University of Singapore (NUS) • Certified Instructor, DDI International MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Integrity and Governance Committee • Member, Board Investment Committee •Member, Board Nomination and Remuneration Committee • Member, Board Audit and Examination Committee • Member, Board IT Committee MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Tender Committee • Member, Board Nomination and Remuneration Committee • Member, Board Risk Committee • Chairman, Board IT Committee OTHER POSITION HELD • Executive Director, Strovi Dox Sdn Bhd PREVIOUS EXPERIENCE •Business Development Consultant, Antah SNC Homeland Security Sdn Bhd • Chief Executive Officer, E Tanah JV Sdn Bhd •Vice President - Enterprise Market, Celcom (Malaysia) Berhad •Vice President - Mobile Data, Celcom (Malaysia) Berhad •Vice President - Wholesale and Global Business, Celcom (Malaysia) Berhad •Vice President - Government Market and Special Projects, Celcom (Malaysia) Berhad •Management Representative - Director, Trifiniti Sdn Bhd • Vice President/Head, Celcom Technology Sdn Bhd •Senior Manager/Head - Multimedia Services, Celcom Technology Sdn Bhd • Senior Manager, Celcom Technology Sdn Bhd (CTSB) • Senior Manager, Celcom (Malaysia) Berhad • Senior Officer, Celcom (Malaysia) Berhad •Operation Programmer, Kompleks Kewangan Malaysia Berhad 87 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
46. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 88 Board of Directors Profile Board of Directors Profile DATUK MOHD IRWAN MOHD MUBARAK Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 24 July 2020 - 23 July 2022 EDUCATION •Certified Mediator, The Accord Group, Sydney, Australia •Diploma in Syariah and Legal Administration, MARA Institute of Technology (UiTM) •Master in Comparative Laws (MCL), International Islamic University Malaysia (IIUM) •Bachelor of Laws (Hons) L.L.B (IIUM) •Certificate of Laws, Matriculation Center (IIUM) •American Degree Programme in Social Science (UiTM) MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Nomination and Remuneration Committee • Member, Board Risk Committee • Member, Board Audit and Examination Committee • Member, Board Integrity and Governance • Interim Member, Board Financing Committee • Member, Board IT Committee OTHER POSITIONS HELD IN BANK RAKYAT GROUP • Director, Rakyat Management Services Sdn Bhd OTHER POSITIONS HELD •Managing Partner, Messrs. Mohd Irwan Mohd Mubarak, Advocates and Solicitors/Syarie Counsel • Part Time Tutor, Open University Malaysia (OUM) • Director, MIMM Travel and Tours Sdn Bhd • Director, MIMM Development Sdn Bhd • Director, MIMM Consultancy Sdn Bhd • Director, Seven T Nine Sdn Bhd • Independent Non-Executive Director, KNM Group Berhad PREVIOUS EXPERIENCE •Reading in Chambers of Messrs. Aziz Zakaria Saiful and Wan, Advocates and Solicitors •Part time Tutor in English Language, Mawar Tuition Center, Damansara •Part Time Lecturer, Systematic College (SEGI) Petaling Jaya •State Manager of Selangor and Kuala Lumpur, Knowledge Development Center (PBI) •Customer service agent/operator, Customer Service Center Pizza Hut, Petaling Jaya •Coordinator in Usrah Programme, International Islamic College (IIC), Kuala Lumpur •Pembantu Rakan Muda, Jabatan Belia dan Sukan Negeri Pulau Pinang •Material Handler, Baxter Healthcare S.A, Penang •Housekeeper, Front Office Assistant, Food and Beverage Assistant various Hotel MOHAMAD RAFI SHAHZADA Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 5 March 2021 - 4 March 2023 EDUCATION •Chartered Auditors Committee Director (CACD), Institute Internal Auditors Malaysia, Malaysia • Certification in General Insurance and Takaful, Malaysia Institute Insurance (MII) Malaysia •Master in Accounting and Finance, University of Wales, United Kingdom •Hon. Degree in Accounting and Finance, University of Wales, United Kingdom •Chartered Institute Management Accountant (CIMA), London School of Accountancy and Emile Wolfe. (CIMA - U.K), United Kingdom MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Risk Committee • Member, Board Investment Committee • Member, Board Tender Committee • Member, Board IT Committee • Member, Board Financing Committee PREVIOUS EXPERIENCE •Independent Director, Global Marine Venture Berhad Pembangunan Leasing Corporation Sdn Bhd - Public Listed Company (Subsidiary of BPMB), Audit Examination and Risk Committee in BPMB Board by invitation. (Banking, Leasing, Factoring and Capital Venture and Investment) (2016 - 2020) •Senior Vice President/Group Project Director, Board of Directors, Puncak Niaga Holdings Berhad, Puncak Oil and Gas Sdn Bhd, Global Offshore Malaysia (GOM Resources Sdn Bhd), (Upstream and Downstream Oil and Gas, Construction EPCIC and EPC - Government and GLC Contract) (2014 - 2017) •Group Financial and Planning Controller/Head of Risk and Compliance Committee, Board of Director, IBN SINA (National Methanol Co.) Saudi Kayan - Saudi Aramco JV, SABIC (Saudi Basic Ind. Corp) - GLC Saudi Govt and subsidiaries - (Downstream petrochemicals, Oil and Gas, Construction, Investment Companies, Financial Institution) (2010 - 2014) •Chief Executive Officer/Project Director, Konsortium Wawasan Klasik Sdn Bhd, (International Manpower and Project Contractor and Management Company in Oil and Gas - Upstream and Downstream) (2004 - 2010) •Chief Executive Officer, Board of Director, Absolute Heritage (M) Sdn Bhd (Manufacturer of Machineries and Equipment including Sales and Service) (1999 - 2004) •Chief Financial Officer, Nittoku (Malaysia) Sdn Bhd, (Manufacturer High Tech Machine and After Sales Service - Japan) (1995 - 1999) •Chief Financial Officer, Canon Inc. Group. Canon Opto Malaysia Sdn Bhd (Manufacturer of Business Machine and Cameras) (1992 - 1994) •Senior Credit Officer (AVP), Bank of Credit and Commerce International (BCCI), (Consumer and International Corporate Bank including Investment Banking) (1989 - 1992) •Management Trainee, Price WaterHouse United Kingdom Ltd, (Audit Firm) (1989 - 1990) •Store Manager (Night Shift), 7 Eleven United Kingdom Linnco Ltd, (Consumer Retail Chain) (1989 - 1990) •Management Trainee, Bank of America, (Bank) (1986 - 1987) 89 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
47. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 90 Board of Directors Profile Board of Directors Profile DATO ’ DR. VASEEHAR HASSAN ABDUL RAZACK Independent Non-Executive Director APPOINTMENT AS DIRECTOR •First Appointment as Board of Director: 15 July 2021 - 14 July 2022 EDUCATION •Executive Master in Consulting and Coaching for Change, INSEAD, France •Doctor of Philosophy, Vrije Universiteit Amsterdam, Netherlands •Specialised Master in Consulting and Coaching, HEC, France •Postgraduate Diploma in Industrial Administration, University of Aston in Birmingham, United Kingdom •Master of Business Administration, University of Aston in Birmingham, United Kingdom •Bachelor of Commerce, Loyola College, University of Madras, India MEMBERSHIP OF BOARD COMMITTEES • Chairman, Board Investment Committee • Member, Board Risk Committee • Member, Board Audit and Examination Committee • Member, Board Financing Committee PREVIOUS EXPERIENCE •Chief Executive Officer/Managing Director, Dallah al-Baraka (Holdings) Sdn Bhd (1990 - 2010) •Director of Bank Islam Malaysia Berhad, Bank Utama Malaysia Berhad, Utama Merchant Berhad, UBG Berhad, RHB Berhad, RHB Capital Berhad, RHB Bank Berhad, RHB Investment Bank Berhad, RHB Islamic Bank Berhad, RHB Insurance Berhad, Unicorn Islamic Investment Bank Berhad and Asian Finance Bank (now known as MBSB Bank) (1989 - 2018) •Manager Corporate Finance, Aseambankers (1980 - 1990) •Consulting Assistant, Messrs. Ernst & Young (1980) AIDAWATHY ISMAIL Relief Bank Secretary/Head, Board Secretarial Services APPOINTMENT AS RELIEF OF BANK SECRETARY •Appointment as Relief of Bank Secretary: 1 February 2022 EDUCATION •A-Level in Law (General Certificate of Education, United Kingdom) •Diploma and Higher Diploma in Law (Twinning Programme with QUT, Australia) •Bachelor Degree in Law (Jurisprudens) (Hons) University Malaya •Certificate in Company Law and Secretarial Practice, International Islamic University Malaysia (IIUM) •License Company Secretary from Companies Commission Malaysia (CCM) Malaysia (LS0009949) •Member Malaysia Institute of Approved Company Secretaries (IACS) (MIACS:2504) •Certified Professional Trainer from Malaysian Institute of Management (MIM) and Human Resource Development Fund (HRDF) •Certified Coach from Interdevelopmental Institute (IDM) PREVIOUS EXPERIENCE •Legal Executive, Lion Group (Property Division) • Executive, Companies Commission Malaysia •Legal Officer/Group Company Secretary, Perbadanan Nasional Berhad (PERNAS) •Head Credit Administration Section (PERNAS) 91 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
48. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Shariah Committee 92 4 2 Shariah Committee 1 3 93 5 10 OUR LEADERSHIP TEAM OUR LEADERSHIP TEAM 6 1 . ASSOC. PROF. DR. AZMAN MOHD NOOR Chairman 2. USTAZ WAN RUMAIZI WAN HUSIN 3.PROF. DATO’ DR. MOHD AZMI OMAR 4. DR. MOHAMMAD ZAINI YAHAYA 5.DR. TUAN BADRUL HISYAM TUAN SOH 6. USTAZ MOHD ZAMEREY ABDUL RAZAK Secretary *Dato’ Setia Hj Mohd Tamyes Abdul Wahid tenure as Chairman of Shariah Committee ended effective on 31 August 2021 **Assoc. Prof. Dr. Azman Mohd Noor appointment as Chairman of Shariah Committee effective on 1 September 2021
49. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 94 Shariah Committee Profile Shariah Committee Profile ASSOC . PROF. DR. AZMAN MOHD NOOR Chairman APPOINTED TO SHARIAH COMMITTEE • Chairman: Effective 1 September 2021 • 1 January 2021 - 31 December 2022 EDUCATION •PhD in Islamic Law, University of Edinburgh, United Kingdom •Master of Islamic Criminal Law, Universiti Kebangsaan Malaysia (UKM) •Master of Muamalat (Islamic Law of Transactions), International Islamic University Malaysia (IIUM) •Bachelor of Islamic Law, Islamic University of Madinah, Saudi Arabia OTHER POSITIONS HELD •Senior Lecturer, International Institute of Islamic Banking and Finance (IIUM) •Deputy Chairman, Shariah Board, Al Rajhi Bank Malaysia •Member, Fatwa Committee, Pejabat Mufti Negeri Perlis •Member, Shariah Committee Etiqa Family Takaful •Member, Shariah Committee TEKUN Nasional, Malaysia •Member, Shariah Committee Rushdi Oriyon, Micro Credit Deposit Organisation, Tajikistan PREVIOUS EXPERIENCE •Member, Shariah Committee, SME Bank •Member, Shariah Advisory Council, Securities Commission Malaysia •Member, Shariah Committee, MNRB Retakaful •Shariah Advisor for Kenanga Capital •Member, JAKIM Muamalat Expert Panel •Chairman, Shariah Committee Am MetLife Family Takaful USTAZ WAN RUMAIZI WAN HUSIN APPOINTED TO SHARIAH COMMITTEE • 1 September 2021 - 31 March 2023 EDUCATION •Master of Fiqh and Usul al-Fiqh, International Islamic University Malaysia (IIUM) •Bachelor of Fiqh and Usul al-Fiqh, al-Bayt University, Jordan OTHER POSITIONS HELD •Member, Shariah Committee, PruBSN Takaful • Chairman, Shariah Board, Al Rajhi Bank Malaysia •Member, Shariah Advisory Committee, Tabung Haji Board •Member, Shariah Council, Malaysian Chinese Muslim Association (MACMA) •Member, Consultant Panel, International Research Centre in Islamic Economics and Finance (IRCIEF), International Islamic University College Selangor (IIUCS) •Consultant, Sadaqa House, IRCIEF (IIUCS) PREVIOUS EXPERIENCE •Lecturer, Department of Fiqh and Usul al-Fiqh (IIUM) •Member, Shariah Committee, Yayasan Muamalat Belia •Shariah Advisor, Tissue Bank, Universiti Sains Malaysia Hospital, Kubang Kerian, Kelantan •Consulting Fellow and Module Developer, IRCIEF (IIUCS) •Member, Working Group for MS1900: 2014 Standard (Shariah-based Quality Management Systems - Requirement with Guidance), SIRIM Secretariat •Trainer in Islamic Finance and Banking for staff of Bank Negara Malaysia, CIMB, Hong Leong Bank, Public Bank, Prudential Assurance Malaysia Berhad, BSN, MBSB, PUNB, RHB and OCBC •Member, International Union of Muslim Scholars (Ittihad al-‘Alami li ‘Ulama’ al-Muslimin), Qatar •Member, Association of Shariah Advisors (ASAS), Kuala Lumpur •Member, Muamalat Expert Panel, Jabatan Kemajuan Islam Malaysia (JAKIM) •Member, Shariah Advisory Committee (IIUM) 95 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
50. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 96 Shariah Committee Profile PROF . DATO’ DR. MOHD AZMI OMAR APPOINTED TO SHARIAH COMMITTEE • 1 January 2021 - 31 December 2022 EDUCATION •PhD (Finance), Bangor University, Wales, United Kingdom •Chartered Professional in Islamic Finance, Chartered Institute of Islamic Finance Professionals (CIIF) •Master of Finance, Northern Illinois University, United States of America •Bachelor of Finance, Northern Illinois University, United States of America • Diploma in Banking, MARA Institute of Technology (UiTM) Shariah Committee Profile DR. MOHAMMAD ZAINI YAHAYA OTHER POSITIONS HELD •President/Chief Executive Officer, International Centre for Education in Islamic Finance (INCEIF) •Member, Shariah Committee, Etiqa Takaful Berhad •Member, Shariah Committee, MUFG Bank Malaysia Berhad •Member, Shariah Advisory Committee, Securities Commission Malaysia •Member, Malaysian Qualification Agency Council APPOINTED TO SHARIAH COMMITTEE • 1 September 2021 - 31 August 2023 PREVIOUS EXPERIENCE •Director General, Islamic Research and Training Institute (now known as Islamic Development Bank Institute), Islamic Development Bank Group, Jeddah, Kingdom of Saudi Arabia •Deputy Rector and Professor, International Islamic University Malaysia (IIUM) •Member, Shariah Committee, Amanah Ikhtiar Malaysia •Islamic Finance Expert, Monetary Authority Brunei Darussalam OTHER POSITIONS HELD •Senior Lecturer, Department of Shariah, Faculty of Islamic Studies (UKM) •Deputy Director, Islamic Centre (UKM) •Research Panel of EC Sham Holding Sdn Bhd •Member, Drafting Panel of Integrated Islamic Curriculum of the Ministry of Education Malaysia EDUCATION •PhD, Fiqh and Usul Department, International Islamic University Malaysia (IIUM) • Master of Islamic Studies, Universiti Kebangsaan Malaysia (UKM) • Bachelor of Shariah (Hons), Al-Azhar University, Cairo, Egypt PREVIOUS EXPERIENCE • Lecturer (UKM) • Tutor (UKM) •Member, Research Panel, Research for The Enhancement of KAFA Curriculum, Department of Islamic Development Malaysia (JAKIM) •Assessment Panel, Chair of Principal Fellow in Fatwa Research Project, World Fatwa Management and Research Institute (INFAD), Universiti Sains Islam Malaysia (USIM) •Chairman, Panel Meeting for Assessment of Manuscripts and Sample Textbook Packages for Primary Schools Standard Curriculum (KSSR), Dewan Bahasa dan Pustaka (DBP) •Chairman, Panel Meeting for Assessment of Manuscripts and Sample Textbook Packages for KSSR Textbooks •Member, Committee for The Development of DSKP KSSM (Document for Standard Curiculum and Assesment, Standard Curriculum for Secondary Schools) Al-Shahadah Al-Ulya Ulul Albab Turath Dirasat Islamiah 2017, Ministry of Education Malaysia • Member, Shariah Committee, Asian Finance Bank 97 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
51. ANNUAL REPORT 2021 OUR LEADERSHIP TEAM 98 Shariah Committee Profile DR . TUAN BADRUL HISYAM TUAN SOH APPOINTED TO SHARIAH COMMITTEE • 1 April 2021 - 31 March 2023 EDUCATION • PhD Law, Newcastle University, United Kingdom •LL.M (Shariah and Law), International Islamic University Malaysia (IIUM) •B.A Judicial Studies and Laws (Shariah), Umm Al-Qura University Makkah Al-Mukarramah OTHER POSITIONS HELD • Senior Consultant, Dar al-Sharia, Dubai • Shariah Committee Member of MyEG Islamic Finance Sdn Bhd • Chairman, Shariah Committee Member of Alliance Islamic Bank Berhad PREVIOUS EXPERIENCE •Shariah Consultant at ISRA Consulting (International Shariah Research Academy for Islamic Finance) •Manager, Shariah Secretariat and Advisory (Retail, Al Rajhi Banking and Investment Corporation (Malaysia) Berhad •Senior Executive, Islamic Capital Market Division, Securities Comission Malaysia • Assistant Manager, Shariah Department, CIMB Islamic Berhad Shariah Committee Profile USTAZ MOHD ZAMEREY ABDUL RAZAK Secretary APPOINTMENT AS SECRETARY •18 August 2014 - To date EDUCATION •Master in Islamic Studies, Universiti Kebangsaan Malaysia (UKM) •Bachelor of Shariah (Hons), Yarmouk University, Jordan OTHER POSITIONS HELD •Chairman, Board of Trustees, Academy Imam Syafi’e •Member, Board of Trustees, Tabung Amanah Tok Kenali •Member, Board of Trustees, Yayasan Kolej Universiti Islam Selangor PREVIOUS EXPERIENCE •Head, Shariah Compliance, Takaful Ikhlas Berhad •Member, Shariah Committee, Stella Capital al-Aqarat, United States of America •Member, Shariah Committee, Islamic Retail Fund (Isareit Retail Properties Sdn Bhd Malaysia) •Head of Shariah, Asian Finance Bank Berhad •Shariah Secretary, Asian Finance Bank Berhad •Shariah Secretary, Safeena (L) Ltd (Islamic Marine Fund-Labuan) •Industrial Advisor, Faculty of Muamalat and Management, International Islamic University College Selangor (IIUCS) 99 OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
52. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Management Committee 100 101 Management Committee 9 10 8 6 4 12 1 5 3 11 7 OUR LEADERSHIP TEAM OUR LEADERSHIP TEAM 2 1 . DATO’ SYED ABDUL AZIZ SYED HASSAN 2. DR. MOHAMMAD HANIS OSMAN Deputy Chief Executive Officer, Business 3. NOR HAIMEE ZAKARIA Chief Finance Officer 4. AHMAD SHUKRI ABD RAHMAN 7. AMREN FAISAL FADZIL Chief Executive Officer Chief Risk Officer 5. ABDUL RAZAK ABU BAKAR Chief Recovery and Collection Officer 6. MUZAMIR OMAR Chief Strategy and Transformation Officer Chief Treasury Officer 8. ADI AZMIR ABDUL GHANI Chief Information Technology Officer 9. NIZAM SANI Chief Marketing and Communications Officer 10. MOHAMAD SHIBLIE ABG SAPUAN Chief Business Banking Officer 11. ZULKARNAIN TAMAN Chief Retail Banking Officer 12. SITI SALMIAH MOHD NOR Chief Human Capital Officer
53. ANNUAL REPORT 2021 102 Management Committee DATO ’ SYED ABDUL AZIZ SYED HASSAN OUR LEADERSHIP TEAM Chief Executive Officer EDUCATION •Bachelor of Business Administration, Ohio University •Diploma in Planting Industry and Management, MARA Institute of Technology (UiTM) •Senior Management Programme, Harvard Business School INTERNAL EXPERIENCE • Chief Executive Officer (2021) • Acting Chief Executive Officer (2020) •Deputy Chief Executive Officer, Operation (2020) •Acting Chief Operation Officer, Banking Operations (2019) •Chief Executive, Corporate Services (2017) EXTERNAL EXPERIENCE •Chief Executive Officer, Rakyat Holdings Sdn Bhd (2012 - 2017) •Chief Executive Officer, Zikay Group Sdn Bhd (2008 - 2012) •General Manager (Property), PECD Berhad (2000 - 2007) •Senior Marketing Manager, Island and Peninsular Berhad (1988 - 2000) DR. MOHAMMAD HANIS OSMAN Deputy Chief Executive Officer, Business EDUCATION •Doctor of Philosophy (Economics), International Islamic University Malaysia (IIUM) •Master of Business Administration (Finance) (IIUM) •B.A (Hons) Accounting and Finance, University of East London (UEL), United Kingdom •Advanced Diploma in Management Accounting, United Kingdom (CIMA) •Member, The Malaysian Financial Markets Certificate (PKMC Examination) Certified Treasury Professional •The Securities Commision of Malaysian Examinations - Licensed Dealer’s Representatives INTERNAL EXPERIENCE •Deputy Chief Executive Officer, Business (2020) •Chief Retail Banking Officer (2018) •Chief Treasury Officer (2016) •Senior Vice President, Treasury (2014) •Head of Treasury and Investment (2009) EXTERNAL EXPERIENCE •Senior Manager, Derivatives and Structured Products, Treasury, Bank Islam Malaysia Berhad (2008 - 2009) •Head of Treasury, Al Wifaq Finance Company, Abu Dhabi, United Arab Emirates (UAE) (2008) •Hwangdbs Investment Bank Berhad •Assistant Vice President, FX Swaps (2006 - 2007) •Assistant Vice President, Fixed Income (2003 - 2006) •Manager, Fixed Income, K&N Kenanga Securities Berhad (2002 - 2003) •BSN Commercial Bank Berhad (Affin Bank) •Manager, Derivatives and Fixed Income (2001 - 2002) •Senior Dealer, Derivatives and Structured Products (1999 - 2000) •Dealer, Money Market (1996 - 1999) 103 Management Committee NOR HAIMEE ZAKARIA Chief Finance Officer EDUCATION •B.A (Hons) Accounting, Finance and Economics - First Degree, University of Essex, Colchester, Essex, United Kingdom •Fellowship, Chartered Association of Certified Accountant, United Kingdom (ACCA) •Chartered Accountant, Malaysia Institute of Accountants (MIA) INTERNAL EXPERIENCE •Chief Finance Officer (2014) •Head, Account and Information Management (2008) EXTERNAL EXPERIENCE •Company Secretary, Bank Islam Malaysia Berhad (2007 - 2008) •Head, Group Finance/Joint Secretary, BIMB Holdings Berhad (2003 - 2006) •Senior Manager, Group Finance, Bank Islam Malaysia Berhad (2001 - 2003) •Finance Manager, Arab Malaysian Development Berhad (1995 - 2001) •Audit Senior, Cooper Lancaster Brewers, Chartered Accountants, London (1994) •Auditor, Coopers and Lybrand Deloitte (CL), Chartered Accountants, United Kingdom (1990 - 1991) AHMAD SHUKRI ABDUL RAHMAN Chief Risk Officer EDUCATION •Executive Master in Islamic Banking and Finance, Asia E University Malaysia •Bachelor of Business Administration, Texas A&M University at Commerce •Certificate in Islamic Law, International Islamic University Malaysia (IIUM) •Chartered Professional in Islamic Finance (CPIF) INTERNAL EXPERIENCE •Chief Risk Officer (2016) EXTERNAL EXPERIENCE •Head, Risk Management Department, OCBC Al-Amin Bank Berhad (2008 - 2016) •Vice President, Retail Credit Operations, Al Rajhi Banking and Investment Corporation (Malaysia) Berhad (2006 - 2008) •Head, Credit Risk Management Section, Risk Management Department, Bank Muamalat Malaysia Berhad (2003 - 2005) •Deputy Manager, Credit Quality, Control Department, The Pacific Bank Berhad (1995 - 2000) •Senior Officer, Loan Supervision Department, Oriental Finance Berhad (1991 - 1995) •Member, FAA (Finance Accreditation Agency) - Accrediting Panel •External Reviewer, INCEIF Certificate of Islamic Professional (CIFP) Risk Management Module •Risk Committee, Dana Peladang Kebangsaan •Part time lecturer, Risk Management (INCEIF) ABDUL RAZAK ABD BAKAR Chief Recovery and Collection Officer EDUCATION •Bachelor of Accountancy (Honours) Universiti Utara Malaysia (UUM) •Member, Chartered Accountant (CA), Malaysian Institute of Accountants (MIA) INTERNAL EXPERIENCE •Chief Recovery and Collection Officer (2020) • Chief Business Banking Officer (2018) •Senior Vice President, Corporate Banking (2014) •Assistant General Manager, Commercial Banking (2012) EXTERNAL EXPERIENCE •Head SME, Commercial Banking, Bank Islam Malaysia Berhad (2009 - 2012) •Assistant Vice President, Head of Structured Finance, OCBC Bank Berhad (2004 - 2009) •Senior Relationship Manager, Commercial Banking, RHB Bank Malaysia Berhad (2001 - 2004) •Assistant Manager, Corporate Finance, Aseambankers Berhad/Aseamlease Berhad, Maybank (1996 - 2001) •Audit Executive/Tax Executive, Azman Wong Salleh and Co (1993 - 1996) MUZAMIR OMAR CB, CPIF Chief Strategy and Transformation Officer EDUCATION • Chartered Banker (AICB) •Chartered Islamic Finance Professional (INCEIF) •Masters in Business Administration (UiTM) • Bachelor of Education (Kent, UK) •Diploma in Accounting Administration (UMCCed) INTERNAL EXPERIENCE •Chief Strategy and Transformation Officer (2018) •Vice President, Corporate Strategy (2014) •Head, Strategic Planning (2013) •Manager, Corporate Planning (2005) EXTERNAL EXPERIENCE • Bursa Malaysia Berhad •Manager, Risk Management (2003 - 2005) •Senior Audit Executive, Risk Assurance (2002 - 2003) •Senior Strategic Planning Officer (1996 - 2001) •Business Process Analyst, Time Quantum Tech (1994 - 1996) OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
54. ANNUAL REPORT 2021 104 Management Committee AMREN FAISAL FADZIL OUR LEADERSHIP TEAM Chief Treasury Officer EDUCATION •Bachelor in Finance, MARA Institute of Technology (UiTM) •Diploma in Investment Analysis (UiTM) • Certified Financial Planner (CFP) •Federation of Malaysia Unit Trust Managers (FMUTM) INTERNAL EXPERIENCE •Chief Treasury Officer (2018) •Vice President of Investment Portfolio Management (2016) •Equity Manager (2014) •Investment Manager (2012) EXTERNAL EXPERIENCE •Portfolio Manager (Senior Manager), Affin Fund Management (2008 - 2012) •Financial Planner Executive, Permodalan Nasional Berhad (PNB) (2002 - 2008) ADI AZMIR ABDUL GHANI Chief Information Technology Officer EDUCATION •Executive Programme Digital Distruption - Digital Transformation Strategies, University of Cambridge, Judge Business School • Master in Computer System, Universiti Putra Malaysia (UPM) •Bachelor in Engineering (Electronic Engineering) (Communications), The University Of Sheffield, United Kingdom INTERNAL EXPERIENCE •Chief Information Technology Officer (2020) EXTERNAL EXPERIENCE •Chief Technology Officer, Amanah Raya Berhad (2019 - 2020) •General Manager, Digital and Strategy, Celcom Axiata Berhad (2018 - 2019) •Chief Operation Officer, Nixfon (M) Sdn Bhd (2016 - 2017) •Head, IS Services, DRB HICOM (2012 - 2016) •Director, IT Division, International Islamic University (IIUM) (2009 - 2012) •Head, IT, Maersk/Port of Tanjung Pelepas (2007 - 2009) •Deputy Director Information System, Tourism Malaysia (2003 - 2007) •Information Service Manager, US Embassy Kuala Lumpur (2001 - 2003) •Associate Engineer, Measat Broadcast Network Systems (ASTRO) (1997 - 2001) 105 Management Committee NIZAM SANI Chief Marketing and Communications Officer EDUCATION •Bachelor of Arts in Marketing and Advertising (Hons), The London Institute, London College of Arts, Distributive Trades England INTERNAL EXPERIENCE •Chief Marketing and Communications Officer (2020) •Chief Executive Officer, Yayasan Bank Rakyat (2020) •Senior Vice President, Marketing and Communications (2015) EXTERNAL EXPERIENCE •Astro - Measat broadcast Network Systems Sdn Bhd •General Manager, Marketing, Astro Radio, Astro (2015) •Head, Malay Premium Channels (Mustika (4) Indopek (2) Basic HD Channel), Astro •Senior Manager/Channel Manager, Astro Prima and Warna, Astro •Product Strategy Manager, Astro (2007 - 2008) •Manager, Marketing Communications, Al Rajhi Bank, Bank Al Rajhi (2007) •Head, Credit Related Business Unit, AmAssurance Berhad (2004 - 2006) •Senior Executive, Corporate Communications, Malaysian Electronic Payment System (MEPS) (2003 - 2004) •Executive, Programme Management and Marcomms, Maybank Berhad (2001 - 2003) MOHAMAD SHIBLIE ABG SAPUAN Chief Business Banking Officer ZULKARNAIN TAMAN Chief Retail Banking Officer EDUCATION •Diploma in Accountancy, MARA Institute of Technology (UiTM) EDUCATION •Master in Business Administration, MARA Institute of Technology (UiTM) •Bachelor of Science (Statistic) (UiTM) INTERNAL EXPERIENCE •Chief Business Banking Officer (2020) •Acting Chief Business Banking Officer (2020) •Acting Regional Director, Sabah and Sarawak Region (2019) • Head (Vice President) at Chief Retail Banking Officer’s Office (2018) INTERNAL EXPERIENCE • Chief Retail Banking Officer (2020) •Acting Chief Retail Banking Officer (2020) •Head (Vice President) Analytic and Insight, Chief Executive Officer’s Office (2020) •Senior Vice President, Retail Recovery/ Rehabilitation (2014) •Assistant General Manager, Risk Management (2011) •Assistant General Manager, Strategic Planning (2010) • Head, Risk Management (2009) •Manager, Risk Management and Surveillance (2003) EXTERNAL EXPERIENCE • Affin Bank Berhad •Head, Network Sales and Support (2016 - 2018) •Branch Manager (2009 - 2016) • Mayban Finance Berhad •Area Manager (2005 - 2009) •Branch Manager (1996 - 2005) •Assistant Branch Manager (1996) •Officer (1991 - 1995) EXTERNAL EXPERIENCE •Deputy Chief Executive Officer, Koperasi Pembiayaan Syariah Angkasa (KOPSYA) (2018 - 2020) •Director, MBML Islamic, Bank of Maldives Plc (2017 - 2018) •Amanie Advisors Sdn Bhd/Amanie Holdings Ltd •Managing Director, Amanie Advisors (2015 - 2016) •Director, Governance, Risk Management and Compliance (2014 - 2015) •Assistant Manager, Cagamas Berhad (2003) •Head of Unit, Utama Merchant Bank Berhad (1998 - 2003) •Sime Bank Berhad •Head of Unit (1994 - 1998) •Research Officer (1991 - 1994) •Asisstant Research Officer, Palm Oil Research Institute of Malaysia (1988 - 1991) • Officer (UiTM) (1988) SITI SALMIAH MOHD NOR Chief Human Capital Officer EDUCATION •Master of Education, University of Oregon •Bachelor of Arts (TESL) and Minor in International Relations, California State University Chico INTERNAL EXPERIENCE •Chief Human Capital Officer (2021) EXTERNAL EXPERIENCE •Senior General Manager, Naza Corporation Management Sdn Bhd (2012 - 2020) •Head Human Resources, Guocoland (Malaysia) Bhd (2011 - 2012) •Senior Manager Human Resource, HL Management Co Sdn Bhd (2006 - 2011) •Head, Training, Hong Leong Management School Sdn Bhd (1992 - 2006) •Lecturer, MARA Junior Science College (MRSM) Kulim (1986 - 1992) OUR LEADERSHIP TEAM BANK KERJASAMA RAKYAT MALAYSIA BERHAD
55. Relevant connection Each colour indicates a different meaning in every painting . Bank Rakyat has always given a meaningful life by providing the relevant banking facilities and fulfilling the current needs.
56. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees The Board of Directors (Board) of Bank Kerjasama Rakyat Berhad (Bank Rakyat or the Bank) is committed to upholding the principles and best practices of corporate governance and adheres to the Bank Negara Malaysia’s (BNM) Corporate Governance Policy Document (BNM CG Policy), and primary legislative and regulatory provisions such as the Development Financial Institutions Act 2002. The Board is cognisant to ensure that the Bank adheres to the highest standards of corporate governance in order to maximise its shareholders and stakeholders’ values. CORPORATE GOVERNANCE 1.0 Board Composition and Balance Board of Directors and Main Committees 3.0 Roles and Responsibilities of the Board Members of the Board of Directors have a fiduciary duty to act in the best interests of the Bank’s cooperative members and stakeholders. They are responsible in ensuring the Bank’s long-term growth and financial stability, as well as maximising value and preserving members’ interests as stewards of the Bank. The Board is responsible for cultivating a culture of good corporate governance and establishing Key Performance Indicators (KPI) to improve corporate responsibility, including but not limited to the standards set forth by applicable laws and regulations from time to time. The composition of the Board follows the requirement stipulated in Section 5 of Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 (BKRM Act), which states that the Board shall consist of a Chairman and not less than six (6) and not more than eleven (11) other members. The composition also meets the requirement of having a majority of independent directors as set out in the BNM CG Policy. The key responsibilities of the Board are as follows: •Approve the risk appetite, business plans and any other initiatives which would, singularly or cumulatively, have a material impact on the Bank’s risk profile; As at 31 December 2021, the Board comprises nine (9) members with one Independent Non-Executive Director/Chairman, six (6) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Directors (nominees from the Ministry of Finance (MOF) and Ministry of Entrepreneur Development and Cooperatives (KUSKOP or the Minister). The Board takes into account a variety of factors in its composition including gender, age, educational background, professional experience, skills, and knowledge. The Directors come from a variety of backgrounds and have expertise and skills in banking, accounting, law, information technology, socio-economics/public policy, and public administration. This diversity enables the Board to have the critical capabilities, expertise and experience necessary to carry out its functions effectively. The profile of each Director is briefly described on pages 82 to 91 of this Annual Report. •Oversee the selection, performance, compensation and succession plans of the Managing Director/CEO, control function heads and other members of the Senior Management team, such that the Board is satisfied with the collective competence of Senior Management to effectively manage operations of the Bank; •Evaluate the training needs of Directors on a continuous basis and identify the areas that would further their understanding of issues facing the Bank; •Oversee the implementation of the Bank’s governance including Shariah governance framework, internal control environment and periodically review them to adequately reflect the size, nature and complexity of the Bank’s operations. This includes the operating infrastructure, systems of control, systems for risk identification and management, financial and operational controls; • Promote sustainability through appropriate environmental, social and governance considerations in the DFl’s business strategies; •Promote, together with the Senior Management team, a corporate culture within the Bank that emphasises ethical, prudent and professional behaviour; 2.0 Board Charter The Board Charter (the “Charter”) is a guiding document for the Board of the Bank Kerjasama Rakyat Malaysia Berhad (the “Bank”) and is in line with Section 4 of the Bank Kerjasama Rakyat (Special Provisions) Act 1978, which empowers the Board to carry out the functions, powers and general administration of the affairs and business of the Bank. The Board of Directors has defined the Bank’s core values, principles and ethos, which are used to determine policies and strategies. The governance structure, authority and terms of reference of the Board, as well as its committees and management have all been outlined in the Charter. The Charter not only reflects current best practises and applicable rules and regulations but also outlines processes and procedures to ensure the effectiveness and efficiency of the Board and Board Committees in carrying out their roles and obligations. •Oversee and approve the recovery and business continuity plans for the Bank to restore its financial strength, critical operations and critical services when it comes under stress; and The Board has also adequately allocated authority to the Board Committees and Management. Notwithstanding of this delegation of authority, the Board will not abdicate its fiduciary roles and will maintain collective oversight of the Board Committees and Management at all times. •Promote timely and effective communications between the Bank and the regulators on matters affecting or that may affect the safety and soundness of the Bank. 4.0 Interaction With the Shariah Committee (SC) The Charter is reviewed and updated on a regular basis to reflect relevant changes to the policies, procedures and processes, as well as amendments to the rules and regulations to ensure that the document remains current and complies with the applicable rules and regulations and best practices. Among others, the Charter comprises the following areas: • • • • • • • • Roles and Responsibilities of the Board; Interaction with the Shariah Committee; Matters Reserved for the Board’s Deliberation and Approval; Appointment, Re-appointment and Removal of Directors; Training and Development for Directors; Board and Director Effectiveness Evaluation (BDEE) Exercise; Roles of the Chairman, Directors, Managing Director/Chief Executive Officer and Bank Secretary; and Board Meetings 109 The Board must have due regard to any decisions or advice of the SC on any Shariah issues relating to the operations, business, affairs or activities of the Bank. The duty requires the Board to: •give sufficient attention to the facts, rationale and basis for any decisions or advice of the SC before arriving at its own decision; • •put in place conflict resolution mechanism to deal with any differences in views between the board and the SC; and • give fair consideration to the implications of implementing any decisions or advice of the SC; maintain a record of deliberations between the Board and the SC.  The Board must establish effective communication with the SC on all matters relating to Shariah requirements, Shariah governance, or Shariah non-compliance risks to enable both parties to discharge respective responsibilities effectively under the Shariah governance framework. The Board must regularly review the quality and frequency of its engagement with the SC. CORPORATE GOVERNANCE 108
57. ANNUAL REPORT 2021 CORPORATE GOVERNANCE 110 Board of Directors and Main Committees Board of Directors and Main Committees 5 .0 Matters Reserved for the Board’s Deliberation and Approval Appointment and Remuneration of Directors and Senior Management Personnel Business Strategy • •Review and approve formal policies defining “Fit and Proper” standards (“Nomination and Appointment Framework”) for Directors and Senior Management personnel and ensure compliance with these standards on continuing basis; •Review and approve the Bank’s business strategies, business plans and significant policies, including Management’s performance in implementing the approved strategies, plans and budget, within the approved risk appetites; •Review and approve the appointment, job grade, promotion, remuneration, compensation and removal of key Senior Management personnel, subject to the approval by BNM and the Minister; •This should take into account the sustainability of the Bank’s business, with attention given to the environmental, social and governance aspects of the business and the impacts of its operations and activities on the communities it operates in; • Review and approve policies relating to staff benefits, code of conduct, performance appraisal procedures, whistle-blowing procedures, disciplinary action procedures and grievance procedures, including appropriate communication and feedback channels that would encourage employees and other stakeholders to bring out information helpful in enforcing good corporate governance practices; •Approve investment or divestment of the Bank, including its subsidiaries with the consent of the Minister, concurrence of the MOF and in accordance with the legislative provisions of BNM; •Establish and regularly review succession plans to promote the Board and Senior Management renewal and address unplanned vacancies; and •Approve major changes in nature of the principal activities carried out by the Bank with the consent of the Minister, concurrence of the MOF and in accordance with the legislative provisions of BNM; • Approve policies of the Bank in all material aspects; and •Review and approve policies and programmes for succession planning for the orderly succession within the Senior Management team and ensure that all candidates appointed to Senior Management positions are of sufficient calibre and competency, and monitor the Senior Management team’s performance on an ongoing basis. • Approve the Bank’s delegated limits of authority and its revision therein. Compliance and Legal Financial Matters (based on the Bank’s authority matrix) •Review and approve the Bank’s compliance framework to enable the operations of the Bank to be in compliance with relevant laws, statutory acts, Shariah principles and established policies and procedures of the Bank; • •Approve major capital commitments, capital management, acquisitions and divestitures, with the consent of the Minister and with concurrence of the MOF [Section 14(4), BKRM Act]; •Review and approve the appointment, powers and removal of corporate representatives and lawful attorneys acting on behalf of the Bank; and • Approve adoption of accounting policies in line with the Malaysian Financial Reporting Standards; •Review and approve Management’s responses by the regulatory authorities in relation to compliance with regulatory requirements. • Approve financial statements; and •Determine the amount of dividends to be paid, with the consent of the Minister and with concurrence of the MOF and in accordance with the legislative provisions of BNM. Risk Management and Audit •Determine the Bank’s overall risk appetite, level of risk tolerance and ensure that adequate internal control systems are in place to effectively monitor and manage these risks; •Review and approve risk management framework and policies, and ensure that the Bank establishes comprehensive risk management policies, processes and infrastructure; • • •Select, appoint and terminate the appointment of the external auditor, with the consent of the Minister and with concurrence of the MOF; and •Oversee the AEC’s evaluation of the performance of the external auditor and on an ongoing basis, ascertain the independence of the external auditor. Review and approve changes to the Bank’s organisation structure; Approve annual budget of the Bank including capital expenditure; Disclosure •Ensure that the financial statements are prepared for each financial year and that it gives a true and fair view of the state of affairs of the Bank and its subsidiaries (the “Group”); •Establish a communications policy that enables both the Board and Senior Management team to communicate effectively with its members, the stakeholders and the public. In this regard, the Board shall regularly convey pertinent information to the stakeholder ministries specifically on governance, business strategies, as well as issues and challenges faced by the institutions and mitigation actions to address such issues; and •Ensure that the Bank discloses its sustainability policies and their implementation status in the annual report and on the corporate website. Review and approve the Bank’s Business Continuity Management Policy and Procedures; 6.0 Appointment of New Directors Establish the internal audit function which reports directly to the Audit and Examination Committee (AEC);  The appointment process of Directors shall be conducted in accordance with the Bank’s Board Nomination and Appointment Framework (BNAF), which has adopted BNM’s Fit and Proper criteria. The Nomination and Remuneration Committee (NRC) is in charge of screening and recommending to the Board for approval qualified candidates to serve as Directors and members of Board Committees based on their skills, core competencies, experience, and commitment to effectively discharge their roles as defined by the Bank’s BNAF and BNM’s Policy Document on Fit and Proper Criteria. Once a potential candidate has been shortlisted for a recommendation, the due diligence process begins with a thorough background check that includes financial and character integrity checks. 111 CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
58. ANNUAL REPORT 2021 112 Board of Directors and Main Committees Detailed assessments of the candidates’ relevant skill sets, expertise, and experience are conducted to fill any gaps in the current Board’s skills and expertise, and the NRC would recommend the appointments for the Board’s approval prior to submission to BNM for verification, and then to the Minister for final approval. Name of Directors Directors’ Re-appointment The proposed re-appointment of a Director at the expiration of their present term of appointment is also subject to BNM’s verification and the Minister’s final approval. Accordingly, the NRC is responsible of evaluating the performance of Directors whose current terms of appointment are due to expire and recommending to the Board whether to submit the application to the BNM for verification, and then to the Minister for final approval on the proposed re-appointment of the respective Directors. CORPORATE GOVERNANCE The NRC evaluates the candidates’ competence, commitment, contribution and performance based on an independent assessment conducted by a professional independent firm and their ability to act in the best interests of the Bank when determining their eligibility for re-appointment. Upon the Board’s approval, submission to BNM for approval is made three (3) months prior to the Director’s tenure expires. 7.0 Training And Development for Directors  Newly appointed Directors receive a comprehensive induction programme where they will be briefed by the Senior Management personnel covering the organisational structure of the Bank, the functions, operations and areas of responsibilities of the various divisions of the Bank. Such induction is to take place within three months of the Director’s appointment. The Board recognises the relevance and value of ongoing training and development, and allocates sufficient resources to the Directors’ training and development needs. During the financial year under review, the Directors attended and participated in seminars and conferences that covered areas among others corporate governance, financial, relevant industry updates, global business developments, digital transformation, corruption, and risk management. The Directors’ participation in seminars and training programmes are set out below: Name of Directors Datuk Haji Abd Rani Lebai Jaafar Date List of Training/Conference/Seminar/ Workshop Attended 2/2/2021 Enhancing Your Image on social media by Ranukka Singham 2/3/2021 Cultural Diversity in the Boardroom 8/3/2021 to 10/3/2021 Introduction to Corporate Directorship by Cheryl Khor and Munir Abdul Aziz 22/3/2021 Collaboration In and Outside The Boardroom: Behaviour And Relationships 23/3/2021 Powerx: Building the Mindset of Tomorrow 24/3/2021 In Conversation with Dr. Jesus Estanislao: Leadership Lessons: Realizing the Value of CG In ASEAN 25/3/2021 Accelerated Digital Transformation of Legacy Companies 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond the Crisis 113 Board of Directors and Main Committees Organiser Dato’ Suriani Dato’ Ahmad Institute Corporate Directors Malaysia (ICDM) Date List of Training/Conference/Seminar/ Workshop Attended 1/4/2021 M&A Due Diligence: From Legal and Risk Perspectives by Munir Abdul Aziz 6/4/2021 FCD Module E - Digital Disruption: Predator or Prey? By Audrey Kuah, Ryan Lim 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 20/4/2021 to 22/4/2021 Board Dynamics Bootcamp Institute Corparate Directors Malaysia (ICDM) 7/5/2021 One Year On: Taking Your MACC Act Section 17A Programme to The Next Level 24/5/2021 Board Committees Overview 15/6/2021 Masterclass: Board Behavioural Dynamics 6/7/2021 How to be an Effective NED in a Disruptive World 8/7/2021 Launch of the 2020 Malaysia Board Practive Review Report 13/7/2021 Board And Executive Remuneration In Times Of Crisis 6/11/2021 to 7/11/2021 Forum Kelestarian Kewangan S-Track 2021 Co-OpBank 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 8/7/2021 to 9/7/2021 12/7/2021 to 15/7/2021 21/7/2021 to 22/7/2021 FIDE MODULE A 2/8/2021 to 4/8/2021 5/8/2021 to 6/8/2021 9/8/2021 11/8/2021 to 12/8/2021 FIDE MODULE B 8/9/2021 to 9/9/2021 Islamic Finance for Board of Director (IF4BOD) Organiser Institute Corparate Directors Malaysia (ICDM) The Iclif Leadership and Governance Centre (ICLIF) ISRA Consulting Sdn Bhd CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
59. ANNUAL REPORT 2021 114 Board of Directors and Main Committees Name of Directors CORPORATE GOVERNANCE Dato ’ Shamsul Azri Abu Bakar Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 115 Board of Directors and Main Committees Date List of Training/Conference/Seminar/ Workshop Attended Organiser Date List of Training/Conference/Seminar/ Workshop Attended Organiser 11/1/2021 to 12/1/2021 18/1/2021 to 21/1/2021 25/1/2021 to 26/1/2021 FIDE MODULE A The Iclif Leadership and Governance Centre (ICLIF) 1/3/2021 to 3/3/2021 4/3/2021 to 5/3/2021 8/3/2021 to 10/3/2021 FIDE MODULE B ICLIF 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 2/8/2021 to 4/8/2021 5/8/2021 to 6/8/2021 9/8/2021 11/8/2021 to 12/8/2021 FIDE MODULE B The Iclif Leadership and Governance Centre (ICLIF) 5/7/2021 to 6/7/2021 Islamic Finance for Board of Director (IF4BOD) ISRA Consulting Sdn Bhd ISRA Consulting Sdn Bhd FIDE MODULE A 5/7/2021 to 6/7/2021 Islamic Finance for Board of Director (IF4BOD) 11/1/2021 to 12/1/2021 18/1/2021 to 21/1/2021 25/1/2021 to 26/1/2021 22/3/2021 Collaboration In and Outside The Boardroom: Behaviour And Relationships 1/3/2021 to 3/3/2021 4/3/2021 to 5/3/2021 8/3/2021 to 10/3/2021 FIDE MODULE 23/3/2021 Powerx: Building the Mindset of Tomorrow Islamic Finance for Board of Director 24/3/2021 In Conversation with Dr. Jesus Estanislao: Leadership Lessons: Realizing The Value of CG In ASEAN 10/2/2021 to 11/2/2021 22/3/2021 Collaboration In and Outside The Boardroom: Behaviour And Relationships 25/3/2021 Accelerated Digital Transformation of Legacy Companies 23/3/2021 Powerx: Building The Mindset of Tomorrow 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond the Crisis 24/3/2021 In Conversation With Dr. Jesus Estanislao: Leadership Lessons: Realizing The Value of CG In ASEAN 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 25/3/2021 Accelerated Digital Transformation of Legacy Companies Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond The Crisis 17/8/2021 to 18/8/2021 Climate Change: Impact on Banks and Role of the Banks The Iclif Leadership and Governance Centre (ICLIF) 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering ASIAN WORLD CENTRE Visioon Business Solutions Sdn Bhd 29/11/2021 CONFERENCE JOINING INSTRUCTIONS (SPEAKER): BOARD TRANSFORMATIONAL AND FUTURE GOVERNANCE ROUNDTABLE MALAYSIA 2021 6/12/2021 Securites Commission Malaysia Audit Oversight Board Conversation with Audit Committees Securities Commission Malaysia 19/4/2021 Name of Directors Yuri Zaharin Wahab Institute Corparate Directors Malaysia (ICDM) Datin Norhamizah Mat Tahir The Iclif Leadership and Governance Centre (ICLIF) ISRA Consulting Sdn Bhd Institute Corparate Directors Malaysia (ICDM) CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
60. ANNUAL REPORT 2021 116 Board of Directors and Main Committees CORPORATE GOVERNANCE Name of Directors Mohd Jafri Kudus Date List of Training /Conference/Seminar/ Workshop Attended 11/1/2021 to 12/1/2021 18/1/2021 to 21/1/2021 25/1/2021 to 26/1/2021 FIDE MODULE A 1/3/2021 to 3/3/2021 4/3/2021 to 5/3/2021 8/3/2021 to 10/3/2021 FIDE MODULE B 10/2/2021 to 11/2/2021 Islamic Finance For Board of Director 22/3/2021 117 Board of Directors and Main Committees Date List of Training/Conference/Seminar/ Workshop Attended Organiser 11/1/2021 to 12/1/2021 18/1/2021 to 21/1/2021 25/1/2021 to 26/1/2021 FIDE MODULE A Institute Corparate Directors Malaysia (ICDM) 1/3/2021 to 3/3/2021 4/3/2021 to 5/3/2021 8/3/2021 to 10/3/2021 FIDE MODULE B Institute Corparate Directors Malaysia (ICDM) ISRA Consulting Sdn Bhd 10/2/2021 to 11/2/2021 Islamic Finance For Board of Director ISRA Consulting Sdn Bhd Collaboration In And Outside The Boardroom: Behaviour And Relationships Institute Corparate Directors Malaysia (ICDM) 22/3/2021 Collaboration In And Outside The Boardroom: Behaviour And Relationships Institute Corparate Directors Malaysia (ICDM) 23/3/2021 Powerx: Building The Mindset of Tomorrow Institute Corparate Directors Malaysia (ICDM) 23/3/2021 Powerx: Building The Mindset of Tomorrow Institute Corparate Directors Malaysia (ICDM) 24/3/2021 In Conversation With Dr. Jesus Estanislao: Leadership Lessons: Realizing The Value of CG In ASEAN Institute Corparate Directors Malaysia (ICDM) 24/3/2021 In Conversation With Dr. Jesus Estanislao: Leadership Lessons: Realizing The Value of CG In ASEAN Institute Corparate Directors Malaysia (ICDM) 25/3/2021 Accelerated Digital Transformation of Legacy Companies Institute Corparate Directors Malaysia (ICDM) 25/3/2021 Accelerated Digital Transformation of Legacy Companies Institute Corparate Directors Malaysia (ICDM) 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond The Crisis Institute Corparate Directors Malaysia (ICDM) 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond The Crisis Institute Corparate Directors Malaysia (ICDM) 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 29/7/2021 to 30/7/2021 Nominating and Remuneration Committees: Beyond Box Ticking and Enhancing Effectiveness Institute Corparate Directors Malaysia (ICDM) 13/7/2021 Board and Executive Remuneration in Times of Crisis Institute Corparate Directors Malaysia (ICDM) 29/7/2021 and 30/7/2021 Nominating and Remuneration Committees: Beyond Box Ticking and Enhancing Effectiveness The Iclif Leadership and Governance Centre (ICLIF) Organiser Name of Directors The Iclif Leadership and Governance Centre (ICLIF) Datuk Mohd Irwan Mohd Mubarak CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
61. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees Name of Directors CORPORATE GOVERNANCE Mohamad Rafi Shahzada Dato ’ Dr. Vaseehar Hassan Abdul Razack 8.0 119 Board of Directors and Main Committees Date List of Training/Conference/Seminar/ Workshop Attended 22/3/2021 Collaboration In And Outside The Boardroom: Behaviour And Relationships 23/3/2021 Powerx: Building The Mindset of Tomorrow 24/3/2021 In Conversation With Dr. Jesus Estanislao: Leadership Lessons: Realizing The Value of CG In ASEAN 25/3/2021 Accelerated Digital Transformation of Legacy Companies 26/3/2021 A Boardroom Simulation Live! Corporate Strategy Beyond The Crisis 12/4/2021 Bicara Santai ‘Cegah Rasuah Hidup Megah, Organisasi Gagah’ Suruhanjaya Pencegah Rasuah Malaysia (SPRM) 19/4/2021 Cybersecurity and Anti-Money Laundering Visioon Business Solutions Sdn Bhd 8/7/2021 to 9/7/2021 12/7/2021, 13/7/2021 and 15/7/2021 21/7/2021 to 22/7/2021 12/1/2022 FIDE MODULE A Organiser Institute Corparate Directors Malaysia (ICDM) The Iclif Leadership and Governance Centre (ICLIF) 2/8/2021 to 4/8/2021 5/8/2021 to 6/8/2021 9/8/2021 11/8/2021 to 12/8/2021 FIDE MODULE B 8/9/2021 to 9/9/2021 Islamic Finance For Board of Director (IF4BOD) ISRA Consulting Sdn Bhd 10/11/2021 to 11/11/2021 Islamic Finance For Board of Director (IF4BOD) ISRA Consulting Sdn Bhd Board and Director Effectiveness Evaluation (BDEE) Exercise The effectiveness of the Board is pertinent to the success of the Bank. The Board conducts a yearly exercise to evaluate the effectiveness of leadership and competencies of its current Board members. The Board has decided that the BDEE exercise should be conducted by an independent firm of consultant on yearly basis. The BDEE exercise was undertaken in two (2) major criteria focusing on the followings: 1. BEE (oversight role, duties and functions); and 2.Directors Development Analysis (DDA) (evaluate performance, addressing gaps and ensuring action plan is carried out). 3. IDE – Individual Development Programme. The BDEE exercise consists of a structured, confidential face-to-face interview, a review of existing governance documents (related Board Charters, Standard Operating Procedures and Minutes of Meeting), and a strategic level of the Board assessment that can be used to prioritise pivotal issues and implement for the Board effectiveness. The Board assessment will be based on the following key strengths: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) 9.0 Independence of Directors Board Leadership Board Composition, Skills and Development Board Committees Board Governance, Oversight and Process Board Agenda, Minutes and Information Board Dynamics and Culture Board and Management Relationship Board and Stakeholder Engagement Board Sustainability Matters Board’s Crisis Management Response The Board recognises Independent Directors’ effective participation, which enables a balanced and objective assessment of issues and increases accountability during the decision-making process. Independent Directors who meet the criteria for suitability can act as a check and balance on the Board. Additionally, such members can bring fresh perspectives from other businesses, which can help the Board function more effectively. The Bank’s Independent Directors shall be independent of Management and free of any business or other relationship that might impair their ability to exercise independent judgement or act in the Bank’s best interests. 10.0 Remuneration of Directors The Bank acknowledges the importance of attracting and retaining high calibre and qualified Directors with the necessary skills, qualificiations and experience to have an effective Board. The Board’s compensation package is generally commensurate with the expertise, skills, responsibilities, and risks assumed by the Board. Each Director is paid on a monthly basis with a fixed directors’ fee and a meeting attendance allowance for each Board and Board Committee they serve on. Additionally, Directors receive other in-kind benefits such as medical coverage and peripheral devices. Director compensation will be subject to approval by the Minister and the Ministry of Finance. The range of remuneration of non-executive directors of the bank during the financial year ended 31 December 2021 are as follows: Non-Executive Directors No. of Directors Below RM100,000 Two (2) RM100,000 – RM200,000 Three (3) RM200,000 – RM300,000 Two (2) RM300,000 – RM500,000 Four (4) <RM1,000,000 One (1) A summary of the total remuneration of the Director for the financial year ended 2021 is set out in the Financial Statements on page 266 of this annual report. CORPORATE GOVERNANCE 118
62. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees The Directors ’ Shareholding Percentage: CORPORATE GOVERNANCE Name of Director 11.0 121 Board of Directors and Main Committees The Board met 21 times during the financial year ended 31 December 2021. The attendance record of the Directors at Board Meetings for 2021 is as follows: Percentage Held By Shareholder (%) Datuk Haji Abd Rani Lebai Jaafar 0.000250 Dato’ Suriani Dato’ Ahmad 0.000250 Dato’ Shamsul Azri Abu Bakar 0.000240 Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 0.000250 Datin Norhamizah Mat Tahir 0.000230 Mohd Jafri Kudus 0.000250 Datuk Mohd Irwan Mohd Mubarak 0.000250 Mohamad Rafi Shahzada 0.000250 Dato’ Dr. Vaseehar Hassan Abdul Razack 0.000250 Board and Board Committee Meetings Meetings of the Board of Directors and Board Committees for the following financial year are scheduled well in advance before the end of the current financial year’s end. The meeting calendar is distributed well in advance to all Directors to allow for planning. The Board shall meet as often as necessary but not less than once every month. Special Board meetings may be convened as needed to consider urgent proposals or matters requiring the Board’s prompt review or consideration. Detailed agenda and briefing materials (where applicable) are forwarded to all Directors prior to the date of the Board/Board Committee meetings. All proceedings of Board/Board Committee meetings are minuted and signed by the Chairman of the Board/Board Committees or chairman of the meeting.  All Directors shall have direct access to the Bank Secretary’s services. Additionally, the Board may seek independent professional advice made available to Directors in carrying out their responsibilities, if such services are required. No. Name of Director 1. Datuk Haji Abd Rani Lebai Jaafar (Chairman) 1 21/21 * 2. Dato’ Suriani Dato’ Ahmad 2 17/20 * 3. Dato’ Shamsul Azri Abu Bakar 19/21 4. Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 21/21 5. Yuri Zaharin Wahab 3 6. Mohd Jafri Kudus 21/21 7. Datuk Mohd Irwan Mohd Mubarak 21/21 8. Mohamad Rafi Shahzada 4 9. Datin Norhamizah Mat Tahir 10. Dato’ Dr. Vaseehar Hassan Abdul Razack 5     3   4   5   *  12.0 Board Committees 1 2 Board Meeting Attendance 2021 11/12 * 17/17 * 21/21 8/9 * Appointed as a Chairman of the Board with effect from 1 January 2021 Appointed as member of the Board on 19 January 2021 Term ended with effect from 1 July 2021 Appointed as member of the Board on 5 March 2021 Appointed as a member of the Board on 15 July 2021 Reflects the number of meetings attended during the time the Director held office The Board has delegated several of its governance responsibilities to the Board Committees, which operate within clearly defined terms of references, primarily to assist the Board in execution of its duties and responsibilities. There are eight (8) Board Committees established to assist the Board in discharging its duties and responsibilities. These are: 1) 2) 3) 4) 5) 6) 7) 8) Board Board Board Board Board Board Board Board Audit and Examination Committee; Risk Committee; Nomination and Remuneration Committee; Tender Committee; Investment Committee; Financing Committee; IT Committee; and Integrity and Governance Where necessary, the Board shall establish ad-hoc Board Committees to consider matters of special importance or to exercise the delegated authority of the Board. The existence of the Board Committees does not diminish the Board’s ultimate responsibility over the functions and duties of these Board Committees. CORPORATE GOVERNANCE 120
63. ANNUAL REPORT 2021 122 Board of Directors and Main Committees 13 .0 BOARD AUDIT AND EXAMINATION COMMITTEE (BAEC) The composition, roles and responsibilities of the BAEC, attendance of each director at the BAEC meetings during the financial year are presented under Audit and Examination Committee Report on page 139 of this Annual Report. (vi)Meet periodically with the Bank’s Audit and Examination Committee to facilitate the exchange of information and enable coverage of risks that the Bank faces; (vii)Review, monitor and report to the Board significant risk profiles, mitigation plans and the controls in place to manage significant risks as well as the overall effectiveness of the risk management framework; 14.0 (viii)Ensure that the Shariah risk management function forms part of the Bank’s integrated risk framework review, and monitor Shariah risk management processes via reports from the Shariah risk management function; (ix)Oversee the Bank’s processes to comply with relevant laws, regulations, internal policies, procedures, and authority limits. This includes the following: BOARD RISK COMMITTEE (BRC)  The primary objective of the BRC is to assist the Board in fulfilling its roles and responsibilities with regards to risk management and compliance. CORPORATE GOVERNANCE Board of Directors and Main Committees Duties and Responsibilities The duties and responsibilities of the BRC are as follows: 1. •Review and monitor effectiveness of the performance and systems of the Bank’s Compliance function in maintaining policies and procedures, detecting and minimising risk of non-compliance; and • Risk management of the Bank (a)The Committee shall ensure that the Bank’s risk governance and business units’ activities are in compliance with BNM’s Guidelines on Risk Governance; (b) The Committee is responsible over the following: (i)Review and recommend risk management strategies, policies and risk tolerance for the Board’s approval; (ii)Review and assess adequacy of risk management framework, policies, guidelines and practices in identifying, measuring, monitoring and controlling key risks and review such policies, guidelines and practices at least once a year to ensure they remain appropriate, relevant and prudent; (iii)Determine and regularly review the Bank’s risk appetite for approval by the Board. The risk appetite should consider operations at the bank-wide level at strategic business unit levels; and (iv)Ensure the organisational structure, processes and information flows promote an integrated approach to evaluate and monitor interrelated risks, and foster bank-wide awareness of the Bank’s risk appetite and strategy. This includes the following: •Properly define relationships of the Risk Management function with other business lines and with the Senior Management team, review and monitor the effectiveness and independence of the Risk Management function, and ensure that the Risk Management function has access to the Committee at all times; • Recommend the appointment of CRO for the consideration of the Board, evaluate the performance of the CRO and in the instance of his resignation, conduct an exit interview; and •Ensure that adequate and technically competent resources are allocated for effective discharge of responsibilities; (v)Review the risk management processes and systems throughout the Bank and ensure that they are effectively operating strategy. This includes the following: •Review risk methodologies for measuring and monitoring significant risks, including credit, market, operational and compliance risks. 123 Review reports issued by regulators on the Bank’s compliance with applicable requirements. (x)The Committee shall further be responsible to review and monitor compliance initiatives and activities on anti-money laundering/counter financing of terrorism, in line with Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 as well as the accompanying Guidelines issued by BNM. (xi)Ensure that all issues related to BNM’s Composite Risk Rating (CRR) review are monitored and resolved accordingly; (xii)Review with the Senior Management team and advise the Board on whether a sound and effective approach has been followed in establishing the Bank’s business continuity planning arrangements including whether disaster recovery plans and procedures have been tested periodically; (xiii)Review the implementation of capital management in line with the Capital Adequacy Framework for Islamic Banks, issued by BNM, and approve scenario for stress test on capital adequacy; (xiv)Oversee the development and implementation of the Internal Capital Adequacy Assessment Process (ICAAP); (xv)Review the allocation of risk-adjusted capital and broad-based limits across the Bank; (xvi)Review and recommend to the Board any new outsourcing proposals and approve the renewal of outsourcing services including the appointment and/or renewal of the outsourcing service providers; and (xvii) In regards to the Bank’s compensation system, examine whether incentives provided by the compensation system take into consideration risks, capital, liquidity and the likelihood and timing of earnings, without prejudice to the tasks of the Bank’s remuneration committee. CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
64. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees 2 . CORPORATE GOVERNANCE Board of Directors and Main Committees Risk management on product development 15.0 (a) The Committee shall ensure the Bank’s risk management framework addresses end-to-end risks in the product life cycle in a consistent manner with expectations set out under Bank Negara Malaysia’s guidelines on Introduction of New Products, such as the following: The primary objective of the BNRC is to assist the Board in fulfilling its roles and responsibilities with regards to the following matters: (i)Review and monitor systems and procedures in place to manage current and new product risks and customer expectations; (ii)Ensure that the designated senior officer has considered the risk implications of any material change to the current product, or combination of products, from the perspective of the Bank and the customer; (iii)Ensure that the designated senior officer has consulted the Shariah Committee for risks of non-compliance after considering any material change to the current, or combination of products; (iv)Ensure that management of product risks are well integrated within the Bank’s overall governance framework and risk management system; (v) (vi)Review and ensure that product innovation is consistent with the Bank’s risk management framework, and capability to manage associated risks before recommendation to the Board; and (b) Establish and review lines of responsibility for managing related risks;     3   4   5   *  2 (a) (b) (c) (d) (e) (f) (g) (h) Composition of the Board and Senior Management; Nomination, appointment and re-appointment of Directors and Senior Management personnel; Induction and continuing education programmes; Assessment of Director’s independence; Board assessment; Succession planning for the Board and Senior Management team; Remuneration policy and framework for Directors; and Remuneration structure for the Senior Management team. Duties and Responsibilities The duties and responsibilities are as follows: 1. Composition of the Board and Senior Management team (vii)Review and ensure that Senior Management personnel have conducted an assessment of the potential risks associated with the new product, including exposures to money-laundering risk, and how these risks will be measured, monitored and controlled before recommendation to the Board. (b)Determine the appropriate limit for the total number of directorships that can be held by a Director nominee in companies, institutions or organisations; Legal and regulatory requirements (c)Ensure compliance with the Guidelines on Corporate Governance for Development Financial Institutions which require a minimum of three (3) Directors, excluding the Managing Director/CEO, to possess banking or accounting experience and a minimum of five years working experience at a senior management level in the discipline of banking, takaful or investment; (d)Establish and recommend to the Board the minimum requirements on skills, business experience, professional and academic qualifications, expertise and other core competencies of a Director and Shariah Committee members (“SC members”); (e)Consider the relationship between ‘pay and performance’ for the Managing Director/CEO and the Senior Management team’s remuneration packages; and (f) Nomination, appointment and re-appointment of Directors and Senior Management personnel (i)The Committee shall review with the Senior Management team any legal matters that could have a significant impact on the Bank’s operations, reputation and/or financial performance. No. 1 (a)Review the structure, size and composition of the Board on a regular basis or at least annually, and make recommendations to the Board on any adjustments that are deemed necessary including in terms of the appropriate size and skills; The BRC shall meet at least every quarter and more frequently as circumstances disctate. During the financial year ended 31 December 2021, the BRC convened fifteen (15) times. The attendance recorded for the members of the BRC is as follows: BOARD NOMINATION AND REMUNERATION COMMITTEE (BNRC) Frequency of Meetings Name of BRC Members BRC Meeting Attendance 2021 1. Mohamad Rafi Shahzada 1 (Chairman) 13/13 * 2. Datuk Haji Abd Rani Lebai Jaafar 2 2/2 * 3. Yuri Zaharin Wahab 3 7/7 * 4. Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 15/15 5. Mohd Jafri Kudus 15/15 6. Datuk Mohd Irwan Mohd Mubarak 7. Dato’ Dr Vaseehar Hassan Abdul Razack 6/6 * 4 5 Appointed as Chairman with effect from 1 April 2021 No longer a member of BRC with effect from 1 April 2021 Term ended with effect from 1 July 2021 Appointed as a member of the BRC on 1 August 2021 Appointed as a member of the BRC on 1 August 2021 Reflects the number of meetings attended during the time the Director held office 6/6 * 125 2. Actively seek women directors in promoting boardroom diversity. (a)Establish a formal and transparent procedure for the recommendation of eligible candidates for appointment or re-appointment as directors, SC members, Managing Director/CEO, Chairman and key Senior Management personnel; (b)Assess the Board on the required mix of skills, experience and core competencies regularly as well as to ascertain whether each Director meets the “fit and proper” criteria as defined under the Development Financial Institutions Act 2002, as also outlined in Bank Rakyat’s BNAF, and the Senior Management Selection and Appointment Framework; CORPORATE GOVERNANCE 124
65. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees CORPORATE GOVERNANCE (c)Assess the competency and experience and recommend to the Board the nominees for directorship, Board Committee members, SC members and the Managing Director/CEO. This includes assessing the competence and experience of directors, SC members and the Managing Director/CEO for re-appointment. For this purpose, the names submitted by the Committee to the Board shall be supported by: (i)sufficient biographical details and other relevant information to enable the Board to make an informed decision on the recommendation of the nominee to the Minister for appointment or re-appointment; and (ii)a statement by the Committee setting out why it believes an individual should be appointed and confirming, when proposing re-appointment, that following the annual performance evaluation conducted by the Committee, the individual has contributed effectively to the Board, possesses expertise and demonstrates commitment to his role. (d)Ensure that all Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of their roles and responsibilities as well as time commitment expected, together with relevant Board and Bank-related documents. Induction and continuing education programmes 3. (a)Review and recommend to the Board the appropriate induction programs for newly onboarded Directors, and monitor continuous training and ongoing development for all Directors; and (b)Evaluate and conduct training needs analysis for each Director based on findings of the Board assessment and ensure that their training needs are met. Board assessment process 4. (a)Ensure that prior to a new Director’s appointment, a full assessment on the candidate is undertaken based on Bank Rakyat’s Policy on Board Composition to assess the core competencies of the said candidate, so that an appropriate balance of skills, experience, expertise and diversity is maintained and that the Board is equipped to discharge its responsibilities effectively; (b)Develop, maintain and review the criteria to be used in the assessment of the Board as a whole, Board Committees and individual Directors, including the Managing Director/CEO; (c)Assess the findings of the Board’s assessment and devise appropriate action plans to address any gaps identified and table to the Board for approval; (d)Undertake ongoing assessment and annual review of the performance of the directors, SC members, the Managing Director/CEO and Chairman, and in particular to seek confirmation on whether any of the directors and SC members are disqualified under any applicable statutory acts and guidelines issued by Bank Negara Malaysia and whether they are qualified “fit and proper” persons under the BNM Guidelines and report its findings to the Board; Board of Directors and Main Committees 5. Succession planning for the Board and Senior Management team (a)Review and oversee the development of a succession planning framework for the Board members, Board Committees, the Managing Director/CEO and Senior Management team; (b)Oversee, assess and recommend to the Board the appointment, job grade, promotion, remuneration package (with appropriate input from the Nomination and Remuneration Committee), succession planning and performance evaluation of key senior management personnel; (c)Recommend to the Board the removal or any other actions to be taken against any Director, SC member, the Managing Director/CEO or the Chairman from the Board or Board Committees if they are assessed to be ineffective, errant or negligent in discharging their responsibilities; (d) Recommend to the Board the actions to be taken for instance the issuance of a warning letter, show cause letter prior to conduct of any Domestic Inquiry process before further stern action against any key Senior Management personnel if they are assessed to ineffective, errant or negligent in discharging their responsibilities; and (e) Policies related to remuneration 6. Undertake such other duties and responsibilities as may be determined by the Board from time to time. (a)Review and recommend to the Board the overall remuneration policy and framework for Directors, the Managing Director/CEO and key Senior Management personnel to ensure appropriate incentives are in place to encourage performance and that the framework commensurates with their contribution and level of responsibility. The remuneration policy should support the Bank’s culture, objectives and strategy; (b)Oversee the design and operation of the Bank’s remuneration system and make recommendations to the Board in relation to any review of employee remuneration and benefit structures, including bonuses and performance-related pay schemes; and (c) Review and recommend to the Board remuneration of the Shariah Committee (“SC”) members. The remuneration should commensurate and reflect the roles and responsibilities of the SC members. Remuneration structure: 7. 127 (a)Periodically review and recommend to the Board remuneration packages for the Directors, the Managing Director/CEO and key senior management personnel reporting functionally or administratively to the Managing Director/CEO and such other personnel as determined by the Board from time to time; (b)The remuneration packages should reflect their contribution, level of responsibility and performance, should be structured to link rewards to corporate and individual performances to encourage high performance standard (such remuneration packages are subject to the Minister’s endorsement, where applicable); (e)Develop, maintain and review the independence criteria to assess independent Director on an annual basis, and recommend to the Board for approval in accordance with the BNM Guidelines and criteria as outlined in Bank Rakyat’s BNAF; and (c)Determine the total individual remuneration package for Senior Management personnel including, where appropriate, bonuses, incentive payments within the terms of the agreed remuneration policy and based on individual performance; and (f)Review the suitability of an Independent Director to remain as one, when they have reached the maximum tenure of nine years, except under exceptional circumstances or as part of transitional arrangements towards full implementation of the succession plans of the Bank. (d)Ensure that executive remuneration must be aligned with prudent risk-taking and appropriately adjusted for risks. The Committee also has to ensure that the remuneration payout schedules must reflect the time horizon of risks and take account of the potential for financial risks to crystallize over a longer period of time. CORPORATE GOVERNANCE 126
66. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees Frequency of Meetings Disclosure and other duties : (a)Ensure the quantitative disclosure of remuneration shows the breakdown of the total amount of remuneration awards for the Managing Director/CEO and Directors for the financial year in the annual report; and The BTC shall meet as and when required. During the financial year ended 31 December 2021, the BTC convened seven (7) times. The attendance recorded for the members of the BTC is as follows: (b) 8. Undertake such other duties and responsibilities as may be determined by the Board from time to time. No. Frequency of Meetings  The BNRC shall meet as and when required. During the financial year ended 31 December 2021, the BNRC convened twenty-nine (29) times. The attendance recorded for the members of the BNRC is as follows: No. CORPORATE GOVERNANCE 129 Board of Directors and Main Committees Name of BNRC Members NRC Meeting Attendance 2021 1. Datuk Mohd Irwan Mohd Mubarak (Chairman) 29/29 2. Datuk Haji Abd Rani Lebai Jaafar 29/29 3. Dato’ Suriani Dato’ Ahmad 1 4. Yuri Zaharin Wahab 2 5. Datin Norhamizah Mat Tahir 29/29 6. Mohd Jafri Kudus 29/29 7. Dato’ Shamsul Azri Abu Bakar 27/29   Appointed as a member of the BNRC on 1 April 2021   No Longer a member of BNRC with effect from 1 April 2021 *  Reflects the number of meetings attended during the time the Director held office 16.0 BOARD TENDER COMMITTEE (BTC) 19/21 * Name of BTC Members BTC Meeting Attendance 2021 1. Mohd Jafri Kudus (Chairman) 7/7 2. Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 7/7 3. Yuri Zaharin Wahab 4. Mohamad Rafi Shahzada 5. Dato’ Shamsul Azri Abu Bakar 4/4 * 1 2   Term ended with effect from 1 July 2021   Appointed as a member of the BTC on 1 August 2021 *  Reflects the number of meetings attended during the time the Director held office 17. BOARD INVESTMENT COMMITTEE (BIC) 2/2 * 7/7 1 2 7/8 * 1 The primary objective of the BIC is to to assist the Board in fulfilling its roles and responsibilities with regards to formulation of investment policies and plans to secure the Bank’s investment and guaranteed returns. Duties and Responsibilities The duties and responsibilities of the BIC are as follows: (a)Determine and approve policies and procedures for investment, assets allocation, the direction of investment, risk control and other relevant investment; (b) Review and approve new investment-related activities, except real estate investments; (c) Approve the purchase of property for relocation of branches and in relation to the Bank’s operations; (d) Inform the Board on investment decisions made; (e) Appoint and dismiss members of the Investment Committee at Management level; (f) Review and recommend termination of current investments; and (g) Review the Bank’s investment portfolio. 2 The primary objective of the BTC is to deliberate on tenders and recommend a bidder for approval by the Board. The Board authorises the BTC to deliberate and and approve on matters within its primary duties and responsibilities in line with such limits as may be determined by the Board from time to time and approve procurement tenders relating to budgeted and unbudgeted capital expenditure in line with the Bank’s Authority Matrix. Duties and Responsibilities The duties and responsibilities of the BTC are as follows: (a) Ensure that all procurement through tender exercise comply to the minimum three (3) quotations; (b) Deliberate on proposals by prospective suppliers/contractors; and Tender Committee Charter; and (c)Report directly to the Board of Directors pertaining to the results of tender evaluation, including criteria and basis for approval of the respective tender exercise. CORPORATE GOVERNANCE 128
67. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Board of Directors and Main Committees The BIC shall meet at least once every quarter and more frequently as circumstances dictate. During the financial year ended 31 December 2021, the BIC convened five (5) times. The attendance recorded for the members of the BIC is as follows: CORPORATE GOVERNANCE No. Name of BIC Members 1. Dato’ Dr. Vaseehar Hassan Abdul Razack 1 (Chairman) 2. Datin Norhamizah Mat Tahir 3. Datuk Haji Abd Rani Lebai Jaafar 4. Mohamad Rafi Shahzada 3 5. Dato’ Shamsul Azri Abu Bakar 6. Mohd Irwan Mohd Mubarak (i) (j)Oversee and monitor the management and recovery of impaired financing to ensure financing recovery functions maximise collections; BIC Meeting Attendance 2021 (k) Approve the appointment and removal of the members of Financing Committee A; and 2/2 * (l) Undertake such other duties and responsibilities as may be determined by the Board from time to time. 1/1 * 4/4 * 4   2   3   4   *  18.0 BOARD FINANCING COMMITTEE (BFC) 1 5/5 2 131 Board of Directors and Main Committees Provide strategic direction and input on the management of delinquent or impaired financing; The BFC shall meet at least once a month and more frequently as circumstances dictate to deliberate on its responsibilities. During the financial year ended 31 December 2021, the BFC convened twenty (20) times. The attendance recorded for the members of the BFC is as follows: 4/5 No. 3/3 * Appointed as a member and the Chairman of BIC on 1 August 2021 No longer a member of BIC with effect from 1 April 2021 Appointed as a member of BIC on 1 April 2021 No longer a member of BIC with effect from 1 August 2021 Reflects the number of meetings attended during the time the Director held office The primary objective of the BFC is to assist the Board in fulfilling its roles and responsibilities in reviewing current and new financing proposals. Duties and Responsibilities The duties and responsibilities of the BFC are as follows: (a)Affirm or veto the Financing Committee A’s approval on annual reviews. Unchanged terms arising from annual review shall be approved by the Financing Committee for subsequent notation to the Board; (b) Affirm or veto the Financing Committee A’s approval on new or additional financing; (c) Affirm or veto the Financial Committee A’s approval on variation to the terms and conditions of existing financing; (d)Recommend financing or additional conditions on financing exceeding the Financing Committee A’s discretionary power, for the Board’s approval; Financing Committee Charter; (e)Affirm or veto all restructuring/rescheduling financing proposals (including business banking and rehabilitation proposals) and recommend for the Board’s decision; (f)Oversee and critically review the performance of rescheduled/restructured accounts to minimise credit loss and maximise the recovery of such accounts; (g) Affirm or veto the Financing Committee A’s approval on all cases of charge-off/writeoff of financing; (h) Provide strategic views on the Bank’s credit risk appetite; Name of BFC Members BFC Meeting Attendance 2021 1. Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan (Chairman) 20/20 2. Datuk Haji Abd Rani Lebai Jaafar 20/20 3. Mohamad Rafi Shahzada 4. Dato’ Dr. Vaseehar Hassan Abdul Razack 5. Datuk Mohd Irwan Mohd Mubarak 6/6 * 1 3 2 7/7 * 20/20 *     3   *  19.0 BOARD IT COMMITTEE (BITC) The primary objective of the BITC is to assist the Board in fulfilling its roles and responsibilities with regard to the following: (a)Carry out with delegated authority on its behalf in ensuring sustainable oversight of IT and digitalization/innovation strategies, plans and operations, information, cybersecurity and data privacy risk management and third-party technology risk management are in place and implemented within the stipulated or desired timeframe and/or monitored efficiently and effectively by the Management; (b)To ensure IT development and maintenance projects initiated are consistent with the Bank’s strategic business goals and overall priorities of the Bank; (c) (d)Govern an effective working relationship with the Management of the Bank to ensure that matters are referred and escalated between the contractors, consultants, advisors, dialogue partner(s) or any other person deemed relevant, Board Committees and the Board as appropriate. 1 2 Appointed as a member of BFC with effect from 1 April 2021 and no longer a member with effect from 16 August 2021 Appointed as a member of the BFC on 1 August 2021 Appointed as an interim member of the BFC on 1 August 2021 Reflects the number of meetings attended during the time the Director held office Ensure that the requirements of good corporate governance practices are observed accordingly; and The BITC was formed by the Board to replace the Board Oversight Committee (BOC) for the Bank’s Core Banking Systems (CBS) in order to ensure a seamless transition between CBS and IT implementation, particularly during the new CBS system’s stability period. 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68. ANNUAL REPORT 2021 132 Board of Directors and Main Committees Duties and Responsibilities The duties and responsibilities of the BITC are as follows : 1. (e) Reviewing results of quality assurance testing to ensure projects meet user specifications and approve implementation or require more development before implementation; and (f)Report and make recommendations to the Board on the above, as the case may be, and on any matter which falls under its authority, as it may deem fit. (a) Oversee the implementation and monitoring of the Board’s decision including the deliverable(s) of IT strategies, planning and implementation within the expected Project timelines. Where potential delays emerge, the Committee is expected to make credible challenge to contributing factors and review proposed immediate/remediation/catch up/improvement plans accordingly initiated; IT/Technology Risk, Security and Cyber Security (a) Reviewing and making recommendations to the Board and Risk Committee in relation to the overall technology and cyber risk profile of the Bank; (b)Conduct and perform investigation, interviews, assessments and impacts upon all findings and information relating to the progress and implementation of IT and digitalization strategies in pursuant to the agreements entered between the Bank and any third party(s); (b) Receiving and reviewing reports from management on technology and cybersecurity risk and major technology and cybersecurity incidents; and (c)Evaluate and determine whether the proposed IT system is within the best-of-breed practice in line with the Bank’s transformation programme to enable optimum harvest of the said system potentials; (c)Reviewing the effectiveness of disaster recovery plans and disaster recovery testing (as a subset of overall Business Continuity planning) and reporting to the Board on the effectiveness of these plans and testing. (d)To evaluate IT requirements that are in line with business needs and meet user specifications with the current industry/market trend; (e)Reviewing IT performance against plans and budgets and recommend changes as needed and to set priorities based on resources required, cost/benefit, implementation schedule requirements or limitations; (f) To review/reassess any major technological innovations/trends that could pose disruptive threats or opportunities to the Bank; and CORPORATE GOVERNANCE 133 Board of Directors and Main Committees 2. Information Technology Strategy Oversight 3. The BITC was established on 1 January 2021 to replace the Board Oversight Committee (CoBRa) and during the financial year ended 31 December 2021, the BITC convened seventeen (17) times. The attendance recorded for the members of the BITC is as follows: No. Name of BITC Members 1. Mohd Jafri Kudus 1 (Chairman) 2. Yuri Zaharin Wahab (g)To review and recommend to the Board on any trainings/programmes related to IT, cybersecurity, technology risk etc. that may benefit the Bank, directors and/or any other officers or employees deemed appropriate, if any. 3. Datin Norhamizah Mat Tahir 4. Dato’ Shamsul Azri Abu Bakar Information, Cybersecurity and Data Privacy Risk Management 5. Mohamad Rafi Shahzada 6. Datuk Mohd Irwan Mohd Mubarak Receive reports from members of management including but not limited to the Chief Information Technology Officer, Chief Risk Officer, Chief Information Security or any other officers or employees as appropriate, regarding the Bank’s practices, management and functioning of technology operations and information security, cybersecurity and data privacy risks, including reports related to the assessment, analysis and mitigation of related risk. 4. IT Operations and Assets (a)Review all proposals, milestones, deliverables, terms of agreements including action plans from the Project Team, appointed consultants and contractors involved with IT to the satisfaction of the Committee in the best interest of the Bank and meeting the authorities’ expectations; (b)To obtain prompt report on the progress on IT implementation on a frequent or periodic basis from any person subject to validation or approval the subject matter experts for the Committee and/or the Board to make informed decisions from time to time; (c)Reviewing and making recommendations to the Board on Information Technology/Data security policies and governance; (d)Reviewing and advising the Audit and Examination Committee on matters which may be relevant to the carrying value of IT assets; 17/17 10/10 * 2 17/17 6/7 * 3 8/8 * 4 5     3   4   5   *  20.0 BOARD INTERGITY AND GOVERNANCE COMMITTEE (BIGC) 1 2 BITC Meeting Attendance 2021 6/6 * Appointed as the Chairman of BITC on 8 June 2021 Term ended with effect from 1 July 2021 No longer a member of BITC with effect from 1 April 2021 Appointed as a member of the BITC on 8 June 2021 Appointed as a member of the BITC on 1 August 2021 Reflects the number of meetings attended during the time the Director held office The primary objective of the BIGC is to assist and advise the Board in fulfilling its statutory and fiduciary responsibilities in relation to Fraud Management and Corporate Integrity and to provide independent oversight of the Bank’s financial reporting and internal control system and to ensure check and balance within the Bank; and Duties and Responsibilities The duties and responsibilities of the BIGC are as follows: 1. 2.Inculcate awareness program among staff in promoting anti-fraud culture and corporate integrity within the Bank towards strong governance and compliance with framework and policy; Maintain oversight and governance assurance on execution of framework and policy; CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
69. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD 3 .To direct and oversee the formulation of a structured mechanism in the Bank to inculcate a strong governance of fraud management and corporate integrity culture within the Bank; 4.Respond to, at an appropriate level, fraud matters and corporate integrity, complaints, possible litigation or breaches of the Code of Business Conduct and Ethics, national laws and regulatory requirements; 5. Review and monitor reports on fraud and corruption risks, policies and control activities, which includes the following: (a) CORPORATE GOVERNANCE Remuneration Principle Board of Directors and Main Committees (c) Ensure the effectiveness of independent reporting of fraud and integrity incidences including the whistle-blowing reporting channel. 6. Provide the key findings and decision of all official investigations to the Board; 7. Establish clear policies on zero-tolerance towards fraud and corruption; 8. Undertake firm corrective actions on any fraud and integrity incidences; 9.To ensure the terms of references for Fraud Management and Corporate Integrity is in accordance to both Fraud Management Framework and the Guideline For The Management of Integrity and Governance by Malaysia Anti-Corruption Commission; and 10.Appoint, upgrading and promotion, set compensation, evaluate performance and decide on the transfer, suspension, disciplinary action, dismissal and/or termination of the Head of Fraud Management and/or Head of Corporate Integrity, subject to the Nomination and Remuneration Committee and/or the Board of Directors’ approval. Note: Fraud Management and Corporate Integrity functions report functionally to the Committee and administratively report to the Chief Executive Officer. During the financial year ended 31 December 2021, the BIGC convened eight (8) times. The attendance recorded for the members of the BIGC is as follows: No. BANK RAKYAT REMUNERATION SYSTEM/PHILOSOPHY The Bank Rakyat Remuneration Principle is under the purview of the Nomination Remuneration Committee (NRC) for its endorsement and approval by the Board where the guiding principles in designing the employee’s remuneration are being deliberated and reviewed as necessary. There are three key principles in Bank Rakyat's Remuneration principles as follows: Principle Provide assurance that the controls are effective; (b)Establish mechanism to ensure the Committee receives accurate and timely information from management, employees, internal and external auditors and other stakeholders; and Name of BIGC Members BIGC Meeting Attendance 2021 Governance Market competitiveness To offer remuneration including rewards that allow Bank Rakyat to attract, motivate and retain the right talent. •Benchmarking against banks of similar standing in the financial industries. COMPONENTS OF REMUNERATION Emphasis on a competitive remuneration forms the various aspects of the Total Rewards Management structure. This is carried out through the comprehensive inclusion of performance measurement standards and the governing process with the levels of assessment to determine reward, therein lies effective governance. KPIs are set by aligning performance measure to the business goals to reinforce a high-performance culture. Its Rewards structure is the result of benchmarking with market via formal and informal channels. The remuneration system is based on accountability to targets or KPIs and competencies. Reward for performance is designed to be competitive, cost-effective and in line with market practice. The overall objectives are: (i) To attract, motivate and retain high performing employees. (ii) To provide a strong link between achievement-based remuneration to our business goals and financial performance. All elements of remuneration are summarised in the table below: 8/8 Element 2. Tunku Dato’ Ahmad Burhanuddin Tunku Datuk Seri Adnan 8/8 Annual base salary 3. Dato’ Suriani Dato’ Ahmad 4. Datuk Mohd Irwan Mohd Mubarak   Appointed as the Chairman of BIGC on 1 August 2021   Appointed as a member of BIGC on 1 August 2021 *  Reflects the number of meetings attended during the time the Director held office • Oversight and review by NRC and approved by the Board. •Guided by input from control functions (i.e. Shariah, Compliance, Risk, Audit). •Performance measurement indicators in 4 Key Results Areas (KRAs) which are Financial, Customer, Governance & Internal Business Process, and People (Learning & Growth). 3/4 * Fixed Cash 1 2 To ensure strong and independent oversight of the remuneration system. Approach To support a performance-based culture. Datin Norhamizah Mat Tahir 1 (Chairman) 8/8 Purpose Appropriate assessment of performance 1. 2 135 Variable Cash Benefits-in-Kind (BIK) Objective To Attract and Retain high-performing employees. To provide additional cash benefits based on job requirements. To Differentiate remuneration for employees who contribute to the success of the Bank. To support wellbeing of the employees through BIK. Purpose and Approach •Reviewed annually based on individual compa-ratios against market and individual performance. • Review market rate of industry peers for competitiveness. •Performance-based reward, reflecting the individual employee's performance against Sectors’ and Bank’s performance. •Benchmark industry peers to ensure competitiveness. CORPORATE GOVERNANCE 134
70. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Remuneration Principle MEASUREMENT OF PERFORMANCE The fundamental purpose of performance management is to enhance results of the organization supported by teams , and individuals by managing performance within an agreed framework of planned goals, standards, and competency requirements. Performance Management incorporate two (2) key elements: i. Remuneration Principle The second element of our performance metric is Competencies. In Bank Rakyat, we have developed a set of competencies we refer to as I.N.S.P.I.R.E framework to measure the competencies as follows: i. Impact and Influence (I) Why it matters  - To position Bank Rakyat as a major player in commercial and retail banking whilst maintaining its cooperative bank role. It is critical for its leaders to be able to effectively use/adapt persuasion and influencing skills to grow its customer base, position a diverse product portfolio as well as to effectively manage key stakeholders (e.g. Bank Negara, Ministry of Domestic Trade, Cooperatives and Consumerism and MOF). Key Performance Indicators (KPIs) CORPORATE GOVERNANCE Employees must know what is expected of them and know “what” that must be achieved by them through structured KPIs. ii. Behavioural Competencies ii. Nurture and Develop Others (N) Employees must have the knowledge, skills and attitude to deliver on these expectations of “what” is expected. Performance metrices in Bank Rakyat are divided into two main categories: KPIs derived from the Key Results Areas (KRAs) and Competencies. Why it matters  -  Building up internal capabilities to mitigate the risk in succession and ensure long-term business sustainability. Ensure that capability development interventions match the longterm business demand. iii. Strategic Insight (S) There are four (4) categories under Key Result Area (KRA) which are: •Financial •Customer • Governance & Internal Business Process • People (Learning & Growth) Why it matters  -  To realise the transformation of Bank Rakyat in strengthening its role as a competitive retail and commercial bank whilst maintaining its core mandate, its leaders needs to be able to recognise market trends and developments; and adapts strategy to achieve business results and meet evolving customer needs. iv. Performance Excellence Mindset (P) The performance metrics implemented is to ensure the employee strives towards meeting the goals to support Bank Rakyat towards achieving its Vision and Mission. Why it matters  - To drive a high-performance culture and to become a merit-based organisation, it is critical to emphasise accountability and personal ownership at all levels of the Bank. The first KRA category is for the Bank, through its employees, to work towards achieving its financial goals in terms of profit and growth. Thus, financial KPIs are determined to enable the employees to strategize to achieve the target financial goals. v. Innovation and Change (I) Why it matters  - In alignment with the Bank’s Vision to become a competitive commercial and retail bank, it is critical to continuously improve and evolve its internal processes and practices such that greater efficiency can be achieved. vi. Re-Energise Customer Service Orientation (R) Why it matters  - To become the bank of choice, it is critical to ensure reliable and efficient service to all customer segments. Enhance end-to-end customer experience by improving service standards, recognising different needs and taking a proactive service approach to meeting those needs. vii. Engage Internal Collaboration (E) Why it matters  - Greater collaboration and a sense of shared purpose within and across functions would promote better alignment and optimisation of resources. The second KRA is to address its target market in terms of customer reach by identifying the best channel for market penetration through appropriate customer-oriented strategies and initiatives to promote its products. Identified KPIs for employees would be to drive customer-oriented initiatives to increase its customer base as well provide value to its customers. The third KRA is to inculcate a compliance culture and strengthen the business processes. A compliance culture displays adherence to governance and mitigation of risks to ensure integrity. While a strong business process supports systems and structural capabilities necessary in an efficient as well as effective management. Employees will have KPIs that range from applying the relevant policies & procedures to applying appropriate SOPs. This serves as an enabler to meet customers’ requirement. Monitoring and reporting become key in managing, analysing and delivering results. KPIs will include areas such as meeting Turn Around Time (TAT) or acceptable response time in completing task with adequate controls in place. The fourth KRA category is in learning and growth to build internal capability and to support the employee’s career development based on their career aspiration. KPIs are structured for supervisors to make people management as part of their agenda. Building of internal capability ensures sustainability as competencies are to be embedded in all aspects of work in the Bank. While a longterm career growth allows for a strong succession pipeline to be institutionalized. Both the supervisor and employee will develop synergy in crafting their KPIs for the Bank’s growth. 137 In maintaining integrity in our performance management process whereby rewards commensurate with the balance of contribution and compliance, we have obtained approval from the Management to incorporate the Demerit System into our appraisal exercise. We have also conducted various briefings to ensure KPIs are better structured for alignment to business goals. CORPORATE GOVERNANCE 136
71. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Audit and Examination Committee Report Remuneration Principle DETERMINATION OF VARIABLE CASH 1 .0COMPOSITION Based on Bank Rakyat’s performance, the Board will determine the overall variable cash elements taking into consideration key performance measures. The Board has discretion to adjust the rewards component of the cash elements where required, based on performance, requirements, economic conditions. •The Audit and Examination Committee (“AEC”) is a committee established by the Board of Directors from amongst its directors. •The AEC comprises only non-executive directors with no less than three (3) members, of which the majority should be independent directors. •All members of the AEC have the skills, knowledge and experience relevant to the responsibilities of the AEC. At least one (1) member should be a member of a relevant professional body. •They are also financially literate and able to understand matters under the purview of the AEC including the financial reporting process. Variable bonus of each individual employees is determined based on individual assessment subject to the bonus pool allocated by the Bank in its business and budget plan. CEO, SENIOR MANAGEMENT AND OTHER MATERIAL RISK TAKERS CORPORATE GOVERNANCE The remuneration of CEO, Senior Management and Other Material Risk Takers are reviewed annually. The remuneration of those in key roles in Bank Rakyat in FY2021 is summarised in the table below: Total value of Remuneration Award for the financial year (RM’000) Annual Base Salary Fixed Cash 755.27 Senior Management Other Material Risk Takers (OMRTs) CEO Category CEO Variable Cash Benefits-inKind (BIK) Total Annual Remuneration 408.67 595.88 48.10 1,807.93 4,906.02 2,274.13 3,582.04 164.18 10,926.37 4,101.93 1,973.80 2,809.52 116.85 9,002.10 Definition An individual, who either individually or jointly with one or more persons, is responsible, subject to the authority of the directors, for the conduct of the business and the administration of the Bank. A person who performs Senior Management functions (solely or jointly) who is having principal authority and responsibility for planning, directing or controlling the whole or substantial part business activities of the Bank, which include: Senior Management Other Material Risk Takers (OMRTs) a) Having the authority and influence in making decisions. b)Is accountable or responsible for implementing and enforcing policies and strategies approved by the Board. c)Is accountable or responsible for developing and implementing systems, internal controls and processes that identify, measure, monitor or control the Bank’s risks. d) Permanent members of the Bank’s Management Committee. e)Has the responsibility for key control functions, including to be accountable for monitoring the appropriateness, and effectiveness of the Bank’s internal controls, risk management, internal audit and compliance systems and processes. a) An officer who is not a member of Senior Management of the Bank and who: i)Can materially execute or control significant amounts of the Bank’s resources or whose actions are likely to have a significant impact on its risk profile; or ii)Either individually or jointly having the authority to approve new business product or to commit to the credit risk exposure and market risk transactions; or iii) Among the most highly remunerated officers in the Bank. iv)Except for those who identify as Key Responsible Persons and Senior Management, all the Bank’s Senior Vice President shall be identified as the Bank’s Other Material Risk Taker. b)The list of the officers who fall under Other Material Risk Taker shall be approved by the Management Committee. 139 2.0AUTHORITY •The Board authorises the AEC to act within the scope of its duties and responsibilities as set out in the AEC Charter. In the exercise of its functions, it is understood that the AEC is not delegated with decision-making powers but shall report its recommendations to the Board for decision. •The AEC has explicit authority to investigate matters within its terms of reference in line with such limits as may be determined by the Board from time to time. During the discharge of such duties, the AEC shall have full and unrestricted access to: • the records, properties and personnel of the Bank; • the resources which are required to perform its duties; •co-operation from Management and the discretion to invite any Director and/or employee, including external auditors without the presence of other employees to attend its meetings; •the advice and services of the Bank Secretary, the Chief Executive Officer, the Chief Internal Audit (“CIA”) and external auditors; and •independent professional advice and expertise necessary to perform its duties at the expense of the Bank, provided that written approval from the Board must be obtained prior to the incurring of any such expense on behalf of the Bank. 3.0 DUTIES AND RESPONSIBILITIES Roles and responsibilities of the AEC, amongst others, include the following: 3.1 Corporate Governance, Internal Control and Audit Functions •Oversee the work and performance of the Internal Audit function and ensure that the Internal Audit function is in compliance with Bank Negara Malaysia’s “Guidelines on Internal Audit Function of Licensed Institutions” (BNM/RH/GL013-4), including the following: •Ensure that the Internal Audit function has an appropriate standing within the Bank and access to the AEC at all times; • Approve the Internal Audit Charter for endorsement by the Board; CORPORATE GOVERNANCE 138
72. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Audit and Examination Committee Report • Review the adequacy and effectiveness of the systems of internal control, risk management and governance processes (which includes compliance with Shariah) of the Bank and its subsidiary including reviewing and approving the audit plan, scope, procedures and frequency; • Review key audit reports (including reports on internal controls, risk management processes, compliance with statutory requirements and governance practices) and ensure that the Management is taking necessary corrective actions in a timely manner to address control weaknesses, non-compliance with laws, regulatory requirements, policies and other problems identified by the Internal Audit and other control functions; •Establish policies and procedures, to assess and monitor the suitability and independence of the external auditors; •Approve the provision of non-audit services by the external auditor and ensure adequacy of checks and balances on the provision of such non-audit services; and •Monitor and assess the effectiveness of the external audit, including by meeting with the external auditor without the presence of Senior Management at least annually. 3.3 •Review and determine the deliverables of the Shariah audit function upon consultation with the Shariah Committee; and • •Review internal, external and Shariah audit findings and recommend to the Board the action to be taken by the Senior Management team. Establish a mechanism to assess the performance and effectiveness of the Internal Audit function; 3.4 Financial Reporting Process •Appoint, set compensation, evaluate performance and decide on the transfer, suspension, disciplinary action, dismissal and/or termination of the CIA; • Review appropriateness and applicability of accounting standards used in preparation of the financial statements; •Review the adequacy of the functions and resources of the Internal Audit, and that it has the necessary authority to carry out its work; and •Ensure that the accounts are prepared in a timely and accurate manner, with frequent reviews of the adequacy of provisions for contingencies as well as bad and doubtful debts; •Ensure the effectiveness of the internal technology audit function. This includes ensuring the adequate competence of the audit staff to perform technology audits. The AEC shall review and ensure appropriate audit scope, procedures and frequency of technology audits. The AEC must also ensure effective oversight over the prompt closure of corrective actions to address technology control gaps. • Ensure fair and transparent reporting, prompt publication of financial accounts and review financial statements to be submitted to the Board; •Ensure that all fraud and non-fraud related irregularities are investigated, and the responses and explanations are examined and investigated, and findings are reported to the Board; and •Review the accuracy and adequacy of the chairman’s statement in the director’s report, corporate governance disclosures, interim financial reports and preliminary announcements in relation to the preparation of financial statements. • Recommend to the Board the external advisors to be engaged when the Internal Audit function lacks expertise needed to perform specialised audit. In such instance, recommend the fees payable, ensure clear establishment of the terms and scope of engagement, and reporting requirements. • Monitor compliance with practices of corporate governance and identification of significant non-compliance. • Determination of compliance with relevant statutory requirements. • Review third-party opinions on the design and effectiveness of the Bank’s internal control framework. External Audit Function 3.2 The AEC shall oversee the external auditors, by undertaking the following: • •Review the external auditors’ plan, audit report and maintain a regular communication with the external auditor, and ensure the external auditor reports to the AEC on significant matters; • Review the external auditor’s letter on weaknesses of accounting procedures and internal controls, and Management’s responses to the external auditors’ report and letter, and ensure that the Senior Management team takes necessary and corrective actions in a timely manner to address the findings; Recommend to the Board on the appointment, removal and remuneration of the external auditor; 3.5 141 Shariah Audit • Note significant disagreements between the CIA and the rest of the Senior Management team, irrespective of whether these have been resolved, in order to identify any impact, the disagreements may have on the audit process or findings; • Endorse training programmes and budgetary resources for effective discharge of Internal Audit responsibilities; CORPORATE GOVERNANCE Audit and Examination Committee Report Other Duties •Monitor compliance with the Board’s conflicts of interest policy described in BNM Policy Document on Corporate Governance for Development Financial Institutions, 2019; •Review any conflict of interest situations and significant transactions which are not usual to the course of business, and review and monitor all related party transactions and report such transactions to the Board. •Meet regularly with the Bank’s Risk Committee to facilitate exchange of information so as to apprise the Committee of risks that the Bank faces, including emerging risks that could have an impact on the Bank’s risk appetite and business plan; and • Maintain oversight on the Bank’s Fraud Management and Corporate Integrity functions. CORPORATE GOVERNANCE 140
73. ANNUAL REPORT 2021 142 Audit and Examination Committee Report Audit and Examination Committee Report 4 .0 ATTENDANCE AT MEETINGS 17 AEC Meetings were held during 2021. The details of attendance of each member are as follows: •Reviewed various periodical regulatory reporting made by Internal Audit prior to submission to the regulators such as BNM and PayNet. •Deliberated key observations points raised by Internal Audit through its IT advisory services and ensured that the Management would addressed the concerns raised accordingly. AEC Meeting Attendance YM. Tunku Dato’ Ahmad Burhanuddin YM. Tunku Datuk Seri Adnan Chairman (appointed effective from 29 October 2019) 17/17 (100%) • Reviewed the monthly Internal Audit Achievements and Performance reports to ensure the progress, achievement, performance, and coverage of the Internal Audit functions in line with the annual audit plan. Datin Norhamizah Mat Tahir Member (appointed effective from 28 July 2020) •Reviewed the audit reports issued by regulatory authorities, Management’s responses to the Regulators’ recommendations and the remedial actions taken to rectify the weaknesses highlighted. 17/17 (100%) •Reviewed the audit reports on Yayasan Bank Rakyat for an overview of the risk management and internal control systems of this entity. Datuk Mohd Irwan Mohd Mubarak Member (appointed effective from 28 July 2020) 17/17 (100%) • Deliberated and approved the 2021 key performance indicators (KPI) setting for CIA. Dato’ Dr. Vaseehar Hassan Abdul Razack Member (appointed effective from 1 August 2021) • Evaluated the performance of the CIA. 6/6 (100%) • Instructed the conduct of investigation on matters within its terms of reference. •Reviewed and noted the AEC’s minutes of meetings to obtain an overview of the deliberation and remedial actions taken by Management on the control lapses raised by the Internal Audit Sector. CORPORATE GOVERNANCE AEC Members 5.0 SUMMARY OF ACTIVITIES For the financial year ended 31 December 2021, the AEC had carried out the following activities in the discharge of its roles and responsibilities: 5.1 Financial Reporting Reviewed the quarterly unaudited financial results and the annual audited financial statements of the Bank and Bank Rakyat Group to ensure that the financial reporting and disclosure were in compliance with the accounting standards and regulatory requirements. 5.2 Annual Report Reviewed and approved the AEC Report for inclusion in Bank Rakyat’s Annual Report for Financial Year ended 31 December 2020. 5.3 Internal Audit • Reviewed and approved the annual audit plan as well as revision to the audit plan to ensure the comprehensiveness of audit scope and coverage over the activities of Bank Rakyat, its subsidiary and Yayasan Bank Rakyat (upon request) as well as the adequacy of Internal Audit Sector’s resources to carry out its functions. • Reviewed the Internal Audit reports, audit recommendations and Management’s responses to these recommendations. •Reviewed the status report on actions implemented by Management to rectify the outstanding audit issues to ensure control lapses were addressed. •Reviewed and deliberated audit findings related to Shariah non-compliance as well as the actions to be taken by the Management to resolve the issues prior to escalation to the Board. 5.4 External Audit •Reviewed with the external auditors the results of audit, the relevant audit reports, Management Letter and Memorandum of Recommendations together with Management’s responses/comments to the findings. •Ensured that there are proper checks and balances in place so that the provision of non-audit services does not interfere with the exercise of independent judgement of the auditors. • Assessed the performance of the external auditors and made recommendations to the Board on their reappointment. •Periodically reviewed and monitored the progress of actions taken to rectify audit findings raised by the external auditor to ensure the issues are being managed and rectified appropriately and in a timely manner. •Performed assessment on the external auditors prior to recommendation to the Board on its reappointment. The assessment was conducted in accordance with BNM’s Guidelines on External Auditor on principal areas covering performance, independence and objectivity. 6.0TRAINING The training attended by the AEC members is reported under the Statement on Corporate Governance. 143 CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
74. ANNUAL REPORT 2021 144 Audit and Examination Committee Report 7 .0 INTERNAL AUDIT FUNCTION The AEC is supported by Internal Audit Sector in the discharge of its duties and responsibilities. Internal Audit Sector provides independent and objective assessment on the adequacy and effectiveness of the risk management, internal controls and governance processes. Internal Audit Sector also carries out investigative audits where there are improper, illegal and dishonest acts reported. Internal Audit Sector reviews the effectiveness of internal control structures over the activities of Bank Rakyat, its subsidiary and Yayasan Bank Rakyat focusing on high risk areas as determined using a risk-based approach. All high-risk activities in each auditable area are audited annually. CORPORATE GOVERNANCE  Internal Audit Sector covers the review of the adequacy of risk management, operational controls, compliance with established procedures, guidelines, and statutory requirements, quality of assets, management efficiency and level of customer services, amongst others. These audits are to ensure that the established controls are appropriate, effectively applied and achieved acceptable risk exposures consistent with the Bank’s risk management policy. In performing such reviews, Internal Audit Sector made recommendations for improvement and enhancements to the existing system of internal controls and work processes. Internal Audit Sector also conducts audits on the information systems of Bank Rakyat to ensure that the computing resources are adequately secured to protect data integrity and confidentiality, availability of adequate measures to safeguard and provide for the continued availability of the system to support business operational needs.  Internal Audit Sector provides consulting or advisory functions in the evaluation of risk exposures of new systems, business products and services to assess the controls that should be in place to mitigate the risks identified prior to their implementation. In order to maintain its objectivity and independence, Internal Audit Sector is not involved in the system selection or implementation process when providing such consulting or advisory functions. All auditing activities are conducted in line with Bank Rakyat’s objectives and policies and in compliance with the relevant policies and guidelines issued by BNM and as guided by the Code of Ethics and International Standards for the Professional Practice of Internal Auditing promulgated by the IIA. During 2021, the activities undertaken by Internal Audit Sector were as follows: •Developed an annual audit plan using a risk-based approach, taking into consideration the Bank’s Strategic Plan, namely BR25, and inputs from the Management (as recommended by the Institute of Internal Auditors); •Provided independent assessment and objective assurance over the adequacy and effectiveness of risk management, internal control and governance processes through structured reviews of departments and operations identified in the annual audit plan; •Performed reviews on the draft unaudited quarterly financial statements to ensure the Bank’s conformity with applicable accounting and financial reporting standards as well as compliance with the relevant regulatory requirements; •Conducted periodical assessment to ensure that a sound and effective internal control system for Shariah compliance have been implemented; • Performed independent assessment and objective assurance designed to add value and improve the Bank’s compliance with Shariah; •Monitored and provided assurance on the soundness and robustness of the Bank’s Shariah governance framework; Audit and Examination Committee Report •Assisted the Shariah Committee in discharging its oversight role on Shariah matters related to the Bank’s business operations and activities through Shariah Audit’s observations and participations at Shariah Committee Meetings which enabled the Shariah Committee to identify issues that require its attention and where appropriate, to propose corrective measures; •Performed audits on the Bank’s information systems to ensure the adequacy of the systems’ security, controls and compliance with the relevant acts or regulatory requirements; •Attended Board of Directors, Board Sub-Committee, Management Committee, Project Working Committee (PWC) and Project Steering Committee (PSC) meetings in a consultative and advisory capacity to provide independent views pertaining to the governance and controls encompassing the Bank’s critical IT projects; •Provided assistance and consultation to the Bank in developing and enhancing the procurement function for IT projects; • Acted as an independent function in observing the Bank’s negotiation meetings for major IT project; • Participated in proposal paper review discussions for IT projects; • Conducted ad-hoc assignments and special reviews as instructed by the AEC, Management or BNM; •Participated in various Business Continuity Management exercises to ensure the Bank’s readiness in resuming/ recovering its operational activities and systems in the event of disaster within the expected timelines; • •Recommended improvements and enhancements to the existing system of internal controls, work procedures/ processes, relevant guidelines, and department manuals; • •Prepared the Audit and Examination Committee Report for Bank Rakyat’s Annual Report for Financial Year ended 31 December 2020. The total costs incurred for the Internal Audit Sector of Bank Rakyat for 2021 is RM11,884,866.60. Ascertained the level of compliance with established policies and procedures and statutory requirements; Conducted investigation into activities or matters as instructed by the AEC and Management; and 145 CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
75. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Risk Management Committee Together We Can ! Liquidity Resiliency Forging Unity and Harnessing Synergies in The Face of Volatility and Hardship Emerging from the worst of the pandemic, resilience was fortified across all operations against a new backdrop in the financial ecosphere with the introduction of various financial assistance programmes, moratoriums and new platforms for conducting business. Economic and social disruptions caused by the COVID-19 pandemic continued to hit all industry sectors in 2021. As the nation continued to sail through unprecedented terrain, Risk Management through its role as the second line of defence continued to manoeuvre the Bank’s direction through an uncharted landscape. Bank Rakyat’s Risk Strategy 2021 was established by Risk Management in collaboration with all business units to ensure that the Bank is able to continue to fulfil our mandated role without prejudicing our profitability and our customers’ financial wellbeing. As an agency under the Ministry of Entrepreneur Development and Cooperatives (KUSKOP), Bank Rakyat continued to support the Government’s initiatives in line with the announced National Budget 2021 and Pakej Perlindungan Rakyat Dan Pemulihan Ekonomi (PEMULIH). On this note, the Policy for Payment Assistance Programme was reviewed in accordance with the said initiatives and requirements as delineated by Bank Negara Malaysia (BNM). CORPORATE GOVERNANCE Risk Management Committee Risk Management continued to be an active participant within the War Room Committee (WRC) where the Chief Risk Officer (CRO) has been given the role of an Alternate Chairman to closely monitor payment assistance granted by the Bank. In-depth analysis was conducted to prudently monitor asset quality and credit risk concerns were proactively highlighted based on monthly market updates to ensure the Bank remained resilient. In support of the Government’s effort to assist Small and Medium Enterprises (SMEs) businesses affected by the COVID-19 pandemic via the introduction of various funds, Risk Management provided technical assistance to simplify the credit underwriting process. Predefined parameters were aligned with the minimum acceptance criteria, as recommended by the regulator/fund providers to expedite the approval process. Risk management is committed to ensure Expected Credit Loss (ECL) computed from the MFRS9 impairment model is sufficient by performing model calibration for the financial year 2021. The model has been validated by an external party, and is deemed robust and able to cushion the Bank from all expected future adversity that may arise. Moreover, to ensure the Bank’s financials remain resilient, the Credit Risk premium is periodically reviewed. The year’s unprecedented events required the Bank to play a more expansive role in supporting the needs of society and our customers. Priority was placed on a #kitajagakita approach as most of our customers’ income were impacted by the COVID-19 outbreak. Stress Testing and Reverse Stress Testing were used as key risk management tools to evaluate the capital adequacy of the Bank. The tests were carried out to assess the impact of a range of adverse scenarios with different probabilities and severities. The outcome from stress testing indicates the Bank’s capital position remains strong, with continued business momentum and balance sheet growth. As the country continues to stabilise and taking prudent steps to end the pandemic phase, the Bank will continue to practice good risk management in facing volatility and hardship. Ensuring Sustainable Growth and Return The pandemic was expected to finally fade into the background in 2021. By leveraging on emerging opportunities, the Bank geared all resources to focus on growth. The strategy to strive for an optimal balance sheet through assets and funding diversification, reflective of the internal and external market conditions, served as a guide in harmonising both risk and reward. The Bank’s key strategy in balance sheet management was to focus on targeted growth and realigning the portfolio composition. The investment portfolio strategy was directed towards maintaining an adequate level of high-quality liquid assets, in line with compliance requirements and ensuring sufficient growth to cater for return requirements. Throughout the year, the Bank concentrated on managing structural risk exposures, namely rate of return and liquidity risks, which guarantee a healthy balance sheet and safeguard returns. The exposure in the rate of return risk was managed through capital reserving and portfolio composition diversification. This emphasised the growth of floating rate financing and current and savings accounts. With commitment to the implemented plans and action steps put forward over the years, the Bank has successfully managed to ensure that the rate of return risk exposure level is within prescribed best practice levels. 147 The Bank adapted to these new variables and ensured liquidity resiliency, recording an adequate liquidity position, with key liquidity ratios such as Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) well above the prescribed minimum requirements. These are supported by the Bank’s comprehensive liquidity risk strategy and management. The Bank accelerated efforts to enhance diversification in liability structure with the primary objective on the stability of funding sources via growth in customer deposits, interbank deposits and medium-term funds. Liquidity risk positions are monitored regularly against the established liquidity risk management framework, policies and procedures. The Bank uses a range of tools to monitor and control liquidity risk exposure, such as intra-day cash flow position, liquidity mismatch gap, concentration of deposits, availability of funding, stress testing, and reverse stress testing. The process of managing liquidity risk includes maintaining enough unencumbered high-quality liquid assets as a protection against any unforeseen interruption to the Bank’s cash flows. The Bank has in place a Liquidity Contingency Funding Plan (LCFP) formulated to provide a systematic approach in addressing potential liquidity crisis or funding disruption affecting its liquidity soundness and financial solvency. The LCFP comprises strategies, decision-making authorities, communication channels and processes as well as courses of action for management to make prompt decisions. The plan is reviewed and tested regularly to ensure its effectiveness and robustness in handling liquidity crisis events and to meet the Bank’s obligations in a timely manner and at a reasonable cost. Maintaining and managing market volatility As a second line of defense, the Treasury Risk Department consistently monitors the Bank’s financial instruments’ (Foreign Exchange, Money Market, Fixed Income and Equity) performance through identifying, measuring, monitoring, and reporting Market Risk limits such as Value at Risk (VaR), Management Action Trigger (MAT), stop loss and sensitivity limits, on a daily and monthly basis, to ensure the trading is in or within the Bank risk parameters. This ongoing effort is crucial to ensure accurate risk recognition, which includes the identification and measurement of market risk factors in line with the Bank’s risk appetite. Risk appetite is translated into risk thresholds which are approved by the Board. These risk thresholds align specific risk-taking activities with the overall risk appetite of the Bank and our business units, i.e., the Treasury Sector. In addition, Treasury Risk continued to support lines of business to develop dynamic tools in managing the Bank’s portfolio risk during the economic uncertainty, as the pandemic slowdown persisted throughout the year. The adherence or compliance to the Market Risk policy, i.e. Trading Book Policy (TBPS), is to avoid undue concentration of market on profit rate risk, equity risk, foreign exchange risk, and commodity price risk. The guided policy for trading and non-trading activities is prepared with a benchmark against best market practices and adheres to regulatory requirements. The Treasury Risk Department ensures timely early warning is provided when risk thresholds are to be reached or exceeded, hence allowing the Treasury Department to manage their exposure within the risk thresholds. Besides that, a periodic review of Bank Rakyat’s Trading Book limits is essential to cater to the anticipated changes in risk profiles and business strategy. The robust Treasury trading system, reporting and data solution empowered the Bank to remain resilient during the pandemic. For that reason, Bank Rakyat continues to invest resources into process and system improvements, which help define and control inherent risks within the Bank. The enhancement initiatives on the Treasury system, led by the IT team in collaboration with the Front, Middle and Back Office teams, are to ensure the current system used is at par with industry practices, and provides a working environment suited to address the Business Continuity Plan during the crisis. CORPORATE GOVERNANCE 146
76. ANNUAL REPORT 2021 CORPORATE GOVERNANCE 148 Statement of Internal Control Risk Management Committee Resilience in Times of Crisis Responsibility Despite the expectations of economic recovery in 2021 , the emergence of new COVID-19 variants and the rising number of cases changed the scenario and delayed recovery expectations. Making it worse, in 2021, Malaysia experienced the worst flood in the country since 2014 – 2015. This was declared as a “once in a century” disaster. The intersection of both events disrupted the Bank’s operation, due to the numerous closures of affected branches and impact on the health of our customers. In accordance with BNM’s Policy Document on Corporate Governance, the Board acknowledges its responsibility to oversee the Bank’s internal control framework’s implementation. In fulfilling its fiduciary duty, the Board recognizes the importance of setting the right tone at the top, and the Board has consistently emphasised that control responsibilities must be taken seriously. As long-term adjustments to the new norm were enforced, there were calls for new initiatives and collective efforts to minimise systemic disruption in factoring the impacts. Relocation of the Bank’s alternate sites to a new centralised location have been initiated to better coordinate our operations whilst safeguarding the continuity of the business during such periods of volatility and uncertainty. Apart from ensuring the establishment of a sound internal control system, one of the Board’s primary responsibilities is to review the effectiveness and suitability of the internal control framework in light of material changes to the size, nature and complexity of the Bank’s operations. In order to form an opinion regarding the effectiveness of the internal control system, the Board would obtain from Management the necessary assurance that appropriate policies have been implemented and that the controls in place are adequate and functioning effectively. By sharing our practices and challenges on operational risks with the industry, we hone our agility to handle emerging risks. Bank Rakyat was a panelist at the 9th Head Operational Risk Consultative Group, where we stood alongside other operational risk players to discuss risk management of outsourcing, which includes concentration risk and substitutability risk during disasters. While the Board sets the ‘tone at the top’, it is the Management’s responsibility to implement the established policies and procedures. The Management is also responsible for identifying and evaluating the risks faced by the Bank as well as designing, implementing and monitoring an appropriate internal control system. Continuous efforts were made to build a cohesive risk management organisation that serves the dual needs of supporting the business and support units through sharing expertise and best practice, whilst at the same time ensuring appropriate risk controls are always in place. A series of Operational Risk Awareness Programmes have been activated to help set an effective Top-Down Approach with Risk Agents at respective regions. These assemble collective efforts to inculcate risk culture at the first line of defense and ensure that all related Operational risk tools are clearly understood and comprehensively executed in tackling the rise of new emerging risks. In view of the inherent limitations of any risk management and internal control system, the Board takes cognisance that such a system can only provide reasonable assurance, rather than absolute assurance, that the Bank’s objectives will be met and that it will be protected from material financial misstatement, fraud or losses. Our unity as an institution in successfully navigating through the unprecedented events of 2021 is the key pivot by which we can brave another such year in the foreseeable future. Now, more than ever before, organised coordination and efforts are required from each and every stakeholder, as encapsulated by our belief that ‘Together We Can!’. The critical components of the Board’s established internal control system that ensures effective governance and oversight of internal controls include, amongst others, the following: Staying Ahead of Technology and Cybersecurity Threats As financial institutions today are more reliant on complex technology, the risk of system failure and data compromise are comparatively high. To remain operationally resilient, the Bank continuously strengthens Technology Risk functions through effective identification of technology and data related risks subsequently reducing and managing those risks by developing appropriate response plans to enhance the Bank’s technology risk posture. With the challenges that arose from the COVID-19 pandemic, cyber security threats continue to evolve, posing the same theme of malicious threat actors taking advantage of the vulnerabilities that could be found on one’s systems or computer networks. Rapid large-scale adoption of digital business and remote working have accelerated opportunities for these threat actors to exploit the unprecedented landscape. In 2021, Malaysia reported eight significant cases of personal data leakage involving 67.5 million personal records of users, and the number of ransomware attacks continues to rise 1. Key Internal Control System • Organisation Structure  The Board has established an organisational structure with clearly defined lines of responsibility, authority limits and accountabilities, which are aligned with business and operations requirements to support the maintenance of a robust control environment. In order to effectively carry out its responsibilities, the Board has delegated authority to various Board Committees including the Board Nomination and Remuneration Committee, Board Risk Committee, Audit and Examination Committee, Board Financing Committee, Board Integrity and Governance Committee, Board IT Committee, Board Tender Committee and Board Investment Committee to oversee specific responsibilities based on the approved terms of reference. Any amendment to the Board Committees’ terms of reference requires the Board’s approval.  As a full-fledged Islamic financial institution incorporated in Malaysia, Bank Rakyat has also established the Shariah Committee to ensure compliance of all activities, products, transactions, operations and zakat management of Bank Rakyat and all of its subsidiaries at all times. The Bank remains committed and has taken proactive measures to stay ahead of cyber threats by prioritising technology investment that ensures our data protection and payment security are secure and up to standards. The Chief Information Security Office (CIS Office) continuously aligns the Bank’s cyber security programme with risk strategy and enhances our capabilities to continuously monitor and respond to threats by elevating cyber security effectiveness and scalability across Information Security, Security Operations Centre as well as Threat Intelligence and Research functions. Regular activities that raise staff awareness, familiarity and alertness on technology and cyber threats and incidents and cyber drills have been carried out continuously. • Moving Forward The AEC actively oversees the work and performance of the IA function. In discharging its duties, the AEC meets periodically to review key audit reports (including reports on internal controls, risk management processes, compliance with statutory requirements and governance practices) and ensure that the Management is taking necessary corrective actions in a timely manner to address control weaknesses, non-compliance with laws, regulatory requirements, policies and other problems identified by the Internal Audit and other control functions. Bank Rakyat is focused on sustainable progress, in line with the Bank’s Sustainability Blueprint and regulatory requirements on Climate Change and Principles-based Taxonomy (CCPT) and Climate Risk Management and Scenario Analysis (CRMSA) by BNM. Towards this end, the Bank will develop a policy on sustainability risk management to manage our exposure in line with the key principles or requirements of BNM’s CCPT and CRMSA, as well as Value-based Intermediation (VBI).   Source: Malaysia Kini, 22 December 2021, https://www.malaysiakini.com/news/604088 1 Oversight by Audit and Examination Committee  The Audit and Examination Committee (“AEC”) is a committee, which comprises of only independent non-executive directors, established by the Board to assist in the execution of its governance and oversight responsibilities as well as to provide independent assurance to the Board that the risk management, internal control systems and governance processes are functioning effectively through the Internal Audit (“IA”) function. 149 CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
77. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statement of Internal Control • Management Committees  Management establishes various Management Committees (Executive-level) to assist and support the various Board Committees in overseeing the core areas of business operations. These Committees include amongst others the Management Committee (MANCO), Management Risk Committee (MRC), Financing Committee A, Financing Recovery Committee, Asset and Liability Committee (ALCO), Management Tender Committee (MTC), Management Investment Committee, Information Technology Steering Committee (ITSC) and Crisis Management Team. • Annual Business Plan and Budget The Board deliberates and approves the annual business plan and budget, which are developed in accordance with the Bank’s strategic objectives. Periodically, the performance achievements are reviewed against the targeted results, allowing time for the necessary responses and corrective actions. • Second Line of Defence Functions CORPORATE GOVERNANCE The second line of defence functions assist the Bank in building and/or monitoring the first line of defence controls to ensure that the controls embedded in the operation processes are properly designed, in place, and functioning as intended. • Risk Management Sector  Risk Management Sector performs independent assessment and monitoring of risk-taking activities and ensure the risk profile and policies remained accommodative for business growth without transgressing the Bank’s Risk Appetite Statement. In promoting sound implementation of risk management, the Bank has established relevant framework and policies in managing the risk-taking activities, for example, Group Risk Management Framework and dedicated policy for each type of risk (e.g., Credit Risk, Market Risk, Liquidity Risk, Operational Risk etc). The framework and policies have been established in tandem with the relevant regulatory requirements issued by BNM. Statement of Internal Control Corporate Integrity on the other hand governs the Anti-Bribery and Corruption objectives, strategies and control measures via implementation of four (4) core functions namely: • • • • Integrity Integrity Integrity Integrity Governance Detection and Verification Complaint Management Enhancement In addition, FRCI promotes and embrace Zero Tolerance towards Fraud, Bribery and Corruption through awareness among stakeholders having business relationship with Bank Rakyat as well as recommendation value added proposition in the fulfillment of the business partner role. • Internal Audit Function As the third line of defence, Internal Audit Sector (“IAS”) serves as an independent function that provides objective assurance and consulting activity that is guided by a philosophy of adding value to improve the operation of Bank Rakyat. IAS is committed in bringing a systematic and disciplined approach to evaluate and improve the effectiveness of Bank Rakyat’s governance, risk management and internal control. It is headed by the Chief Internal Auditor, who reports functionally to the AEC and administratively to the Chief Executive Officer. The internal audit activities are governed by the relevant regulatory guidelines, the Bank’s Code of Ethics and the International Standards for the Professional Practice of Internal Auditing (Standards). Note: More detailed description of the Internal Audit function is highlighted in the Audit and Examination Committee Report. • Policies and Procedures The Bank established a set clearly defined policies and procedures to ensure compliance with internal controls and the prescribed laws and regulations. These policies and procedures will be updated from time to time to cater any changes in the business environment or regulatory guidelines. These documents are published and accessible by all employees in the Bank’s portal. •Compliance • Compliance’s commitment is to ensure that the Bank operates with integrity and adheres to applicable laws, regulations and internal policies. Compliance sectors provides oversight, coordination and consultation of bank’s compliance towards regulatory requirements including Shariah and Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA).  This Code describes the values and minimum standards for ethical business conduct for all Bank’s employees. All employees of the Bank are expected to perform business activities and represent the Bank with the highest ethical, legal and professional standards. Code of Business Conducts and Ethics These are achieved through reviews and monitoring to assess the overall effectiveness of business’ compliance practices. Compliance sectors also assists and advices business to ensure regulatory requirements are served whilst ensuring bank’s responsibilities to stakeholders and business objectives are met. Additionally, the sector actively engages in continuous awareness programme to inculcate compliance culture within the Bank.  This Code also consists of the Bank’s consequence management in Disciplinary Procedure. The Bank’s consequence management provides a detailed and comprehensive guideline for disciplinary management, which consists of employee behavioral, fraud, integrity, and compliance. The Bank’s consequence management was reviewed once in 2021 to ensure this Code is relevant to the current employment environment, best industry practices and in line with employment law requirements. • • Fraud and Corporate Integrity (FRCI) Function FRCI is established and reports directly to the Board of Directors of Bank Rakyat. FRCI executes and prevents the conduct of fraudulent act through bank-wide Fraud Management Framework inclusive of 3 prong approaches namely Fraud Prevention, Fraud Detection and Fraud Response. 151 Task Force Officers Task Force Officers (“TFO”) act as Compliance Officers that perform monitoring to further strengthen the level of compliance culture at branches. The TFO are assigned at every region and are entrusted to perform site visits and review on branches under their purview are in compliance with the internal Policies and Procedures, minimize Regulatory, Laws, Audit, Compliance or Shariah findings. The TFOs function is important to ensure that the branch operations remains compliant at all times and to strengthen the internal process by conducting regular review in ensuring that branch operations and activities of the branch are conducted within internal policies and regulatory requirements. CORPORATE GOVERNANCE 150
78. ANNUAL REPORT 2021 Shariah Committee Terms of Reference 152 1 .0INTRODUCTION CORPORATE GOVERNANCE Establishment of Shariah Committee (“SC”) of Bank Rakyat is a requirement by Bank Negara Malaysia (“BNM”) pursuant to Section 33 F of the Development Financial Institutions Act 2002 (DFIA). The purpose is to ensure all activities, products, transactions, operations and zakat management of Bank Rakyat and all of its subsidiaries are Shariah compliant at all times as a full-fledged Islamic financial institution incorporated in Malaysia. 2.0 REPORTING LINE 2.1 3.0 FORMATION OF SHARIAH COMMITTEE Shariah Committee Terms of Reference 3.7Majority members of SC should be able to demonstrate strong proficiency and knowledge in written and verbal Arabic and have good understanding in Bahasa Malaysia and English. 3.8The SC member is not considered an SC member and disallowed to perform the roles of SC upon expiry of the appointment term until fresh approval is obtained from BNM. 4.0 CESSATION AND DISQUALIFICATION 4.1Pursuant to section 12.3 of the Shariah Governance Policy Document issued by Bank Negara Malaysia (BNM), a person is disqualified from being appointed or reappointed, accepting any appointment or reappointment or holding office as a Shariah committee member of the bank if: The SC shall report directly to the Board of Directors (“BOD”) and shall be recognised as an independent committee. a)he is an undischarged bankrupt, has suspended payments or has compounded by his creditors whether in or outside Malaysia; 3.1The appointment of the SC members must obtain prior written approval from BNM and BOD upon recommendation by the Nomination Committee. b)a charge for criminal offence relating to dishonesty or fraud under any written law or the law of any country, territory or place outside Malaysia, has been proven against him; or 3.2SC member must fulfill the ‘fit and proper’ criteria to become an SC as described in Shariah Governance Policy Document (SGPD/BNM) as follows: c) a) the person is a Muslim individual. b)the person has been assessed to have met the requirements specified in the policy document on “Fit and Proper Criteria” on a continuous basis; and c) the person is either: i. a Shariah qualified person; or ii. an expert who possesses skills, knowledge and experience relevant to support the roles and responsibilities of the SC. In determining a Shariah qualified person, the SC must fulfils the following: a)holds, at minimum, a bachelor’s degree in Shariah, which includes study in Usul Fiqh (principles of Islamic jurisprudence) or Fiqh Muamalat (Islamic transaction/commercial law); b)possesses solid knowledge in Shariah with reasonable Islamic finance knowledge and experience of the relevant industry; and c)demonstrates strong proficiency and knowledge in written and verbal Arabic, with good command in the preferred language of the bank, either Bahasa Malaysia or English language. 3.3 The SC shall comprise of at least five (5) members as required by SGPD/BNM. 3.4Majority members in the SC shall have qualified Shariah background with at least bachelor’s degree in Shariah, which includes study in usul fiqh (origin of Islamic law) or fiqh muamalat (Islamic transaction/commercial law) from a recognized university. 3.5 3.6The SC may comprise experts with diverse qualification, experience and knowledge to support the depth and breadth of the Shariah deliberations. Chairman of the SC shall have qualified Shariah background. under any law relating to prevention of crime, drug trafficking or immigration; (i) an order for detention, supervision or deportation has been made against him; or (ii) any forms of restriction or supervision by bond or otherwise, has been imposed on him. Where any criminal proceeding is pending in any court for any offence referred to in paragraph 4.1(b) against a SC member of the bank, such person shall not: (a) (b)be concerned with, take part or engage in, any manner, whether directly or indirectly, in any activity, affairs or business of, or in relation to, the bank, act in such capacity, hold any other office or act in any other capacity, in the bank; or except as may be permitted by the BOD subject to such conditions as may be specified by the bank. For the purpose of this paragraph, “criminal proceedings” shall be deemed to be pending from the date that the accused person is first charged in court for the offence until the date of the final conclusion of the proceedings, whether in the court of original jurisdiction or, in the event of any appeal by any party, in the court of final appellate jurisdiction. 4.2 SC member or his immediate family member must not: a)be an executive of the bank during the tenure of his appointment or within the last two (2) years of his proposed appointment as a SC member; b) c)have a significant business or other contractual relationship with the bank or any of its affiliates within the last two (2) years. 4.3 SC member must not serve the bank for more than nine (9) years . 4.4SC member must not have competing time commitments that may impair his ability to discharge his duties effectively. In respect of multiple appointments, a SC member is required to manage his commitments effectively, observe professional objectivity and confidentiality in carrying out his duties. be a substantial shareholder, executive director or senior officer of the bank or any of its affiliates; or 153 CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
79. ANNUAL REPORT 2021 154 Shariah Committee Terms of Reference 4 .5SC member must not accept any appointment in more than one licensed Islamic bank, one licensed takaful operator and one prescribed institution. 4.6 4.7SC member must immediately disclose to the BOD any circumstances that may affect his ability to meet the minimum requirements. 4.8Secretariat of SC must submit an application in writing to the BNM for the purpose of appointment and reappointment of SC members and chairman of the SC at least three (3) months before it expects a proposed candidate to assume his responsibilities. In the case of reappointment, the application must be submitted three (3) months prior to the expiry of the SC member’s tenure. All applications shall be made using the form enclosed in FI@KijangNet portal. 5.11 5.12Where the SC has reason to believe that any Shariah issues or matter may affect the safety and soundness of the bank, the SC must immediately update the BOD on such matter. 5.13In cases where the SAC/BNM has not made any rulings on a particular matter or the SC is not able to arrive at a decision or advice, the bank shall refer to the SAC/BNM for a ruling in accordance with Manual Rujukan Institusi Kewangan Islam kepada Majlis Penasihat Syariah. Any requests for a ruling or advice shall be communicated through the Secretariat of the SAC/BNM. 5.14Advice the bank on the calculation, allocation and distribution of zakat and validate the list of zakat recipients postdecision of JZPBA. 5.15Abstain from making decision which is not in line with the ruling of SAC/BNM which may violate the Central Bank of Malaysia Act 2009. 5.16Retreat of Shariah decision issued by SC in the event of issuance of new and/or revised Shariah resolutions and decisions made by SAC/BNM and SAC/SECCOM. In line with the Shariah Governance Policy Document issued by Bank Negara Malaysia (BNM), the SC during the discharge of its duties shall: 5.1Responsible and accountable for all Shariah decisions, views and opinions issued on Shariah matters to ensure the operations, business, affairs and activities of the bank are in compliance with Shariah. 5.17Harmonize the conflict between Shariah and legal approaches to gradually lead bank’s practices towards the best globally accepted Shariah practices. 5.2Advice, provide input and necessary assistance on Shariah matters to BOD, bank’s stakeholders and parties associated with bank’s business operations and activities including the activities of its subsidiary and cooperatives regulated by Suruhanjaya Koperasi Malaysia (SKM) which consult or refer to the bank on case by case basis to ensure compliance with Shariah requirements at all time. SC member must not be an active politician. In line with the Shariah Governance Policy Document issued by Bank Negara Malaysia (BNM), the SC during the discharge of its duties shall: 5.0 CORPORATE GOVERNANCE Shariah Committee Terms of Reference ROLES AND RESPONSIBILITIES Accountable for the quality, accuracy and soundness of its own decision or advice. 5.18Inform BNM on SNC activities in the event they are not effectively or adequately addressed or no rectification measures are made by the bank. 5.19 Regularly inform the BOD on relevant Shariah matters. 5.20Disclose sufficient information relating to Shariah as required by BNM in the Annual SC Report which is embedded in bank’s annual report and endorse the annual report prior to publishment. 5.21Act as Shariah spokesperson to respond on Shariah related inquiries during bank’s annual general meeting or any public events which involve Bank Rakyat. 5.22Observe the principle of confidentiality in relation to the bank’s business, operations and affairs at all times whereby all information obtained shall not be used in the manner that could be detrimental to Bank Rakyat. 5.3To adopt the resolutions of Shariah Advisory Council of Bank Negara Malaysia (SAC/BNM) and Shariah Advisory Council of Securities Commission (SAC/SECCOM) upon publishment in deriving Shariah decisions and to highlight to Management and BOD in the event SC invokes its right to adopt stringent decisions as permissible by BNM. 5.4Perform oversight role on Shariah matters related to the bank’s business operations and activities including its subsidiaries and guide the bank and its subsidiaries on the implementation of Shariah decisions issued. 5.5Providing a decision or advice on the operations, business, affairs and activities of the bank which may trigger a Shariah non-compliance event. 5.23Other responsibilities being assigned by BOD from time to time or any Shariah matters that require SC’s immediate attention. 5.6Deliberate, validate and endorse all matters related to Shariah Non-Compliance (SNC) event, rectification measures and purification process including the list of beneficiaries of tainted income for further reporting to BOD. 5.24Free from association or circumstances that may impair the exercise of SC’s professional objectivity in arriving a Shariah decision or advice. 5.7Assess and validate works which include Shariah research, takyif fiqhi (adaptation of Shariah ruling), report and finding carried out by all Shariah functions inclusive of Shariah Research and Advisory, Shariah Review, SRM and Shariah Audit in order to ensure Shariah compliance. 5.25 5.26Ensure consistency in providing his views and must not act in a manner that would undermine the rulings of the SAC/BNM or any decisions of the SC that they represent. 5.27Disclose the nature and extent of his interest that constitutes or gives rise to a conflict or potential conflict of interest upon the appointment, reappointment or as soon as there is any changes in his circumstances that may affect his status. 5.28Continuously develop a reasonable understanding of the business and operations of the bank and keep abreast with relevant market and regulatory developments. The chairman of the SC must lead efforts to manage the SC’s developmental plans. 5.8Approve and provide written confirmation on Shariah compliance of bank’s product proposal based on proper support of takyif fiqhi and confirmation whereby no contradiction against SAC/BNM ruling is identified in the product proposal for the purpose of new product approval submission to BNM. 5.9Endorse and approve all frameworks, policies, procedures and any other applicable documents relating to Shariah and ensure the contents do not contain any elements which are not in line with Shariah. 5.10Endorse and validate all relevant documentations relating to products, business and operations including, but not limited to, legal documents, product policies and procedures, product manual and marketing collaterals to ensure compliance with Shariah requirements with exception to certain specific tasks empowered to a specific internal Shariah functions by recorded decision of SC in consensus. 155 Devote sufficient time to prepare for and attend Shariah committee meetings. CORPORATE GOVERNANCE BANK KERJASAMA RAKYAT MALAYSIA BERHAD
80. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Shariah Committee Terms of Reference Shariah Committee Terms of Reference 6 .0 SHARIAH COMMITTEE MEETING 7.0 SECRETARY AND SECRETARIAT TO SHARIAH COMMITTEE 6.1The 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 of the Shariah committee must: 7.1Head of Shariah who is qualified Shariah personnel shall be appointed by SC as the Secretary to SC. Secretary to SC has no voting power in decision making by the SC. 7.2Secretary to SC, or an alternate secretary appointed by the Secretary to SC in his/her absence with apology, should attend all SC meetings and should maintain accurate and adequate records of any action deliberated during the meetings. All records regarding SC meeting shall be reviewed by the Secretary prior to escalation. a) ensure appropriate procedures are in place to govern the SC’s deliberations and proceedings; b) act as a direct liaison between the BOD and SC 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; 7.3The function of Shariah Secretariat to SC is assigned to SC Secretariat under the Shariah Research and Advisory Department. d)encourage healthy discussion, participation and contribution, and ensure that dissenting views can be freely expressed and discussed; and 8.0 FREQUENCY OF SHARIAH COMMITTEE MEETING e) ensure sufficient records of the discussion leading to formulation of the SC’s decision or advice are maintained. 8.1 6.2 SC meeting can be facilitated by means of video or telephone conference as an alternative. 9.0 NOTICE OF MEETING 6.3Secretariat of SC must ensure that attendance of members at a Shariah committee meeting, by way other than physical presence, remains the exception rather than the norm, and is subject to appropriate safeguards to preserve confidentiality of the deliberations. 9.1The notice for each meeting confirming the venue, date and time together with the agenda of the meetings shall be forwarded to each member of the SC at least five (5) days prior to the date of the meeting. 6.4Secretariat of SC must provide the SC with access to all information required and ensure that the information provided is timely, accurate, comprehensive and clear. 10.0 QUORUM FOR MEETING 6.5MANCO must provide the SC with access to advice from third party experts on any matters deliberated by the SC as and when required, and the cost of such advice shall be borne by the bank. 10.1Minimum quorum for SC meetings shall be 2/3 with majority attending are Shariah qualified members to be present at each meeting. 6.6In relation to paragraphs 6.4 and 6.5, any party with the knowledge or awareness of a Shariah committee’s access to any relevant information or request for third party expert advice being declined, denied or withheld by any officers or employees of the bank, the SC must inform the BOD of the situation. The BOD shall take appropriate action to rectify the situation. 10.2In the event Chairman of SC is unable to attend the SC meeting, the members shall elect one (1) member among themselves to become the alternate Chairman with qualified Shariah background to preside over the meeting. 10.3Any member who participates in the meeting via tele-conferencing device shall be counted for the purpose of determining a quorum. For avoidance of doubt, reference to “any party” in this paragraph shall include a SC member. 6.7While the BOD or MANCO may provide useful insights on any business, technical or operational matters discussed during a Shariah committee meeting, the BOD and MANCO must not exercise undue influence that could hinder the SC in exercising objective judgment in its deliberations and decision-making. 6.8Chief Executive Officer (CEO), Chief Risk Officer (CRO), Chief Internal Audit (CIA), Chief of Compliance and Governance and other members of Management may be invited on per meeting invitation basis to provide explanation to SC on matters arising and/or papers presented. 6.9 Bank Rakyat shall ensure potential Shariah non-compliance events must be tabled at SC meeting within the regulatory timeline. SC shall be called for ad-hoc meeting to ensure compliance with regulatory requirement on the confirmation of SNC events. 6.10SC must confirm on the potential SNC events presented as to whether it is SNC or non-SNC and approved the rectification plan. This decision must be clearly reflected in the SC’s meeting and minutes. 157 The SC meeting shall be held at minimum, at least once in every two (2) months. 11.0ATTENDANCE 11.1The SC members must attend at least 75% of the SC meetings held in each financial year, except with reasonable excuse, at venue determined by Shariah Secretariat to the SC in or outside Malaysia. The SC must not appoint another person to attend or participate in Shariah committee meetings on his behalf. 12.0 DECISION OF MEETING 12.1Any decisions during the SC meeting shall be made on the basis of simple majority. Majority of the 2/3 votes shall come from Shariah qualified members. 12.2If a matter to be brought before the SC gives rise to a conflict of interest to any SC members, the SC must excuse himself from the discussion and abstain from voting on that particular matter. 12.3Any dissenting view by member of SC shall be properly recorded with justification and he/she reserves the right to abstain from voting in decision making. 12.4In reaching to the decision on matters referred to the SC, the SC must always observe the methodology of Shariah decision making process as detailed out in Shariah Governance Framework of Bank Rakyat. CORPORATE GOVERNANCE CORPORATE GOVERNANCE 156
81. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Shariah Committee Terms of Reference Shariah Committee Terms of Reference 13 .0 CIRCULAR RESOLUTION 13.1Decision by the SC may be made via circular resolution where the mode of communication can be via telephone, email, mobile meeting apps, facsimile etc. 16.3The appointed SC as BOD member or the SC representative shall provide advices on Shariah related matters only without intervening into other than the coverage of roles and responsibilities of the SC. 13.2Decisions made via circular resolutions are deemed effective after being executed by two-third (2/3) of the members with majority of the votes shall be members with qualified Shariah background. 16.4Seating fee paid to the appointed SC as BOD member or the SC representative who attends the meeting is subjected to BOD’s approval and/or review from time to time upon recommendation by the Remuneration Committee. 13.3 17.0 ADVISOR TO JAWATANKUASA ZAKAT PERNIAGAAN BANK DI BAWAH ASNAF 14.0 MINUTES OF MEETING 17.1Two (2) of the SC members are appointed as an advisor to JZPBA to ensure the management of zakat is compliant with Shariah. 14.1Secretariat of SC shall ensure that clear and accurate minutes of SC meetings are maintained to record the decisions or advice of the SC, including the key deliberations, rationale for each decision or advice made, and any significant concerns and dissenting views. 17.2 14.2All Shariah decisions made by the SC must be documented in the form of meeting minutes or resolution by circulation including views and opinions from all of the SC members. 17.3The SC representative or zakat advisors shall provide advices on zakat matters which cover the zakat calculation, allocation, distribution, issue of had kifayah (sufficient amount) and asnaf qualification related matters to be in line with Shariah principles and requirements. 14.3The Shariah decisions should be written precisely, concisely and free from any confusing details that may lead to blights and preachy expressions that have nothing to do with serving the purpose. 17.4Seating fee paid to the advisors is subjected to BOD’s approval and/or review from time to time upon recommendation by the Remuneration Committee. 14.4 18.0 SHARIAH COMMITTEE’S ANNUAL REPORT 14.5The meeting minutes shall be signed by all SC members attended the meeting while the resolution by circulation is valid upon signing by at least 2/3 of the SC members. 18.1 14.6SC Secretariat is responsible and accountable for management of documentations relating to Shariah decision issued by the SC. 14.7Formal decision of SC shall be submitted to MANCO and BOD at least on quarterly basis for notification and circulation to respective division/department shall be done on post-meeting basis upon review by the Secretary of SC and validation by the Chairman of SC. All decisions made via circular resolution shall be presented at the subsequent SC meeting for notification. Any dissenting views by the SC members shall be clearly recorded in the meeting minutes. 15.0 DELEGATION OF AUTHORITY 15.1The SC may be delegated any of its responsibilities to Shariah functions to expedite the approval process base on case to case basis. 15.2The SC must remain fully accountable for the decisions and any ensuing implications arising from the delegated responsibility. 16.0 REPRESENTATION IN BOARD OF DIRECTORS MEETING 159 JZPBA meeting can only be conducted with the present of at least one (1) of the appointed advisors. The Shariah Committee’s Annual Report shall disclose: a) responsibilities of the SC relating to Shariah governance; and b) opinion on the state of the bank’s compliance with Shariah. 18.2SC is required to report all approved and launched products for the year, disclose sufficient information relating to Shariah which is embedded in Bank Rakyat’s annual report, confirm the management of Zakat is compliant to Shariah and endorse the annual report prior to publishment. 18.3 The Shariah Committee’s Annual Report must also address all information required by BNM as per Shariah Governance Policy Document issued by BNM. 18.4Secretariat of SC shall disclose the number of SC meetings held during the financial year and the attendance of every SC member in the bank’s annual report. 18.5SC shall not disclose any information in the bank’s annual report which is false, misleading, inaccurate or incomplete. 18.6 The Shariah committee’s opinion on the state of the bank compliance with Shariah shall be expressed as follows: (a)nothing has come to the Shariah committee’s attention that causes the Shariah committee to believe that the operations, business, affairs and activities of the bank involve any material Shariah non-compliances; or 16.1In relation to paragraph 12.10, Shariah Governance Policy Document issued by BNM, one (1) of SC members may be appointed as BOD member to serve as a bridge between SC and BOD in matters pertaining to Shariah and expected to foster closer integration of Shariah governance consideration within the business and risk strategy of the bank. (b)the overall operations, business, affairs and activities of the bank are in compliance with Shariah but it has come to the Shariah committee’s attention that a material Shariah non-compliance event(s) has occurred and has been or in the process of being rectified. 16.2The bank may be appointed permanent representative while another one (1) as an alternate representative in the event the permanent representative is unavailable to attend the meeting. 18.7The Shariah Committee’s Annual Report must include the nature, status and measures undertaken to address the material Shariah non-compliance events reported. 18.8 The report shall be signed by all SC members. CORPORATE GOVERNANCE CORPORATE GOVERNANCE 158
82. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notice of Annual General Meeting Shariah Committee Terms of Reference 19 .0 REMUNERATION OF SHARIAH COMMITTEE Date 19.1SC member is remunerated with fixed monthly allowance and seating allowance which are paid based on meeting attendance. All Representatives of Bank Rakyat Cooperative Members All Representatives of Bank Rakyat Individual Members 19.2 19.3Whenever SC member is invited to attend formal or informal bank’s event, attending formal event on bank’s behalf, invited as a trainer to bank’s internal or external program or any other event in the name of Bank Rakyat, the respective SC member is entitled to a fixed allowance and mileage claim. 19.4 19.5Remuneration amount is subjected to BOD’s approval and/or review from time to time upon recommendation by the Remuneration Committee and it shall commensurate with the roles and responsibilities of the SC member. 20.0 ASSESSMENT OF SHARIAH COMMITTEE 20.1The annual assessment of SC is to ensure that the SC meet the criteria of 'fit and proper’ as outlined in the Shariah Governance Policy Document issued by BNM. 20.2Assessment of each SC members must be conducted at least once in a year. The assessment process may be prepared by the Secretariat of SC based on the criteria required i.e. commitment and diligence, integrity and reputation, quality of input, interpersonal skills, knowledge and contribution of each Shariah committee member to the overall functioning of the SC. Seating allowance includes SC meeting and all other meetings that require the SC member to be present. Upon reappointment of SC member, an increment to the respective SC member shall be considered. : 27 May 2022 NOTICE OF BANK RAKYAT ANNUAL GENERAL MEETING 2022 NOTICE IS HEREBY GIVEN THAT the Bank Rakyat Annual General Meeting 2022 will be held as follows: Date : 11 June 2022 (Saturday) Venue : Dewan Tun Abdul Razak Level 2, Tower 1 Menara Kembar Bank Rakyat No. 33, Jalan Rakyat 50470 Kuala Lumpur. Time 10:30 a.m. : Method: Fully Virtual (www.agm2022bankrakyat.com) MEETING AGENDA 1. Confirmation of the minutes of the Annual General Meeting held on 25 September 2021; 20.3The analysis of the SC assessment methods will be considered by the Secretariat of SC to produce the overall assessment of each SC. 2.To appoint a Committee of six (6) representatives and four (4) members of the Board including the Chairman, to verify the draft of the minutes of the Annual General Meeting; 20.4The assessment process and result is to be presented to Nomination Committee for recommendation to the BOD for approval. 20.5 3.To present the Audited Financial Statements for the year ended 31 December 2021, together with the Board of Directors' Report, Audit and Examination Committee Report, Auditor General’s Report, and Views of the Malaysia Cooperative Societies Commission; and 21.0 REVIEW OF TERMS OF REFERENCE 21.1 SC Secretariat shall keep all documents involve in the process for easy reference. This Terms of Reference may be reviewed as and when is necessary. 161 4.To deliberate on the proposals from members received by the Board not less than seven (7) days before the Annual General Meeting (if available). By Order of the Board AIDAWATHY BINTI ISMAIL Relief Bank Secretary CORPORATE GOVERNANCE CORPORATE GOVERNANCE 160
83. Innovating connection Each colour indicates a different meaning in every painting . Bank Rakyat has always given a meaningful life by providing the relevant banking facilities and fulfilling the current needs.
84. Independence and Other Ethical Responsibilities CERTIFICATE OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF BANK KERJASAMA RAKYAT MALAYSIA BERHAD FOR THE YEAR ENDED 31 DECEMBER 2021 Certificate on the Audit of the Financial Statements Opinion I have authorised a private audit firm pursuant to Subsection 7 (3) of the Audit Act 1957 [Act 62] to undertake an audit of the Financial Statements of the Bank Kerjasama Rakyat Malaysia Berhad. The financial statements comprise the Statements of Financial Position as at 31 December 2021 of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad and the Statements of Profit or Loss and Other Comprehensive Income, Statements of Changes in Equity and Statement of Cash Flows of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 4 to 211. In my opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad as at 31 December 2021, and of their financial performance and their cash flows for the year then ended in accordance with the Malaysian Financial Reporting Standards (MFRS) and the Financial Reporting for Development Financial Institutions policy issued by Bank Negara Malaysia, Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 [Act 202], the Co-operative Societies Act 1993 [Act 502] and the Development Financial Institutions Act 2002 [Act 618] requirements. I am independent of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad and I have fulfilled my other ethical responsibilities in accordance with the International Standards of Supreme Audit Institutions. Information Other than the Financial Statements and Auditor’s Certificate Thereon The Board of Directors of the Bank Kerjasama Rakyat Malaysia Berhad is responsible for the other information in the Annual Report. My opinion on the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad does not cover the other information than the financial statements and Auditor’s Certificate thereon and I do not express any form of assurance conclusion thereon. Responsibilities of the Board of Directors for the Financial Statements The Board of Directors is responsible for the preparation of Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad that give a true and fair view in accordance with the Malaysian Financial Reporting Standards (MFRS) and the Financial Reporting for Development Financial Institutions policy issued by Bank Negara Malaysia, Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 [Act 202], the Co-operative Societies Act 1993 [Act 502] and the Development Financial Institutions Act 2002 [Act 618] requirements. The Board of Directors is also responsible for such internal control as the Board of Directors determines is necessary to enable the preparation of the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad, the Board of Directors is responsible for assessing the Group’s and the Bank Kerjasama Rakyat Malaysia Berhad’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting. Basis for Opinion Auditor’s Responsibilities for the Audit of the Financial Statements The audit was conducted in accordance with the Audit Act 1957 and the International Standards of Supreme Audit Institutions. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my certificate. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. My objectives are to obtain reasonable assurance about whether the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor’s Certificate that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the International Standards of Supreme Audit Institutions 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 2/4
85. 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 the International Standards of Supreme Audit Institutions, I exercise professional judgement and maintain professional scepticism throughout the audit. I also: a.identify and assess the risks of material misstatement of the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad, 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 my 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; f.obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the Financial Statements of the Group. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion. The Board of Directors has been informed regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I have identify during the audit. I have also disclosed to the Board of Directors that I have complied with the ethical requirements regarding independence, and communicated with them all relationships and other matters that may reasonably be thought to bear on my independence, and if applicable, actions taken to eliminate threats or safeguards applied. Report on Other Legal and Regulatory Requirements b.obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Bank Kerjasama Rakyat Malaysia Berhad’s internal control; c.evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors; In accordance with the requirements of the Financial Reporting for Development Financial Institutions policy issued by Bank Negara Malaysia, Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 [Act 202], the Co-operative Societies Act 1993 [Act 502] and the Development Financial Institutions Act 2002 [Act 618], I report that the subsidiaries, of which I have not acted as auditor, are disclosed in Note 16 to the Financial Statements. Other Matters d.conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Bank Kerjasama Rakyat Malaysia Berhad’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my Auditor’s Certificate to the related disclosures in the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of Auditor’s Certificate. However, future events or conditions may cause the Group or the Bank Kerjasama Rakyat Malaysia Berhad to cease to continue as a going concern; e.evaluate the overall presentation, structure and content of the Financial Statements of the Group and of the Bank Kerjasama Rakyat Malaysia Berhad, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation; and This certificate is made solely to the Board of Directors of the Bank Kerjasama Rakyat Malaysia Berhad in accordance with the Financial Reporting for Development Financial Institutions policy issued by Bank Negara Malaysia, Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 [Act 202], the Co-operative Societies Act 1993 [Act 502] and the Development Financial Institutions Act 2002 [Act 618] requirements, and for no other purpose. I do not assume responsibility to any other person for the content of this certificate. (DATUK SERI NIK AZMAN NIK ABDUL MAJID) AUDITOR GENERAL MALAYSIA PUTRAJAYA 25 MARCH 2022 3/4 4/4
86. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statement by Directors Annual Report of Shariah Committee of Bank Rakyat 2021 We , DATUK HAJI ABD RANI LEBAI JAAFAR and TUNKU DATO’ AHMAD BURHANUDDIN TUNKU DATUK SERI ADNAN, being two of the Directors of Bank Kerjasama Rakyat Malaysia Berhad, do hereby state that: In carrying out the roles and responsibilities of Shariah Committee of Bank Rakyat, we hereby submit the following report on Shariah compliance of Bank Rakyat’s business activities and operations for the financial year ended 31st December 2021. (i)The financial statements of the Bank have been prepared in accordance with the provisions of Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 (Act 202), the Co-operative Societies Act 1993 (Act 502), Development Financial Institutions Act 2002 (Act 618) and applicable Malaysian Financial Reporting Standards (“MFRS”) as modified by Guidelines issued by Bank Negara Malaysia (“BNM”) and in compliance with the principles of Shariah; The Management of Bank Rakyat is responsible to ensure Bank Rakyat conducts its business in accordance with Shariah principles and it is our responsibility to form an independent opinion, based on our review of Bank Rakyat’s operation and to report to the Board of Director of Bank Rakyat. Our main responsibility and accountability is to assist the Board in ensuring that the Bank’s business does not have elements and activities which are not permissible under Shariah. We have provided the Shariah advisory services on various aspects to the Bank in order to ensure compliance with applicable Shariah principles as well as the relevant resolutions and rulings locally and globally made by the Shariah Advisory Councils of the regulatory bodies. (ii)The financial statements of the subsidiaries of the Bank have been prepared in accordance with MFRS, IFRS and the provisions of the Companies Act, 2016 in Malaysia. In the opinion of the Directors, the financial statements are drawn up so as to give true and fair view of state of affairs as at 31 December 2021 and of the results of the operations and cash flows for the year ended on that date. FINANCIAL STATEMENT Signed on behalf of the Board of Directors in accordance with a resolution of the Directors. During the financial year ended 31st December 2021, the Shariah Committee had convened 14 meetings including 2 special meetings and 9 resolutions passed by circulation to cater for urgent proposals. All Shariah Committee members have satisfied attendance requirement under BNM’s Shariah Governance Policy. Shariah Committee places importance on ensuring effective implementation of Shariah governance and best practices of corporate governance. In view of this, 2 engagement sessions were held between Shariah Committee and the Board of Directors in financial year 2021. To ensure smoothness of banking operation, we empowered and delegated the approval authority to Shariah Research and Advisory Department to approve generic Shariah related matters and the approvals by the Shariah Research and Advisory Department are duly reported to us on quarterly basis for review and confirmation. Head of Shariah Compliance Division or his representative is also sitting as a member in the following committees to advise the Bank on matters relating Shariah requirement and principles: DATUK HAJI ABD RANI LEBAI JAAFAR Chairman a) b) c) d) e) f) Sponsorship Committee Operation Risk Committee Product Committee Zakat Committee Surau Al-Barakah Committee Member’s Share Approval Committee (JKSA) We planned and performed our review to obtain all information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that Bank Rakyat has not violated the Shariah principles. TUNKU DATO’ AHMAD BURHANUDDIN TUNKU DATUK SERI ADNAN Director Kuala Lumpur Date: 169 APPROVAL 1.We have endorsed and approved the transactions, applications and dealings entered into by Bank Rakyat through the following processes: i. Shariah review on development of Bank products including policies, operational guidelines and procedures. ii. Shariah review on legal and banking documentation, Products Disclosure Sheet (PDS), notices and marketing materials prior to publishment. iii. iv.Shariah review on product operations at the branches level, related departments and Bank’s subsidiaries which involve review on legal documents executed and akad sequences. v. vi.Shariah review on banking activities, asset rental by the bank and its subsidiaries to third party as well as sponsorship activities. Shariah review on Shariah compliance status of commercial banking customers prior to approval of financing. Shariah review on system application related to banking products. FINANCIAL STATEMENT 168
87. ANNUAL REPORT 2021 170 Annual Report of Shariah Committee of Bank Rakyat 2021 vii .Shariah risk assessment on new products or enhancement to the existing products, processes and procedures, business activities and operations. viii.Shariah audit on operations, documentations and system application of departments, branches and subsidiaries of Bank Rakyat. SHARIAH RESEARCH AND ADVISORY, SHARIAH REVIEW, SHARIAH AUDIT AND SHARIAH RISK 2.Shariah Research and Advisory, Shariah Review, Shariah Audit and Shariah Risk functions play a vital role in achieving the objective of ensuring end to end Shariah Compliance of the bank at all times by evaluating and assessing all activities and banking operation. FINANCIAL STATEMENT 3.We have assessed the function carried out by Shariah Research and Advisory, Shariah Review, Shariah Audit and Shariah Risk which included examining on a sample basis of each type of transaction, the relevant documentations and procedures adopted by Bank Rakyat. 4. Shariah Research and Advisory provide advisory on product development and day to day business operations which includes issuing of Shariah Compliance Review Certificate, Shariah parameters, vetting of legal documentation, screening business banking financing applications, approving marketing materials and cooperative appointment of card merchants as delegated by us. We are also responsible to validate Shariah research papers conducted by Shariah Research and Advisory Department as well as Takyif Fiqhi on current issues related to Islamic Banking products and services as a support to the business proposal of the bank. Among the Shariah research papers that have been validated by us is the Shariah studies on the Application of Deemed Consent In Contract Execution. 5.Shariah Review and Shariah Audit have performed their review and audit based on review and audit plan. Shariah Review and Shariah Audit Reports were presented and deliberated in our meetings to confirm that the Bank has complied with the rulings issued by the Shariah Advisory Council of Bank Negara Malaysia, Shariah Advisory Council of Securities Commission Malaysia and decisions made by us. 6. Shariah Risk responsible to systematically identify, measure, monitor and control Shariah non-compliance risks, and therefore mitigate or minimize the occurrence of Shariah non-compliances. A systematic approach of managing Shariah non-compliance risks will enable the Bank to continue its operations and activities effectively without exposing the Bank to unacceptable levels of risk. 7.During the financial year of 2021, Shariah Review, Shariah Audit and Shariah Risk presented to us the following reports: Shariah Review a) b) c) d) e) f) g) h) i) Shariah Review Report on 147 Bank Rakyat’s branches in Malaysia. Shariah Review Report on 27 Ar-Rahnu X’Change (ARX), 20 Rakyat Xcess and Ar-Rahnu X’Change and 4 Rakyat Xcess. Shariah Review Report on 5 Auto Finance Centre (AFC). Shariah Review Report on 187 corporate financing and cooperative financing application. Shariah Review Report on 21 Trade Finance application. Shariah Review Report on 17 departments of Bank Rakyat. Shariah Review Report on 7 Cooperatives (Credit and Ar-Rahnu). Shariah Review Report on Rakyat Management Services Sdn Bhd. Shariah Review Report on Commodity’s Platforms. Annual Report of Shariah Committee of Bank Rakyat 2021 Shariah Audit a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) q) r) s) t) u) Shariah Risk a) b) Follow-up Report on Unresolved Shariah Audit Finding for Q4 2020. Shariah Audit Report on Quality Management Department. Shariah Audit Report on Sustainability Department. Shariah Audit Report on Creative Communications Department. Shariah Audit Report on Events Management Department. Shariah Audit Report on Corporate Communications Department. Follow-up Report on Unresolved Shariah Audit Finding for Q1 2021. Shariah Audit Report on Foreign Exchange. Shariah Audit Report on Fixed Income. Shariah Audit Report on Marketing Department. Shariah Audit Report on IT Sector. Shariah Audit Report on Waqf. Shariah Audit Report on Money Market. Follow-up Report on Unresolved Shariah Audit Finding for Q2, 2021. Shariah Audit Report on Personal Financing-i. Shariah Audit Report on Pawn Broking-i. Shariah Audit Report on Home Financing-i. Shariah Audit Report on Vehicle Financing-i. Shariah Audit Report on Savings Account-i. Follow-up Report on Unresolved Shariah Audit Finding for Q3 2021. Shariah Audit Report: Retail Collection. Shariah Risk Profiling 2020. Risk and Control Self-Assessment (RCSA) Profiling Report 2021 for Branches. Shariah Development and Awareness Program 8.In the year of 2021, thirty (30) Shariah training and briefing sessions were conducted within Bank’s internal employees covering more than 500 of participants throughout nationwide with more than 10 of total hours spent. 9.For Bank Rakyat’s newly recruits, they were required to spend a half-day session to be exposed to the fundamentals of Shariah application in Islamic Banking, which has been incorporated in induction program organized by Centre of Excellence Department. 10.As an effort to ensure all employees are expected to have reasonable understanding on the principles of the Shariah and its broad application in Islamic finance, Shariah Compliance Division has developed an e-Learning (Intermediate) regarding Shariah Concept application in current Bank Rakyat’s practise as well as Shariah Governance which resulting more than 90% participation of Bank Rakyat employees. 11.Apart from that, with the aim to inculcate the Shariah compliance culture within Bank Rakyat, Shariah Review Department’s officers who’s conducted Shariah Review at Bank Rakyat’s branches were delegated to deliver a briefing session with branch employees regarding Shariah Compliance. The program was aimed to provide awareness to Business Support and Unit (BSU) on the avoidance of Shariah non-compliant event and to update on the new Shariah rulings issued by Shariah Committee of Bank Rakyat, Bank Negara Malaysia (BNM), Securities Commission and other related authorities/regulators. 12.Bank Rakyat has also extended the commitment for its Shariah fraternity to have a deeper knowledge and understanding on Shariah and Muamalat with execution of in-house training program. Shariah officers of Bank Rakyat has attended three (3) series of Intensive Course of Fiqh Muamalat, which were conducted by local prominent Shariah scholars of Islamic Finance industry. 171 FINANCIAL STATEMENT BANK KERJASAMA RAKYAT MALAYSIA BERHAD
88. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Annual Report of Shariah Committee of Bank Rakyat 2021 Annual Report of Shariah Committee of Bank Rakyat 2021 Shariah Non-Compliance Issue 13 .For the financial year ended 31st December 2021, there were a total of two (2) Shariah non-compliance incidents recorded and deliberated in the Shariah Committee Meeting as follows: Cash Waqf is one of the types of waqf introduced by Bank Rakyat. Through this waqf, the cash value will be maintained and invested and the investment proceeds will be distributed to the beneficiaries. As of 31 December 2021, the total collection for the Kolej Profesional Baitulmal Kuala Lumpur (KPBKL) is RM191,103.91 and for Yayasan Waqaf Malaysia (YWM) is RM224,315.23. Issue No. 1 Shariah Non-Compliance Incident Status a)Error in the disbursement process executed through (I18) system that was made prior to the completion of commodity trading transaction. Pawn Broking Financing-i (Tawarruq) product b)Wrong execution of selling price during commodity trading transaction in which selling price generated in the commodity certificate is lower than Surat Akuan Gadaian’s (SAG) sales price. FINANCIAL STATEMENT Pawn Broking Financing-i (Tawarruq) product Shariah Non-Compliance with financial implication Shariah Non-Compliance Incident Status a)Acceptance of one (1) marhun item with the symbol of the divinity and spirituality in Indian religion (Hinduism, Buddhism, Jainism). Shariah Non-Compliance without financial implication 14.All potential Shariah Non-Compliant events are initially assessed by the Qualified Shariah Officer and all of the Shariah non-compliance events together with the rectification plans were presented to us and the Board of Directors for confirmation and was subsequently reported to Bank Negara Malaysia in accordance with the Shariah non-compliance reporting process within the required timeframe set by Bank Negara Malaysia. 15.Shariah non-compliance events experienced by the Bank were mostly due to the non-compliance to the operational guidelines based on the report presented by Shariah Review and Shariah Audit. The Bank has taken the corrective as well as preventive measures in order to avoid the same Shariah non-compliance events from occurring in the future which includes specific Shariah training to all staff. 16.Within the financial year of 2021, the Bank received Shariah non-compliant income amounting of RM267,088.53. Part of that amount was disposed to the eligible beneficiaries that not related to the bank for charitable purposes upon Shariah Committee’s approval. Bank Rakyat Waqf Initiative 17. Cash Waqf 18.Jāriah al-Barakah is a collaborative initiative between Bank Rakyat and Surau Al-Barakah which was created to support the practice of giving alms among Bank employees and the community. Through this Jāriah al-Barakah platform, charity management can be implemented more effectively and the total collection until 31 December 2021 is RM502,961.08. c)Absence of commodity trading (sale commodity from Bank to customer) perform by the branch at the second leg of Tawarruq transaction. Issue No. 2 b) 173 Waqf initiatives in Bank Rakyat which has been approved by us is divided into two, as follows: a)Waqf This waqf initiative involves various types of waqf and the wider implementation of waqf. Bank Rakyat through MyWakaf initiative introduced by Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) has collaborated with the Majlis Agama Islam dan Adat Melayu Terengganu (MAIDAM) and as of 31 December 2021, the accumulated waqf received is RM1,401,173.25. Zakat on Business 19.We confirmed that the bank has fulfilled its obligation to pay Zakat on its business for the financial year ended 2020 to Majlis Agama Islam Negeri-Negeri amounting RM12,790,334.00 by adopting the computation based on capital growth method and in compliance with the Manual Pengurusan Zakat Perbankan issued by Jabatan Wakaf, Zakat dan Haji (JAWHAR). 20.For the Zakat Asnaf (own distribution), we confirmed that business Zakat of the bank was distributed accordingly amounting to RM7,674,201.00 to the eligible Asnaf as guided by Policy and Procedure Business Zakat Management of Bank Rakyat that was approved by us. With due concern to the Asnaf during COVID-19 Pandemic, Bank Rakyat has approved an additional payment of Hibah/Tabarru’ amounting to RM10,000,000.00. 21.In summary, we endorsed that Bank Rakyat has managed to pay Zakat on business for the year of 2020 in total sum of RM30,464,535.00. Based on the report, we opined that: 1.The Shariah principles and contracts implemented on products offered by the bank are in compliance with the Shariah principles and Shariah resolutions issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us. 2. The transactions, applications and dealings entered into by the Bank that we have reviewed excluding the Shariah Non-compliance events mentioned above, are in compliance with the Shariah principles and Shariah resolutions issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us. 3. Rectification plans has been executed on all confirmed Shariah Non-Compliant events. 4.The transactions, applications and dealings which are subjected to further investigation and rectification will be carried out on an on-going basis. 5.All earnings that have been realized from sources or by means prohibited with the Shariah principles were disposed accordingly. 6. The distribution of Zakat on Banking Business for the year of 2021 is in compliance with Shariah principles. 7. The collection of Waqf fund under Bank Rakyat Waqf Initiative for the year of 2020 is in compliance with Shariah principles. FINANCIAL STATEMENT 172
89. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statutory Declaration Annual Report of Shariah Committee of Bank Rakyat 2021 SHARIAH COMMITTEE ATTENDANCE 2021 I , NOR HAIMEE ZAKARIA, being the officer primarily responsible for the financial management of Bank Kerjasama Rakyat Malaysia Berhad, do solemnly and sincerely declare that the financial statements are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. For January to December 2021, Shariah Committee attendance for fourteen (14) meetings held are as follows: FINANCIAL STATEMENT No. Shariah Committee Member 175 Attendance (%) 1. SS Dato’ Setia Mohd Tamyes Abd Wahid 10/10 100% 2. Prof. Dato’ Dr. Mohd Azmi Omar 14/14 100% 3. Assoc. Prof. Dr. Azman Mohd Noor 14/14 100% 4. Dr. Mohammad Zaini Yahaya 14/14 100% 5. Ustaz Wan Rumaizi Wan Husin 14/14 100% 6. Dr. Tuan Badrul Hisyam Tuan Soh 10/10 100% We, the members of the Shariah Committee of Bank Rakyat, to the best of our knowledge, do hereby confirm that the operations of Bank Rakyat, to the best of its effort, for the year ended 31st December 2021 have been conducted in conformity with the Shariah principles. ASSOC. PROF. DR. AZMAN MOHD NOOR Chairman of Shariah Committee PROF. DATO’ DR. MOHD AZMI OMAR Shariah Committee Member USTAZ WAN RUMAIZI WAN HUSIN Shariah Committee Member DR. MOHAMMAD ZAINI YAHAYA Shariah Committee Member DR. TUAN BADRUL HISYAM TUAN SOH Shariah Committee Member Subscribed and solemnly declared by the above named in Kuala Lumpur on NOR HAIMEE ZAKARIA Before me: FINANCIAL STATEMENT 174
90. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Directors ’ Report Directors’ Report DIRECTORS’ REPORT OTHER STATUTORY INFORMATION The Directors of Bank Kerjasama Rakyat Malaysia Berhad (“the Bank”) have pleasure in submitting their report and the audited financial statements of the Group and of the Bank for the financial year ended 31 December 2021. In the opinion of the Directors, the financial statements set out on pages 178 to 331 have been drawn up so as to give a true and fair view of the state of affairs of the Group and of the Bank as of 31 December 2021 and of the results of their operations and cash flows for the year ended on that date. PRINCIPAL ACTIVITIES The Directors are satisfied that before the statements of financial position and the statements of profit or loss and other comprehensive income of the Group and of the Bank were made out, reasonable steps have been taken on the following matters: The principal activities of the Bank are those of a co-operative that carries out banking activities based on Shariah principles through accepting deposits and providing financial services for retail and commercial needs. The principal activities of the subsidiaries are disclosed in Note 16 to the financial statements. At the date of this report, within the knowledge of the Directors, they are not aware of any circumstances that would cause the following: RESULTS OF OPERATIONS FINANCIAL STATEMENT (i)to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of impairment provisions and allowance for doubtful debts and had satisfied themselves that all known bad financing and bad debts had been written off and that adequate impairment provisions and allowance for impaired financing had been made for doubtful debts; and (ii)to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. There have been no significant changes in the nature of the principal activities of the Group and the Bank. GroupBank RM’000RM’000 Profit before taxation and zakat 1,626,066 1,615,096 Taxation 274,201 278,107 Zakat (42,382) (40,465) (i)the amount written off for bad financing and bad debts or the amount of the impairment provisions and allowance for doubtful debts in the financial statements of the Group and of the Bank inadequate to any substantial extent; or (ii) the values attributed to the current assets in the financial statements of the Group and of the Bank misleading; or (iii) the amount reported in the financial statements of the Group and of the Bank misleading; and (iv)any adherence to the existing method of valuation of assets or liabilities of the Group and of the Bank misleading or inappropriate. Profit after taxation and zakat Statutory appropriations 1,857,885 (536,684) 1,852,738 (536,684) Profit for the year after statutory appropriations Other comprehensive loss 1,321,201 (710,962) 1,316,054 (710,962) Total comprehensive income for the year 610,239 605,092 (ii) 605,092 No contingent or other liability which has not been discharged has been undertaken by the Group and the Bank, except as disclosed in Note 40 to the financial statements. No contingent or other liability 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 Bank to meet their obligations as and when they fall due. Total comprehensive income for the year attributable to:   Equity holders of the Bank 177 610,239 At the date of this report, there does not exist: (i)any charge on the assets of the Group and of the Bank which has arisen since the end of the financial year which secures the liability of any other person; and any contingent liability of the Group and of the Bank which has arisen since the end of the financial year. In the opinion of the Directors, the results of operations of the Group and of the Bank during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Bank for the succeeding financial year. RESERVES AND PROVISION The Directors do solemnly and sincerely declare that there were no other matters, within their knowledge, that are not disclosed in accordance with Section 59, Co-operative Societies Act 1993. There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors. DIVIDENDS During the financial year ended 31 December 2021, the Bank paid a cash dividend of 13% amounting to RM373 million in regard to the previous financial year ended 31 December 2020. In respect of the current financial year, the Board of Directors has proposed a cash dividend of up to 15% amounting to approximately RM450 million. The proposed dividend will be recognised in the subsequent financial year upon approval by the relevant external authorities. DATUK HAJI ABD RANI LEBAI JAAFAR Kuala Lumpur, Malaysia TUNKU DATO’ AHMAD BURHANUDDIN TUNKU DATUK SERI ADNAN FINANCIAL STATEMENT 176
91. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statements of Profit or Loss and Other Comprehensive Income Statements of Financial Position as at 31 December 2021 for the Year Ended 31 December 2021 GroupBank Note 2021 RM ’000 2020 RM’000 2021 RM’000 2020 RM’000 FINANCIAL STATEMENT Cash and short-termfunds 6 835,189981,636834,987981,180 Deposits and placements with financial institutions 7 672,463277,275672,463277,275 Financial investments at fair value through   profit or loss 8 976,032447,826976,032447,826 Financial investments at fair value through   other comprehensive income 9 20,781,71820,620,07020,781,71020,620,062 Financial investments at amortised cost 10 10,826,8509,747,865 10,826,8509,747,865 Financing and advances 11 77,296,43776,083,19877,516,58176,285,365 Trade receivables 12 909147 -Other assets 13 620,169947,839596,551924,408 Right-of-use assets 14 49,07556,34560,94874,930 Inventories 15 23,3933,457 -Investments in subsidiaries 16 -- 100,744100,744 Property and equipment 17 606,186602,106514,446507,166 Intangible assets 18 579,046471,005565,861457,820 Investment properties 19 1,388,0911,353,684 948,920939,305 Prepaid lease payments 20 59,03860,62859,03860,628 Tax recoverable 142,07897,492 138,74794,053 Deferred tax assets 21 201,484571 201,000Total assets 115,058,158111,751,144114,794,878111,518,627 Liabilities Deposits from customers 22 86,523,88485,575,43186,523,88485,575,431 Deposits and placements from banks and   financial institutions 23 850,000150,000850,000150,000 Trade payables 1,8391,374 -Recourse obligations on financing sold to Cagamas 24 318,311339,826318,311339,826 Debt securities issued 25 3,297,9402,642,5583,297,9402,642,558 Cashline facility 26 700,417400,870700,417400,870 Other liabilities 27 1,697,0221,599,9621,884,2601,811,536 Provision for taxation -33 -Deferred tax liabilities 21 13,55092,702 -80,000 93,402,96390,802,75693,574,81291,000,221 Shareholders’ fund Share capital 28 2,986,0302,986,0302,986,0302,986,030 Share redemption fund 5,8859,9775,8859,977 Reserves 29 18,663,28017,952,38118,228,15117,522,399 Total shareholders’ fund 21,655,19520,948,38821,220,06620,518,406 Total liabilities and shareholders’ fund 115,058,158111,751,144114,794,878111,518,627 Commitments and contingencies 40 2,543,1342,697,8562,543,1342,697,856 The accompanying notes form an integral part of the financial statements. GroupBank Assets Total liabilities 179 Note Income Expenditure 2020 RM’000 2021 RM’000 2020 RM’000 30 5,708,5506,082,4735,654,2586,062,235 31 (2,184,440)(2,669,129)(2,134,250)(2,655,077) Net income Allowances for impairment Other operating income Operating expenses 2021 RM’000 3,524,1103,413,3443,520,0083,407,158 32 (728,892)(876,311)(729,615)(879,467) 33 355,194470,545347,802468,255 34 (1,524,346)(1,571,757)(1,523,099)(1,590,897) Profit before taxation and zakat Taxation 35 Zakat 36 1,626,0661,435,8211,615,0961,405,049 274,201(33,558) 278,107(28,938) (42,382)(26,412)(40,465)(23,993) Profit after taxation and zakat 1,857,8851,375,8511,852,7381,352,118 Statutory appropriations 37 Transfer to statutory reserve: 25% (2020: 25%) Contribution to the Co-operative Education   Trust Fund: 2% (2020: 2%) Contribution to the Co-operative Development   Provident Fund: 1% (2020: 1%) Contribution to Bank Rakyat Foundation (473,301)(344,028)(473,301)(344,028) (536,684)(401,109)(536,684)(401,109) Profit for the year (32,302)(28,101)(32,302)(28,101) (16,151)(14,050)(16,151)(14,050) (14,930)(14,930)(14,930)(14,930) 1,321,201974,742 1,316,054951,009 Other comprehensive (loss)/income Items that will not be reclassified to   profit or loss: Change in fair value reserve (equity instruments) 14,71410,61914,71410,619 Items that may be reclassified   subsequently to profit or loss: Fair value reserve (debt instruments)   - Change in fair value   - Amount transferred to profit or loss (723,327)410,275(723,327)410,275 (2,304)(120,305) (2,304)(120,305) Change in expected credit loss (“ECL”)   reserve on debt instruments at FVOCI (45)(100) (45)(100) Other comprehensive (loss)/income for the year (710,962)300,489(710,962)300,489 Total comprehensive income for the year 610,2391,275,231 605,0921,251,498 Earnings per share (RM)   Basic 38 0.630.470.630.46 The accompanying notes form an integral part of the financial statements. FINANCIAL STATEMENT 178
92. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statements of Changes In Equity Statements of Changes In Equity for the Year Ended 31 December 2021 Non-distributableDistributable Share Share redemption Other Retained capital fund reserves profits RM ’000 RM’000 RM’000 RM’000 Non-distributableDistributable Total equity RM’000 Group FINANCIAL STATEMENT At 1 January 2020 Share Share redemption Other Retained capital fund reserves profits RM’000 RM’000 RM’000 RM’000 Total equity RM’000 Group 2,986,030 9,860 7,447,046 9,291,10219,734,038 Profit after taxation and zakat Transfer to statutory reserve Contribution to the Co-operative   Education Trust Fund Contribution to the Co-operative   Development Provident Fund Contribution to Bank Rakyat Foundation - - - - - - 1,375,851 (344,028) 1,375,851 (344,028) - - - (28,101) (28,101) - - - - - - (14,050) (14,930) (14,050) (14,930) Profit for the year Other comprehensive income - - - - - 300,489 Total comprehensive income for the year Transfer from retained profits Issuance to new member Share withdrawal Transfer to share capital Dividends (Note 39) Overprovision in contribution to   Bank Rakyat Foundation - - 24,485 (24,368) (117) - At 31 December 2020 2,986,030 181 for the Year Ended 31 December 2021 (Continued) - 974,742 - 974,742 300,489 - 300,489 974,742 1,275,231 - 344,028 - 344,028 - - - 24,485 - - - (24,368) 117 - - - - (405,484) (405,484) - - 458 458 9,9778,091,5639,860,818 20,948,388 Note 28 Note 29 Note 29 At 1 January 2021 2,986,030 9,9778,091,5639,860,818 20,948,388 Profit after taxation and zakat Transfer to statutory reserve Contribution to the Co-operative   Education Trust Fund Contribution to the Co-operative   Development Provident Fund Contribution to Bank Rakyat Foundation - - -1,857,8851,857,885 --- (473,301) (473,301) Profit for the year Other comprehensive loss - - Total comprehensive   (loss)/income for the year Transfer from retained profits Issuance to new member Share withdrawal Transfer to share capital Dividends (Note 39) Overprovision in contribution to   Bank Rakyat Foundation At 31 December 2021 --- (32,302) (32,302) --- (16,151) (16,151) --- (14,930) (14,930) - -1,321,2011,321,201 -(710,962) -(710,962) - - (710,962)1,321,201 610,239 - -473,301 -473,301 18,282--- 18,282 (22,374)--- (22,374) 4,092 (4,092)----- (373,230) (373,230) - 2,986,030 - 5,885 -589589 7,853,902 10,809,378 Note 28 Note 29 Note 29 21,655,195 FINANCIAL STATEMENT 180
93. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statements of Changes In Equity Statements of Changes In Equity for the Year Ended 31 December 2021 (Continued) Non-distributableDistributable Share Share redemption Other Retained capital fund reserves profits RM’000 RM’000 RM’000 RM’000 Non-distributableDistributable Total equity RM’000 Bank FINANCIAL STATEMENT At 1 January 2020 Share Share redemption Other Retained capital fund reserves profits RM’000 RM’000 RM’000 RM’000 Total equity RM’000 Bank 2,986,030 9,860 7,447,787 8,884,11219,327,789 Profit after taxation and zakat Transfer to statutory reserve Contribution to the Co-operative   Education Trust Fund Contribution to the Co-operative   Development Provident Fund Contribution to Bank Rakyat Foundation - - - - - - 1,352,118 (344,028) 1,352,118 (344,028) - - - (28,101) (28,101) - - - - - - (14,050) (14,930) (14,050) (14,930) Profit for the year Other comprehensive income - - - - - 300,489 Total comprehensive income for the year Transfer from retained profits Issuance to new member Share withdrawal Transfer to share capital Dividends (Note 39) Overprovision in contribution to   Bank Rakyat Foundation - - 24,485 (24,368) (117) - At 31 December 2020 2,986,030 183 for the Year Ended 31 December 2021 (Continued) - 951,009 - 951,009 300,489 - 300,489 951,009 1,251,498 - 344,028 - 344,028 - - - 24,485 - - - (24,368) 117 - - - - (405,484) (405,484) - - 458 458 9,9778,092,3049,430,095 20,518,406 Note 28 Note 29 Note 29 At 1 January 2021 2,986,030 9,9778,092,3049,430,095 20,518,406 Profit after taxation and zakat Transfer to statutory reserve Contribution to the Co-operative   Education Trust Fund Contribution to the Co-operative   Development Provident Fund Contribution to Bank Rakyat Foundation - - -1,852,7381,852,738 --- (473,301) (473,301) Profit for the year Other comprehensive loss - - Total comprehensive   (loss)/income for the year Transfer from retained profits Issuance to new member Share withdrawal Transfer to share capital Dividends (Note 39) Overprovision in contribution to   Bank Rakyat Foundation At 31 December 2021 --- (32,302) (32,302) --- (16,151) (16,151) --- (14,930) (14,930) - -1,316,0541,316,054 -(710,962) -(710,962) - - (710,962)1,316,054 605,092 - -473,301 -473,301 18,282--- 18,282 (22,374)--- (22,374) 4,092 (4,092)----- (373,230) (373,230) - 2,986,030 - 5,885 -589589 7,854,643 10,373,508 Note 28 Note 29 Note 29 The accompanying notes form an integral part of the financial statements. 21,220,066 FINANCIAL STATEMENT 182
94. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statements of Cash Flows Statements of Cash Flows for the Year Ended 31 December 2021 GroupBank 2021 RM ’000 2020 RM’000 2021 RM’000 2020 RM’000 Cash flows from operating activities FINANCIAL STATEMENT Profit for the year Adjustment for:   Transfer to statutory reserve   Contribution to the Co-operative Education Trust Fund   Contribution to the Co-operative Development   Provident Fund   Contribution to Bank Rakyat Foundation   Taxation   Zakat   Profit expense on debt securities issued (Note 31)   Allowance for impairment on financing and    advances (Note 32)   Writeback for impairment on financial investments at fair    value through other comprehensive income (Note 32)   Writeback for impairment on financial investments at    amortised cost (Note 32)   Depreciation of property and equipment (Note 34(ii))   Depreciation of right-of-use assets (Note 34(ii))   Amortisation of prepaid lease payment (Note 34(ii))   Amortisation of intangible assets (Note 34(ii))   Finance cost on lease liabilities (Note 34(ii))   Property and equipment written off (Note 34(ii))   Intangible assets written off (Note 34(ii))   Gain on disposal of property and equipment (Note 33(ii))   Loss on financing written off (Note 34(ii))   Impairment of trade and other receivables (Note 34(ii))   Gain on revaluation of investment properties (Note 33(ii))   Loss on revaluation of investment properties (Note 34(ii))   Writeback for impairment on trade receivables (Note 33(ii))   Net gain on disposal of financial investments at fair value    through profit or loss (Note 33(ii))   Net gain on disposal of financial investments at fair value    through other comprehensive income (Note 33(ii))   Net loss on revaluation of financial investments at fair value    through profit or loss (Note 33(ii))   Net gain on redemption of financial assets at amortised    cost (Note 33(ii))   Profit expense on financing sold with recourse to    Cagamas (Note 31)   Profit expense on cashline facility (Note 31)   Dividend from financial investments at fair value through    profit or loss (Note 33(ii)) Operating profit before working capital changes 185 for the Year Ended 31 December 2021 (Continued) GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Cash flows from operating activities (continued) 1,321,201974,742 1,316,054951,009 473,301344,028473,301344,028 32,30228,10132,30228,101 16,15114,05016,15114,050 14,93014,93014,93014,930 (274,201)33,558 (278,107)28,938 42,38226,41240,46523,993 134,198110,616134,198110,616 729,585877,644730,308880,800 (45)(100) (45)(100) (648)(1,233) (648)(1,233) 37,92445,89734,64342,883 16,19019,73121,97624,903 1,5901,5421,5901,542 49,44829,95449,44829,954 2,1171,3142,7772,160 257329238101 31- 31(185)(18) -6,78511,633 6,78511,633 43849,361 13549,438 (8,871)- (2,779)-49,084 -68,742 (1,054)(33) -(2,608)(18,852) (2,608)(18,852) (2,304)(120,305) (2,304)(120,305) 46,84050,72246,84050,722 -(926) -(926) 16,56717,63116,56717,631 3,4732,8583,4732,858 (17,538)(18,580)(17,538)(18,580) 2,638,2562,544,0902,638,1832,539,036 Decrease/(Increase) in assets:   Deposits and placements with financial institutions   Financing and advances   Trade receivables   Other assets   Inventories (Decrease)/Increase in liabilities:   Deposits from customers   Deposits and placements from banks and   financial institutions   Trade payables   Recourse obligations on financing sold to Cagamas   Other liabilities (405,134)(207,216)(405,134)(207,216) (1,951,358)(5,782,830)(1,970,058)(5,913,234) (11)177 -327,535142,531327,722147,738 (19,936)3,333 -- 948,4531,744,026 948,4531,744,026 700,000(1,150,000) 700,000(1,150,000) 465(278) -(38,082)(38,575)(38,082)(38,575) (150,552)(216,387)(168,712)(162,942) Cash generated from/(used in) operations activities Income tax paid Zakat paid 2,049,636(2,961,129)2,032,372(3,041,167) (50,483)(25,171)(47,587)(21,324) (28,869)(35,195)(26,414)(32,736) Net cash generated from/(used in) operating activities 1,970,284(3,021,495)1,958,371(3,095,227) FINANCIAL STATEMENT 184 Cash flows from investing activities Purchases of financial investmentsat fair value through   profit or loss (960,000)(1,720,000) (960,000)(1,720,000) Proceed from disposal of financial investments at fair value   through profit or loss 387,5621,876,997 387,5621,876,997 Purchases of financial investments at fair value through   other comprehensive income (4,433,100)(2,660,000)(4,433,100)(2,660,000) Proceed from disposal of financial investments at fair value   through other comprehensive income 3,562,8394,734,6663,562,8394,734,666 Purchases of financial investments at amortised cost (3,905,000)(3,210,000)(3,905,000)(3,210,000) Proceeds from disposal of financial investments   at amortised cost 2,826,6633,725,3852,826,6633,725,385 Purchase of investment properties (25,536)(80,042) (6,836)Purchase of property and equipment (42,263)(16,991)(42,161)(16,845) Purchase of intangible assets (157,520)(144,789)(157,520)(144,789) Proceeds from disposal of property and equipment 187601 -25 Dividend from financial investments at fair value through   profit or loss (Note 33(ii)) 17,53818,58017,53818,580 Net cash (used in)/generated from investing activities (2,728,630)2,524,407(2,710,015)2,604,019
95. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Statements of Cash Flows Statements of Cash Flows for the Year Ended 31 December 2021 (Continued) GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 An analysis of changes in liabilities arising from financing activities is as follows: 2020 RM’000 Cash flows from financing activities Proceeds from issue of shares to members Dividend paid Fund received from government Proceeds from debt securities issued Payment of profit expenses on debt securities issued Payment of lease liabilities Payment of cashline facility Receipt of cashline facilities FINANCIAL STATEMENT Net cash generated from/(used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 18,28224,48518,28224,485 (373,230)(405,484)(373,230)(405,484) 157,47123,885 157,47123,885 1,300,000700,000 1,300,000700,000 (778,816)(730,844)(778,816)(730,844) (17,828)(20,951)(24,276)(26,669) (803,926)(202,595)(803,926)(202,595) 1,100,000400,000 1,100,000400,000 601,953(211,504)595,505(217,222) (156,393)(708,592)(156,139)(708,430) 1,051,6951,760,2871,051,2391,759,669 895,3021,051,695 895,1001,051,239 Cash and cash equivalents comprises: Cash and short-term funds (Note 6) 835,189981,636834,987981,180 Deposits and placements with financial institutions (Note 7) 672,463277,275672,463277,275 Less: Cash and short-term funds and deposits and placements   with original maturity of more than three months 187 for the Year Ended 31 December 2021 (Continued) 1,507,6521,258,9111,507,4501,258,455 (612,350)(207,216)(612,350)(207,216) 895,3021,051,695 895,1001,051,239 Debt Lease Cashline securitiesliabilities facility RM’000 RM’000 RM’000 Total RM’000 Group At 1 January 2021   Profit expense during the year   Profit paid during the year   Additions   Payment 2,642,558 58,027 400,8703,101,455 134,1982,1173,473 139,788 (778,816) - -(778,816) 1,300,000 8,9201,100,0002,408,920 - (17,828)(803,926)(821,754) At 31 December 2021 3,297,940 51,236 700,4174,049,593 At 1 January 2020   Profit expense during the year   Profit paid during the year   Additions   Payment 2,562,786 110,616 (730,844) 700,000 - 65,875 200,607 2,829,268 1,314 2,858 114,788 - - (730,844) 11,789 400,000 1,111,789 (20,951) (202,595) (223,546) At 31 December 2020 2,642,558 58,027 400,870 3,101,455 Bank At 1 January 2021   Profit expense during the year   Profit paid during the year   Additions   Payment 2,642,558 77,210 400,8703,120,638 134,1982,7773,473 140,448 (778,816) - -(778,816) 1,300,000 7,9941,100,0002,407,994 - (24,276)(803,926)(828,202) At 31 December 2021 3,297,940 63,705 700,4174,062,062 At 1 January 2020   Profit expense during the year   Profit paid during the year   Additions   Payment 2,562,786 110,616 (730,844) 700,000 - 92,116 200,607 2,855,509 2,160 2,858 115,634 - - (730,844) 9,603 400,000 1,109,603 (26,669) (202,595) (229,264) At 31 December 2020 2,642,558 The accompanying notes form an integral part of the financial statements. 77,210 400,870 3,120,638 FINANCIAL STATEMENT 186
96. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 1. GENERAL INFORMATION The Bank was established under the Co-operative Societies Act 1993 with the registered office address at 35th Floor, Menara 1, Menara Kembar Bank Rakyat, No. 33, Jalan Rakyat, 50470 Kuala Lumpur. FINANCIAL STATEMENT The principal activities of the Bank are those of a co-operative that carries out banking activities based on Shariah principles through accepting deposits and providing financial services for retail and commercial needs. The principal activities of the subsidiaries are disclosed in Note 16. There have been no significant changes in the nature of these principal activities of the Group and the Bank. The Bank has a total of 148 branches as of 31 December 2021 (2020: 147). 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Bank have been prepared in accordance with the provisions of Bank Kerjasama Rakyat Malaysia Berhad (Special Provisions) Act 1978 (Act 202), the Co-operative Societies Act 1993 (Act 502), Development Financial Institutions Act 2002 (Act 618) and applicable Malaysian Financial Reporting Standards (“MFRS”) as modified by Guidelines issued by Bank Negara Malaysia (“BNM”) and in compliance with the principles of Shariah. The financial statements of the subsidiaries of the Bank have been prepared in accordance with MFRS, IFRS and the provisions of the Companies Act, 2016 in Malaysia. The financial statements are presented in Ringgit Malaysia (“RM”) and are rounded to the nearest thousand (“000”), unless otherwise stated. The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Bank. MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 April 2021 • MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2022 •Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS Standards 2018-2020) • Amendments to MFRS 3, Business Combinations - Reference to the Conceptual Framework • Amendments to MFRS 9, Financial Instruments (Annual Improvements to MFRS Standards 2018-2020) •Amendments to Illustrative Examples accompanying MFRS 16, Leases (Annual Improvements to MFRS Standards 2018-2020) • Amendments to MFRS 116, Property, Plant and Equipment - Proceeds before Intended Use •Amendments to MFRS 137, Provisions, Contingent Liabilities and Contingent Assets - Onerous Contracts - Cost of Fulfilling a Contract • Amendments to MFRS 141, Agriculture (Annual Improvements to MFRS Standards 2018-2020) Amendment to MFRS 16, Leases - COVID-19-Related Rent Concessions beyond 30 June 2021 189 MFRSs, interpretations and amendments effective for annual periods beginning on or after 1 January 2023 • MFRS 17, Insurance Contracts Amendments to MFRS 17, Insurance Contracts - Initial application of MFRS 17 and MFRS 9 - Comparative Information • Amendments to MFRS 101, Presentation of Financial Statements - Classification of Liabilities as Current or Non-current and Disclosures of Accounting Policies • Amendments to MFRS 108, Accounting Policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates •Amendments to MFRS 112, Income Taxes - Deferred Tax related to Assets and Liabilities arising from a Single Transaction MFRSs, Interpretations and amendments effective for annual periods beginning on or after a date yet to be confirmed •Amendments to MFRS 10, Consolidated Financial Statements and MFRS 128, Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The initial application of the accounting standards, amendments or interpretations are not expected to have any material financial impacts to the current period and prior period financial statements of the Group and of the Bank. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of preparation The financial statements of the Group and of the Bank have been prepared on the historical cost basis, except for certain assets and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration involved in exchange for goods and services. 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of MFRS 2, leasing transactions that are within the scope of MFRS 16 and measurements that have some similarities to fair value but are not fair value, such as net realisable value in MFRS 102 or value-in-use in MFRS 136. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: •Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; •Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; •Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. The principal accounting policies are set out below. FINANCIAL STATEMENT 188
97. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.2 3.2 Subsidiaries and basis of consolidation The consolidated financial statements incorporate the financial statements of the Bank and entities (including structured entities) controlled by the Bank and its subsidiaries. Control is achieved when the Bank has the power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect the investee’s return. The Bank 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 stated above. When the Bank has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Bank considers all relevant facts and circumstances in assessing whether or not the Bank’s voting rights in an investee are sufficient to give it power, including: FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) •the size of the Bank’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; • potential voting rights held by the Bank, other vote holders or other parties; • rights arising from other contractual arrangements; and •any additional facts and circumstances that indicate that the Bank has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins when the Bank obtains control over the subsidiary and ceases when the Bank loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in profit or loss and other comprehensive income from the date the Bank gains control until the date when the Bank ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Bank and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Bank and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policy.  All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Bank. 191 Subsidiaries and basis of consolidation (continued) When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 9, Financial Instruments (“MFRS 9”), and when applicable, the cost on initial recognition of an investment in an associate or joint venture. Investments in subsidiaries are measured in the Bank’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. 3.3 Business combinations  Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value, except that: •deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with MFRS 112, Income Taxes and MFRS 119, Employee Benefits respectively; •liabilities or equity instruments related to the share-based payment arrangements of the acquiree or sharebased payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with MFRS 2, Share-based Payment at the acquisition date; and •assets (or disposal groups) that are classified and measured as held-for-sale in accordance with MFRS 5, Non-current Assets Held for Sale and Discontinued Operations. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the noncontrolling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another MFRS. FINANCIAL STATEMENT 190
98. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.3 3.5 Business combinations (continued) Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the “measurement period” (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 9, is measured at fair value with the changes in fair value recognised in the statements of profit or loss in accordance with MFRS 9. Other contingent consideration that is not within the scope of MFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Where a business combination is achieved in stages, the Group’s previously held equity interests in the acquiree are remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised at that date. 3.4 Goodwill on consolidation Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see 3.3 above) less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 193 Financial instruments Financial assets and financial liabilities are recognised when, and only when the Group and the Bank become a party to the contractual provisions of the instruments.  Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. 3.5.1 Financial assets 3.5.1.1 Date of recognition All financial assets are initially recognised on the trade date, i.e. the date that the Group and the Bank become a party to the contractual provisions of the instruments. This includes regular way trades, purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. 3.5.1.2 Initial recognition and subsequent measurement All financial assets are measured initially at their fair value plus directly attributable transaction costs, except in the case of financial assets recorded at fair value through profit or loss. The Group and the Bank classify all of its financial assets based on the business model for managing the assets and the asset’s contractual cash flow characteristics, measured at either: • Amortised cost • Fair value through other comprehensive income (“FVOCI”) • Fair value through profit or loss (“FVTPL”) Included in financial assets are the following: (i) Financial assets at amortised cost The Group and the Bank measure financial assets at amortised cost if both of the following conditions are met: •The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and •The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and profit (“SPPP”) on the principal amount outstanding. FINANCIAL STATEMENT 192
99. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 Financial instruments (continued) 3.5 3.5.1 Financial assets (continued) 3.5.1.2 Initial recognition and subsequent measurement (continued) (i) 3.5.1 Financial assets (continued) 3.5.1.2 Initial recognition and subsequent measurement (continued) The details of these conditions are outlined below: Business model assessment The Group and the Bank determine its business model at the level that best reflects how groups of financial assets are managed to achieve its business objective.  The Group and the Bank’s business model is not assessed on an instrument-byinstrument basis, but a higher level of aggregated portfolios and is based on observable factors such as: • How the performance of the business model and the financial assets held within that business model are evaluated and reported to the key management personnel; •The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed; • How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected); or •The expected frequency, value and timing of sales are also important aspects of the Group and the Bank’s assessment. The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Group and the Bank’s original expectations, the Group and the Bank do not change the classification of the remaining financial assets held in that business model, but incorporate such information when assessing newly originated or newly purchased financial assets going forward. (b) The SPPP test  As a second step of its classification process the Group and the Bank assess the contractual terms of financial assets to identify whether they meet the SPPP test. “Principal” for the purpose of this test is defined as their fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are financing payment of principal or amortisation of the premium/discount). 195 Financial instruments (continued) Financial assets at amortised cost (continued) (a) FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) (i) Financial assets at amortised cost (continued) (b) The SPPP test (continued) The most significant elements of profit within a financing arrangement are typically the consideration for the time value of money and credit risk. To make the SPPP assessment, the Group and the Bank apply judgement and considers relevant factors such as the currency in which the financial asset is denominated, and the period for which the profit rate is set.  In contrast, contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic financing arrangement do not give rise to contractual cash flows that are solely payments of principal and profit on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL. (ii) Fair value through other comprehensive income (“FVOCI”) The Group and the Bank apply the new category under MFRS 9 of debt instruments measured at FVOCI when both of the following conditions are met: •The instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling financial assets; and • The contractual terms of the financial assets meet the SPPP test. Financial assets at FVOCI are subsequently measured at fair value with gains and losses arising due to changes in fair value recognised in Other Comprehensive Income (“OCI”). Profit income and foreign exchange gains and losses are recognised in profit or loss in the same manner as for financial assets measured at amortised cost. On derecognition, cumulative gains or losses previously recognised in OCI are reclassified from OCI to profit or loss.  Equity instruments are normally measured at FVTPL. However, for unquoted equity instruments, with an irrevocable option at inception, the Group and the Bank measure the changes through FVOCI (without recycling profit or loss upon derecognition). (iii) Financial assets at fair value through profit or loss (“FVTPL”)  Financial assets at FVTPL include financial assets held-for-trading and financial asset designated at FVTPL upon initial recognition. Financial assets are classified as held-for-trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held-for-trading. FINANCIAL STATEMENT 194
100. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 Financial instruments (continued) 3.5 3.5.1 Financial assets (continued) 3.5.1.2 Initial recognition and subsequent measurement (continued) (iii) Financial assets at fair value through profit or loss (“FVTPL”) (continued)  Financial assets at FVTPL are those that are not held-for-trading and have been either designated by management upon initial recognition or are mandatorily required to be measured at fair value under MFRS 9. Management designates an instrument at FVTPL upon initial recognition when one of the following criteria are met. Such designation is determined on an instrument-by-instrument basis: • 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; or •The assets and liabilities are part of a group of financial assets, financial liabilities or both, which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. Financial instruments (continued) 3.5.1 Financial assets (continued) 3.5.1.3 Impairment of financial assets (continued) The measurement of ECL involves increased complexity and judgement that include: (i) Determining a significant increase in credit risk since initial recognition The assessment of significant deterioration since initial recognition is the key to determine the point of switching between measuring an allowance based on 12-month ECL, or an allowance based on lifetime ECL. A number of both qualitative and quantitative assessments are used in determining whether there is a significant increase in credit risk as at reporting date when compared with the date of initial recognition. The Group and the Bank apply a three-stage approach based on the change in credit quality since initial recognition: (iv) Financing and receivables  Financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Profit on financing is recognised in profit or loss by applying the effective profit rate. Effective profit method The effective profit method is a method of calculating the amortised cost of a financial asset or liability and of allocating profit income or expense over the relevant period. The effective profit rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. 3.5.1.3 Impairment of financial assets The MFRS 9 impairment requirements are based on an Expected Credit Loss (“ECL”) model. The ECL model applies to financial assets measured at amortised cost or at FVOCI, irrevocable financing commitments and financial guarantee contracts; which include financing and advances, as well as financial instruments held by the Group and the Bank. The ECL model also applies to contract assets under MFRS 15, Revenue from Contracts with Customers. Stage 1 Stage 2 Stage 3 Performing Under-performing Non-performing Description No significant increase in credit risk Credit risk increased significantly Credit impaired assets ECL Approach 12-month ECL Lifetime ECL Lifetime ECL Recognition of profit income On gross carrying amount On gross carrying amount On net carrying amount 3-Stage approach  Subsequent to initial recognition, financial assets held-for-trading and financial assets designated at FVTPL are recorded in the statements of financial position at fair value. Changes in fair value are recognised in the profit or loss under the heading of ‘other operating income’. Financing and receivables are initially recognised at fair value, including direct and incremental transaction costs, and subsequently measured at amortised cost using the effective profit method, less any impairment. Regular way recognition of financing and advances is recorded on settlement date, when all the conditions under financing contract have been fulfilled. 197 for the Year Ended 31 December 2021 (Continued) 3. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) (ii) ECL Measurement There are three main components to measure ECL which are probability of default (“PD”) model, a loss given default (“LGD”) model, and the exposure at default model (“EAD”). a) Probability of default PD provides an estimate of the likelihood that a customer will be unable to meet its debt obligation or default over a particular time horizon. b) Loss Given Default LGD is defined as the percentage of exposure the Bank might lose in case the customer defaults. These losses are usually shown as a percentage of EAD, and depend, amongst others, on the type and amount of collateral as well as the type of customer and the expected proceeds from the work-out of the assets. c) Exposure at Default EAD is an estimate of the Bank’s exposure to its counterparty at the time of default. For defaulted accounts, EAD is simply the amount outstanding at the point of default. FINANCIAL STATEMENT 196
101. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 Financial instruments (continued) 3.5 3.5.1 Financial assets (continued) 3.5.1.3 Impairment of financial assets (continued) (ii) ECL Measurement (continued)  MFRS 9 does not distinguish between individual assessment and collective assessment. Therefore, the Group and the Bank have continued to measure impairment on individual assessment basis for financial assets that are deemed to be individually significant. All other remaining financial assets are collectively assessed as per the Group’s policy. (iii) Expected life FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Lifetime expected credit losses must be measured over the expected life. This is defined to be the maximum contractual life, including any expected prepayment, extension, call and similar options. (iv) Financial investments at FVOCI The ECLs of financial investments measured at FVOCI do not reduce the carrying amount of these financial assets, which remains at fair value. Rather, an amount equal to the allowance that would arise if the assets were measured at amortised cost is recognised in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognised in OCI is recycled to the profit or loss upon derecognition of the assets. (v) Forward-looking information Expected credit losses are the unbiased probability-weighted credit losses, determined by evaluating a range of possible outcomes and considering future economic conditions. The reasonable and supportable forward-looking forward is based on the Group’s and the Bank’s Economic Research Division. Where applicable, the Group and the Bank incorporate forward-looking adjustments in credit risk factors of PD and LGD used in ECL calculation, taking into account the impact of multiple probability-weighted future forecast economic scenarios. Embedded in ECL is a broad range of forward-looking information as economic inputs, such as: • • • • • • • • • Private Final Consumption (“PFC”); Gross Domestic Product (“GDP”); Consumer Sentiment Index (“CSI”); Unemployment Rate (“Unemployment”); Overnight Pricing Rate (“OPR”); Passenger Cars (“Passenger Cars”); Consumer Price Indices (“CPI”); House Price Indices (“HPI”); or FTSE Bursa Malaysia Small Cap Index (“FTSE”). 199 Financial instruments (continued) 3.5.1 Financial assets (continued) 3.5.1.3 Impairment of financial assets (continued) (v) Forward-looking information (continued) The Group and Bank apply the following three alternative macro-economic scenarios to reflect an unbiased probability-weighted range of possible future outcomes in estimating ECL: • Base scenario: This scenario reflects the current macro-economic conditions continue to prevail. • Best and Worst scenarios: These scenarios are set relative to the base scenario; reflecting the best and worst case macro-economic conditions respectively, based on subject matter expert’s best judgement from current economic conditions. (vi) Valuation for Stage 3 ECL The Group and the Bank’s accounting policy for collateral assigned to it through its financing arrangements under MFRS 9 is the same as it was under MFRS 139. 3.5.1.4 Rescheduled and restructured financing Where a financing shows evidence of credit weaknesses, the Group and the Bank may seek to renegotiate the financing rather than to take possession of collateral. This may involve an extension of the payment arrangements via rescheduling or the renegotiation of new financing terms and conditions via restructuring. Management monitors the renegotiated financing to ensure that all the revised terms are met and that the payments are made promptly for a continuous period. Where an impaired financing is renegotiated, the customer must adhere to the revised and/or restructured payment terms for a continuous period of six months before the financing is classified as non-impaired. This financing continues to be subjected to ECL individually or collectively assessed. 3.5.1.5 Modification of financing (Policy applicable from 1 January 2020 to 31 December 2022)  Based on the BNM’s revised guideline on Financial Reporting for Development Financial Institutions, the prescribed development financial institutions (“DFIs”) shall make one-time election in 2020 to apply revision to the original effective profit rate in respect of any modifications made to the contractual cash flows of financing. In the event of election, the requirements shall apply for financial years beginning between 1 January 2020 to 31 December 2022 and in respect of financing for which the contractual cash flows are modified, including payments deferred under moratoriums provided by DFIs during these financial years. The Group and the Bank elected to adopt the modified accounting treatment. FINANCIAL STATEMENT 198
102. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 Financial instruments (continued) 3.5 3.5.1 Financial assets (continued) 3.5.2 3.5.1.6 Modification of financing (Policy applicable before 1 January 2020) Financial assets are derecognised when the contractual rights to the cash flows from the assets expire, or when the Group and the Bank transfer the financial assets and substantially all the risks and rewards of ownership of the assets to another entity. If the Group and the Bank neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the financial asset, the Group and the Bank recognise their retained interest in the asset and an associated liability for amounts it may have to pay. If the Group and the Bank retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and the Bank continue to recognise the financial asset and also recognise a collaterised financing for the proceeds received. The Group and the Bank sometimes renegotiate or otherwise modify the contractual cash flows of financing to customers. When this happens, the Group and the Bank assess whether or not the new terms are substantially different to the original terms. The Group and the Bank do this by considering, among others, the following factors: FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) • If the customer is in financial difficulty, whether the modification merely reduces the contractual cash flows to amount the customer is expected to be able to pay; •Whether any substantial new terms are introduced, such as profit share/equity-based return that substantially affects the risk profile of the financing; • Significant extension of the financing term when the customer is not in financial difficulty; or • Significant change in profit rate. The Group and Bank sometimes renegotiate or otherwise modify the contractual cash flows of customer financing. When this happens, the Group and the Bank assess whether or not the new terms are substantially different to the original terms. The Group and Bank do this by considering, among others, the insertion of collateral, other security, or credit enhancements that significantly affect the credit risk associated with the financing. If the terms are substantially different, the Group and the Bank derecognise the original financial asset and recognise a ‘new’ asset at fair value and recalculate a new effective profit rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for both impairment calculation purposes and in determining whether a significant increase in credit risk has occurred. If the terms are not substantially different, the renegotiation or modification does not result in derecognition. The Group and the Bank recalculate the gross carrying amount based on the revised cash flows of the financial asset and recognises a modification gain or loss in the income statements. The new gross carrying amount is recalculated by discounting the modified cashflows at the original effective profit rate. 3.5.1.7 Reclassification of financial assets Reclassification of financial assets is permissible when and only when there is change in business model for managing financial assets. Subsequent to initial recognition, the Group and the Bank do not reclassify its financial assets. 201 Financial instruments (continued) Derecognition of financial assets On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated under the heading of other reserves is recognised in profit or loss. 3.5.3 Classification as debt or equity Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument. 3.5.4 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are recognised at the proceeds received, net of direct issue costs. Repurchase of the Group’s and of the Bank’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s and of the Bank’s own equity instruments. 3.5.5 Financial liabilities Financial liabilities are initially recognised at the fair value of consideration received less directly attributable transaction costs. Subsequent to initial recognition, financial liabilities are measured at amortised cost using the effective profit method. The Group and the Bank do not have any non-derivative financial liabilities designated at fair value through profit or loss. Financial liabilities at amortised cost include deposits from customers, deposits and placements from banks and financial institutions, trade and other payables, recourse obligations on financing sold to Cagamas, debt securities issued and other fund placement. The effective profit method is a method of calculating the amortised cost of a financial liability and of allocating profit expense over the relevant period. The effective profit rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period to the net carrying amount on initial recognition. 3.5.6 Derecognition of financial liabilities The Group and the Bank derecognise financial liabilities when, and only when, the Group’s and the Bank’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liabilities derecognised and the consideration paid or payable is recognised in profit or loss. FINANCIAL STATEMENT 200
103. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.5 3.7 Financial instruments (continued) 3.5.7 Determination of fair value For financial instruments traded in active markets, the determination of fair values of financial assets and financial liabilities is based on quoted market prices. This includes listed equity securities and quoted debt instruments on Bursa Malaysia and broker quotes from Bond Pricing Agency. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. If the above criteria are not met, the market is regarded as being inactive. Indications that a market is inactive are when there is a wide bid-offer spread or significant increase in the bid-offer spread or there are few recent transactions. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued)  For all other financial instruments, fair value is determined using valuation techniques. Under these techniques, fair values are estimated from observable data in respect of similar financial instruments, using models to estimate the present value of expected future cash flows or other valuation techniques, and using inputs existing at the end of the reporting period. 3.6  he fair value for financing and advances as well as liabilities to banks and customers are determined using T a present value model on the basis of contractually agreed cash flows, taking into account credit quality, liquidity and costs. Cash and cash equivalents Cash and short term funds in the statements of financial position comprise of cash and bank balances with bank and other financial institutions and short-term deposits maturing within one month. For purpose of the statements of cash flows, cash and cash equivalents consist of cash and short term funds with original maturity of less than three months. 3.7Leases At inception of a contract, the Group and the Bank assess whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group and the Bank use the definition of a lease in MFRS 16. (a) Group as lessor Leases (continued) (a) Group as lessor (continued) Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease as part of ‘Other operating income’ (Note 33). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.  mounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s A and the Bank’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s and the Bank’s net investment outstanding in respect of the leases. (b) Group as lessee The Group and the Bank apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group and the Bank recognise lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. (i) Right-of-use assets The right-of-use assets comprise the initial measurement of the corresponding lease liabilities, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for certain remeasurements of the lease liabilities. Whenever the Group and the Bank incur an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under MFRS 137, Provisions, Contingent Liabilities and Contingent Assets. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group and the Bank expect to exercise a purchase option, the related rightof-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease: The Group and the Bank enter into lease agreements as a lessor with respect to some of its investment properties. Buildings Other equipment Leases for which the Group and the Bank is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. The right-of-use assets are presented as a separate line in the statements of financial position. When the Group or the Bank is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group or the Bank applies the exemption described above, then it classifies the sub-lease as an operating lease. 203 1 - 10 years 1 - 2 years The Group and the Bank apply MFRS 136, Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in Note 3.20 Impairment of non-financial assets. If ownership of the leased asset transfers to the Group and the Bank at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. FINANCIAL STATEMENT 202
104. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.7 3.8 Leases (continued) (b) Group as lessee (continued) (i) Right-of-use assets (continued) As a practical expedient, MFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group and the Bank has not used this practical expedient. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group and the Bank allocate the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) (ii) Lease liabilities  At the commencement date of the lease, the Group and the Bank recognise 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 the Bank and payments of compensation for terminating the lease, if the lease term reflects the Group and the Bank exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs and are included in ‘Operating expenses’ in profit or loss. The Group and the Bank present lease liabilities in ‘Other liabilities’ (Note 27) in the statements of financial position. In calculating the present value of lease payments, the Group and the Bank use finance rate implicit in the lease. If this rate cannot be readily determined, the lessees uses its incremental financing rate. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of finance cost and reduced for the lease payments made. In addition, the carrying amount of lease liabilities are remeasured (and makes a corresponding adjustment to the related right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero) if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Group and the Bank do not make any such adjustments during the periods presented. (iii) Short-term leases and leases of low-value assets  The Group and the Bank apply the short-term lease recognition exemption to its short-term leases of parking space (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 to be low value. 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 unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. 205 Financing costs financing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other financing costs are expensed in the period in which they occur. financing costs consist of profit expense and other costs that an entity incurs in connection with the financing of funds. 3.9 Investment properties Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in the Group and the Bank, are classified as investment properties. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value, which reflects market conditions at the end of the reporting period. Gains or losses arising from changes in the fair value of investment properties are included in profit or loss in the year in which they arise. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between net disposal proceeds and the carrying amount of the assets), is included in profit or loss in the period which the property is derecognised. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which they arise, including the corresponding tax effect. Fair values are determined based on an annual valuation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee. Investment properties are derecognised either when they have been disposed of (i.e., at the date the recipient obtains control) or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition. In determining the amount of consideration from the derecognition of investment property the Group and the Bank consider the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the buyer (if any). Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group and the Bank account for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use. Rental income from investment property is recognised as other income on a straight-line basis over the term of the lease. 3.10 Property and equipment Land and buildings comprise mainly branches and offices. All property and equipment used by the Group and the Bank are stated at historical cost less accumulated depreciation and any impairment losses. Historical cost includes expenditure that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.  Subsequent expenditures are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Bank and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. FINANCIAL STATEMENT 204
105. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.10 3.11 Property and equipment (continued) All other repair and maintenance costs are charged to profit or loss during the financial period in which they are incurred. Freehold land has unlimited useful life and therefore is not depreciated. Construction work-in-progress are not depreciated until the assets are ready for their intended use. Depreciation of other property and equipment are calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives as follows: FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Buildings Leasehold land and buildings Renovation Furniture, fittings and office equipment Motor vehicles 50 years 50 years 5 - 50 years 5 years 5 years The assets’ residual values, useful lives and depreciation method are reviewed at the end of each reporting period with the effect of any changes in estimates accounted for on a prospective basis.  An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gains and losses arising on disposals are determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in profit or loss. 3.11 Intangible assets In addition to goodwill, intangible assets also includes computer software and software in-development. An intangible asset is recognised only when its cost can be measured reliably and it is probable that the expected future economic benefits that are attributable to it will flow to the Group and the Bank.  Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Subsequent to initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses, except software-in-development which is not subject to amortisation until the development is completed and the asset is available for use. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with indefinite 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. Intangible assets with finite lives are amortised over the useful economic 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 each financial year end. 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 and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives recognised in the income statements in the expense category consistent with the function of the intangible asset. 207 Intangible assets (continued) Gains or losses arising from derecognition of intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets and are recognised in income statements when the asset are derecognised. Amortisation of intangible assets are calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives as follows: 3.12 Computer software 5 - 15 years Prepaid lease payments Leasehold land that has an indefinite economic life which title is not expected to pass to the Group by end of the lease period is classified as operating lease. The upfront payments for right to use the leasehold land over a predetermined period are accounted for as prepaid lease payments and are stated at cost less amount amortised. The prepaid lease payments are amortised on a straight-line basis over the remaining lease terms, ranging from 4 to 860 years (2020: 5 to 861 years). 3.13Provisions Provisions are recognised when the Group and the Bank have a present obligation (legal or constructive) as a result of past events, when it is probable that the Group and the Bank will be required to settle the obligation, and when a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of time value of money is material). 3.14Inventories Inventories are valued at the lower of cost (determined using the first-in, first out method) and net realisable value. The cost of inventories comprises the original cost of purchase plus the incidental cost incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price in the ordinary course of business less selling and distribution costs and all other estimated costs to completion. In arriving at net realisable value, due allowance is made for damaged, obsolete or slow-moving inventories. Completed property units for sale are valued at the lower of cost and net realisable value. Cost is determined using the ‘specific identification’ method. 3.15 Profit income and expense For all financial instruments measured at amortised cost and profit-bearing financial assets classified as fair value through profit or loss and fair value through other comprehensive income, income and expense are recognised under “Income” and “Expenditure” respectively using the effective profit method. The effective profit method is a method of calculating the amortised cost of a financial asset or liability and of allocating the profit income or expense over the relevant period. The effective profit rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. FINANCIAL STATEMENT 206
106. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 3.15 3.18 Profit income and expense (continued) The calculation takes into account all contractual terms of the financial instruments (for example, prepayment options) but does not consider future credit losses. Significant fees and transaction costs integral to the effective profit rate, as well as premiums or discounts are also considered. For impaired assets where the value of the financial assets has been written down as a result of an impairment loss, profit income continues to be recognised using the profit rate used to discount the future cash flows for the purpose of measuring the impairment loss. 3.16 Fee and commission income  Financing arrangement fees are recognised as income based on contractual arrangements. Guarantee fee is recognised as income upon issuance of the guarantee. Fees from advisory and corporate finance activities are recognised net of sales and service tax and discounts on completion of each stage of the assignment. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3.17 3.18 3.18.2 Deferred income tax (continued) 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 they relate to income taxes levied by the same taxation authority on the same taxable entity, or on different tax entities, but they intend to settle their current tax assets and liabilities on a net basis. 3.19 Employee benefits 3.19.1 Defined contribution plan Fees and commissions are generally recognised on an accrual basis when the service has been provided. Dividend income 3.19.2 Dividends are recognised in profit or loss as ‘dividend income’ when the Group’s right to receive payment is established. Wages, salaries, paid annual leaves, bonuses and social contributions are recognised in the year in which the associated services are rendered by employees of the Group and of the Bank. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by the employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. 3.18.1 Current income tax Current income tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. 3.18.2 Deferred income tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that sufficient future taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group and the Bank expect, at the end of the reporting period, to recover or settle the carrying amount of their assets and liabilities. Income tax (continued) For defined contribution plan, the Group and the Bank pay contributions to Employees Provident Fund (“EPF”) on a mandatory basis. The Group and the Bank have no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Income tax The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the asset to be recovered. 209 3.20 Short-term employee benefits Impairment of non-financial assets At the end of each reporting period, the Group and the Bank review the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group and the Bank estimate the recoverable amount of the cash generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. FINANCIAL STATEMENT 208
107. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) 3.21Zakat 4.1 In computing for zakat, the Group and the Bank have been applying the growth capital method based on the rate of 2.5%. This method applies the rate on owners’ equity, long term liability, net of fixed assets and non-current assets, and subjected to allowable adjustments. It is an obligatory amount payable on the business on behalf of the shareholders and/or business entity depending on the ownership characteristics. Zakat is distributed according to Shariah principle and being extended through Islamic Religious Council of the respective states and other rightful beneficiaries or asnaf. 4. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The Group’s and the Bank’s financial statements and financial results are influenced by accounting policies, assumptions, estimates and management judgements, which necessarily have to be made in the course of preparation of the financial statements. The Group and the Bank make estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. All estimates and assumptions required in conformity with MFRS are best estimates undertaken in accordance with the applicable standards. Estimates and judgements are evaluated on a continuous basis, and are based on past experience and other factors, including expectations with regard to future events. Accounting policies and management’s judgements for certain items are especially critical for the Group’s and the Bank’s results and financial situation due to their materiality. 4.1 Impairment losses on financing and advances The Group and the Bank review their financing and advances portfolio to determine whether impairment losses should be recognised in profit or loss. Financing is considered as impaired when there is objective evidence of impairment as a result of loss event that has affected future estimated cash flows of the financing subsequent to its initial recognition. Components of impairment allowance are as follows: (i) ECL individually assessed Where an account has exceeded certain number of arrears or when the account has fulfilled certain criteria that indicates credit weaknesses, the account is individually assessed for impairment. Individual allowance is measured as the difference between carrying amount of the financing and present value of estimated future cash flows that are discounted at the effective profit rate. Expectation on future cash flows is established by applying the best estimate formed on reliable and objective evidence. This process involves significant and reasonable judgement. 211 Impairment losses on financing and advances (continued) (ii) ECL collectively assessed The Group and the Bank’s ECL calculations under MFRS 9 are outputs of complex models with several underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgements and estimates include: •Criteria for assessing if there has been a significant increase in credit risk, which includes qualitative assessment, to determine whether financial assets should be measures on lifetime ECL basis rather than 12-month ECL basis; • The segmentation of financial assets, when their ECL is assessed on a collective basis; • Development of ECL models, including various formulas and the choice of inputs; •Determination of associations between macroeconomic scenarios, and economic inputs, such as unemployment levels and overnight pricing rate, and their effect on PDs, EADs, and LGDs; and •Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive the economic inputs into the ECL models. 4.2 Impairment of financial assets portfolio The Group and the Bank review their financial investments at FVOCI and financial investments at amortised cost under MFRS 9 to recognise the ECL at each reporting date to reflect changes in credit risk of the financial investments not measured through FVTPL. MFRS 9 incorporates forward-looking and historical, current and forecasted information into ECL estimation. In carrying out the impairment review, the following management’s judgements are required: (i)Determination whether the investment is impaired based on certain indicators such as, among others, difficulties of the issuers or obligors, deterioration of the credit quality of the issuers or obligors; and (ii) Determination of ECL that reflect: (a)An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; (b) (c)Reasonable and supportable information, that is available without undue cost or effort, as at the reporting date about past events, current conditions, and forecasts of future economic conditions. The time value of money; and FINANCIAL STATEMENT 210
108. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 213 for the Year Ended 31 December 2021 (Continued) 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) 5. 4.3  Based on the BNM’s revised guideline on Financial Reporting for Development Financial Institutions, the prescribed development financial institutions (“DFIs”) shall make a one-time election in 2020 to apply revisions to the original effective profit rate in respect of any modifications made to the contractual cash flows of financing. In the event of election, the requirements shall apply for financial years beginning between 1 January 2020 to 31 December 2022 and in respect of financing for which the contractual cash flows are modified, including payments deferred under moratoriums provided by DFIs during these financial years. Fair value estimation of financial assets at FVTPL and financial investments at FVOCI When the fair value of financial assets recorded in the statements of financial position cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques. Valuation techniques include the discounted cashflow methods, option pricing models, and other relevant valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 4.4 Deferred tax CHANGES IN REGULATORY REQUIREMENTS The Group and the Bank elected to adopt the modified accounting treatment. The comparison of the financial impact of applying the accounting treatment in accordance with Malaysian Financial Reporting Standard (“MFRS”) and the modified accounting treatment is as follows: Deferred tax assets are recognised for deductible temporary differences to the extent that it is probable that sufficient future taxable profit will be available against which the deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profit together with future tax planning strategies. 4.5 Determine the lease term of contracts with renewal and termination options - Group as lessee As at 31 December GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Financing and advances The Group and the Bank determine 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 reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. Closing balance under MFRS Modification loss Loss of income due to changes in effective rate 78,933,16177,868,39479,166,91178,083,444 858,835349,430858,835349,430 (176,532)(61,941) (176,532)(61,941) The Group and the Bank have several lease contracts that include extension and termination options. The Group and the Bank apply judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group and the Bank reassess 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 or to terminate. Closing balance under modified   accounting treatment 79,615,46478,155,88379,849,21478,370,933 The Group and the Bank include the renewal period as part of the lease term for leases of buildings and other equipment with shorter non-cancellable period (i.e., one to three years). The Group and the Bank typically exercise its option to renew for these leases because there will be a significant negative effect on operation if a replacement asset is not readily available. The renewal periods for leases of buildings with longer non-cancellable periods (i.e., 10 to 15 years) are not included as part of the lease term as these are not reasonably certain to be exercised. Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised. Refer to Note 14 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term. For the year ended 31 December GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Income Year ended balance under MFRS Modification loss Loss of income due to changes in effective rate 4,010,5494,488,9134,020,6064,495,905 509,405349,430509,405349,430 (114,592)(61,941) (114,592)(61,941) Year ended balance under modified   accounting treatment 4,405,3624,776,4024,415,4194,783,394 FINANCIAL STATEMENT 212
109. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 6 . 8. GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 At amortised cost Cash and balances with banks   and other financial institutions Money at call and deposit placements   maturing within one month 835,189881,621834,987881,165 835,189981,636834,987981,180 -100,015 -100,015 For the purpose of the statements of cash flows, cash and cash equivalents comprise the following: GroupBank 2020 RM’000 2021 RM’000 Cash and short-term funds 835,189981,636834,987981,180 7. DEPOSITS AND PLACEMENTS WITH FINANCIAL INSTITUTIONS 2021 RM’000 2020 RM’000 Group and Bank 2021 RM’000 2020 RM’000 At amortised cost Licensed banks 672,463277,275 Group and Bank 2021 RM’000 Group and Bank 2021 RM’000 311,21470,059 361,249207,216 2020 RM’000 672,463277,275 2020 RM’000 Debt instruments at fair value through profit or loss:   Government investment issues 695,93989,942   Islamic redeemable convertible preference shares 213,200213,200 909,139303,142 Equity securities at fair value through profit or loss:   Quoted shares 66,893144,684 66,893144,684 Total financial investments at fair value through profit or loss 9. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME Debt instruments at fair value through   other comprehensive income:   Islamic debt securities   Government investment issues   Government sukuk   Khazanah sukuk   Cagamas sukuk The maturity structure of the deposits and placements with financial institutions is as follows: Maturity more than one month and less than three months More than three months FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS 215 for the Year Ended 31 December 2021 (Continued) CASH AND SHORT-TERM FUNDS FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 976,032447,826 GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 5,036,3724,764,8435,036,3724,764,843 5,550,2526,034,1425,550,2526,034,142 8,709,4947,703,7048,709,4947,703,704 156,319235,038156,319235,038 1,256,5021,824,3781,256,5021,824,378 20,708,93920,562,10520,708,93920,562,105 Equity securities at fair value through   other comprehensive income:   Unquoted shares 72,77957,96572,77157,957 72,77957,96572,77157,957 Total financial investments at fair value   through other comprehensive income 20,781,71820,620,07020,781,71020,620,062 FINANCIAL STATEMENT 214
110. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 9. FINANCIAL INVESTMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (CONTINUED) 10. Movement of allowance for ECL by stage for debt instruments at fair value through other comprehensive income is as follows: Group and Bank 2021 RM’000 12-month ECL Group and Bank Stage 1 RM’000 FINANCIAL STATEMENT 217 for the Year Ended 31 December 2021 (Continued) FINANCIAL INVESTMENTS AT AMORTISED COST 2020 RM’000 At 1 January 2020 Changes in credit risk (Note 32(ii)) 274 (100) At 31 December 2020/1 January 2021 Changes in credit risk (Note 32(ii)) 174 (45) At amortised cost   Islamic debt securities 471,788572,783   Government investment issues 6,925,9035,480,409   Government sukuk3,170,8722,923,692   Khazanah sukuk 100,040240,070   Cagamas sukuk 76,349449,617   Negotiable Islamic debt certificates 99,94099,984 At 31 December 2021 129 10,844,8929,766,555 The decrease in ECL Stage 1 of RM45,000 is due to improvement in credit quality during the financial year. The maturity structure of the debt instruments is as follows: Less: Allowance for ECL   Negotiable Islamic debt certificates   Islamic debt securities 10,826,8509,747,865 Group and Bank 2021 RM’000 Maturity within one year More than one year to five years More than five years (12)(2) (18,030)(18,688) 2020 RM’000 3,124,6373,809,671 9,814,49910,936,085 7,769,8035,816,349 20,708,93920,562,105 Movement of allowance for ECL by stage is as follows: Lifetime ECL 12-month Credit ECL Impaired Group and Bank Stage 1 Stage 3 RM’000 RM’000 94 (55) Total RM’000 At 1 January 2020 Changes in credit risk (Note 32(ii)) 19,829 (1,178) 19,923 (1,233) At 31 December 2020/1 January 2021 Changes in credit risk (Note 32(ii)) 3918,65118,690 (7)(641)(648) At 31 December 2021 3218,01018,042 The decrease in ECL Stage 1 of RM7,000 is due to decrease in gross carrying amount during the financial year. The decrease in ECL Stage 3 is due to partial redemption of impaired sukuk. The maturity structure of the instruments is as follows: Group and Bank 2021 2020 RM’000 RM’000 Maturity within one year 1,669,4231,731,426 More than one year to five years 2,298,5123,450,553 More than five years 6,876,9574,584,576 10,844,8929,766,555 FINANCIAL STATEMENT Notes to the Financial Statements 216
111. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 11. FINANCING AND ADVANCES 11. FINANCING AND ADVANCES (CONTINUED) (i) (i) Financing and advances analysed by type and concept 219 Financing and advances analysed by type and concept (continued) Bai`Ijarah Group Bithaman Thumma 2021 Bai` `Inah Ajil Ar-Rahn Qard MurabahahAl-Bai` Tawarruq Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Bai`Ijarah Group Bithaman Thumma 2020 Bai` `Inah Ajil Ar-Rahn Qard MurabahahAl-Bai` Tawarruq Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 At amortised cost At amortised cost Term financing   - Personal financing 17,640,575----- 42,269,868 59,910,443   - House financing - 809,343---- 7,579,937 8,389,280   - Hire-purchase    receivables ----- 1,922,355- 1,922,355   - Syndicated financing ------ 346,196 346,196   - Bridging financing ------ 257,291 257,291   - Other term financing 105,462 3,981 - 11 29,700 -5,262,9805,402,134 Pawn broking -- 437--- 2,015,366 2,015,803 Cashline ------ 224,006 224,006 Revolving credit ------ 304,539 304,539 Credit card ------ 356,279 356,279 Staff financing ------ 487,138 487,138 Term financing   - Personal financing 20,961,835----- 38,416,192 59,378,027   - House financing - 933,849- 116-- 6,539,130 7,473,095   - Hire-purchase      receivables ----- 1,872,092- 1,872,092    - Syndicated financing ------ 313,742 313,742   - Bridging financing ------ 258,354 258,354   - Other term financing 8,605 1,159 - 16 - - 5,297,634 5,307,414 Pawn broking -- 599,893--- 1,594,886 2,194,779 Cashline ------ 147,637 147,637 Revolving credit ------ 356,659 356,659 Credit card ------ 376,004 376,004 Staff financing ------ 478,080 478,080 17,746,037 20,970,440 935,008 599,893 132 813,324 437 11 29,700 1,922,35559,103,60079,615,464 - 1,872,092 53,778,318 78,155,883 Allowance for ECL on financing and advances:   Stage 1 - 12 month ECL (934,553)   Stage 2 - lifetime ECL not credit impaired (609,842)   Stage 3 - lifetime ECL credit impaired (774,632) Allowance for ECL on financing and advances:   Stage 1 - 12 month ECL (388,082)   Stage 2 - lifetime ECL not credit impaired (709,254)   Stage 3 - lifetime ECL credit impaired (975,349) Net financing and advances 77,296,437 Net financing and advances 76,083,198 FINANCIAL STATEMENT FINANCIAL STATEMENT 218
112. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 11. FINANCING AND ADVANCES (CONTINUED) 11. FINANCING AND ADVANCES (CONTINUED) (i) (i) Financing and advances analysed by type and concept (continued) 221 Financing and advances analysed by type and concept (continued) Bai`Ijarah Bank Bithaman Thumma 2021 Bai` `Inah Ajil Ar-Rahn Qard MurabahahAl-Bai` Tawarruq Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Bai`Ijarah Bank Bithaman Thumma 2020 Bai` `Inah Ajil Ar-Rahn Qard MurabahahAl-Bai` Tawarruq Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 At amortised cost At amortised cost Term financing   - Personal financing 17,640,575----- 42,269,868 59,910,443   - House financing - 809,343---- 7,813,687 8,623,030   - Hire-purchase    receivables ----- 1,922,355- 1,922,355   - Syndicated financing ------ 346,196 346,196   - Bridging financing ------ 257,291 257,291   - Other term financing 105,462 3,981 - 11 29,700 -5,262,9805,402,134 Pawn broking -- 437--- 2,015,366 2,015,803 Cashline ------ 224,006 224,006 Revolving credit ------ 304,539 304,539 Credit card ------ 356,279 356,279 Staff financing ------ 487,138 487,138 Term financing   - Personal financing 20,961,835----- 38,416,192 59,378,027   - House financing - 933,849- 116-- 6,754,180 7,688,145   - Hire-purchase      receivables ----- 1,872,092- 1,872,092    - Syndicated financing ------ 313,742 313,742   - Bridging financing ------ 258,354 258,354   - Other term financing 8,605 1,159 - 16 - - 5,297,634 5,307,414 Pawn broking -- 599,893--- 1,594,886 2,194,779 Cashline ------ 147,637 147,637 Revolving credit ------ 356,659 356,659 Credit card ------ 376,004 376,004 Staff financing ------ 478,080 478,080 17,746,037 20,970,440 935,008 599,893 132 813,324 437 11 29,700 1,922,35559,337,35079,849,214 - 1,872,092 53,993,368 78,370,933 Allowance for ECL on financing and advances:   Stage 1 - 12 month ECL (948,159)   Stage 2 - lifetime ECL not credit impaired (609,842)   Stage 3 - lifetime ECL credit impaired (774,632) Allowance for ECL on financing and advances:   Stage 1 - 12 month ECL (400,965)   Stage 2 - lifetime ECL not credit impaired (709,254)   Stage 3 - lifetime ECL credit impaired (975,349) Net financing and advances 77,516,581 Net financing and advances 76,285,365 FINANCIAL STATEMENT FINANCIAL STATEMENT 220
113. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 11. FINANCING AND ADVANCES (CONTINUED) 11. FINANCING AND ADVANCES (CONTINUED) (i) (iv) Financing and advances analysed by type and concept (continued) Assets funded under Ijarah financing are owned by the Bank throughout the tenure of the Ijarah financing and ownership of the assets will be transferred to customer at the end of financing tenure for a token consideration or other amount as specified in the Ijarah financing contract. Included in the Bank’s financing and advances is financing granted to Rakyat Holdings Sdn Bhd, a subsidiary of the Bank, amounting RM220.14 million net of expected credit losses (2020: RM202.17 million), subject to profit rate of 4.53% to 8.62% (2020: 4.53% to 8.62%). Included in the Group’s and the Bank’s financing and advances as at 31 December 2021 are government financing scheme as part of the government support measures in response to COVID-19 pandemic for the purpose of SME financing amounting to RM128.68 million (2020: RM22.70 million). FINANCIAL STATEMENT (ii) Financing and advances analysed by geographical distribution 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Central Region Southern Region Eastern Region Northern Region East Malaysia Region 31,337,57130,253,81331,571,32130,468,863 12,143,63111,638,99112,143,63111,638,991 12,180,51212,954,65712,180,51212,954,657 9,376,6039,069,8759,376,6039,069,875 14,577,14714,238,54714,577,14714,238,547 79,615,46478,155,88379,849,21478,370,933 (iii) Maturity within one year More than one year to three years More than three years to five years More than five years (v) GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 Purchase of securities Purchase of non-residential property Consumption credit Agriculture Mining and quarrying Manufacturing Electricity, gas and water Construction Wholesale and retail trade Transportation and communication Financial, takaful and business services Community, social and personal services 18,66019,66618,66019,666 110,945157,446110,945157,446 73,976,11572,558,74273,976,11572,558,742 81,26281,98881,26281,988 300- 30077,10737,15077,10737,150 27,43311,04427,43311,044 961,965983,569961,965983,569 562,177690,652562,177690,652 274,798256,447274,798256,447 3,135,9503,091,9353,369,7003,306,985 388,752267,244388,752267,244 79,615,46478,155,88379,849,21478,370,933 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 2,380,3531,910,8552,380,3531,910,855 2,864,8043,017,3602,864,8043,017,360 6,423,6006,514,5076,423,6006,514,507 67,946,70766,713,16168,180,45766,928,211 79,615,46478,155,88379,849,21478,370,933 GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Individuals 74,104,15472,751,86674,104,15472,751,866 Business enterprises 3,041,9602,789,5173,275,7103,004,567 Non-bank financial institutions   - Co-operatives 2,214,4522,352,1212,214,4522,352,121 Foreign entities 1,5662,1321,5662,132 Other entities 253,332260,247253,332260,247 2020 RM’000 GroupBank Financing and advances analysed by customer type Financing and advances analysed by economic sector Financing and advances analysed by remaining contractual maturity GroupBank 223 for the Year Ended 31 December 2021 (Continued) FINANCIAL STATEMENT Notes to the Financial Statements 222 (vi) 79,615,46478,155,88379,849,21478,370,933 Financing and advances analysed by profit rate sensitivity GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Fixed rate   Personal financing-i   House financing-i   Others 18,896,64521,074,78818,896,64521,074,788 1,499,8081,559,1251,499,8081,559,125 6,340,6666,444,4826,340,6666,444,482 Floating rate   Personal financing-i   House financing-i   Others 41,013,79838,303,21441,013,79838,303,214 6,889,4735,913,9797,123,2236,129,029 4,975,0744,860,2954,975,0744,860,295 79,615,46478,155,88379,849,21478,370,933
114. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 11. FINANCING AND ADVANCES (CONTINUED) 11. FINANCING AND ADVANCES (CONTINUED) (vii) (x) Impaired financing and advances analysed by geographical distribution Group and Bank 2021 RM’000 2020 RM’000 Central Region 1,035,1741,180,067 Southern Region 70,53283,215 Eastern Region 87,72087,393 Northern Region 63,02268,089 East Malaysia Region 97,05299,440 1,353,5001,518,204 FINANCIAL STATEMENT (viii) Impaired financing and advances analysed by economic sector Group and Bank 2021 RM’000 2020 RM’000 Purchase of securities 1,004131 Purchase of non-residential property 2,2453,833 Consumption credit 605,093740,707 Agriculture 49,96528,858 Manufacturing 2,0112,236 Construction 184,089190,911 Wholesale and retail trade 8,37512,988 Transportation and communication 7,542930 Financial, takaful and business services 492,542537,610 Community, social and personal services 6341,353,5001,518,204 (ix) Movements in impaired financing and advances are as follows: Group and Bank 2021 RM’000 At 1 January Classified as impaired during the year Amount written back in respect of recoveries Amount written off during the year 2020 RM’000 1,518,2041,406,672 2,005,7551,207,376 (1,685,467)(826,201) (484,992)(269,643) (164,704)111,532 At 31 December 1,353,5001,518,204 Gross impaired financing and advances as a percentage   of gross financing and advances 1.70%1.94% 225 for the Year Ended 31 December 2021 (Continued) Movements in allowance for ECL on financing and advances are as follows: Lifetime Lifetime ECL ECL 12-month Not Credit Credit Group ECL Impaired Impaired 2021 Stage 1 Stage 2 Stage 3 RM’000 RM’000 RM’000 Total RM’000 ECL allowance At 1 January 2021 Changes due to financing   and advances movements:    - Transfer to 12-month ECL (Stage 1)    - Transfer to lifetime ECL not credit       impaired (Stage 2)    - Transfer to lifetime ECL credit       impaired (Stage 3) New financial assets originated * Changes in credit risk Financial assets derecognised Amount written off 388,082709,254975,349 2,072,685 934,553609,842774,632 2,319,027 At 31 December 2021 398,873(336,297) (62,576) - (30,758)113,902 (83,144) - (2,623)(35,976) 38,599 108,64314,59916,998 140,240 99,925174,923405,806680,654 (27,589)(30,563)(31,408)(89,560) - - (484,992)(484,992) Lifetime Lifetime ECL ECL 12-month Not Credit Credit Group ECL Impaired Impaired 2020 Stage 1 Stage 2 Stage 3 RM’000 RM’000 RM’000 Total RM’000 ECL allowance At 1 January 2020 Changes due to financing   and advances movements:    - Transfer to 12-month ECL (Stage 1)    - Transfer to lifetime ECL not credit       impaired (Stage 2)    - Transfer to lifetime ECL credit       impaired (Stage 3) New financial assets originated * Changes in credit risk Financial assets derecognised Amount written off 240,394 388,082 At 31 December 2020 44,517 399,011 (41,217) 820,128 1,459,533 (3,300) - (85,361) - (17,255) 102,616 (1,475) 84,720 70,520 (33,339) - (57,697) 36,888 320,040 (50,387) - 59,172 30,988 454,082 (30,717) (269,643) 709,254 975,349 152,596 844,642 (114,443) (269,643) 2,072,685 FINANCIAL STATEMENT 224
115. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 11. FINANCING AND ADVANCES (CONTINUED) 11. FINANCING AND ADVANCES (CONTINUED) (x) (x) Movements in allowance for ECL on financing and advances are as follows: (continued) Lifetime Lifetime ECL ECL 12-month Not Credit Credit Bank ECL Impaired Impaired 2021 Stage 1 Stage 2 Stage 3 RM’000 RM’000 RM’000 Total RM’000 FINANCIAL STATEMENT At 1 January 2021 Changes due to financing   and advances movements:    - Transfer to 12-month ECL (Stage 1)    - Transfer to lifetime ECL not credit       impaired (Stage 2)    - Transfer to lifetime ECL credit       impaired (Stage 3) New financial assets originated * Changes in credit risk Financial assets derecognised Amount written off 400,965709,254975,349 2,085,568 948,159609,842774,632 2,332,633 398,873(336,297) (62,576) - (30,758)113,902 (83,144) - (2,623)(35,976) 38,599 108,64314,59916,998 140,240 100,648174,923405,806681,377 (27,589)(30,563)(31,408)(89,560) - - (484,992)(484,992) Lifetime Lifetime ECL ECL 12-month Not Credit Credit Bank ECL Impaired Impaired 2020 Stage 1 Stage 2 Stage 3 RM’000 RM’000 RM’000 Overall, the total allowance for impairment on financing and advances increased due to the following: a)12 month ECL (Stage 1) - increase by RM546.47 million for the Group and increase by RM547.19 million for the Bank mainly due to changes in ECL staging policy and refinement of management overlay to further include the presumption of payment ability to be affected from COVID-19 and flood which has resulted in additional ECL charge. b)Lifetime ECL (Stage 2) - decrease by RM99.41 million for the Group and the Bank mainly due to changes in ECL staging policy. c)Lifetime ECL (Stage 3) - decrease by RM200.72 million for the Group and the Bank mainly from financing and advances amount written off and partially offset by financing and advances that migrated into Stage 3 due to deterioration in credit quality. Total RM’000 At 1 January 2020 Changes due to financing   and advances movements:    - Transfer to 12-month ECL (Stage 1)    - Transfer to lifetime ECL not credit       impaired (Stage 2)    - Transfer to lifetime ECL credit       impaired (Stage 3) New financial assets originated * Changes in credit risk Financial assets derecognised Amount written off 250,121 At 31 December 2020 400,965 *  New financing and advances originated during the year which were not credit impaired at origination but subsequently the credit risk has deteriorated. 44,517 (41,217) 820,128 1,469,260 (3,300) - (85,361) - (17,255) 102,616 (1,475) 84,720 73,676 (33,339) - (57,697) 36,888 320,040 (50,387) - 59,172 30,988 454,082 (30,717) (269,643) 709,254 975,349 12. 152,596 847,798 (114,443) (269,643) 2,085,568 TRADE RECEIVABLES ECL allowance 399,011 Movements in allowance for ECL on financing and advances are as follows: (continued) The following explains how significant changes in the gross carrying amount of financing and advances during the financial year have contributed to the change in the allowance for ECL on financing and advances. ECL allowance At 31 December 2021 227 for the Year Ended 31 December 2021 (Continued) 2021 RM’000 2020 RM’000 At amortised cost Trade receivables Less: Allowance for ECL Group 2,0752,108 (1,166)(1,961) 909147 The credit period granted for sale of goods is 30 days (2020: 30 days). No profit is charged on trade receivables. FINANCIAL STATEMENT 226
116. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements TRADE RECEIVABLES (CONTINUED) 13. OTHER ASSETS (CONTINUED) The table below is an analysis of trade receivables at the end of the reporting period: (i) Group 2021 RM’000 2020 RM’000 Neither past due nor impaired 1 day to less than 1 month 60122 Past due but not impaired 1 month to less than 2 months 2 months to less than 3 months 374455 597349 971804 Past due and impaired 1,0441,182 2,0752,108 Group 2021 RM’000 2020 RM’000 At 1 January Impairment losses recognised during the year (Note 34(ii)) Amount recovered during the year (Note 33(ii)) Amount written off during the year 1,9611,971 30333 (1,054)(33) (44)(10) At 31 December 1,1661,961 In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the customer base being large and unrelated. 13. OTHER ASSETS GroupBank 2021 RM’000 -- 12,52413,976 620,169947,839584,027910,432 Amount due from subsidiaries (i) Other receivables, deposits and prepayments (ii) 2020 RM’000 2021 RM’000 Amount due from subsidiaries The amount due from subsidiaries is non-trade in nature, not subject to financing charges and has no fixed terms of payment. Bank 2021 RM’000 Outstanding balances Less: Allowance for ECL 23,95225,404 (11,428)(11,428) 2020 RM’000 620,169947,839596,551924,408 2020 RM’000 12,52413,976 Movements in the allowance for ECL of amount due from subsidiaries that are neither past due nor impaired are as follows: Bank Movements in the allowance for ECL are as follows: 229 for the Year Ended 31 December 2021 (Continued) 12. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) At 1 January/31 December (ii) 2021 RM’000 2020 RM’000 11,42811,428 Other receivables, deposits and prepayments GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Other receivables Allowance for ECL 351,626663,015350,797661,211 (11,096)(31,973)(10,567)(31,333) Refundable deposits Prepayments Contribution to Central Liquidity   Monetary Fund * 340,530631,042340,230629,878 45,98946,43310,47910,290 33,65070,36433,31870,264 620,169947,839584,027910,432 200,000200,000200,000200,000 FINANCIAL STATEMENT 228
117. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements OTHER ASSETS (CONTINUED) 14. RIGHT-OF-USE ASSETS (CONTINUED) (ii) Other receivables, deposits and prepayments (continued) (i) Movements in the allowance for ECL of other receivables that are neither past due nor impaired are as follows: At 1 January Impairment losses recognised during   the year (Note 34(ii)) Amount written off during the year GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 31,97320,56331,33319,813 13549,328 13549,438 (21,012)(37,918)(20,901)(37,918) 11,09631,97310,56731,333 At 31 December * This contribution is required under sub-section 42(i) of Malaysia Co-operative Societies Commission Act 2007 (Act 665) either at a rate of 3% on the qualifying liability or RM200 million, whichever is lower, commencing in the financial period beginning on or after 1 January 2012. 14. RIGHT-OF-USE ASSETS (i) 231 for the Year Ended 31 December 2021 (Continued) 13. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Group as a lessee The Group and the Bank have lease contracts for buildings and other equipment used in its operations. Leases of buildings generally have lease terms between 1 to 10 years, with option to extend for another 1 to 3 years, while other equipment generally have lease terms between 1 to 2 years. The Group’s and the Bank’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Group and the Bank are restricted from assigning and subleasing the leased assets and some contracts require the Group and the Bank to maintain certain financial ratios. There are several lease contracts that include extension and variable lease payments, which are further discussed below. The Group and the Bank also have certain leases of motor vehicle with lease terms of 12 months or less and lease of office equipment with low value. The Group and the Bank apply the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases. Group as a lessee (continued) Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Other Buildings equipment RM’000 RM’000 Total RM’000 Group At 1 January 2020   Additions   Disposal   Depreciation (Note 34(ii)) 61,322 15,713 (12,176) (16,902) At 31 December 2020/1 January 2021   Additions   Disposal   Depreciation (Note 34(ii)) 47,957 8,388 56,345 18,680 -18,680 (9,605) (155)(9,760) (14,181) (2,009)(16,190) At 31 December 2021 2,965 8,252 - (2,829) 64,287 23,965 (12,176) (19,731) 42,851 6,22449,075 Bank At 1 January 2020   Additions   Disposal   Depreciation (Note 34(ii)) 87,265 18,925 (17,574) (22,074) At 31 December 2020/1 January 2021   Additions   Disposal   Depreciation (Note 34(ii)) 66,542 8,388 74,930 18,558 -18,558 (10,409) (155)(10,564) (19,967) (2,009)(21,976) At 31 December 2021 2,965 8,252 - (2,829) 90,230 27,177 (17,574) (24,903) 54,724 6,22460,948 The total cash outflow for leases for the Group is RM17,828,000 (2020: RM20,951,000) and for the Bank is RM24,276,000 (2020: RM26,669,000). There are no non-cash additions to right-of-use assets and lease liabilities. The future cash outflows relating to leases that have not yet commenced are disclosed in Note 27. Some property leases contain extension options exercisable by the Group and the Bank up to three years before the end of the non-cancellable contract period. Where practicable, the Group and the Bank seek to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group and the Bank assess at lease commencement date whether it is reasonably certain to exercise the extension options. The Group and the Bank reassess whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control. FINANCIAL STATEMENT 230
118. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements RIGHT-OF-USE ASSETS (CONTINUED) 15.INVENTORIES (i) Group as a lessee (continued) The following are the amounts recognised in profit or loss: GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Depreciation expense of right-of-use   assets (Note 34(ii)) Finance cost on lease liabilities (Note 34(ii)) 16,19019,73121,97624,903 2,1171,3142,7772,160 Total amount recognised in profit or loss 18,30721,04524,75327,063 The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised. (ii) Group as a lessor The Group and the Bank have entered into operating leases on its investment property portfolio consisting of certain office buildings (Note 19). These leases have terms of between 1 and 3 years. Rental income recognised by the Group and the Bank during the year is RM19,760,097 (2020: RM21,430,010) and RM19,069,786 (2020: RM20,860,171), respectively. Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows: GroupBank 2021 RM’000 2020 RM’000 233 for the Year Ended 31 December 2021 (Continued) 14. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 2021 RM’000 2020 RM’000 Future rental income within: - 1 year - 2 years - 3 years 13,14415,55512,41114,846 6,5309,8525,6169,119 3,7884,7801,8812,916 23,46230,18719,90826,881 Inventories consist of the following: Group 2021 RM’000 2020 RM’000 Trading inventories, at cost 23,3933,457 Recognised in profit or loss:   Inventories recognised as cost of sales 50,95517,534 16. INVESTMENTS IN SUBSIDIARIES Bank 2021 RM’000 Unquoted shares, at cost 100,744100,744 Details of the subsidiaries, all incorporated in Malaysia, are as follows: Name Proportion of ownership interest and voting power held by the Group 2021 2020 % % 2020 RM’000 Principal activities Directly owned Rakyat Holdings Sdn Bhd * 100 100 Investment and property management Rakyat Management Services Sdn Bhd * 100 100 Management of Ar-Rahnu business and franchise Rakyat Nominees Sdn Bhd * 100 100 Dormant Rakyat Hartanah Sdn Bhd * 100 100 Dormant Rakyat Asset Management Sdn Bhd * 100 100 Dormant Rakyat Facility Management Sdn Bhd * 100 100 Dormant Rakyat Niaga Sdn Bhd * 100 100 Dormant Indirectly owned through   Rakyat Holdings Sdn Bhd Rakyat Travel Sdn Bhd * 100 100 Dormant *  The financial statements of these subsidiaries were not audited by the Auditor General of Malaysia. FINANCIAL STATEMENT 232
119. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 16. INVESTMENTS IN SUBSIDIARIES (CONTINUED) 17. Composition of the Group Information about the composition of the Group at the end of the reporting period is as follows: Long-term Short-term Furniture, leasehold leasehold fittings Freehold land and land and Work-in- and officeMotor land Buildings buildings buildings progress Renovation equipment vehiclesTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Place of Incorporation Principal activities and Operation Number of directly Number of indirectly owned subsidiaries owned subsidiaries 2021 2020 2021 2020 Group (continued) 2020 At cost Investment and property management Malaysia 11 -- Management of Ar-Rahnu business and franchise Malaysia 11 -- Malaysia 5511 At 1 January41,510457,189117,598 928 85,954283,332425,446 5,289 1,417,246 Additions - 102 - - 565 3,95211,111 1,26116,991 Disposals ----- (545) (2,317) (87) (2,949) Write-offs ----- (4,544) (7,111) (60) (11,715) Reclassifications ---- (1,865) 1,908 (43)- Transfer to intangible   assets (Note 18) ---- (61,849)--- (61,849) Transfer to prepaid lease   payments (Note 20) -- (3,173)----- (3,173) 17. 7711 PROPERTY AND EQUIPMENT Long-term Short-term Furniture, leasehold leasehold fittings Freehold land and land and Work-in- and officeMotor land Buildings buildings buildings progress Renovation equipment vehiclesTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Group 2021 At cost At 1 January 41,510457,291114,425 928 22,805284,103427,086 6,403 1,354,551 Additions - - - -16,631 2,03623,027 56942,263 Disposals ----- (43) (211) (276) (530) Write-offs ----- (731) (10,839)- (11,570) Reclassifications - 17,605 4,635- (22,240)--- At 31 December Accumulated depreciation 41,510474,896119,060 928 17,196285,365439,063 6,696 1,384,714 At 1 January Charge for the year Disposals Write-offs - 61,214 27,863 902 -269,181389,832 3,453752,445 -9,2422,372 18 -8,12917,272 89137,924 ----- (43) (209) (276) (528) ----- (732) (10,581)- (11,313) At 31 December - 70,456 30,235 Net book value At 31 December 41,510404,44088,825 920 -276,535396,314 4,068778,528 817,196 8,83042,749 2,628606,186 235 PROPERTY AND EQUIPMENT (CONTINUED) Dormant FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) At 31 December41,510457,291114,425 Accumulated depreciation 928 22,805284,103427,086 6,403 1,354,551 At 1 January - 52,305 25,371 881 -261,772377,253 2,903720,485 Charge for the year - 8,909 2,677 21 - 12,183 21,457 650 45,897 Disposals ----- (465) (1,814) (87) (2,366) Write-offs ----- (4,318) (7,055) (13) (11,386) Reclassifications -----9(9)- Transfer to prepaid lease   payments (Note 20) -- (185)----- (185) At 31 December Net book value - 61,214 27,863 At 31 December 41,510396,07786,562 902 -269,181389,832 3,453752,445 2622,80514,92237,254 2,950602,106 FINANCIAL STATEMENT 234
120. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 17 . PROPERTY AND EQUIPMENT (CONTINUED) for the Year Ended 31 December 2021 (Continued) 17. Long-term Short-term Furniture, leasehold leasehold fittings Freehold land and land and Work-in- and officeMotor land Buildings buildings buildings progress Renovation equipment vehiclesTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Bank 2021 Bank (continued) 2020 At cost At 1 January 40,122394,246 75,690 928 22,805282,135424,191 5,985 1,246,102 Additions - - - -16,631 2,02122,940 56942,161 Write-offs ----- (731) (10,684)- (11,415) Reclassifications - 17,605 4,635- (22,240)--- At 31 December Accumulated depreciation 40,122411,851 80,325 928 17,196283,425436,447 6,554 1,276,848 At 1 January Charge for the year Write-offs - 56,162 23,255 902 -267,922387,585 3,110738,936 -7,8251,502 18 -7,56016,909 82934,643 ----- (732) (10,445)- (11,177) At 31 December - 63,987 24,757 Net book value At 31 December 40,122347,86455,568 920 -274,750394,049 3,939762,402 817,196 8,67542,398 2,615514,446 237 PROPERTY AND EQUIPMENT (CONTINUED) Long-term Short-term Furniture, leasehold leasehold fittings Freehold land and land and Work-in- and officeMotor land Buildings buildings buildings progress Renovation equipment vehiclesTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) At cost At 1 January40,122394,144 78,863 928 85,954280,384421,033 4,784 1,306,212 Additions - 102 - - 565 3,95210,965 1,26116,845 Disposals ----- (431) (714)- (1,145) Write-offs ----- (3,635) (7,093) (60) (10,788) Reclassifications ---- (1,865) 1,865-- Transfer to intangible   assets (Note 18) ---- (61,849)--- (61,849) Transfer to prepaid lease   payments (Note 20) -- (3,173)----- (3,173) At 31 December40,122394,246 75,690 Accumulated depreciation 928 22,805282,135424,191 5,985 1,246,102 At 1 January - 48,670 21,633 881 -260,092374,258 2,511708,045 Charge for the year - 7,492 1,807 21 - 11,895 21,057 611 42,883 Disposals ----- (431) (689)- (1,120) Write-offs ----- (3,634) (7,041) (12) (10,687) Transfer to prepaid lease   payments (Note 20) -- (185)----- (185) At 31 December Net book value - 56,162 23,255 At 31 December 40,122338,08452,435 902 -267,922387,585 3,110738,936 2622,80514,21336,606 2,875507,166 Land titles of certain freehold land of the Group and the Bank with carrying amount of RM25,014,244 (2020: RM3,003,259) have not yet been issued by the relevant authorities. FINANCIAL STATEMENT 236
121. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 18. INTANGIBLE ASSETS 18. Computer Goodwill software RM’000 RM’000 Total RM’000 Group 2021 FINANCIAL STATEMENT INTANGIBLE ASSETS (CONTINUED) Computer Software in Goodwill software development RM’000 RM’000 RM’000 Total RM’000 Group (continued) 2020 At cost At 1 January Additions Write-offs 13,185731,775744,960 -157,520157,520 - (123)(123) At 31 December 13,185889,172902,357 Accumulated amortisation At 1 January Charge for the year Write-offs -273,955273,955 -49,44849,448 - (92)(92) At 31 December -323,311323,311 Net book value At 31 December 239 for the Year Ended 31 December 2021 (Continued) 13,185565,861579,046 At cost At 1 January Additions Disposals Write-offs Transfer from property and equipment (Note 17) Reclassifications 13,185 300,105 225,222 538,512 - 25,312 119,477 144,789 - (3) - (3) - (187) - (187) - - 61,849 61,849 - 406,548 (406,548) - At 31 December 13,185 Accumulated amortisation 731,775 - 744,960 At 1 January Charge for the year Disposals Write-offs - 244,191 - 29,954 - (3) - (187) - 244,1915 - 29,9548 - (3) - (187) At 31 December - 273,955 - 273,955 Net book value At 31 December 13,185 457,820 - 471,005 FINANCIAL STATEMENT 238
122. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 18. INTANGIBLE ASSETS (CONTINUED) 18. INTANGIBLE ASSETS (CONTINUED) Computer software RM’000 Computer Software in software development RM’000 RM’000 Bank 2021 Bank (continued) 2020 At cost At 1 January 731,775 Additions 157,520 Write-offs (123) FINANCIAL STATEMENT 241 for the Year Ended 31 December 2021 (Continued) At 31 December Accumulated amortisation 889,172 At 1 January 273,955 Charge for the year 49,448 Write-offs (92) At 31 December Net book value At 31 December 323,311 565,861 Total RM’000 At cost At 1 January 300,105 225,222 525,327 Additions 25,312 119,477 144,789 Disposals (3) - (3) Write-offs (187) - (187) Transfer from property and equipment (Note 17) - 61,849 61,849 Reclassifications 406,548 (406,548) At 31 December Accumulated amortisation 731,775 - 731,775 At 1 January 244,191 Charge for the year 29,954 Disposals (3) Write-offs (187) - 244,191 - 29,954 - (3) - (187) At 31 December 273,955 - 273,955 Net book value At 31 December 457,820 - 457,820 FINANCIAL STATEMENT 240
123. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 19 . GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 At fair value At 1 January Additions Gain on revaluation (Note 33(ii)) Loss on revaluation (Note 34(ii)) 1,353,6841,322,726 939,3051,008,047 25,53680,042 6,8368,871- 2,779-(49,084) -(68,742) At 31 December 1,388,0911,353,684 948,920939,305 Investment properties include the following: 2021 RM’000 Freehold land Buildings Long-term leasehold land 145,245145,235145,203145,203 931,692904,517522,200519,635 311,154303,932281,517274,467 1,388,0911,353,684 948,920939,305 2020 RM’000 2021 RM’000 2020 RM’000 Investment properties of the Group and of the Bank are stated at fair value and are situated in Malaysia. The fair values of the Group’s and of the Bank’s investment properties as at 31 December 2021 and 31 December 2020 have been arrived at on the basis of a valuation carried out by independent valuers who have appropriate qualification and recent experience in the valuation of properties in the relevant locations. The fair value at level 3 was arrived at by using a variety of approaches such as sales comparison and investment method. Details of the Group’s and the Bank’s investment properties and information about the fair value hierarchy are as follows: Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 1,388,0911,388,091 1,353,684 1,353,684 - - -1,388,091 - 1,353,684 - - -948,920 - 939,305 Level 2 RM’000 Level 3 RM’000 Group At 31 December 2021 At 31 December 2020 Bank At 31 December 2021 At 31 December 2020 948,920948,920 939,305 939,305 19. INVESTMENT PROPERTIES (CONTINUED) Reconciliation of fair value: Long-term Freeholdleasehold landBuildings land RM’000 RM’000 RM’000 Total RM’000 Group At 1 January 2020 145,192 848,390 329,144 1,322,726 Additions - 80,040 2 80,042 Remeasurement recognised in profit or loss 43 (23,913) (25,214) (49,084) At 31 December 2020/1 January 2021 145,235 904,517 303,932 1,353,684 Additions -18,700 6,83625,536 Remeasurement recognised in profit or loss (Note 33(ii)) 108,475 3868,871 GroupBank 243 for the Year Ended 31 December 2021 (Continued) INVESTMENT PROPERTIES FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) At 31 December 2021 Bank At 1 January 2020 Remeasurement recognised in profit or loss 145,245931,692311,154 1,388,091 145,160 43 560,197 (40,562) 302,690 (28,223) 1,008,047 (68,742) At 31 December 2020/1 January 2021 145,203 519,635 274,467 939,305 Additions - -6,8366,836 Remeasurement recognised in profit or loss (Note 33(ii)) -2,565 2142,779 At 31 December 2021 145,203522,200281,517948,920 Land titles for certain freehold land and leasehold land of the Group and the Bank with fair value amounting to RM980,000 (2020: RM980,000) have not been issued to the Group and the Bank by the relevant authorities. The investment properties held by the Group and the Bank are let under operating leases to third parties, from which rental income of RM19,760,097 (2020: RM21,430,010) and RM19,069,786 (2020: RM20,860,171) has been earned during the year. FINANCIAL STATEMENT 242
124. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 20. PREPAID LEASE PAYMENTS 21. DEFERRED TAX ASSETS/(LIABILITIES) Group and Bank 2021 RM’000 2021 RM’000 At 1 January Recognised in profit or loss (net) (Note 35) - relating to origination and reversal   of temporary differences - underprovision of net deferred   tax liabilities (92,131)(79,344)(80,000)(69,000) As of 31 December 2020 RM’000 Cost FINANCIAL STATEMENT 245 for the Year Ended 31 December 2021 (Continued) At 1 January Transfer from property and equipment (Note 17) 79,85376,680 -3,173 At 31 December 79,85379,853 Accumulated amortisation At 1 January Charge for the year (Note 34(ii)) Transfer from property and equipment (Note 17) 19,22517,498 1,5901,542 -185 At 31 December 20,81519,225 59,03860,628 Group and Bank 2021 RM’000 2020 RM’000 2020 RM’000 280,787(12,725) 281,000(11,000) (722)(62) -- 187,934(92,131) 201,000(80,000) GroupBank 2021 RM’000 Deferred tax assets, net Deferred tax liabilities, net 201,484571 201,000(13,550)(92,702) -(80,000) 187,934(92,131) 201,000(80,000) 59,03860,628 The land titles of certain leasehold land of the Group and of the Bank amounting to RM6,730,115 (2020: RM6,901,409) have not yet been issued to the Group and the Bank by the relevant authorities. 2021 RM’000 52,04453,448 6,9947,180 The remaining period of the leasehold land of the Group and of the Bank ranges from 4 to 860 years (2020: 5 to 861 years). 2020 RM’000 Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities in respect of each entity and when the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the statements of financial position after appropriate offsetting are as follows: Prepaid lease payments include:   Long-term leasehold land   Short-term leasehold land GroupBank 2021 RM’000 2020 RM’000 Deferred tax assets and liabilities prior to offsetting are summarised as follows: 2020 RM’000 GroupBank 2021 RM’000 2020 RM’000 2021 RM’000 2020 RM’000 Deferred tax assets Deferred tax liabilities 386,088249,403385,000248,000 (198,154)(341,534)(184,000)(328,000) 187,934(92,131) 201,000(80,000) FINANCIAL STATEMENT Notes to the Financial Statements 244
125. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 21. DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED) 21. The components and movement of deferred tax assets and liabilities during the financial year prior to offsetting are as follows: FINANCIAL STATEMENT Group Deferred tax assets At 1 January 2020 Recognised in profit or loss - relating to origination and reversal   of temporary differences - overprovision Financing Other allowances Provision of temporary for ECLliabilities differences  * Total RM’000 RM’000 RM’000 RM’000 41,000 93,890 71,000 - 14,064 - 29,744 164,634 (224) (71) 84,840 (71) At 31 December 2020/1 January 2021 Recognised in profit or loss - relating to origination and reversal   of temporary differences - underprovision 112,000107,954 29,449249,403 At 31 December 2021 244,000121,304 20,784386,088 *  Mainly consist of temporary differences in respect of allowance for ECL of other receivables and lease liabilities. 132,000 13,350 (8,719)136,631 - -5454 FVOCI reserve and impairment losses on Other financial temporary Group investments differences ^ Total RM’000 RM’000 RM’000 247 for the Year Ended 31 December 2021 (Continued) Deferred tax liabilities At 1 January 2020 138,000 105,978 243,978 Recognised in profit or loss - relating to origination and reversal   of temporary differences 69,000 28,565 97,565 - overprovision - (9) (9) At 31 December 2020/1 January 2021 207,000134,534341,534 Recognised in profit or loss - relating to origination and reversal   of temporary differences (174,000) 29,844(144,156) - underprovision -776776 33,000165,154198,154 At 31 December 2021 ^ Mainly consist of temporary differences in respect of property and equipment, investment in properties and right-of-use assets. DEFERRED TAX ASSETS/(LIABILITIES) (CONTINUED) The components and movement of deferred tax assets and liabilities during the financial year prior to offsetting are as follows: (continued) Bank Financing Other allowances Provision of temporary for ECLliabilities differences  * Total RM’000 RM’000 RM’000 RM’000 Deferred tax assets At 1 January 2020 Recognised in profit or loss - relating to origination and reversal   of temporary differences At 31 December 2020/1 January 2021 Recognised in profit or loss - relating to origination and reversal   of temporary differences 112,000107,000 29,000248,000 At 31 December 2021 244,000121,000 20,000385,000 *  Mainly consist of temporary differences in respect of allowance for ECL of other receivables and lease liabilities. 41,000 93,000 71,000 14,000 132,000 14,000 29,000 163,000 - 85,000 (9,000)137,000 FVOCI reserve and impairment losses on Other financial temporary Bank investments differences ^ Total RM’000 RM’000 RM’000 Deferred tax liabilities At 1 January 2020 Recognised in profit or loss - relating to origination and reversal of temporary differences 138,000 At 31 December 2020/1 January 2021 Recognised in profit or loss - relating to origination and reversal   of temporary differences 207,000121,000328,000 At 31 December 2021 ^ Mainly consist of temporary differences in respect of property and equipment, investment in properties and right-of-use assets. 69,000 94,000 27,000 232,000 96,000 (174,000) 30,000(144,000) 33,000151,000184,000 FINANCIAL STATEMENT 246
126. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 22. DEPOSITS FROM CUSTOMERS 23. DEPOSITS AND PLACEMENTS FROM BANKS AND FINANCIAL INSTITUTIONS Group and Bank Group and Bank 2021 RM’000 2021 RM’000 Licensed Islamic banks 850,000150,000 24. RECOURSE OBLIGATIONS ON FINANCING SOLD TO CAGAMAS 2020 RM’000 Savings deposits Qard9,231,9528,283,345 Term deposits Tawarruq 74,016,43272,992,086 Negotiable Islamic debt certificates 3,275,5004,300,000 FINANCIAL STATEMENT 249 for the Year Ended 31 December 2021 (Continued) 86,523,88485,575,431 Deposits from customers are sourced from the following type of customers: Group and Bank 2021 RM’000 2020 RM’000 Government 43,517,08738,041,363 Business enterprises 19,314,09023,717,792 Co-operatives2,439,6943,041,520 Individuals 19,597,89719,212,057 Others1,655,1161,562,699 86,523,88485,575,431 Maturity structure of term deposits and negotiable Islamic debt certificates is as follows: Group and Bank 2021 RM’000 Maturity within six months More than six months to one year More than one year to five years 2020 RM’000 60,012,30360,790,619 11,156,42011,314,941 6,123,2095,186,526 77,291,93277,292,086 2020 RM’000 This represents proceeds received from financing sold directly to Cagamas Berhad with recourse to the Bank. Types of financing involved are personal financing and house financing. Under these agreements, the Bank undertakes to administer the financing on behalf of Cagamas Berhad and to replace any financing which are regarded as defective based on prudential criteria set by Cagamas Berhad. Recourse obligations on financing sold to Cagamas are stated at amortised cost. 25. DEBT SECURITIES ISSUED Group and Bank Note 2021 RM’000 Issued under the RM9.0 billion Senior Islamic Medium   Term Notes (IMTN) Programme:    RM350 million IMTN due in 2021    RM850 million IMTN due in 2022    RM430 million IMTN due in 2022 -351,579 853,176853,095 433,370433,447 (i)(a) (i)(b) (i)(c) 2020 RM’000 Issued under the RM10.0 billion Senior   Sukuk Wakalah Programme:    RM400 million IMTN due in 2025 (ii)(a) 402,368402,262    RM300 million IMTN due in 2027 (ii)(a) 301,905301,850    RM300 million IMTN due in 2026 (ii)(b) 301,996   RM700 million IMTN due in 2028 (ii)(b) 705,138 Issued under the RM5.0 billion Tier II   Subordinated Programme:    RM300 million Tier II due in 2026 (iii)(a) -300,325    RM300 million Tier II due in 2031 (iii)(b) 299,987 3,297,9402,642,558 FINANCIAL STATEMENT 248
127. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements DEBT SECURITIES ISSUED (CONTINUED) 25. (i)On 25 October 2013, the Bank established a RM9.0 billion Senior IMTNs Programme to issue Sukuk Musharakah via a Special Purpose Vehicle (“SPV”), Imtiaz Sukuk II Berhad with a programme tenor of 10 years. (a)On 24 November 2014, the Bank issued the sixth tranche of RM350 million. The sixth tranche bears a profit distribution rate at 4.65% matured on 24 November 2021. The profit is payable semi-annually each year commencing 25 May 2015. The sixth tranche has been fully redeemed on 24 November 2021. (b)On 29 May 2017, the Bank issued the seventh and eighth tranches of RM350 million and RM850 million. The seventh tranche bears a profit distribution rate at 4.46% matured on 29 May 2020. The seventh tranche has been fully redeemed on 29 May 2020. The eighth tranche bears a profit distribution rate at 4.58% maturing on 27 May 2022. The profit is payable semi-annually each year commencing 29 November 2017. (c)On 17 October 2017, the Bank issued the ninth and tenth tranches of RM270 million and RM430 million. The ninth tranche bears a profit distribution rate at 4.45% matured on 16 October 2020. The ninth tranche has been fully redeemed on 16 October 2020. The tenth tranche bears a profit distribution rate at 4.57% maturing on 17 October 2022. The profit is payable semi-annually each year commencing 17 April 2018. The Sukuk Musharakah constitute direct, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu without discrimination, preference or priority among themselves and at least pari passu with all other unsecured and unsubordinated obligations of the Issuer, subject to the previous of the Transaction Documents and those preferred by law. (ii)On 10 July 2020, the Bank established a RM10.0 billion Senior IMTNs Programme to issue Sukuk Wakalah via a SPV, Imtiaz Sukuk II Berhad with a programme tenor of 30 years. (a)On 7 October 2020, the Bank issued the first and second tranches of RM400 million and RM300 million. The first tranche bears a profit distribution rate at 2.97% maturing on 7 October 2025. The second tranche bears a profit distribution rate at 3.20% maturing on 7 October 2027. The profit is payable semi-annually each year commencing 7 April 2021. (b)On 19 April 2021, the Bank issued the third and fourth tranches of RM300 million and RM700 million. The third tranche bears a profit distribution rate at 3.54% maturing on 17 April 2026. The fourth tranche bears a profit distribution rate at 3.90% maturing on 19 April 2028. The profit is payable semi-annually each year commencing 20 October 2021. The Sukuk Wakalah constitute direct, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu without discrimination, preference or priority among themselves and at least pari passu with all other unsecured and unsubordinated obligations of the Issuer, subject to the previous of the Transaction Documents and those preferred by law. (iii)On 19 April 2016, the Bank established a Subordinated Sukuk Programme to issue a Basel III compliant Tier II Subordinated Sukuk Murabahah of up to RM5.0 billion in nominal value. The issuance was made via a SPV, Mumtaz Rakyat Sukuk Berhad. The Subordinated Sukuk Programme has a tenor of up to 20 years from the date of the first issuance and shall be issued with a maturity for at least 5 years and up to 20 years. (a)On 20 June 2016, the Bank issued the first tranche of RM300 million on nominal value of the Tier II Subordinated Sukuk for a tenor of 10 years on a 10 non-callable 5 basis with profit distribution rate at 4.95% and maturing on 19 June 2026. The profit is payable semi-annually each year commencing 20 December 2016. The first tranche has been fully redeemed on 18 June 2021. 251 for the Year Ended 31 December 2021 (Continued) 25. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) DEBT SECURITIES ISSUED (CONTINUED) (b) On 25 June 2021, the Bank issued the second tranche of RM300 million on nominal value of the Tier II Subordinated Sukuk for a tenor of 10 years on a 10 non-callable 5 basis with profit distribution rate at 3.78% and maturing on 25 June 2031. The profit is payable semi-annually each year commencing 27 December 2021. The Subordinated Sukuk Murabahah will constitute direct, unconditional, unsecured and subordinated obligations of the Issuer ranking pari passu without any preference among themselves and at least pari passu with all other present and future unsecured and subordinated obligations of the Issuer, except those preferred by law and the Transaction Documents. The proceeds from the issuances were utilised by the Bank for Shariah-compliant working capital and general corporate purposes. 26. CASHLINE FACILITY The cashline facility is a committed lines provided by local banks. It is an interbank arrangement where the facility is collateralised on agreed terms and alternative source of funds. 27. OTHER LIABILITIES GroupBank 2021 RM’000 Amount due to subsidiaries (i) Sundry creditors Income payable Other liabilities and accruals Lease liabilities (ii) Allowances for ECL on financial guarantee (iii) Government fund Zakat payable -- 177,889200,430 169,554233,432176,286237,685 431,786473,204431,786473,203 654,131597,567646,389587,924 51,23658,02763,70577,210 4,2135,9624,2135,962 333,732192,913333,732192,913 52,37038,85750,26036,209 2020 RM’000 2021 RM’000 2020 RM’000 1,697,0221,599,9621,884,2601,811,536 Included in the government fund is amount received by the Group and the Bank under various financing facilities established by the government to provide relief and support recovery for SME/micro enterprises at below than market rate. (i) Amount due to subsidiaries Bank 2021 RM’000 2020 RM’000 Term deposits 118,486180,947 Savings deposits 59,40319,483 177,889200,430 FINANCIAL STATEMENT 250
128. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 27. OTHER LIABILITIES (CONTINUED) 27. OTHER LIABILITIES (CONTINUED) (i) (iii) Amount due to subsidiaries (continued) The amount due to subsidiaries represents deposits placed with the Bank at profit rate paid/payable ranging from 1.90% to 2.30% (2020:1.85% to 4.00%) per annum and have maturity period ranging from 30 days to 365 days (2020: 30 days to 365 days). (ii) Lease liabilities Set out below are the carrying amounts of lease liabilities and the movements during the year: GroupBank FINANCIAL STATEMENT 2020 RM’000 2021 RM’000 At 1 January Additions Disposal Lease payments Finance cost on lease liabilities (Note 34(ii)) 58,02765,87577,21092,116 18,68023,96518,55827,177 (9,760)(12,176)(10,564)(17,574) (17,828)(20,951)(24,276)(26,669) 2,1171,3142,7772,160 2021 RM’000 2020 RM’000 51,23658,02763,70577,210 At 31 December Future minimum rentals commitment under non-cancellable operating leases as at 31 December are as follows: GroupBank 2021 RM’000 2020 RM’000 253 for the Year Ended 31 December 2021 (Continued) 2021 RM’000 2020 RM’000 Future rental commitment within: - 1 year - 2 years - 3 years - 4 years - 5 years - 6 years onwards 1,3991,110 3811,093 6081,3884,4881,423 10,9215,268 13,77112,338 31,68411,09638,11214,961 6,05838,813 6,38747,043 566352566352 51,23658,02763,70577,210 Allowances for ECL on financial guarantee Lifetime Lifetime ECL ECL 12-month Not Credit Credit ECL Impaired Impaired Group and Bank Stage 1 Stage 2 Stage 3 RM’000 RM’000 RM’000 Total RM’000 At 1 January 2020 New financial assets originated Financial assets derecognised 11,113 5,962 (11,113) At 31 December 2020/1 January 2021 Changes in credit risk -3,2982,6645,962 -(1,749) -(1,749) At 31 December 2021 -1,5492,6644,213 28. 11,113 - (11,113) - 3,298 - - 2,664 - SHARE CAPITAL Group and Bank 2021 RM’000 2020 RM’000 Issued and fully paid - Ordinary shares At 1 January2,986,0302,986,030 Net issuance during the year 18,28224,485 Share withdrawal (22,374)(24,368) Transfer from/(to) share redemption fund * 4,092(117) At 31 December Membership as of 31 December is as follows: 2,986,0302,986,030 Group and Bank 2021 2020 The Group and the Bank do not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group’s and the Bank’s treasury function. Individual 824,799832,055 Co-operative 2,2672,247 827,066834,302 All lease obligations are denominated in Ringgit Malaysia. *  The share redemption fund is maintained under Paragraph 19(i) of Undang-undang Kecil Bank Kerjasama Rakyat Malaysia Berhad for redemption of shares by members. FINANCIAL STATEMENT 252
129. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 29.RESERVES 29. Non-distributable Distributable FINANCIAL STATEMENT Group At 31 December 2021 14,617 7,306,693 129 202,791 329,672 7,853,90210,809,37818,663,280 Non-distributable Distributable Capital Statutory ECL Fair value Regulatory Total other Retained reservereservereservereservereservereserve profits Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 At 1 January 2021 14,6176,833,392 174 913,708 329,6728,091,5639,860,81817,952,381 Profit after taxation and zakat ------ 1,857,885 1,857,885 Transfer from retained profits - 473,301--- 473,301 (473,301) Contribution to the Co-operative   Education Trust Fund ------ (32,302) (32,302) Contribution to the Co-operative   Development Provident Fund ------ (16,151) (16,151) Contribution to Bank Rakyat   Foundation ------ (14,341) (14,341) Fair value reserve   - Change in fair value - - -(708,613) -(708,613) -(708,613)   - Transferred to profit or loss - - -(2,304) -(2,304) -(2,304) Change in ECL reserve - -(45) - -(45) -(45) Dividends (Note 39) ------ (373,230) (373,230) RESERVES (CONTINUED) Capital Statutory ECL Fair value Regulatory Total other Retained reservereservereservereservereservereserve profits Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 255 for the Year Ended 31 December 2021 (Continued) Bank At 1 January 2021 15,3586,833,392 174 913,708 329,6728,092,3049,430,09517,522,399 Profit after taxation and zakat ------ 1,852,738 1,852,738 Transfer from retained profits - 473,301--- 473,301 (473,301) Contribution to the Co-operative   Education Trust Fund ------ (32,302) (32,302) Contribution to the Co-operative   Development Provident Fund ------ (16,151) (16,151) Contribution to Bank Rakyat   Foundation ------ (14,341) (14,341) Fair value reserve   - Change in fair value - - -(708,613) -(708,613) -(708,613)   - Transferred to profit or loss - - -(2,304) -(2,304) -(2,304) Change in ECL reserve - -(45) - -(45) -(45) Dividends (Note 39) ------ (373,230) (373,230) At 31 December 2021 15,358 7,306,693 129 202,791 329,672 7,854,64310,373,50818,228,151 At 1 January 2020 14,617 6,489,364 274 613,119 329,672 7,447,046 9,291,102 16,738,148 Profit after taxation and zakat------ 1,375,851 1,375,851 Transfer from retained profits- 344,028--- 344,028 (344,028) Contribution to the Co-operative   Education Trust Fund------ (28,101) (28,101) Contribution to the Co-operative   Development Provident Fund------ (14,050) (14,050) Contribution to Bank Rakyat   Foundation------ (14,472) (14,472) Fair value reserve   - Change in fair value--- 420,894- 420,894- 420,894   - Transferred to profit or loss - - - (120,305) - (120,305) - (120,305) Change in ECL reserve - - (100) - - (100) - (100) Dividends (Note 39)------ (405,484) (405,484) At 1 January 2020 15,358 6,489,364 274 613,119 329,672 7,447,787 8,884,112 16,331,899 Profit after taxation and zakat------ 1,352,118 1,352,118 Transfer from retained profits- 344,028--- 344,028 (344,028) Contribution to the Co-operative   Education Trust Fund------ (28,101) (28,101) Contribution to the Co-operative   Development Provident Fund------ (14,050) (14,050) Contribution to Bank Rakyat   Foundation------ (14,472) (14,472) Fair value reserve   - Change in fair value--- 420,894- 420,894- 420,894   - Transferred to profit or loss - - - (120,305) - (120,305) - (120,305) Change in ECL reserve - - (100) - - (100) - (100) Dividends (Note 39)------ (405,484) (405,484) At 31 December 2020 14,617 6,833,392 174 913,708 329,672 8,091,563 9,860,818 17,952,381 At 31 December 2020 15,358 6,833,392 174 913,708 329,672 8,092,304 9,430,095 17,522,399 FINANCIAL STATEMENT 254
130. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 29 . RESERVES (CONTINUED) (i) (ii) Statutory reserve Capital reserve This is a reserve required to be maintained under Co-operative Societies Act 1993 and consists of capital gain from disposal of land or building, or both, under non-current assets. (iii) ECL reserve This ECL reserve comprises ECL allowance for financial investments at FVOCI. The ECL allowance will be reversed to profit or loss upon disposal or derecognition of the financial instruments. (iv) Fair value reserve of financial investments at FVOCI This reserve relates to unrealised fair value gains and losses on financial investments at fair value through other comprehensive income. (v) Regulatory reserve The regulatory reserve is maintained as an additional credit risk buffer to ensure the robustness of the financing impairment assessment methodology. The regulatory reserve is maintained in accordance with Bank Negara Malaysia’s policy on Financial Reporting for Development Financial Institutions to maintain, in aggregate, loss allowance for non-credit impaired exposures and regulatory reserve of no less than 1% (2020: no less than 1%) of total credit exposures, net of loss allowance for credit-impaired exposures. During the year, Bank Negara Malaysia permitted reduction of the reserve as part of the COVID-19 related measures to disburse prudential buffers. The Bank has yet to disburse the reserve for the year 2021. (vi) 257 for the Year Ended 31 December 2021 (Continued) The following table provides information on financial assets that were modified while they had a loss allowance measured at an amount equal to lifetime ECL: The statutory reserve is maintained in compliance with Development Financial Institutions Act 2002 (Act 618) and is not distributable as dividend. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Retained profits Group and Bank 2021 RM’000 Amortised cost before modification Net modification loss (i) 2020 RM’000 23,543,60816,076,000 (176,532)(82,888) Income derived from investment of depositors’ fund GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Income from financing and advances * Income from deposits and placements   with banks and financial institutions Income from financial investments 3,394,6403,721,6433,402,3893,727,091 4,349,2524,718,0814,357,0014,723,529 (ii) 8,39616,011 8,39616,011 946,216980,427946,216980,427 Income derived from investment of shareholders’ fund GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Included in retained profits is an amount of RM1,340,000,000 (2020: RM1,340,000,000) earmarked to improve the Rate of Return Risk (ROR) exposure as part of asset and liability management strategies. Income from financing and advances * Income from deposits and placements   with banks and financial institutions Income from financial investments 1,010,7221,054,7591,013,0301,056,303 30.INCOME 1,294,9491,337,1621,297,2571,338,706 Income derived from investment   of depositors’ fund (i) Income derived from investment   of shareholders’ fund (ii) Income generated by subsidiaries (iii) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 4,349,2524,718,0814,357,0014,723,529 1,294,9491,337,1621,297,2571,338,706 64,34927,230 -5,708,5506,082,4735,654,2586,062,235 2,5004,5382,5004,538 281,727277,865281,727277,865 * Included in income from financing and advances for the current year is profit accrued on impaired financing of RM71,443,653 (2020: RM63,471,109).   I ncluded the net effect under government support measures to provide relief and support recovery for SME/micro enterprises in order to sustain their business operations amounting to RM27,523,270 (2020: RM2,838,347) for the Group and the Bank. FINANCIAL STATEMENT 256
131. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements INCOME (CONTINUED) 32. (iii) Income generated by subsidiaries Group 2021 RM’000 2020 RM’000 Pawning income Rental income Management fee Sale of goods 54,55020,556 716600 9,0835,888 -186 64,34927,230 GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Income attributable to depositors (i) Profit expense on financing sold with recourse   to Cagamas Profit expense on debt securities issued Profit expense on cashline facility Cost of sales 1,976,4442,519,0191,980,0122,523,972 2,184,4402,669,1292,134,2502,655,077 (i) 16,56717,63116,56717,631 134,198110,616134,198110,616 3,4732,8583,4732,858 53,75819,005 -- Income attributable to depositors Deposits from customers   Non-Mudarabah Deposits and placements from banks   and other financial institutions   Non-Mudarabah ALLOWANCES FOR IMPAIRMENT Allowance for impairment on financing   and advances (i) Allowance for impairment on financial   investments (ii) (i) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 1,951,7892,504,5181,955,3572,509,471 Stage 1 - 12 month ECL Stage 2 - lifetime ECL not credit impaired Stage 3 - lifetime ECL credit impaired (ii) 1,976,4442,519,0191,980,0122,523,972 2021202020212020 RM’000RM’000RM’000RM’000 729,585877,644730,308880,800 (693)(1,333) (693)(1,333) 728,892876,311729,615879,467 GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 546,471136,575547,194139,731 (101,161)313,541(101,161)313,541 284,275427,528284,275427,528 729,585877,644730,308880,800 Allowance for impairment on financial investments Group and Bank 2021 RM’000 2020 RM’000 Financial investments at fair value through other comprehensive income (Note 9) Financial investments at amortised cost (Note 10) (45)(100) (648)(1,233) (693)(1,333) 33. OTHER OPERATING INCOME 24,65514,50124,65514,501 GroupBank Allowance for impairment on financing and advances 31.EXPENDITURE 259 for the Year Ended 31 December 2021 (Continued) 30. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 103,439101,617103,439101,617 251,755368,928244,363366,638 Fees and commission (i) Other income (ii) 355,194470,545347,802468,255 FINANCIAL STATEMENT 258
132. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 33. OTHER OPERATING INCOME (CONTINUED) 33. OTHER OPERATING INCOME (CONTINUED) (i) (ii) Fees and commission Takaful commission ATM service fees Wasiat commission Other commission Processing fees MEPS fees Other fees FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) (ii) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 60,60047,60660,60047,606 98,738 98,738 8,8137,3378,8137,337 23,25132,51323,25132,513 35346 35346 6,4761,7476,4761,747 4,2553,3304,2553,330 103,439101,617103,439101,617 Other income GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Net other income from financial   instruments Dividend from financial investments   at fair value through profit or loss 17,53818,58017,53818,580 Net gain on disposal of financial   investments at fair value   through profit or loss 2,60818,852 2,60818,852 Net gain on disposal of financial   investments at fair value through   other comprehensive income 2,304120,305 2,304120,305 Net loss on revaluation of financial   investments at fair value through   profit or loss (46,840)(50,722)(46,840)(50,722) Net gain on redemption of financial   assets at amortised cost -926 -926 (24,390)107,941 (24,390)107,941 261 Other income (continued) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Others Rental income Compensation for late payment Charges from credit card services Other service charges Recoveries from financing written off Writeback for impairment on trade   receivables (Note 12) Gain on disposal of property   and equipment Other income Gain on revaluation of investment   properties (Note 19) 19,09520,87719,12020,908 6,9034,8726,9034,872 5,0927,8205,0927,820 12,82310,49112,82310,491 169,933175,781169,933175,781 276,145260,987268,753258,697 251,755368,928244,363366,638 34. 1,05433 -18518 -52,18941,09552,10338,825 8,871- 2,779- OPERATING EXPENSES GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 959,515944,820955,256941,142 564,831626,937567,843649,755 Personnel expenses (i) Other overheads and expenditure (ii) 1,524,3461,571,7571,523,0991,590,897 FINANCIAL STATEMENT 260
133. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD for the Year Ended 31 December 2021 (Continued) 34. OPERATING EXPENSES (CONTINUED) 34. OPERATING EXPENSES (CONTINUED) (i) (ii) Personnel expenses FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) GroupBank Other overheads and expenditure (continued) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Salaries and wages Allowances and bonuses Defined contribution plan - EPF Social security contributions   - SOCSO Other staff related costs 456,792422,838454,085420,619 300,629326,434299,652325,354 144,772133,465144,533133,187 Promotion Advertisement and publicity 17,79324,63817,78924,636 959,515944,820955,256941,142 General expenses Legal and professional fees Auditors’ remuneration Communication expenses Utilities expenses Printing and stationery Postage and courier Security expenses Service charges Loss on financing written off Property and equipment written off Intangible assets written off Commission expenses Travelling and transportation Others 38,73923,69438,48023,412 1,3511,3571,2001,200 35,24323,16335,19423,075 18,21221,15518,17421,135 16,78119,08816,70919,040 13,96216,25313,91016,211 22,66625,57522,66625,543 37,04827,18338,57729,730 6,78511,633 6,78511,633 257329238101 31- 3161,06759,55461,06759,554 6,05212,562 6,03612,544 33,507125,946 32,594144,366 5,1535,2315,1285,207 52,16956,85251,85856,775 Total number of staff (excluding the Board of Directors) for the Group is 6,060 (2020: 5,893) and for the Bank is 6,022 (2020: 5,855). (ii) Other overheads and expenditure GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Establishment 2021202020212020 RM’000RM’000RM’000RM’000 1,0741,3021,0981,268 291,701367,492291,661387,544 37,92445,89734,64342,883 564,831626,937567,843649,755 Rental Depreciation of property and   equipment (Note 17) Depreciation of right-of-use   assets (Note 14) Amortisation of prepaid lease   payments (Note 20) Amortisation of intangible assets (Note 18) Finance cost on lease liabilities (Note 27(ii)) Repair and maintenance Takaful 1,5901,5421,5901,542 49,44829,95449,44829,954 2,1171,3142,7772,160 137,432126,048137,346125,928 9,5629,0199,5158,937 255,337234,807258,393237,575 16,19019,73121,97624,903 263 FINANCIAL STATEMENT Notes to the Financial Statements 262
134. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD 265 for the Year Ended 31 December 2021 (Continued) 34. OPERATING EXPENSES (CONTINUED) 34. OPERATING EXPENSES (CONTINUED) (ii) Other overheads and expenditure (continued) (ii) The above expenditure includes the following statutory disclosures: Included in general expenses are the following Chief Executive Officer, Directors and Shariah Committee members’ remuneration: FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Impairment losses on:   Trade receivables (Note 12) 30333 -  Other receivables, deposits    and prepayments (Note 13(ii)) 13549,328 13549,438 Auditors’ remuneration:   Current year:    Statutory audit fees 1,3511,3571,2001,200 Amortisation of prepaid   lease payment (Note 20) 1,5901,5421,5901,542 Depreciation of property and   equipment (Note 17) 37,92445,89734,64342,883 Amortisation of intangible   assets (Note 18) 49,44829,95449,44829,954 Depreciation of right-of-use   assets (Note 14) 16,19019,73121,97624,903 Finance cost on lease liabilities 2,1171,3142,7772,160 Property and equipment   written off 257329238101 Intangible assets written off 31- 31 Loss on revaluation of investment   properties (Note 19) -49,084 -68,742 Rental of premises 1,0581,2351,0981,268 Rental of equipment 1667 -- Other overheads and expenditure (continued) Chief Executive Officer Salary and other remuneration Bonuses EPF contributions GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 8601,073 8601,073 602525602525 271291271291 1,7331,8891,7331,889 Acting Chief Executive Officer Salary and other remuneration Bonuses EPF contributions -624 -434 -202 -624 -434 -202 -1,260 -1,260 Executive Director Salary and other remuneration EPF contributions Other emoluments -65 -65 -13 -13 -1 -1 -79 -79 Non-Executive Directors Fees Other emoluments 3,1652,0413,0251,941 51695169 3,2162,1103,0762,010 4,9495,3384,8095,238 Shariah Committee Fees Other emoluments 476489476489 105 105 486494486494 5,4355,8325,2955,732 FINANCIAL STATEMENT Notes to the Financial Statements 264
135. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements OPERATING EXPENSES (CONTINUED) 34. OPERATING EXPENSES (CONTINUED) (ii) Other overheads and expenditure (continued) (ii) Total remuneration of the Chief Executive Officer and Directors is as follows: Bank 267 for the Year Ended 31 December 2021 (Continued) 34. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Group Other overheads and expenditure (continued) Total remuneration of the Chief Executive Officer and Directors is as follows: (continued) Remuneration received Remuneration received from the Bank Bank from Subsidiary Companies Bank Group Remuneration received Remuneration received from the Bank Bank from Subsidiary Companies Salary andOther bonus Fees emolumentsTotal FeesTotalTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Salary andOther bonus Fees emolumentsTotal FeesTotalTotal RM’000RM’000RM’000RM’000RM’000RM’000RM’000 2021 2020 Chief Executive Officer Dato’ Syed Abdul Aziz Syed Hassan 1,733-- 1,733-- 1,733 Non-Executive Directors Datuk Haji Abd Rani Lebai Jaafar Dato’ Suriani Dato’ Ahmad Dato’ Shamsul Azri Abu Bakar Tunku Dato’ Ahmad Burhanuddin   Tunku Datuk Seri Adnan Datin Norhamizah Mat Tahir Mohd Jafri Kudus Mohd Irwan Mohd Mubarak Mohamad Rafi Shahzada Dato’ Dr. Vaseehar Hassan Abdul Razack -549 31580123123703 -177 -177 - -177 -247 -247 - -247 -415 -336 -343 -368 -186 -108 -415 - -415 -336 - -336 -343 - -343 -368 17 17385 -186 - -186 -108 - -108 -2,729 Former Non-Executive Directors Yuri Zaharin Wahab Prof. Dr. Obiyathulla Ismath Bacha Sofiyan Yahya -276 10286 - -286 -101020 - -20 -10 -10 - -10 -296 20316 1,7333,025 312,760 140 1402,900 - -316 514,809 140 1404,949 Acting Chief Executive Officer Dato’ Syed Abdul Aziz Syed Hassan 1,260 - - 1,260 - - 1,260 Non-Executive Directors Datuk Haji Abd Rani Lebai Jaafar - 321 13 334 65 65 399 Tunku Dato’ Ahmad Burhanuddin   Tunku Datuk Seri Adnan- 230- 230-- 230 Yuri Zaharin Wahab- 246- 246-- 246 Datin Norhamizah Mat Tahir- 95- 95-- 95 Mohd Jafri Kudus- 104- 104-- 104 Mohd Irwan Mohd Mubarak- 101- 101-- 101 Dato’ Shamsul Azri Abu Bakar - 29 - 29 - - 29 -1,126 Former Chief Executive Officer Dato’ Rosman Mohamed1,967 - 131,139 65 651,204 11,968 - -1,968 Former Non-Executive Directors Datuk Noripah Kamso -741690 - -90 Datuk Wan Suraya Wan Mohd Radzi -471057353592 Prof. Dr. Obiyathulla Ismath Bacha - 237 - 237 - - 237 Muhamad Shahril Othman -191 10201 - -201 Sofiyan Yahya -181 10191 - -191 Dato’ Sri Haji Mohammad Mentek - 85 - 85 - - 85 Dato’ Sri Jamil Salleh-- 10 10-- 10 - 815 3,2271,941 56 871 35 35 906 705,238 100 1005,338 FINANCIAL STATEMENT 266
136. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 269 for the Year Ended 31 December 2021 (Continued) 34. OPERATING EXPENSES (CONTINUED) 34. OPERATING EXPENSES (CONTINUED) (ii) Other overheads and expenditure (continued) (ii) Total remuneration of the Shariah Committee is as follows: FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Other overheads and expenditure (continued) Total remuneration of the Shariah Committee is as follows: (continued) Group and Bank Group and Bank Remuneration received from the Bank Remuneration received from the Bank Salary and Other bonus Fees emolumentsTotal RM’000RM’000RM’000RM’000 Salary and Other bonus Fees emolumentsTotal RM’000RM’000RM’000RM’000 2021 2020 Shariah Committees Assoc. Prof. Dr. Azman Mohd Noor - Ustaz Wan Rumaizi Wan Husin - Dr. Tuan Badrul Hisyam Tuan Soh - Dr. Mohammad Zaini Yahaya- Prof. Dato’ Dr. Mohd Azmi Omar - -396 Former Shariah Committee Dato’ Setia Hj. Mohd Tamyes Abd Wahid - Dr. Abdullaah Jalil- 98 81 57 88 72 62 18 -98 -81 -57 - 88 - 72 -396 5 5 67 23 -801090 -476 10486 Shariah Committees Dato’ Setia Hj. Mohd Tamyes Abd Wahid - 84 - 84 Prof. Dato’ Dr. Mohd Azmi Omar - 68 - 68 Ustaz Wan Rumaizi Wan Husin - 70 - 70 Assoc. Prof. Dr. Azman Mohd Noor - 80 - 80 Dr. Abdullaah Jalil- 70- 70 Dr. Mohammad Zaini Yahaya- 83- 83 - 455 - 455 Former Shariah Committee Ustaz Md. Yunus Abd Aziz - 34 5 39 - 34 5 39 - 489 5 494 The above disclosure on total remuneration of the Shariah Committee is presented in accordance with para 12.16 as per BNM’s policy on Financial Reporting for Development Financial Institutions, which became effective on or after 1 January 2020. FINANCIAL STATEMENT 268
137. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 35 .TAXATION FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 36.ZAKAT GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Malaysian income tax Current year (Over)/Underprovision in prior years 44,7712,763 42,650(38,907)18,008(39,757)17,938 5,86420,771 2,89317,938 Deferred tax (Note 21) Current year Underprovision in prior years (280,787)12,725 (281,000)11,000 72262 -- (280,065)12,787 (281,000)11,000 Total (274,201)33,558 (278,107)28,938 A reconciliation of income tax expense applicable to profit before taxation and zakat at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Bank are as follows: Profit before taxation and zakat 271 for the Year Ended 31 December 2021 (Continued) GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 1,626,0661,435,8211,615,0961,405,049 Tax expense at statutory tax rate of 24% (2020: 24%) * Non-taxable income Non-deductible expenses Tax exempt under Section 65(A) of the Income   Tax Act 1967 (Over)/Underprovision in prior years:   Income tax   Deferred tax 390,256344,597387,623337,212 (185,509)(184,767)(187,999)(186,155) 25,733277,059 28,522281,344 (274,201)33,558 (278,107)28,938 (466,496)(421,401)(466,496)(421,401) (38,907)18,008(39,757)17,938 72262 -- *  The Bank, being a co-operative society uses the tax rates under Part IV, Schedule 1 of the Income Tax Act, 1967 as follows: • • • • • • • • On the first RM30,000 of chargeable income: 0% (2020: 0%) On the next RM30,000 of chargeable income: 5% (2020: 5%) On the next RM40,000 of chargeable income: 10% (2020: 10%) On the next RM50,000 of chargeable income: 15% (2020: 15%) On the next RM100,000 of chargeable income: 18% (2020: 18%) On the next RM250,000 of chargeable income: 21% (2020: 21%) On the next RM250,000 of chargeable income: 23% (2020: 23%) In excess of RM750,000 of chargeable income: 24% (2020: 24%) In computing for zakat, the Group and the Bank have been applying the growth capital method based on the rate of 2.5%. This method applies the rate on owners’ equity, long term liability, net of fixed assets and non-current assets, and subjected to allowable adjustments. Provision for current year Overprovision in prior years 37. GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 42,91733,41941,00031,000 (535)(7,007) (535)(7,007) 42,38226,41240,46523,993 STATUTORY APPROPRIATIONS Maintenance of statutory reserve fund is required under the Development Financial Institutions Act 2002 (Act 618), whereas contributions to Co-operative Education Trust Fund and Co-operative Development Provident Fund are made in compliance with the Co-operative Societies Act 1993 (Act 502). Contribution to Bank Rakyat Foundation is made under paragraph 65(ii) of Undang-Undang Kecil Bank Kerjasama Rakyat Malaysia Berhad, which states that net profit for the year can be utilised towards a fund meant for welfare and benefits of members. 38. EARNINGS PER SHARE Basic earnings per ordinary share have been calculated based on the Group’s and the Bank’s profit after taxation and zakat of RM1,857,885,000 (2020: RM1,375,851,000) and RM1,852,738,000 (2020: RM1,352,118,000) divided by the weighted average number of ordinary shares of 2,940,605,000 (2020: 2,935,861,000) of RM1 each in issue during the financial year. 39.DIVIDENDS Group and Bank 2021 RM’000 373,230405,484 Cash dividend of 13% for the year ended 31 December 2020 (2019: 14%) 2020 RM’000 During the financial year ended 31 December 2021, the Bank paid a cash dividend of 13% amounting to RM373 million in regard to the previous financial year ended 31 December 2020. In respect of the current financial year, the Board of Directors has proposed a cash dividend of up to 15% amounting to approximately RM450 million. The proposed dividend will be recognised in the subsequent financial year upon approval by the relevant external authorities. FINANCIAL STATEMENT 270
138. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 40. for the Year Ended 31 December 2021 (Continued) COMMITMENTS AND CONTINGENCIES 42. In the normal course of business, the Group and the Bank make various commitments and incur certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. Parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party in making financial or operational decisions, or if one other party controls both. Group and Bank The related parties of the Group and of the Bank are: 2021 RM’000 42.1Subsidiaries 130,900111,407 140,403292,327 Contingent liabilities Bank guarantee given in respect of banking facilities granted to customers Claims for damages from litigation taken against the Bank Commitments Undrawn financing 2,271,8312,294,122 2,543,1342,697,856 FINANCIAL STATEMENT RELATED PARTY TRANSACTIONS 2020 RM’000 A summary of the status of material litigations against the Bank is as follows: Case 1 The Bank had terminated financing facility and filed a claim against a customer and its corporate guarantors to recover the outstanding financing of approximately RM24 million. The main contractor, the customer and its corporate guarantors had also filed claims against the Bank respectively. The High Court on 24 January 2018 had dismissed the main contractor’s claim against the Bank and other defendants. However, the counter claim by the Bank against the customer and its corporate guarantors was dismissed by the Court. Meanwhile, the customer’s counter claim against the Bank was allowed but no sum has been determined by the Court and is subject to further assessment. The corporate guarantors’ counter claim against the Bank was allowed but it was a non monetary claim. The appeal has been fixed for hearing on 28 April 2022. The Bank’s solicitor is of the view that based on the evidence at trial and the main legal arguments for the appeal, the Bank has a fair chance in the said appeal. Case 2 The Defendant is the Bank’s corporate customer who has been sued by the Bank in a recovery action. However the Defendant claimed that the Bank had wrongly terminated the facility and in return filed a counter claim against the Bank. The Defendants’ counterclaim againt the Bank was dismissed by the Court following a full trial. The Defendants’ are currently appealing against the decision and the case management has been fixed on 14 June 2022. The Bank’s solicitor is of the view that the Bank has a good chance in the said appeal. 41. CAPITAL COMMITMENTS Capital expenditure approved but not provided for in the financial statements are as follows: GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 385,118458,800244,868299,850 Capital expenditure Approved and contracted for 273 42.2 Details of the subsidiaries are shown in Note 16. Key Management Personnel Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Bank either directly or indirectly. The key management personnel of the Group and of the Bank includes Executive Director and Non-Executive Directors of the Bank and certain members of senior management of the Bank and heads of major subsidiaries of the Group. Remuneration of Directors and other members of key management are as follows: 2021202020212020 RM’000RM’000RM’000RM’000 Short-term employee benefits Fees Salary Allowances EPF contribution Bonuses Other emoluments GroupBank 3,1652,0413,0251,941 5,5015,8695,5015,869 717655717655 1,7241,8611,7241,861 3,6303,6713,6303,671 51705170 14,78814,16714,64814,067 Included in the total compensation for key management personnel are the following items: GroupBank 2021202020212020 RM’000RM’000RM’000RM’000 Directors’ remuneration From the Bank From subsidiaries 3,0762,0893,0762,089 140100 -- 3,2162,1893,0762,089 FINANCIAL STATEMENT 272
139. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 42. RELATED PARTY TRANSACTIONS (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 42.3 44.2 Transactions with subsidiaries All related party transactions within the Bank Rakyat group are conducted on normal commercial terms which are not more favourable than those generally available to the public. FINANCIAL STATEMENT Bank 2021 RM’000 2020 RM’000 Income earned Income from financing and advances Rental income (10,057)(6,993) (40)(45) Expenditure incurred Profit expenses Management fee expenses Rental expenses 3,5694,953 1,5612,602 6,4416,471 1,4746,988 43. FINANCING FACILITIES WITH CONNECTED PARTIES Group and Bank 2021 RM’000 Outstanding exposures with connected parties % of outstanding exposures to connected parties as a proportion of total exposure % of outstanding exposures financing exposures with connected parties   which is non-performing or in default 2020 RM’000 4,125,1951,110,253 3.71%1.04% 0.00%0.01% The above disclosure on Financing Facilities with Connected Parties is presented in accordance with para 14.1 as per BNM’s policy on Financing Facilities with Connected Parties, which became effective on 13 July 2016. 44. FINANCIAL RISK MANAGEMENT 44.1Overview The Bank’s business activities involve the use of financial instruments that expose the Bank to a variety of financial risks with the following as the primary risks: (i) Credit risk (ii)Liquidity risk (iii)Market risk (iv)Operational risk 275 Risk management framework  Risk Management Framework articulates the objectives, guiding principles and governance structure for risk management processes in the Bank. This enables the identification, assessment and measurement control and continuous monitoring of all material risks on a group-and bank-wide basis, supported by robust management information system that facilitates timely and reliable reporting of risks and the integration of information across the Bank. Risk Management within the Bank is guided by the following principles: • • Risk aware decision making with clear understanding of risks and their impacts on profitability and sustainability; •Accountability through ownership of risks, controls, and profitability inherent in the Bank’s business and support functions; and • The Bank’s Risk Appetite Statement is as follows: Alignment of risk taking activities with the Bank’s risk appetite; Integration of risk management, compliance and ethical business practices into the culture of the Bank. “The Bank’s business strategy and risk-taking activities should always be within the capacity of the Bank. This is achieved by strengthening the following six dimensions - Risk Governance; Capital Adequacy and Shareholders’ Value; Reputation as Islamic Bank; Asset Quality; Liquidity; and Operational Resilience.” 44.2.1 Risk governance  The Bank manages its risks in accordance with the “Three Lines of Defence Model”, which places accountability and ownership to the source of risk, whilst ensuring sufficient level of independent oversight. The “Three Lines of Defence” consists of the following components: (i) First Line of Defence - Informed Decision Making by Business Units The Business Units are responsible to identify, manage and report their own risks. At this stage risk awareness is instilled starting at risk taking units so that Risk Management is incorporated into every aspect of work conducted. (ii) Second Line of Defence - Oversight by Risk Management and Compliance Risk Management and Compliance supports business units, as well as review and report key risks to the Management and Board of Directors. In doing so, Risk Management and Compliance provides support to Management and Board of Directors in fulfilling their oversight functions. (iii) Third Line of Defence - Independent Assurance by Internal Audit Internal Audit conducts quality assurance review, to ensure that the risk-taking activities are in line with established standards. Internal Audit provides recommendations for improvement where necessary. Its functions complement the support extended to the Management and Board Audit Committee in the risk oversight functions. FINANCIAL STATEMENT 274
140. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.2 Risk management framework (continued) 44.2 44.2.1 Risk governance (continued) Roles and responsibilities of the oversight Committee: Roles and responsibilities of the oversight Committee: (continued) Roles and responsibilities of the Board Risk Committee (“BRC”): Roles and responsibilities of Financing Review Committee: (a)The BRC shall be responsible to review and recommend risk management strategies, policies, appetite and tolerance for Board’s approval. (a)Direct, monitor, review and consider such issues as may materially impact on the present and future quality of the Bank’s financing book. (b)The BRC with the recommendation of Management Risk Committee periodically reviews the Risk Management Framework. (b)Conduct post-mortem on impaired financing and to learn weaknesses in existing credit policies and processes. (c)The BRC shall be responsible to assess the adequacy of risk management policies, processes and infrastructure to manage various types of risks is comprehensive and recommend to the Board for approval. (c)Ensure the procedures and resources are effective to identify and manage irregular and problem credits, minimise credit loss and maximise recoveries. (d) Review management’s periodic reports on risk exposure, risk portfolio composition and risk management activities. (d) Roles and responsibilities of Management Risk Committee: (a)Assess whether the Bank’s corporate objectives are supported by a sound risk strategy and an effective risk management framework that is appropriate to the nature, scale and complexity of its activities. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) (b) Establish, review and implement Board approved risk management framework and policies. (c)Communicate approved policies to employees and monitor as well as enforce compliance with these policies. (d)Periodically review Risk Management Framework and recommend to Management Risk Committee for escalation to BRC and Board. Roles and responsibilities of Operational Risk Management Committee: (a) Review and recommend operational risk management strategies, policies, guidelines and procedures. (b)Review and assess adequacy of operational risk management framework, policies, guidelines and procedures in identifying, assessing, controlling and monitoring of operational risk and the extent to which these are operating effectively. (c) Ensure that infrastructure, resources and systems are in place to effectively manage operational risks. (d) Review operational risk profiles and periodic reports, including progress and follow-up actions. (e)Monitor the identified operational risks, key risk indicators and loss incidents in the business and functional units’ operations. 44.3 277 Risk management framework (continued) 44.2.1 Risk governance (continued) Review and recommend any enhancement of credit related policies, process and procedures. Credit risk Credit risk is the risk of suffering financial or non-financial loss should any of the customers, clients or market counterparties fail to fulfill their contractual obligations through the Bank’s financing, hedging, trading and investing activities. The Bank’s retail and corporate credit exposures are governed by credit policies and stringent underwriting criteria. The Bank’s credit processes are in line with industry best practices which emphasises on individual accountability with clear lines of responsibility where credit administration, early monitoring and recovery are independent from Business Units. 44.3.1 Management of credit risk The Bank’s credit risk management includes establishment of comprehensive credit risk policies, guidelines and procedures that document financing standards, credit risk rating, acceptable collateral and valuation, and compliance with regulatory and statutory requirements. The policies are periodically reviewed to ensure their continuous relevance. Risk Management is responsible to formulate and review the credit risk policies, guidelines and procedures as well as credit portfolio monitoring. Risk Management also conducts independent credit assessment to evaluate quality of credit proposals by Business Units for corporate customers. Risk Management also prepares reports to be presented to Board and Senior Management. The reports contain information on identified credit risk factors. With this information, Board and Senior Management are able to effectively identify adverse credit risk trends, take corrective actions and formulate business strategies accordingly. FINANCIAL STATEMENT 276
141. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 44.3 Credit risk (continued) 44.3.2 Financing to retail customers Financing granted to retail customers is individually underwritten by assessing historical payment track record and payment capacity of the customer. This process is governed by Retail Credit Risk Policy, Product Policies and assessed using credit scorecard. Both Retail Credit Risk Policy and credit scorecard are developed by Risk Management while Product Policies are developed by Product Division within Retail Banking and are independently reviewed by Risk Management. The credit approving authority and credit approving officers have the responsibility to ensure that credit risk is properly assessed and all crucial credit information of the customer is included in the financing application. Risk Management is also responsible to assess new/variation of financing product or program to ensure that the product/program offered to customers is beneficial to both customers and Bank whilst mitigating the inherent risks. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44.3.3 Financing to corporate customers Granting of credit to corporate customers is individually underwritten as guided by the Bank’s risk appetite and policies. In its oversight role, Risk Management conducts independent assessment on all credit proposals to corporate customers prior to approval. 44.3.4 Purchase of investment securities Credit qualities of financial instruments are assessed based on ratings from external credit ratings agencies. Portfolio review and monitoring is frequently conducted in ensuring the exposures are effectively managed and concentration risk is observed at all times. 44.3.5 Impaired financing and investment securities  Individually impaired financing and investment securities are financing and advances and investment securities (other than those carried at fair value through profit or loss) for which the Bank determines that there is objective evidence of impairment and it does not expect to collect all principal and profits due according to the contractual terms of the financing/investment security agreement(s). 44.3.6 Neither past due nor impaired financing and investment securities These are financing and investment securities from which contractual payment of profit or principal have not defaulted and therefore are not impaired since there is no objective evidence of impairment. 44.3.7 Past due but not impaired financing and investment securities Past due but not impaired financing and investment securities, other than those carried at fair value through profit or loss, are those for which contractual profits or principal payments are past due, more than 1 day but less than three (3) months. 44.3.8 Financing with renegotiated terms Financing with renegotiated terms are financing that have been restructured due to deterioration in the customer’s financial position. Once the financing is restructured it remains in this category independent of satisfactory performance after restructuring. 279 Credit risk (continued) 44.3.9 Allowances for impairment The Bank establishes an allowance for impairment loss on assets carried at amortised cost and fair value through other comprehensive income, which represents an estimation of expected losses in the financing and investment security portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective financing loss allowance established for groups of homogenous assets. Both components of allowance incorporates historical, current, and forecasted information in estimating the expected losses. Assets carried at fair value through profit or loss are not subject to impairment testing as the measure of fair value reflects the credit quality of each asset. 44.3.10 Write-off policy The Bank writes-off a financing or an investment security, and any related allowances for impairment losses, when the Bank determines that the financing or investment security is uncollectible. This determination is made after considering information such as the occurrence of significant changes in the customer’s/issuer’s financial position such that the customer/issuer can no longer pay the obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. 44.3.11 Collateral on financing and advances In mitigating credit risk on financing and advances granted to customers, collaterals are obtained as follows: (i) House financing - charges over residential properties. (ii) Commercial property financing - charges over the properties being financed. (iii) Vehicle financing - ownership claims over the vehicles being financed. (iv)Other financing and advances - charges over business assets such as premises, trade receivables or deposits. 44.3.12 Credit grading for investment securities Credit qualities of financial instruments are assessed based on ratings from external credit ratings agencies. At the end of the reporting period, instruments rated with “Grade D” are those that have defaulted beyond their maturity period. 44.3.13 Maximum exposure to credit risk The following table presents the Bank’s credit exposure of on-balance sheet and off-balance sheet financial instruments. For on-balance sheet assets, the exposure to credit risk equals the carrying amount. For credit commitments, maximum exposure to credit risk is the full amount of the undrawn credit facilities granter to customers. FINANCIAL STATEMENT 278
142. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 44.3 Credit risk (continued) 44.3.13 Maximum exposure to credit risk (continued) FINANCIAL STATEMENT Credit risk (continued) 44.3.14 Credit risk exposure on financing and advances Group Group 2021 RM’000 2020 RM’000 Assets Neither past due nor impaired   0 month 111,730,128108,789,059 Past due and impaired   Less than 4 months   4 months to 6 months   7 months to 9 months   More than 9 months Commitments Undrawn financing Total maximum exposure to credit risk 114,001,959111,083,181 2,271,831 2,294,122 2021 RM’000 2020 RM’000 Assets Cash and short-term funds 834,987 Deposits and placements with financial institutions 672,463 Financial investments at fair value through profit or loss 976,032 Financial investments at fair value through other   comprehensive income 20,781,710 Financial investments at amortised cost 10,826,850 Financing and advances 77,516,581 Other receivables 352,754 20,620,062 9,747,865 76,285,365 643,854 111,961,377 109,003,427 981,180 277,275 447,826 Commitments Undrawn financing 2,271,831 2,294,122 Total maximum exposure to credit risk 114,233,208 111,297,549 2020 RM’000 77,360,90174,630,848 Past due but not impaired   1 month 616,2741,324,758   2 months 252,876656,386   3 months 31,913 25,687 Bank 2021 RM’000 At amortised cost Cash and short-term funds 835,189981,636 Deposits and placements with financial institutions 672,463277,275 Financial investments at fair value through profit or loss 976,032447,826 Financial investments at fair value through other   comprehensive income 20,781,71820,620,070 Financial investments at amortised cost 10,826,8509,747,865 Financing and advances 77,296,43776,083,198 Trade receivables 909147 Other receivables 340,530 631,042 281 for the Year Ended 31 December 2021 (Continued) 438,104422,545 91,981204,168 118,72545,897 704,690 845,594 1,353,500 1,518,204 Gross financing and advances 79,615,46478,155,883 Less:   Stage 1 - 12 month ECL   Stage 2 - lifetime ECL not credit impaired   Stage 3 - lifetime ECL credit impaired 901,063 2,006,831 (934,553)(388,082) (609,842)(709,254) (774,632) (975,349) Net financing and advances 77,296,43776,083,198 FINANCIAL STATEMENT 280
143. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 44.3 Credit risk (continued) 44.3.14 Credit risk exposure on financing and advances (continued) Bank FINANCIAL STATEMENT 2021 RM’000 2020 RM’000 At amortised cost Neither past due nor impaired   0 month 77,594,65174,845,898 Past due but not impaired   1 month 616,2741,324,7588   2 months 252,876656,386   3 months 31,913 25,687 Past due and impaired   Less than 4 months   4 months to 6 months   7 months to 9 months   More than 9 months 901,063 2,006,831 438,104422,545 91,981204,168 118,72545,897 704,690 845,594 1,353,500 1,518,204 Gross financing and advances 79,849,21478,370,933 Less:   Stage 1 - 12 month ECL   Stage 2 - lifetime ECL not credit impaired   Stage 3 - lifetime ECL credit impaired 283 for the Year Ended 31 December 2021 (Continued) (948,159)(400,965) (609,842)(709,254) (774,632) (975,349) Net financing and advances 77,516,58176,285,365 Credit risk (continued) 44.3.15 Credit risk exposure on investment securities Financial Financial investments investments at fair value Financial at fair value through other investments Group through comprehensive at amortised 2021 profit or loss income cost Total RM’000RM’000RM’000RM’000 Rated securities Islamic debt securities   Grade AAA   Grade AA+   Grade AA   Grade AA-   Grade AA1   Grade AA2   Grade AA3 Cagamas sukuk   Grade AAA -3,580,875 249,7553,830,630 -204,172 -204,172 -274,972 5,170280,142 -284,251 84,082368,333 -185,615 67,033252,648 -139,783 20,545160,328 -366,704 27,173393,877 -5,036,372 453,7585,490,130 -1,256,502 76,3491,332,851 Negotiable Islamic debt certificates   Grade AA1 - -6,292,874 630,0356,922,909 Unrated securities Government investment issues Government sukuk Khazanah sukuk Islamic redeemable convertible   preference shares Shares Quoted and unit trust shares Unquoted shares -99,92899,928 695,9395,550,2526,925,903 13,172,094 -8,709,4943,170,872 11,880,366 -156,319100,040256,359 213,200-- 213,200 909,13914,416,06510,196,81525,522,019 66,893-- 66,893 -72,779 -72,779 66,893 72,779 -139,672 976,03220,781,71810,826,85032,584,600 FINANCIAL STATEMENT 282
144. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 285 for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 Credit risk (continued) 44.3 44.3.15 Credit risk exposure on investment securities (continued) FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Credit risk (continued) 44.3.15 Credit risk exposure on investment securities (continued) Financial Financial investments investments at fair value Financial at fair value through other investments Bank through comprehensive at amortised 2021 profit or loss income cost Total RM’000RM’000RM’000RM’000 Financial Financial investments investments at fair value Financial at fair value through other investments Group through comprehensive at amortised 2020 profit or loss income cost Total RM’000RM’000RM’000RM’000 Rated securities Islamic debt securities   Grade AAA   Grade AA+   Grade AA   Grade AA-   Grade AA1   Grade AA2   Grade AA3 Rated securities Islamic debt securities   Grade AAA   Grade AA+   Grade AA   Grade AA-   Grade AA1   Grade AA2   Grade AA3 Cagamas sukuk   Grade AAA -3,580,875 249,7553,830,630 -204,172 -204,172 -274,972 5,170280,142 -284,251 84,082368,333 -185,615 67,033252,648 -139,783 20,545160,328 -366,704 27,173393,877 -5,036,372 453,7585,490,130 -1,256,502 76,3491,332,851 Negotiable Islamic debt certificates   Grade AA1 - -6,292,874 630,0356,922,909 Unrated securities Government investment issues Government sukuk Khazanah sukuk Islamic redeemable convertible   preference shares Shares Quoted and unit trust shares Unquoted shares -99,92899,928 Cagamas sukuk   Grade AAA - 3,195,076 234,448 3,429,524 - 94,354 5,137 99,491 - 288,396 5,223 293,619 - 239,624 84,862 324,486 -198,255153,442351,697 - 401,988 20,673 422,661 - 347,150 50,310 397,460 - 4,764,843 554,095 5,318,938 - 1,824,378 449,617 2,273,995 Negotiable Islamic debt certificates   Grade AA2 - -6,589,2211,103,6947,692,915 - 99,982 99,982 213,200-- 213,200 Unrated securities Government investment issues Government sukuk Khazanah sukuk Islamic redeemable convertible   preference shares 213,200 909,13914,416,06510,196,81525,522,019 303,14213,972,884 8,644,17122,920,197 695,9395,550,2526,925,903 13,172,094 -8,709,4943,170,872 11,880,366 -156,319100,040256,359 66,893-- 66,893 -72,771 -72,771 66,893 72,771 -139,664 976,03220,781,71010,826,85032,584,592 Shares Quoted and unit trust shares Unquoted shares 89,942 6,034,142 5,480,409 11,604,493 - 7,703,704 2,923,69210,627,396 -235,038240,070475,108 - - 213,200 144,684 - - 57,965 - 144,684 - 57,965 144,684 57,965 - 202,649 447,82620,620,070 9,747,86530,815,761 FINANCIAL STATEMENT 284
145. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 Credit risk (continued) 44.3 44.3.15 Credit risk exposure on investment securities (continued) FINANCIAL STATEMENT Financial Financial investments investments at fair value Financial at fair value through other investments Bank through comprehensive at amortised 2020 profit or loss income cost Total RM’000RM’000RM’000RM’000 Rated securities Islamic debt securities   Grade AAA   Grade AA+   Grade AA   Grade AA-   Grade AA1   Grade AA2   Grade AA3 287 for the Year Ended 31 December 2021 (Continued) - 3,195,076 234,448 3,429,524 - 94,354 5,137 99,491 - 288,396 5,223 293,619 - 239,624 84,862 324,486 -198,255153,442351,697 - 401,988 20,673 422,661 - 347,150 50,310 397,460 Credit risk (continued) 44.3.16 Maximum exposure to credit risk The following analysis represents the Group’s maximum exposure to credit risk of on-balance sheet financial assets and off-balance sheet exposure, excluding any collateral held or other credit enhancements. For on-balance sheet financial assets, the exposure to credit risk equals their carrying amount. For off-balance sheet exposure, the maximum exposure to credit risk is the maximum amount that the Group would have to pay if obligations of the instruments issued are called upon and/or the full amount of the undrawn credit facilities granted to customers. Group Credit exposure for on-balance sheet financial assets: 2021 RM’000 2020 RM’000 - 1,824,378 449,617 2,273,995 Cash and short-term funds 835,189981,636 Deposits and placements   with financial institutions 672,463277,275 Financial investments portfolio * 32,462,97030,631,802 Financing and advances 69,032,98668,450,174 Trade receivables 909147 Other assets 540,530831,042 Negotiable Islamic debt certificates   Grade AA2 - 99,982 Credit exposure for off-balance sheet financial assets: Undrawn financing2,271,8312,294,122 -6,589,2211,103,6947,692,915 Total maximum credit risk exposure 105,816,878103,466,198 Bank Credit exposure for on-balance sheet financial assets: Cagamas sukuk   Grade AAA - 4,764,843 554,095 5,318,938 - 99,982 Unrated securities Government investment issues Government sukuk Khazanah sukuk Islamic redeemable convertible   preference shares 213,200 303,14213,972,884 8,644,17122,920,197 Shares Quoted and unit trust shares Unquoted shares 89,942 6,034,142 5,480,409 11,604,493 - 7,703,704 2,923,69210,627,396 -235,038240,070475,108 - - 213,200 144,684 - - 57,957 - 144,684 - 57,957 144,684 57,957 - 202,641 447,82620,620,062 9,747,86530,815,753 Cash and short-term funds 834,987981,180 Deposits and placements   with financial institutions 672,463277,275 Financial investments portfolio * 32,462,97030,631,802 Financing and advances 69,032,98668,450,174 Other assets 552,754843,854 Credit exposure for off-balance sheet financial assets: Undrawn financing2,271,8312,294,122 Total maximum credit risk exposure 105,827,991103,478,407 * Financial investment portfolio consists of financial investments at fair value through profit or loss, financial investments at fair value through other comprehensive income and financial investments at amortised costs, excluding equity investments. FINANCIAL STATEMENT 286
146. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 Credit risk (continued) 44.3 44.3.17 Exposures to COVID-19 impacted sector Group and Bank Financing and advances On-balance sheet (net of impairment) Retail and wholesale/trading, manufacturing, transportation,   agriculture, food and beverage services/restaurants 2021 RM’000 2020 RM’000 3,388,88230,863,495 44.3.18 COVID-19 customer relief and support measures Retail customers 289 for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Non-retail customers Group and Bank House Personal Hire- Other term Corporate Grand At 31 December 2021financingfinancingpurchasefinancing Totalfinancing total RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Total payment moratoriums,   payment assistances,   rescheduling and restructuring   (“R&R”) granted 4,322,76837,260,066 1,246,073 353,52843,182,435 1,131,20644,313,641 of which: Resumed payments 3,205,62224,784,149 923,510 326,22929,239,510 918,88530,158,395 Extended and paying as per   revised schedules 885,83712,231,692 294,242 19,19713,430,968 168,49913,599,467 Missed payments 231,309244,225 28,321 8,102511,957 43,822555,779 As a percentage of total: Resumed payments 75%66%74%93%68%81%68% Extended and paying as per   revised schedules 20%33%24% 5%31%15%31% Missed payments 5%1%2%2%1%4%1% 100%100%100%100%100%100%100% Credit risk (continued) 44.3.18 COVID-19 customer relief and support measures (continued) Retail customers Non-retail customers Group and Bank House Personal Hire- Other term Corporate Grand At 31 December 2020financingfinancingpurchasefinancing Totalfinancing total RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Total payment moratoriums,   payment assistances,   rescheduling and restructuring  (“R&R”) granted 6,393,34949,641,772 2,765,115 507,14259,307,378 1,456,35860,763,736 of which: Resumed payments 5,478,87142,852,574 2,542,231 498,56251,372,238 1,136,22152,508,459 Extended and paying as per   revised schedules 322,6005,389,101 106,096 3,2135,821,010 311,2416,132,251 Missed payments 591,8781,400,097 116,788 5,3672,114,130 8,8962,123,026 As a percentage of total: Resumed payments86%86%92%98%87%78%86% Extended and paying as per   revised schedules 5%11% 4% 1%10%21%10% Missed payments9%3%4%1%3%1%4% 100%100%100%100%100%100%100% FINANCIAL STATEMENT 288
147. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.3 44.4 Credit risk (continued) 291 for the Year Ended 31 December 2021 (Continued) 44. Liquidity risk (continued) 44.3.19 Overlays and adjustments for expected credit losses amid COVID-19 environment As the current MFRS 9 models are not expected to generate levels of expected credit losses (“ECL”) with sufficient reliability in view of the unprecedented and on-going COVID-19 pandemic, flood, overlays and post-model adjustments have been applied to determine a sufficient overall level of ECLs for the year ended and as at 31 December 2021. The Bank has established liquidity contingency funding plan which entails the early warning indicators as well as strategies and actions to be taken by the liquidity crisis management team arising from different liquidity crisis scenarios. These overlays and post-model adjustments were taken to reflect the latest macroeconomic outlook not captured in the modelled outcome and the potential impact to delinquencies and defaults when the various relief and support measures expire.  The overlays and post-model 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. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) The customers who have received payment 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. The adjusted downside scenario assumes on ability of the identified customers to resume payment after the end of the payment assistance program that they have enrolled, the impact of these post-model adjustments were estimated at account level, remain outside the core MFRS 9 process and amounted to RM578 million as at 31 December 2021. 44.4 Liquidity risk Liquidity risk arises from mismatches in the timing of cash flows due to the inability to meet maturing or regulatory obligations and customers’ demands for funds when required, which may adversely affect daily operations, Bank’s reputation and incur unacceptable losses. 44.4.1 Management of liquidity risk The management of liquidity risk is subject to Bank Negara Malaysia’s Liquidity Framework and Liquidity Coverage Ratio requirements as well as the Bank’s liquidity risk management framework. The Bank adopts various liquidity risk measurement tools in managing the cash flows for daily movement as well as medium and long-term positions to ensure sufficient funding sources to meet obligations. It is important for the Bank to maintain diversification strategy of funding sources and providers to ensure stability of funding structure and adequate standby facilities while managing excessive concentration towards key depositors. The Bank maintains sufficient high-quality liquid assets to withstand against any unforeseen liquidity stress. In addition, a liquidity stress testing is conducted based on sensitivity analysis for various stress scenarios covering the Bank’s specific and market-wide crisis scenario. The stress scenarios would provide valuable assessment on the impact from adverse liquidity environment and the Bank’s vulnerable portfolios. 44.4.1 Management of liquidity risk (continued) The Bank’s liquidity risk management framework, policies and procedures are reviewed periodically which are endorsed by Asset and Liability Committee (ALCO) and approved by the Board. ALCO meets on a monthly basis and is responsible to monitor the liquidity risk position against the Bank’s risk appetite and approved limits. 44.4.2 Exposure to liquidity risk The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits from customers. For this purpose, net liquid assets are considered as including cash and cash equivalents and investment grade securities for which there is an active and liquid market. Details of the reported Bank ratio of net liquid assets to deposits from customers at the end of the reporting period and during the year were as follows: Bank 2021 RM’000 At 31 December Average for the year Maximum for the year Minimum for the year 31.84%30.67% 32.19%32.66% 33.23%35.10% 31.26%30.67% Liquidity risk of assets and liabilities 44.4.3 2020 RM’000 The main thrust of liquidity management is the projection of up to one year of the maturity profile of the Bank’s assets, liabilities and off-balance sheet commitments from a given position. The focus is on the ability of the Bank to match its short-term liquidity requirement arising from maturing obligations with maturing assets, followed by a medium-term assessment of liquidity up to one year. The primary basis for determining the appropriate time bands is the contractual maturity, which is when the cash flows crystallise. FINANCIAL STATEMENT 290
148. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 Liquidity risk (continued) 44.4 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Assets Cash, deposits   and placements   with financial   institutions835,189- 311,214- 361,249-- 1,507,652 Investment   securities -304,065334,578 1,506,914 2,652,425 27,664,988121,630 32,584,600 Financing and   advances533,9341,066,5852,193,9183,152,6365,683,19966,985,192(2,319,027) 77,296,437 Trade receivables ------ 909 909 Other assets -- 351,626--- 234,893 586,519 1,369,1231,370,6503,191,3364,659,5508,696,87394,650,180(1,961,595) 111,976,117 Liabilities Deposits from   customers 15,617,10916,397,34520,446,18316,783,61811,156,420 6,123,209 -86,523,884 Deposits and   placements   from banks   and financial   institutions450,000 150,000 250,000---- 850,000 Recourse   obligations on   financing sold   to Cagamas -1,8343,6995,626 307,152 - - 318,311 Debt securities   issued --- 867,940 430,000 2,000,000- 3,297,940 Cashline facility - 400,032 300,385---- 700,417 Trade payables -- 1,839---- 1,839 Other liabilities -116 1,308,074350700 49,837 337,945 1,697,022 16,067,10916,949,32722,310,18017,657,53411,894,272 8,173,046 337,94593,389,413 Net maturity   mismatch (14,697,986)(15,578,677)(19,118,844)(12,997,984) (3,197,399) 86,477,134 (2,299,540) 18,586,704 293 Liquidity risk (continued) 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Commitment and   contingencies Bank guarantee   given in respect   of banking   facilities granted   to customers130,900------ 130,900 Claims for damages   from litigation   taken against   the Bank ----- 140,403- 140,403 Undrawn financing 2,271,831------ 2,271,831 2,402,731---- 140,403- 2,543,134 FINANCIAL STATEMENT 292
149. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 Liquidity risk (continued) 44.4 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Assets Cash, deposits   and placements   with financial   institutions 981,636- 70,059- 207,216-- 1,258,911 Investment   securities 99,982 76,5531,291,2471,728,0512,326,64525,109,324 183,95930,815,761 Financing and   advances 600,6791,117,7862,383,8454,077,3505,619,71364,356,510(2,072,685) 76,083,198 Trade receivables ------ 147 147 Other assets -- 663,015--- 214,460 877,475 1,682,2971,194,3394,408,1665,805,4018,153,57489,465,834(1,674,119) 109,035,492 Liabilities Deposits from  customers 14,970,77616,475,75621,933,92515,693,50711,314,941 5,186,526 -85,575,431 Deposits and   placements   from banks   and financial   institutions 150,000------ 150,000 Recourse   obligations on   financing sold   to Cagamas -1,7763,5825,44811,171 317,849 - 339,826 Debt securities   issued --- 12,558 350,000 2,280,000- 2,642,558 Cashline facility - 400,870----- 400,870 Trade payables -- 1,374---- 1,374 Other liabilities - 921,343,245 278 555 56,917 198,8751,599,962 15,120,77616,878,49423,282,12615,711,79111,676,667 7,841,292 198,87590,710,021 Net maturity  mismatch (13,438,479)(15,684,155)(18,873,960) (9,906,390) (3,523,093) 81,624,542 (1,872,994) 18,325,471 295 Liquidity risk (continued) 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Commitment and   contingencies Bank guarantee   given in respect   of banking   facilities granted   to customers 111,407------ 111,407 Claims for damages   from litigation   taken against   the Bank ----- 292,327- 292,327 Undrawn financing 2,294,122------ 2,294,122 2,405,529---- 292,327- 2,697,856 FINANCIAL STATEMENT 294
150. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 Liquidity risk (continued) 44.4 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Assets Cash, deposits   and placements   with financial   institutions834,987- 311,214- 361,249-- 1,507,450 Investment   securities -304,065334,578 1,506,914 2,652,425 27,664,988121,622 32,584,592 Financing and   advances533,9341,066,5852,193,9183,152,6365,683,19967,218,942(2,332,633) 77,516,581 Other assets -- 363,321--- 199,912 563,233 1,368,9211,370,6503,203,0314,659,5508,696,87394,883,930(2,011,099) 112,171,856 Deposits from   customers 15,617,10916,397,34520,446,18316,783,61811,156,420 6,123,209 -86,523,884 Deposits and   placements   from banks   and financial   institutions450,000 150,000 250,000---- 850,000 Recourse   obligations on   financing sold   to Cagamas -1,8343,6995,626 307,152 - - 318,311 Debt securities   issued --- 867,940 430,000 2,000,000- 3,297,940 Cashline facility - 400,032 300,385---- 700,417 Other liabilities 928 7,573 1,324,33530,93159,82163,324397,348 1,884,260 16,068,03716,956,78422,324,60217,688,11511,953,393 8,186,533 Liquidity risk (continued) 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Commitment and   contingencies Bank guarantee   given in respect   of banking   facilities granted   to customers130,900------ 130,900 Claims for damages   from litigation   taken against   the Bank ----- 140,403- 140,403 Undrawn financing 2,271,831------ 2,271,831 2,402,731---- 140,403- 2,543,134 Liabilities 397,34893,574,812 Net maturity   mismatch (14,699,116)(15,586,134)(19,121,571)(13,028,565) (3,256,520) 86,697,397 (2,408,447) 18,597,044 297 FINANCIAL STATEMENT 296
151. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 Liquidity risk (continued) 44.4 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Assets Cash, deposits   and placements   with financial   institutions 981,180- 70,059- 207,216-- 1,258,455 Investment   securities 99,982 76,5531,291,2471,728,0512,326,64525,109,324 183,95130,815,753 Financing and   advances 600,6791,117,7862,383,8454,077,3505,619,71364,571,560(2,085,568) 76,285,365 Other assets -- 675,187--- 178,957 854,144 1,681,8411,194,3394,420,3385,805,4018,153,57489,680,884(1,722,660) 109,213,717 Deposits from  customers 14,970,77616,475,75621,933,92515,693,50711,314,941 5,186,526 -85,575,431 Deposits and   placements   from banks   and financial   institutions 150,000------ 150,000 Recourse   obligations on   financing sold   to Cagamas -1,7763,5825,44811,171 317,849 - 339,826 Debt securities   issued --- 12,558 350,000 2,280,000- 2,642,558 Cashline facility - 400,870----- 400,870 Other liabilities 1,953 7,999 1,404,14127,86975,09976,117218,358 1,811,536 15,122,72916,886,40123,341,64815,739,38211,751,211 7,860,492 Liquidity risk (continued) 44.4.4 Liquidity risk of assets and liabilities by remaining contractual maturities (continued) More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Commitment and   contingencies Bank guarantee   given in respect   of banking   facilities granted   to customers 111,407------ 111,407 Claims for damages   from litigation   taken against   the Bank ----- 292,327- 292,327 Undrawn financing 2,294,122------ 2,294,122 2,405,529---- 292,327- 2,697,856 Liabilities 218,35890,920,221 Net maturity  mismatch (13,440,888)(15,692,062)(18,921,310) (9,933,981) (3,597,637) 81,820,392 (1,941,018) 18,293,496 299 FINANCIAL STATEMENT 298
152. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 44.4 Liquidity risk (continued) 44.4.5 Contractual maturity of financial liabilities on an undiscounted basis More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 FINANCIAL STATEMENT Liabilities Deposits from   customers 15,678,93216,424,49420,546,34116,986,26911,438,960 7,667,554 -88,742,550 Deposits and   placements   from banks   and financial   institutions450,416 150,454 251,264---- 852,134 Recourse   obligations on   financing sold   to Cagamas -3,1666,3399,528 314,741 - - 333,774 Debt securities   issued --- 914,059 475,265 2,367,462- 3,756,786 Trade payables -- 1,839---- 1,839 Cashline facility - 401,002 301,325---- 702,327 Other liabilities -116 1,308,074350700 49,837 337,945 1,697,022 16,129,34816,979,23222,415,18217,910,20612,229,66610,084,853 Liquidity risk (continued) 44.4.5 The tables below present the cash flows payable by the Group and the Bank under financial liabilities by remaining contractual maturities as at 31 December 2021 and 31 December 2020. The amounts disclosed in the table will not agree to the carrying amounts reported in the statements of financial positions as the amounts incorporated all contractual cash flows, on an undiscounted basis, relating to both principal and profit analysis. The Group and the Bank manage profit liquidity risk based on discounted expected cash flows. 301 for the Year Ended 31 December 2021 (Continued) 337,94596,086,432 Contractual maturity of financial liabilities on an undiscounted basis (continued) More than More than More than More than No Group Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from  customers 14,357,28016,500,17422,086,43715,816,56511,594,292 6,984,317 -87,339,065 Deposits and   placements   from banks   and financial   institutions 150,044------ 150,044 Recourse   obligations on   financing sold   to Cagamas -3,1986,4039,62319,313 333,271 - 371,808 Debt securities   issued --- 55,396 405,589 2,490,742- 2,951,727 Trade payables -- 1,374---- 1,374 Cashline facility - 400,922----- 400,922 Other liabilities - 921,343,245 278 555 56,917 198,8751,599,962 14,507,32416,904,38623,437,45915,881,86212,019,749 9,865,247 198,87592,814,902 FINANCIAL STATEMENT 300
153. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.4 44.4 Liquidity risk (continued) 44.4.5 Contractual maturity of financial liabilities on an undiscounted basis (continued) FINANCIAL STATEMENT Liquidity risk (continued) 44.4.5 More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2021 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 303 for the Year Ended 31 December 2021 (Continued) Liabilities Contractual maturity of financial liabilities on an undiscounted basis (continued) More than More than More than More than No Bank Up to 1 week- 1 month- 3 months- 6 months- More than specific 2020 1 week 1 month 3 months 6 months 1 year 1 year maturity Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from   customers 15,678,93216,424,49420,546,34116,986,26911,438,960 7,667,554 -88,742,550 Deposits and   placements   from banks   and financial   institutions450,416 150,454 251,264---- 852,134 Recourse   obligations on   financing sold   to Cagamas -3,1666,3399,528 314,741 - - 333,774 Debt securities   issued --- 914,059 475,265 2,367,462- 3,756,786 Cashline facility - 401,002 301,325---- 702,327 Other liabilities 928 7,573 1,324,33530,93159,82163,324397,348 1,884,260 Deposits from  customers 14,357,28016,500,17422,086,43715,816,56511,594,292 6,984,317 -87,339,065 Deposits and   placements   from banks   and financial   institutions 150,044------ 150,044 Recourse   obligations on   financing sold   to Cagamas -3,1986,4039,62319,313 333,271 - 371,808 Debt securities   issued --- 55,396 405,589 2,490,742- 2,951,727 Cashline facility - 400,922----- 400,922 Other liabilities 1,953 7,999 1,404,14127,86975,09976,117218,358 1,811,536 16,130,27616,986,68922,429,60417,940,78712,288,78710,098,340 14,509,27716,912,29323,496,98115,909,45312,094,293 9,884,447 397,34896,271,831 218,35893,025,102 FINANCIAL STATEMENT 302
154. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.5 44.5 Market risk The function of Market Risk and Asset Liability Management (“ALM”) is to manage and control market risk exposure in order to optimize return on risk while maintaining a market profile consistent with the Bank’s strategic plan.  The Bank has established the market risk policy, strategy and processes which are periodically reviewed and updated to take into account changes in activities and market structure to ensure effective implementation of risk management policies. 44.5.1 Management of market risk The Bank manages market risk by segregating exposure to market risk between trading and non-trading portfolios. Trading portfolios are held by treasury department which consist of financial assets that are managed on fair value basis.  The risk measurement techniques employed by the Bank to measure and quantify the market value changes and the level of market risk comprise of Value-at-Risk (“VaR”), Modified Duration and Present Value of One Basis Point (“PV01”). Exposure of the Bank to the foreign exchange rates is minimal since operation of foreign currency unit is limited to remittance services only. 44.5.2 Profit rate risk Investment in debt securities and financing are exposed to risk of change in profit rates that would result in changes in cash flows. On the other hand, investment in equity securities and other short-term receivables and payables are not significantly exposed to profit rate risk. Among other efforts in mitigating this risk is by diversifying investment mainly in fixed-income securities with different duration. The Bank has not engaged in hedging through derivative instruments during the year. The sensitivity of the Bank’s financial assets and liabilities to the profit rate risk is measured and monitored proactively using multiple measurement techniques such as Gap Analysis, Duration and Simulation Model. 305 for the Year Ended 31 December 2021 (Continued) 44. Market risk is defined as the risk of financial loss due to changes in equity prices, benchmark rates, credit spreads, foreign-exchange rates, commodity prices, and other indicators whose values are set in a public market. Changes in market rates can affect the Bank’s net earnings and also the economic value of Bank’s equity. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Market risk (continued) 44.5.2 Profit rate risk (continued) The following shows the Bank’s sensitivity to an increase or decrease in market profit rates, assuming no asymmetrical movement in yield curves and constant financial position. Sensitivity of projected net Profit income Bank 2021 Year ended 31 December Average for the year Maximum for the year Minimum for the year 2020 Year ended 31 December Average for the year Maximum for the year Minimum for the year 44.5.3 Exposure to profit rate Increase Decrease Increase Decrease by 100 bp by 100 bp by 50 bp by 50 bp RM’000RM’000RM’000RM’000 83,351(100,261) 41,670 (41,658) 69,627(84,255)34,801(34,750) 122,631(47,959)61,305(16,228) 32,508(137,325) 16,246 (61,284) 98,160 56,651 98,160 15,939 (113,370) (67,234) (113,370) (25,054) 49,072 28,315 49,072 7,960 (49,056) (28,277) (49,056) (7,942) Among other controls to ensure that market risk exposures remain within tolerable levels include stress testing, new product approval procedures and listing of permissible instruments that can be traded.  Periodic stress testing and control assessment are conducted to address the plausible market events relating to the threat of market failure that could disrupt the Bank’s profitability and capital adequacy in ensuring its resiliency. FINANCIAL STATEMENT 304
155. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.5 44.5 Market risk (continued) Exposure to profit rate risk on profit-bearing financial instruments Non-trading book More than More than More than Group Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2021 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Assets Cash, deposits   and placements   with financial   institutions150,189311,214211,060 - -835,189 - 1,507,652 Financial   investments at   fair value   through   profit or loss ------ 976,032 976,032 Financial   investments at   fair value   through other   comprehensive   income199,160 335,6822,589,9009,814,4297,769,768 - 72,77920,781,718 Financial   investments at   amortised cost105,022 -1,546,3742,298,5046,876,950 - -10,826,850 Financing and   advances   - Non-impaired 52,857,393 45,689 65,819 3,569,80919,915,070 1,808,184 -78,261,964   - Impaired, net    of allowances ----- (965,527)- (965,527) Other non-profit   sensitive balances ----- 3,669,469- 3,669,469 53,311,764 692,5854,413,15315,682,74234,561,7885,347,3151,048,811 115,058,158 307 for the Year Ended 31 December 2021 (Continued) 44. 44.5.4 FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Market risk (continued) 44.5.4 Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Group (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2021 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from   customers 25,829,04620,446,18327,940,03810,182,524 2,126,093 - -86,523,884 Deposits and   placements   from banks   and financial   institutions600,000 250,000----- 850,000 Recourse   obligations on   financing sold   to Cagamas --- 318,311--- 318,311 Debt securities   issued - -1,286,546 704,3671,307,027 - -3,297,940 Cashline facility400,032 300,385----- 700,417 Other non-profit   sensitive   balances ----- 1,712,411- 1,712,411 26,829,07820,996,56829,226,58411,205,202 3,433,120 1,712,411 -93,402,963 On-balance   sheet profit   sensitivity gap 26,482,686(20,303,983) (24,813,431) 4,477,54031,128,668 3,634,904 1,048,81121,655,195 Off-balance   sheet profit   sensitivity gap ------- Total profit   sensitivity gap 26,482,686(20,303,983) (24,813,431) 4,477,54031,128,668 3,634,904 1,048,81121,655,195 FINANCIAL STATEMENT 306
156. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.5 44.5 Market risk (continued) Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Group (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2020 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Assets Cash, deposits   and placements   with financial   institutions 100,015 70,060 207,215-- 881,621- 1,258,911 Financial   investments at   fair value   through   profit or loss ------ 447,826 447,826 Financial   investments at   fair value   through other   comprehensive  income 76,550 949,273 2,783,90410,936,072 5,816,307 - 57,96420,620,070 Financial   investments at   amortised cost 99,982 341,9701,270,8133,450,5354,584,565 - -9,747,865 Financing and   advances  - Non-impaired 48,907,595 66,412 73,382 3,065,78622,368,049 2,156,455 -76,637,679   - Impaired, net    of allowances----- (554,481)- (554,481) Other non-profit   sensitive balances ----- 3,593,274- 3,593,274 49,184,1421,427,7154,335,31417,452,39332,768,9216,076,869 505,790 111,751,144 309 for the Year Ended 31 December 2021 (Continued) 44. 44.5.4 FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Market risk (continued) 44.5.4 Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Group (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2020 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from  customers 25,896,69221,933,92527,008,447 7,999,843 2,736,524 - -85,575,431 Deposits and   placements   from banks   and financial   institutions 150,000------ 150,000 Recourse   obligations on   financing sold   to Cagamas --- 339,826--- 339,826 Debt securities   issued -- 351,579 1,688,805 602,174-- 2,642,558 Cashline facility 400,870------ 400,870 Other non-profit   sensitive   balances ----- 1,694,071- 1,694,071 26,447,56221,933,92527,360,02610,028,474 3,338,698 1,694,071 -90,802,756 On-balance   sheet profit  sensitivity gap 22,736,580(20,506,210)(23,024,712) 7,423,91929,430,223 4,382,798 505,79020,948,388 Off-balance   sheet profit   sensitivity gap ------- Total profit   sensitivity gap 22,736,580(20,506,210)(23,024,712) 7,423,91929,430,223 4,382,798 505,79020,948,388 FINANCIAL STATEMENT 308
157. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.5 44.5 Market risk (continued) Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Bank Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2021 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Assets Cash, deposits   and placements   with financial   institutions150,189311,214211,060 - -834,987 - 1,507,450 Financial   investments at   fair value   through   profit or loss ------ 976,032 976,032 Financial   investments at   fair value   through other   comprehensive   income199,160 335,6822,589,9009,814,4297,769,768 - 72,77120,781,710 Financial   investments at   amortised cost105,022 -1,546,3742,298,5046,876,950 - -10,826,850 Financing and   advances   - Non-impaired 52,857,393 45,689 65,819 3,569,80920,148,820 1,808,184 -78,495,714   - Impaired, net    of allowances ----- (979,133)- (979,133) Other non-profit   sensitive balances ----- 3,186,255- 3,186,255 53,311,764 692,5854,413,15315,682,74234,795,5384,850,2931,048,803 114,794,878 311 for the Year Ended 31 December 2021 (Continued) 44. 44.5.4 FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Market risk (continued) 44.5.4 Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Bank (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2021 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from   customers 25,829,04620,446,18327,940,03810,182,524 2,126,093 - -86,523,884 Deposits and   placements   from banks   and financial   institutions600,000 250,000----- 850,000 Recourse   obligations on   financing sold   to Cagamas --- 318,311--- 318,311 Debt securities   issued - -1,286,546 704,3671,307,027 - -3,297,940 Cashline facility400,032 300,385----- 700,417 Other non-profit   sensitive   balances ----- 1,884,260- 1,884,260 26,829,07820,996,56829,226,58411,205,202 3,433,120 1,884,260 -93,574,812 On-balance   sheet profit   sensitivity gap 26,482,686(20,303,983) (24,813,431) 4,477,54031,362,418 2,966,033 1,048,80321,220,066 Off-balance   sheet profit   sensitivity gap ------- Total profit   sensitivity gap 26,482,686(20,303,983) (24,813,431) 4,477,54031,362,418 2,966,033 1,048,80321,220,066 FINANCIAL STATEMENT 310
158. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.5 44.5 Market risk (continued) Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Bank (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2020 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Assets Cash, deposits   and placements   with financial   institutions 100,015 70,060 207,215-- 881,165- 1,258,455 Financial   investments at   fair value   through   profit or loss ------ 447,826 447,826 Financial   investments at   fair value   through other   comprehensive  income 76,550 949,273 2,783,90410,936,072 5,816,307 - 57,95620,620,062 Financial   investments at   amortised cost 99,982 341,9701,270,8133,450,5354,584,565 - -9,747,865 Financing and   advances  - Non-impaired 48,907,595 66,412 73,382 3,065,78622,583,099 2,156,455 -76,852,729   - Impaired, net    of allowances----- (567,364)- (567,364) Other non-profit   sensitive balances ----- 3,159,054- 3,159,054 49,184,1421,427,7154,335,31417,452,39332,983,9715,629,310 505,782 111,518,627 313 for the Year Ended 31 December 2021 (Continued) 44. 44.5.4 FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Market risk (continued) 44.5.4 Exposure to profit rate risk on profit-bearing financial instruments (continued) Non-trading book More than More than More than Bank (continued) Up to 1 month- 3 months- 1 year- More than Non-profit Trading 2020 1 month 3 months 1 year 5 years 5 years sensitive book Total RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000 Liabilities Deposits from  customers 25,896,69221,933,92527,008,447 7,999,843 2,736,524 - -85,575,431 Deposits and   placements   from banks   and financial   institutions 150,000------ 150,000 Recourse   obligations on   financing sold   to Cagamas --- 339,826--- 339,826 Debt securities   issued -- 351,579 1,688,805 602,174-- 2,642,558 Cashline facility 400,870------ 400,870 Other non-profit   sensitive   balances ----- 1,891,536- 1,891,536 26,447,56221,933,92527,360,02610,028,474 3,338,698 1,891,536 -91,000,221 On-balance   sheet profit  sensitivity gap 22,736,580(20,506,210)(23,024,712) 7,423,91929,645,273 3,737,774 505,78220,518,406 Off-balance   sheet profit   sensitivity gap ------- Total profit   sensitivity gap 22,736,580(20,506,210)(23,024,712) 7,423,91929,645,273 3,737,774 505,78220,518,406 FINANCIAL STATEMENT 312
159. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.6 44.7 Operational risk The Bank’s Operational Risk Management (“ORM”) Framework sets out the governance and oversight structure, roles and relationships of the three lines of defense mechanism as well as the high level principles and methodologies for operational risk identification, assessment, control and monitoring. The framework recognises the relationships between operational risk and other risk types such as strategic, credit, market and reputation risks; and is cascaded to also govern the management of operational risk sub-types i.e. legal and compliance risk, Shariah non-compliance risk, Information Technology risk and outsourcing risk. The Bank has no appetite for losses arising from inadequate internal controls, systems, and processes; which can be elaborated as zero appetite for: • Failure to maintain a sound and proportionate system of internal controls to manage the expected operational risk losses and avoid the unexpected operational risk losses; • •Failure to comply with Shariah rules and parameters as set out by the Shariah Committee (“SC”) and/or the Shariah Advisory Council of Bank Negara Malaysia. Regulatory censures, fines or prosecution relating to the laws and regulations applicable to the Bank; and The Bank continuously monitors its operational risk exposure to ensure the level of exposure is within the acceptable tolerance. This is conducted by means of the established governance and oversight structure as well as through the day-to-day operational risk management processes. ORM processes are undertaken through the implementation of tools such as Risk and Control Self-Assessment (“RCSA”), Key Risk Indicator (“KRI”) and Loss Event Data (“LED”) collection. RCSA is a tool used to identify and assess the risks in key business processes, evaluate the effectiveness of internal controls and provide the basis for determining risk responses/strategies in pursuing business objectives. KRI provides early warning signal of any increase in risk exposure and/or occurrence of control failures. To support operational risk analytics, the Bank collects LED based on BNM’s Operational Risk Integrated Online Network (“ORION”) requirements. To improve its operational resilience, the Bank has revamped its Business Continuity Management (“BCM”) framework and processes by streamlining the governance structure and response matrix based on severity of disruption; namely code Amber, Red and Black. Code Amber incidents are isolated disruption affecting only a particular business/activity which shall be managed by the respective business involved. The entire crisis management hierarchy headed by Managing Director/President shall be activated under Code Black, which is a full-on crisis that could potentially affect the going concern of the Bank. To ensure effectiveness of the business continuity plans and to be in line with regulatory requirements, regular exercises, disaster simulations and recovery drills are conducted throughout the year. 315 for the Year Ended 31 December 2021 (Continued) 44. The Bank defines operational risk as the risk of loss or non-achievement of business objectives due to inadequate or failed internal processes, people and system, or from external events. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Capital management The objective of capital management is to maintain a strong capital position to support business growth, to maintain investors, depositors, customers and market confidence and to provide cushion for any potential losses. In line with this objective, the Bank manages its capital actively and ensures that the capital adequacy ratios which take into account the risk profile of the Bank, are above the regulatory minimum requirement. Capital adequacy and the use of regulatory capital are monitored monthly by the Bank’s management, employing techniques based on the Capital Framework for Development Financial Institutions by Bank Negara Malaysia. The required information is filed with Bank Negara Malaysia on a monthly basis. The Bank maintains a ratio of total regulatory capital to its risk-weighted assets above a minimum level agreed with Bank Negara Malaysia which takes into account the risk profile of the Bank. The regulatory capital requirements are strictly observed when managing economic capital. The Bank’s regulatory capital comprises two tiers: (i) (ii) Tier 2 capital: subordinated sukuk, collective impairment allowances on non-impaired financing and regulatory reserve. Tier 1 capital: share capital, statutory reserve, capital reserve and retained profits; and Banking operations are categorised as either trading book or banking book, and risk-weighted assets are determined according to specified requirements that seek to reflect the varying levels of risk attached to assets and exposures not recognised in the statements of financial position. The Bank’s policy is to maintain a strong capital base so as to ensure investors’, creditors’ and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position. 44.7.1 Capital adequacy ratio The Bank is required to comply with the core capital ratio and risk-weighted capital adequacy ratio prescribed by Bank Negara Malaysia. The capital adequacy ratios of the Bank are computed in accordance with BNM’s Capital Framework for Development Financial Institutions (Capital Component and Risk-Weighted Asset). The Bank was in compliance with all prescribed capital ratios throughout the period. Bank 2021 2020 Before proposed dividend   Core capital ratio   Risk-weighted capital adequacy ratio 23.868%22.671% 26.277%24.600% After proposed dividend   Core capital ratio   Risk-weighted capital adequacy ratio 23.349%22.212% 25.757%24.141% FINANCIAL STATEMENT 314
160. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44. FINANCIAL RISK MANAGEMENT (CONTINUED) 44.7 44.7 Capital management (continued) 44.7.1 Capital adequacy ratio (continued) FINANCIAL STATEMENT Capital management (continued) 44.7.2 The above ratios are derived by taking into account the core capital and capital base against the risk weighted assets of the Bank. Components of the capital are as follows: 317 for the Year Ended 31 December 2021 (Continued) Bank 2021 RM’000 2020 RM’000 Transitional Arrangement Based on the BNM’s policy document on Transitional Arrangements for Regulatory Capital Treatment of Accounting Provisions for Development Financial Institutions (DFIs) issued on 9 December 2020, the prescribed development financial institutions (“DFIs”) which elect to apply the transitional arrangements are allowed to add back a portion of the Stage 1 and Stage 2 provisions for expected credit losses to Tier I Capital over a four-year period from financial year beginning 2020 or a three-year period from financial year beginning 2021. The Group and Bank elected to adopt the transitional arrangements for four-year period from financial year beginning 2020. Tier I capital Paid-up share capital 2,986,0302,986,030 Retained profits 10,373,5089,430,095 Other reserves7,322,0516,848,750 Before After TransitionalTransitional ArrangementArrangement RM’000 RM’000 Total Tier I capital (core) 20,681,58919,264,875 Tier II capital Subordinated sukuk 300,000300,000 Collective impairment * 1,558,0011,110,219 Regulatory reserve 329,672329,672 Total Tier II capital 2,187,6731,739,891 Total capital 22,869,26221,004,766 Less: Investment in subsidiaries (100,744)(100,744) Total capital base * This is a surplus amount allowable after taking into account the collective impairment allowance on impaired financing of the Bank. Assets in various categories are risk-weighted as follows: Total assets assigned 20% risk-weighted Total assets assigned 50% risk-weighted Total assets assigned 100% risk-weighted Off-Balance Sheet claims assigned 100% risk-weighted 22,768,51820,904,022 2021 RM’000 Total Tier I Capital 20,681,589   of which: Total Add-back - 20,681,589 899,305 Total Additional Tier I Capital 20,681,589 21,580,894 Total Tier II Capital 2,187,673   of which: Loss provisions 1,887,673 2,187,673 1,887,673 Total Risk Weighted Assets 86,648,984 86,648,984 Core capital ratio 23.868% Risk-weighted capital adequacy ratio 26.277% 24.906% 27.315% Before After TransitionalTransitional Arrangement Arrangement * RM’000 RM’000 Bank 2020 RM’000 421,050530,251 2,596,7342,533,856 82,638,06080,910,841 993,1401,000,609 86,648,98484,975,557 2021 2020 Total Tier I Capital19,264,87519,264,875   of which: Total Add-back - 453,272 Total Additional Tier I Capital 19,264,875 19,718,147 Total Tier II Capital1,739,8911,739,891   of which: Loss provisions 1,439,891 1,439,891 Total Risk Weighted Assets 84,975,55784,975,557 Core capital ratio22.671%23.204% Risk-weighted capital adequacy ratio24.600%25.133% *  The comparative has been restated to conform to the current year’s presentation. FINANCIAL STATEMENT 316
161. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements 45 . FAIR VALUES OF FINANCIAL INSTRUMENTS Financial instruments comprise financial assets, financial liabilities and off-balance sheet financial instruments. Fair value is the amount at which the financial asset could be exchanged or a financial liability could be settled, between knowledgeable and willing parties in an arm’s length transaction. The information presented herein represents the best estimates of fair values as at the end of the reporting period. 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 appropriate methodologies and assumptions on risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materially affect these estimates and the resulting fair value estimates. Fair value information for non-financial assets and liabilities is excluded as they do not fall within the scope of MFRS 132, Financial Instruments: Disclosure and Presentation which requires the fair value information to be disclosed. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 45.1 Valuation of financial instruments The Group and the Bank measure fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. (i) (ii) Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. Level 1: Quoted market price (unadjusted) in an active market for an identical instrument. (iii)Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices. For all other financial instruments, the Group and the Bank determine fair values using valuation techniques. There were no financial liabilities of the Group and the Bank at the end of the reporting period that were measured at fair value. 319 for the Year Ended 31 December 2021 (Continued) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.2 Valuation of financial instruments at fair value Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Group 2021 Financial investments   at fair value through   profit or loss Government investment   issues Islamic redeemable   convertible preference   shares Quoted shares 695,939695,939 -695,939 - 213,200213,200 -213,200 66,89366,89366,893 - - 976,032976,032 66,893909,139 - Financial investments   at fair value through   other comprehensive   income Islamic debt securities Government investment   issues Government sukuk Khazanah sukuk Cagamas sukuk Unquoted shares 5,036,3725,036,372 -5,036,372 5,550,2525,550,252 8,709,4948,709,494 156,319156,319 1,256,5021,256,502 72,77972,779 -5,550,252 -8,709,494 -156,319 -1,256,502 - -72,779 20,781,71820,781,718 -20,708,939 - 72,779 FINANCIAL STATEMENT 318
162. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.2 45.2 Valuation of financial instruments at fair value (continued) Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Valuation of financial instruments at fair value (continued) Group Bank 2020 2021 Financial investments   at fair value through   profit or loss Financial investments   at fair value through   profit or loss Government investment   issues Islamic redeemable   convertible preference   shares Quoted shares 89,942 - 213,200 213,200 - 213,200 144,684 144,684 144,684 - - Government investment   issues Islamic redeemable   convertible preference   shares Quoted shares 447,826 447,826 144,684 303,142 - 89,942 89,942 - Financial investments   at fair value through   other comprehensive   income Islamic debt securities Government investment   issues Government sukuk Khazanah sukuk Cagamas sukuk Unquoted shares 321 for the Year Ended 31 December 2021 (Continued) 45. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 695,939695,939 Level 2 RM’000 Level 3 RM’000 -695,939 - 213,200213,200 -213,200 66,89366,89366,893 - - 976,032976,032 66,893909,139 - Financial investments   at fair value through   other comprehensive   income 4,764,843 4,764,843 - 4,764,843 - 6,034,142 6,034,142 7,703,704 7,703,704 235,038 235,038 1,824,378 1,824,378 57,965 57,965 - 6,034,142 - 7,703,704 - 235,038 - 1,824,378 - - 57,965 Islamic debt securities Government investment   issues Government sukuk Khazanah sukuk Cagamas sukuk Unquoted shares 20,620,07020,620,070 -20,562,105 57,965 5,036,3725,036,372 -5,036,372 5,550,2525,550,252 8,709,4948,709,494 156,319156,319 1,256,5021,256,502 72,77172,771 -5,550,252 -8,709,494 -156,319 -1,256,502 - -72,771 20,781,71020,781,710 -20,708,939 - 72,771 FINANCIAL STATEMENT 320
163. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.2 45.2 Valuation of financial instruments at fair value (continued) Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Bank FINANCIAL STATEMENT Financial investments   at fair value through   profit or loss The following table shows a reconciliation of the opening and closing amounts of Level 3 financial instruments which are recorded at fair value: Group 2021 RM’000 2020 RM’000 Financial investments at fair value through   other comprehensive income Government investment   issues Islamic redeemable   convertible preference   shares Quoted shares 89,942 - 213,200 213,200 - 213,200 144,684 144,684 144,684 - - 447,826 447,826 144,684 303,142 - 89,942 89,942 - Financial investments   at fair value through   other comprehensive   income Valuation of financial instruments at fair value (continued) 2020 Islamic debt securities Government investment   issues Government sukuk Khazanah sukuk Cagamas sukuk Unquoted shares 323 for the Year Ended 31 December 2021 (Continued) Unquoted shares At 1 January Addition of unquoted shares Unrealised gains recognised in other comprehensive income 57,96546,846 100500 14,71410,619 72,77957,965 At 31 December 4,764,843 4,764,843 - 4,764,843 - Bank 2021 RM’000 2020 RM’000 Financial investments at fair value through   other comprehensive income 6,034,142 6,034,142 7,703,704 7,703,704 235,038 235,038 1,824,378 1,824,378 57,957 57,957 - 6,034,142 - 7,703,704 - 235,038 - 1,824,378 - - 57,957 Unquoted shares At 1 January Addition of unquoted shares Unrealised gains recognised in other comprehensive income 57,95746,838 100500 14,71410,619 20,620,06220,620,062 -20,562,105 57,957 72,77157,957 At 31 December FINANCIAL STATEMENT 322
164. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.3 45.3 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) Set out below is a comparison of the carrying amount and fair value of financial instruments that are not measured at fair value in the financial statements. Carrying Carrying amount Fair value amount Fair value 2021202120202020 RM’000RM’000RM’000RM’000 Group Financial assets FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) Cash and short-term funds 835,189835,189981,636981,636 Deposits and placements with   financial institutions 672,463672,463277,275277,275 Financial investments at amortised cost 10,826,85010,682,828 9,747,86510,015,027 Financing and advances 77,296,43779,026,32076,083,19880,859,140 Trade receivables 909909147147 Other receivables and deposits 586,519586,519877,475877,475 Financial liabilities Deposits from customers 86,523,88486,383,29285,575,43185,456,346 Deposits and placements from   banks and financial institutions 850,000850,000150,000150,000 Recourse obligations on financing   sold to Cagamas 318,311303,095339,826309,115 Debt securities issued 3,297,9403,261,5972,642,5582,678,020 Trade payables 1,8391,8391,3741,374 Cashline facility 700,417700,417400,870400,870 Other liabilities1,697,0221,697,0221,599,9621,599,962 325 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) Carrying Carrying amount Fair value amount Fair value 2021202120202020 RM’000RM’000RM’000RM’000 Bank Financial assets Cash and short-term funds 834,987834,987981,180981,180 Deposits and placements with   financial institutions 672,463672,463277,275277,275 Financial investments at amortised cost 10,826,85010,682,828 9,747,86510,015,027 Financing and advances 77,516,58179,246,46476,285,36581,061,307 Other receivables and deposits 550,709550,709840,168840,168 Financial liabilities Deposits from customers 86,523,88486,383,29285,575,43185,456,346 Deposits and placements from   banks and financial institutions 850,000850,000150,000150,000 Recourse obligations on financing   sold to Cagamas 318,311303,095339,826309,115 Debt securities issued 3,297,9403,261,5972,642,5582,678,020 Cashline facility 700,417700,417400,870400,870 Other liabilities1,884,2601,884,2601,811,5361,811,536 FINANCIAL STATEMENT 324
165. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.3 45.3 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) Group Group 2021 2020 Financial assets Financial assets Cash and short-term funds Deposits and placements   with financial institutions Financial investments   at amortised cost:   Government sukuk   Government    investment issues    Islamic debt securities   Khazanah sukuk   Cagamas sukuk   Negotiable Islamic    debt certificates Financing and advances Trade receivables Other receivables   and deposits 835,189835,189 - -835,189 672,463672,463 - -672,463 3,170,8723,137,762 -3,137,762 - 6,925,9036,816,254 453,758449,496 100,040102,220 76,34977,168 -6,816,254 -449,496 -102,220 -77,168 - 99,92899,928 77,296,43779,026,320 909909 586,519586,519 90,218,36791,804,228 327 for the Year Ended 31 December 2021 (Continued) 45. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) - - - -99,928 -79,026,320 -909 - -586,519 -10,582,90081,221,328 Cash and short-term funds Deposits and placements   with financial institutions Financial investments   at amortised cost:   Government sukuk   Government    investment issues    Islamic debt securities   Khazanah sukuk   Cagamas sukuk   Negotiable Islamic    debt certificates Financing and advances Trade receivables Other receivables   and deposits Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 981,636 981,636 - - 981,636 277,275 277,275 - - 277,275 2,923,692 3,006,919 - 3,006,919 - 5,480,409 554,095 240,070 449,617 5,644,698 563,610 245,127 454,691 - - - - 5,644,698 563,610 245,127 454,691 - 99,982 99,982 76,083,198 80,859,140 147 147 - - - - 99,982 - 80,859,140 - 147 877,475 877,475 - - 877,475 87,967,59693,010,700 - 9,915,04583,095,655 85,575,431 - - - - 150,000 - -303,095 -3,261,597 - -1,839 - -700,417 - -1,697,022 Deposits from customers Deposits and placements   from banks and   financial Institutions Recourse obligations   on financing sold   to Cagamas Debt securities issued Trade payables Cashline facility Other liabilities - 3,261,59789,935,665 90,710,02190,595,687 Financial liabilities Carrying amount RM’000 Financial liabilities Deposits from customers Deposits and placements   from banks and   financial Institutions Recourse obligations   on financing sold   to Cagamas Debt securities issued Trade payables Cashline facility Other liabilities 86,523,88486,383,292 93,389,41393,197,262 850,000850,000 318,311303,095 3,297,9403,261,597 1,8391,839 700,417700,417 1,697,0221,697,022 - -86,383,292 - -850,000 85,456,346 150,000 150,000 339,826 309,115 2,642,558 2,678,020 1,374 1,374 400,870 400,870 1,599,962 1,599,962 85,456,346 - - 309,115 - 2,678,020 - - 1,374 - - 400,870 - - 1,599,962 - 2,678,02087,917,667 FINANCIAL STATEMENT 326
166. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.3 45.3 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) Carrying amount RM’000 Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) Bank Bank 2021 2020 Financial assets Financial assets Cash and short-term funds Deposits and placements   with financial institutions Financial investments   at amortised cost:   Government sukuk   Government    investment issues    Islamic debt securities   Khazanah sukuk   Cagamas sukuk   Negotiable Islamic    debt certificates Financing and advances Other receivables   and deposits 834,987834,987 - -834,987 672,463672,463 - -672,463 3,170,8723,137,762 -3,137,762 - 6,925,9036,816,254 453,758449,496 100,040102,220 76,34977,168 -6,816,254 -449,496 -102,220 -77,168 - 99,92899,928 77,516,58179,246,464 550,709550,709 90,401,59091,987,451 329 for the Year Ended 31 December 2021 (Continued) 45. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) - - -99,928 -79,246,464 - -550,709 -10,582,90081,404,551 Cash and short-term funds Deposits and placements   with financial institutions Financial investments   at amortised cost:   Government sukuk   Government    investment issues    Islamic debt securities   Khazanah sukuk   Cagamas sukuk   Negotiable Islamic    debt certificates Financing and advances Other receivables   and deposits Fair value RM’000 Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 981,180 981,180 - - 981,180 277,275 277,275 - - 277,275 2,923,692 3,006,919 - 3,006,919 - 5,480,409 554,095 240,070 449,617 5,644,698 563,610 245,127 454,691 - - - - 5,644,698 563,610 245,127 454,691 - 99,982 76,285,365 99,982 81,061,307 - - - - 99,982 81,061,307 - - 840,168 840,168 840,168 88,131,85393,174,957 - 9,915,04583,259,912 85,575,431 - - - - 150,000 - -303,095 -3,261,597 - -700,417 - -1,884,260 Deposits from customers Deposits and placements   from banks and   financial Institutions Recourse obligations   on financing sold   to Cagamas Debt securities issued Cashline facility Other liabilities - 3,261,59790,121,064 90,920,22190,805,887 Financial liabilities Carrying amount RM’000 Financial liabilities Deposits from customers Deposits and placements   from banks and   financial Institutions Recourse obligations   on financing sold   to Cagamas Debt securities issued Cashline facility Other liabilities 86,523,88486,383,292 93,574,81293,382,661 850,000850,000 318,311303,095 3,297,9403,261,597 700,417700,417 1,884,2601,884,260 - -86,383,292 - -850,000 85,456,346 150,000 150,000 339,826 309,115 2,642,558 2,678,020 400,870 400,870 1,811,536 1,811,536 85,456,346 - - 309,115 - 2,678,020 - - 400,870 - - 1,811,536 - 2,678,02088,127,867 FINANCIAL STATEMENT 328
167. ANNUAL REPORT 2021 BANK KERJASAMA RAKYAT MALAYSIA BERHAD Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED) 45.3 45.3 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments: 45.3.1 Cash and short-term funds The carrying amounts of cash and short-term funds approximate fair values due to the relatively short maturity of the financial instruments. This is similar to deposits and placements with financial institutions maturing within one month that have relatively short maturity period. 45.3.2 Deposits and placements with financial institutions The fair values of deposits and placements with financial institutions are not materially sensitive to changes in market profit rate because of their limited term to maturity. FINANCIAL STATEMENT Notes to the Financial Statements for the Year Ended 31 December 2021 (Continued) 45.3.3 Financial investments at amortised cost Financial investments at amortised are carried at amortised cost at the end of the reporting period. Fair values for these financial instruments are estimated based on broker quotes from Bond Pricing Agency Malaysia. 45.3.4 Financing and advances Financing and advances are carried at amortised cost at the end of the reporting period. Fair valuation of these financial instruments are estimated based on discounted payment to be received in the future using effective profit rate offered for similar financing at the reporting date. 45.3.5 Trade and other receivables  The carrying amounts of trade and other receivables reported in the statements of financial position approximate their fair values due to the relatively short-term maturity of these instruments. 45.3.6 Deposits from customers The fair values of deposits payable on demand (demand and savings deposits), or deposits with remaining maturity of less than one year are estimated to approximate their carrying amounts. The fair values of deposits with remaining maturities of more than one year are estimated using discounted cash flows based on effective profit rates for similar deposits from customers at the reporting date. However, since all deposits received can be classified as Islamic deposits, their fair values are deemed to approximate their carrying amounts as profit rates are determined at the end of the maturity period based on the sharing of profits generated from investments of the deposits. 331 Valuation of financial instruments not carried at fair value (but fair value disclosures are required) (continued) 45.3.7 Deposits and placements from banks and financial institutions The fair values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments. 45.3.8 Recourse obligations on financing sold to Cagamas The fair values for recourse obligations sold to Cagamas that have remaining maturity of less than one year are estimated to approximate their carrying amounts. For remaining maturity of more than one year, they are estimated using discounted cash flows based on prevailing Cagamas rates at the reporting date. 45.3.9 Debt securities issued Debt securities issued are measured at amortised cost at the end of the reporting period. The fair value of the securities are derived by referring to the present value of the expected amount due in the future by applying the effective profit rate for the debt securities at the reporting date. 45.3.10 Trade and other liabilities  The carrying amounts of trade and other liabilities reported in the statements of financial position approximate their fair values due to the relatively short-term maturity of these instruments. FINANCIAL STATEMENT 330
168. Connection Every beautiful painting is produced through the effort , diligence and precision of the artist. Every sweat we shed charts our capabilities as the No. 1 Progressive Islamic Cooperative Bank through the banking facilities provided.
169. ANNUAL REPORT 2021 Corporate Office and Branches 334 CORPORATE OFFICE BANK RAKYAT Menara 1 Menara Kembar Bank Rakyat No . 33, Jalan Rakyat, KL Sentral 50470 Kuala Lumpur Tel : 03-2612 9600 ADDITIONAL INFORMATION AND DIRECTORY BRANCHES REGION OFFICE (PERLIS/KEDAH/ PULAU PINANG) No. 66, Level 2, Jalan Langgar 05460 Alor Setar, Kedah ARAU No. 6, 8 & 10, Jalan Pauh Taman Pauh Utama 02600 Pekan Pauh, Perlis KANGAR No. 13, Jalan Hospital 01000 Kangar, Perlis Website : www.bankrakyat.com.my Tele-Rakyat : 1-300-80-5454 International Call : +603-5526 9000 i-Rakyat : www.irakyat.com.my Facebook/Twitter/Instagram : /myBankRakyat LANGKAWI No. 28 & 29, Jalan Mahawangsa 1 Langkawi Blvd 07000 Langkawi, Kedah MERGONG No. 7 & 8, Tuanku Haminah Business Centre Mergong 05150 Alor Setar, Kedah PENDANG Lot 9-11, Pendang Square 06700 Pendang, Kedah SUNGAI PETANI No. 21 & 22, Jalan Jati 1/11 Pusat Perniagaan Amanjaya 08000 Sungai Petani, Kedah ALOR SETAR No. 66, Jalan Langgar 05460 Alor Setar, Kedah BAYAN BARU No. 49, 51 & 53, Block H Persiaran Mahsuri 1/3 Sunway Avenue 11950 Bayan Baru, Pulau Pinang BALING Tingkat Bawah, Bangunan UMNO Pekan Baru 09100 Baling, Kedah BUKIT MERTAJAM No. 22 & 24, Jalan Perda Selatan Bandar Perda 14000 Bukit Mertajam, Pulau Pinang GURUN No. 19 C & 19 D, Jalan Sungai Petani 08300 Gurun, Kedah GEORGETOWN No. 137, Jalan Magazine 10300 Georgetown, Pulau Pinang JITRA No. 247 & 248, Jalan PJ 2/2 Pekan Jitra 2 06000 Jitra, Kedah JAWI No. 56 & 58, Jalan Jawi Jaya 1 Taman Jawi Jaya Seberang Perai Selatan 14200 Sungai Jawi, Pulau Pinang KUALA NERANG No. 32-33 Pekan Baru Jalan Semeliang 06300 Kuala Nerang, Kedah KULIM No. 203 & 204, Jalan Lunas Taman Seluang, Kelang Lama 09000 Kulim, Kedah JELUTONG No. 13 & 13A, Metro Avenue Jelutong Express Way 11600 Pulau Pinang 335 Corporate Office and Branches KEPALA BATAS No. 8, Jalan Dagangan 2 Pusat Bandar Bertam Perdana 13200 Kepala Batas, Pulau Pinang TANJUNG MALIM Lot 27 & 29, Jalan Permai 1 Taman Ketoyong Permai 2 35900 Tanjung Malim, Perak MELAWATI No. G-2 & G-3, Melawati Corporate Centre Taman Melawati 53100 Kuala Lumpur SEBERANG JAYA No. 1, Tingkat Bawah & 1, Jalan Todak 1 Pusat Bandar Seberang Jaya 13700 Perai, Pulau Pinang TAPAH No. 56 & 57, Jalan Besar 35000 Tapah, Perak PETALING JAYA No. 1-1, Jalan 14/22 Wisma Federal Academy Ballet 46100 Petaling Jaya, Selangor REGION OFFICE (PERAK) No. 47B, Jalan Meru Bestari A2 Medan Meru Bestari 30020 Ipoh, Perak TELUK INTAN No. 187, Jalan Intan 5, Bandar Baru 36000 Teluk Intan, Perak REGION OFFICE (SELANGOR) BAGAN SERAI No. 132, Jalan Setia, Pusat Bandar 34300 Bagan Serai, Perak No. 9 & 11, Level 3 Jalan Tuanku Ampuan Zabedah H/9H Seksyen 9 40000 Shah Alam, Selangor GREENTOWN No. 8 & 10, Jalan Greentown 5 Greentown Nova 30450 Ipoh, Perak AMPANG No. 2, Jalan Dagang 1/1A Taman Dagang 68000 Ampang, Selangor GRIK No. 1, Jalan Indah 1 33600 Grik, Perak BANDAR BARU BANGI No. 37 & 39 Jalan Medan Pusat 2D, Seksyen 9 43650 Bandar Baru Bangi, Selangor KUALA KANGSAR No. 1 & 2, Bangunan Bank Rakyat Jalan Daeng Selili 33000 Kuala Kangsar, Perak MANJUNG No. 41, 43 & 45, Persiaran PM 3/2 Seri Manjung City Centre, Section III 32040 Seri Manjung, Perak MEDAN GOPENG No. 37 & 39, Medan Gopeng 1 Jalan Raja Dr Nazrin Shah Peti Surat 494 30750 Ipoh, Perak MERU RAYA No. 42 & 44, Jalan Meru, Impian A1 Meru Impian Business Centre Bandar Meru Raya 30010 Ipoh, Perak SERI ISKANDAR No. 24 & 26, Jalan Maju Satu Taman Maju, Bandar Sri Iskandar 32610 Bandar Seri Iskandar, Perak TAIPING Lot 2478 & 2482, Jalan Berek 34000 Taiping, Perak BANDAR BARU KLANG No. 2, Lorong Tiara 1B Bandar Baru Klang 41150 Klang, Selangor BANTING No. 239, Jalan Sultan Abdul Samad 42700 Banting, Selangor CYBERJAYA Unit F03 & F03A, Fasa 1 Glomac Cyberjaya, Persiaran APEC 63000 Cyberjaya, Selangor KAJANG No. 18 & 19, Jalan Jelok 3 Off Jalan Bukit Kajang 43000 Kajang, Selangor KELANA JAYA Ground Floor, Wisma Sekatarakyat Glomac Business Centre Jalan SS 5/1, Kelana Jaya 47301 Petaling Jaya, Selangor KUALA SELANGOR No. 2, Jalan Bendahara 1/1 Bandar Bendahara 45000 Kuala Selangor, Selangor PJ STATE No. 11 & 13 Jalan Yong Shook Lin, Seksyen 52 46200 Petaling Jaya, Selangor PORT KLANG No. 2 & 4, Harbour Point Commercial Centre, Jalan Sungai Aur 42000 Port Klang, Selangor PUCHONG No. 28 & 30, Jalan Puteri 4/2 Bandar Puteri 47100 Puchong, Selangor RAWANG No. 73, Jalan Bandar Rawang 2 Pusat Bandar Rawang 48000 Rawang, Selangor SEKSYEN 23, SHAH ALAM No. 23 & 25, Jalan Pelabur B/23B Seksyen 23 40300 Shah Alam, Selangor SERDANG RAYA No. C1-00-28, Seksyen 9, Jalan SR 1/9 Taman Serdang Raya 43300 Seri Kembangan, Selangor SHAH ALAM No. F30 & F31 Vista Alam Jalan Ikhtisas 14/1 40000 Shah Alam, Selangor SUBANG PERDANA No. 39, Jalan Dinar GU 3/G Seksyen U3, Taman Subang Perdana 40150 Shah Alam, Selangor SUNGAI BESAR No. A12 & A13, Jalan Menteri 45300 Sungai Besar, Selangor SUNGAI BULOH Lot 91 & 93, Pusat Commercial TSB Jalan Nautika A U20/A Seksyen U20, Sungai Buloh 40160 Shah Alam, Selangor TANJONG KARANG No.1&3, Jalan Makmur 1 Taman Makmur, Batu 7 45500, Tanjong Karang, Selangor USJ, SUBANG JAYA No. 22 & 24, Jalan USJ 9/5Q, UEP 47600 Subang Jaya, Selangor REGION OFFICE (KUALA LUMPUR/ PUTRAJAYA) Tingkat 6, No. 140 Bangunan Bank Rakyat, Jalan Ipoh 51200 Kuala Lumpur BANGSAR BARU No. 60 & 62 Tingkat Bawah 1 & 2, Jalan Maarof 59100 Bangsar Baru, Kuala Lumpur BANDAR TUN RAZAK No. G11, G12, 01-11 & 01-12 Wisma Zelan, Bandar Tun Razak 56000 Kuala Lumpur DESA PANDAN No. 33 & 35 Jalan 1/76 Desa Pandan 55100 Kuala Lumpur DESA SRI HARTAMAS Lot B-02 & B-03, Galeria Hartamas Jalan 26/70A, Desa Seri Hartamas 50480 Kuala Lumpur GLO DAMANSARA Level G.01, G.01AL Aras Bawah, GLO Damansara Jalan Damansara 60000 Kuala Lumpur JALAN IPOH, KL No. 140, Bangunan Bank Rakyat Jalan Ipoh 51200 Kuala Lumpur JALAN PINANG, KL No. 19-1-1 Tingkat Bawah & 19-1-1A Mezzanine Floor, UOA Centre No. 19 Jalan Pinang 50450 Kuala Lumpur JALAN TANGSI, KL Tingkat Bawah, Bangunan Bank Rakyat Jalan Tangsi 50732 Kuala Lumpur KEPONG No. 11 & 15, Jalan Rimbunan Raya 1 Laman Rimbunan Raya 1 Laman Rimbunan 52100 Kepong, Kuala Lumpur ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
170. ANNUAL REPORT 2021 ADDITIONAL INFORMATION AND DIRECTORY 336 Corporate Office and Branches PRESINT 15 , PUTRAJAYA No. 22 & 24, Jalan Diplomatik 3/1 Presint 15 62050 Putrajaya MELAKA Bangunan Bank Rakyat Jalan Hang Tuah, Peti Surat No. 354 75760 Melaka JOHOR BAHRU Podium 2, Unit 2B, Menara Ansar No. 65, Jalan Trus, Peti Surat 112 80000 Johor Bahru, Johor REGION OFFICE (PAHANG/TERENGGANU/ KELANTAN) PUTRAJAYA Ayer @ 8, Lot 3 & 3A, Blok B8C1 Jalan P8G, Presint 8 62250 Putrajaya BAHAU No. 25 & 27, Jalan Ara 1 Pusat Perniagaan Ara 72100 Bahau, Negeri Sembilan KLUANG No. 27 & 29, Jalan Md Lazim Saim 86000 Kluang, Johor No. 25 & 26, Tingkat 4 Bazar Maidam, Jalan Masjid Abidin 20100 Kuala Terengganu, Terengganu SELAYANG Tingkat Bawah, Blok B, KIP Tower Jalan Kuching 68100 Kuala Lumpur KUALA PILAH Lot No. 3803 & 3804 Jalan Dato’ Muar, Ulu Muar 70000 Kuala Pilah, Negeri Sembilan KOTA TINGGI No. 24 & 26, Jalan Jaya 1 Taman Jaya 81900 Kota Tinggi, Johor BANDAR INDERA MAHKOTA No. B 56 & B 58, Persiaran Sultan Abu Bakar, Bandar Indera Mahkota 25000 Kuantan, Pahang SETAPAK No. 13, Plaza KLTS Kuala Lumpur Traders Square Block A, Jalan Gombak 53000 Kuala Lumpur LUKUT No. 137 & 138, Jalan D8 1/11 Bandar Dataran Segar, Lukut 71010 Port Dickson, Negeri Sembilan KULAI No. 4 & 5, Jalan Anggerik Satu Taman Kulai Utama 81000 Kulai, Johor BENTONG No. P18 & P19 Jalan Prima 1, Bentong Prima 28700 Bentong, Pahang LABIS No. 4A & 4B Jalan Segamat 85300 Labis, Johor BERA No. 13, 15 & 17, Jalan Angsana 1 Taman Angsana, Bandar Bera 28200 Bera, Pahang SHAMELIN No. 68-1-1 & 68-1-2, Jalan 4/91 Dataran Shamelin Taman Shamelin Perkasa 56100 Kuala Lumpur UTAMA, MKBR Tingkat Bawah Menara Kembar Bank Rakyat No. 33, Jalan Rakyat, KL Sentral 50470 Kuala Lumpur REGION OFFICE (MELAKA/NEGERI SEMBILAN) No. 4-5 & 6-5, Tingkat 5, Jalan KC 1 Kota Cemerlang 75450 Ayer Keroh, Melaka NILAI PT 332, Jalan BBN 1/1A Pusat Bandar Putra Point 71800 Nilai, Negeri Sembilan SENAWANG No. 156 & 157, Blok L Senawang Commercial Park 70450 Seremban, Negeri Sembilan SEREMBAN Bangunan Bank Rakyat, Lot 5750 Jalan Tuanku Munawir, Peti Surat 70 70000 Seremban, Negeri Sembilan TAMPIN No. 1135 Taman Seri Intan 73000 Tampin, Negeri Sembilan REGION OFFICE (JOHOR) AYER KEROH No. G-4 & G-6, Jalan KC 1 Kota Cemerlang 75450 Ayer Keroh, Melaka Lot 1610, Indahwalk 2 Jalan Indah 15-2 Bukit Indah 81200 Johor Bahru, Johor JASIN No. JA 9943 Bandar Baru Jasin III 77000 Jasin, Melaka BATU PAHAT No. 3 & 4, Jalan Maju Barat Taman Maju, Bukit Pasir 83000 Batu Pahat, Johor MASJID TANAH MT 2893-2895 Jalan Taman Bandar Baru Utama Taman Bandar Baru Masjid Tanah 78300 Masjid Tanah, Melaka DAMANSARA ALIFF No. 57 & 59, Jalan Aliff 4 Taman Damansara Aliff 81200 Johor Bahru, Johor 337 Corporate Office and Branches MASAI No. 31, Jalan Suria 3 Bandar Seri Alam 81750 Masai, Johor MERSING No. 345 F & 345 G Jalan Ismail 86800 Mersing, Johor JENGKA Lot 92, Jalan Zamrud Nadi Kota 26400 Bandar Jengka, Pahang JERANTUT No. 1, Jalan Pine 1, Taman Pine 27000 Jerantut, Pahang DUNGUN Lot PT 12447 & 12448 Taman Saujana, Sura Gate 23000 Dungun, Terengganu GONG BADAK No. 1, 2 & 3, Taman Tanjung Permata Kampung Gong Badak Jalan Batu Rakit 21300 Kuala Terengganu, Terengganu JERTIH Lot 4123 & 4124, Jalan Pasar Bandar Jertih 22000 Jertih, Terengganu KEMAMAN Lot K12086 & K12087 Jalan Kubang Kurus 24000 Kemaman, Terengganu KERTEH Lot PT14507, 14508 & 14509 Kampung Baru, Mukim Kerteh 24300 Kerteh, Terengganu KUALA BERANG Lot PT 11282 & 11283, Batu 23 Jalan Kuala Berang 21700 Kuala Berang, Terangganu MACHANG Lot 90-92 Bangunan Usahasama Sentosa Jaya Dev. Sdn Bhd, Jalan Bakat 18500 Machang, Kelantan PASIR MAS Lot PT 315 & PT 316 Wisma Majlis Daerah Pasir Mas Jalan Pasir Pekan 17000 Pasir Mas, Kelantan TANAH MERAH Lot PT 237 & PT 238 Bandar Tanah Merah 17500 Tanah Merah, Kelantan WAKAF CHE YEH No. J-105 & J-106 Zon Komersial Wakaf Che Yeh 15050 Kota Bharu, Kelantan REGION OFFICE (SARAWAK) Tingkat 2 Blok E, Sentosa Parade KCLD, Jalan Kucing-Serian 93250 Kuching, Sarawak MUAR No. 222, Jalan Abdullah 84000 Muar, Johor KUALA LIPIS Lot 2891, Jalan BBKL, 2-3-1 No. 2-3-1, Bandar Baru Kuala Lipis 27200 Kuala Lipis, Pahang KUALA TERENGGANU No. 8 & 9 Pusat Niaga Paya Keladi Jalan Paya Keladi 20000 Kuala Terengganu, Terengganu BINTULU Lot 22 & 23, Commerce Square Jalan Tun Ahmad Zaidi 97000 Bintulu, Sarawak NUSAJAYA No. 21, Jalan Indah 15/2 Taman Bukit Indah 81200 Johor Bahru, Johor KUANTAN No. G-15, Mahkota Square Jalan Mahkota 25000 Kuantan, Pahang MARANG Lot 8996 & 8997 Kompleks Komersial Marang 21600 Marang, Terengganu KAPIT Lot 542 & 543 Wisma Ngieng Ping Toh Jalan Airport 96800 Kapit, Sarawak PONTIAN No. 11, Jalan Delima 2 Pusat Perdagangan Pontian 82000 Pontian, Johor MUADZAM SHAH No. 117, 118 & 119 Jalan Medan Mewah 7, Medan Mewah 26700 Bandar Muadzam Shah, Pahang GUA MUSANG Lot PT 7841 & PT 7842 Jalan Persiaran Raya, Taman Mesra 18300 Gua Musang, Kelantan SEGAMAT No. 123 & 124, Jalan Genuang 85000 Segamat, Johor PEKAN No. G-1, Bangunan UMNO Pekan Jalan Teng Quee 26600 Pekan, Pahang KOTA BHARU Lot 206 & 207, Jalan Pengkalan Chepa 15400 Kota Bharu, Kelantan TAMAN UNIVERSITI, SKUDAI No. 14 & 16, Jalan Pendidikan 8 Taman Universiti 81300 Skudai, Johor YONG PENG No. 5 & 6, Jalan Tropika Utama 4 Taman Bukit Tropika 83700 Yong Peng, Johor RAUB No. 25 & 26 Bandar Raub Perdana, Jalan Lipis 27600 Raub, Pahang TEMERLOH No. 7 & 9, Jalan Sudirman 2 Bandar Sri Semantan 28000 Temerloh, Pahang KUALA KRAI No. PT 5572 & PT 5573 KM 2, Jalan Kuala Krai - Gua Musang 18000 Kuala Krai, Kelantan KUBANG KERIAN Lot PT 1709 & 1710 Jalan Raja Perempuan Zainab 2 Bandar Baru Kubang Kerian 16150 Kubang Kerian, Kelantan KOTA SENTOSA Tingkat Bawah & 1 Block E, Sentosa Parade KCLD, Jalan Kucing-Serian 93250 Kuching, Sarawak KOTA SAMARAHAN Lot 18 & 19 Uni Capital Commercial Centre Kuching/Kota Samarahan Express Way 94300 Kota Samarahan, Sarawak ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
171. ANNUAL REPORT 2021 338 LIMBANG Lot 11 & 12, Limbang Town District Jalan Pandaruan 98700 Limbang, Sarawak MATANG JAYA No. 3 & 4, Taman Lee Ling Commercial Centre, Jalan Matang 93050 Kuching, Sarawak MIRI Lot 1111 & 1112 Bangunan Tabung Baitulmal Sarawak Pelita Commercial Central 98000 Miri, Sarawak ADDITIONAL INFORMATION AND DIRECTORY Ar-Rahnu X’Change Corporate Office and Branches MUKAH No. 1152 & 1153, Blok C Mukah Town Extension Phase II 96400 Mukah, Sarawak PERMY JAYA Lot 6131 & 6132, Pusat Bandar Fasa 6 Bandar Baru Permy Jaya 98000 Miri, Sarawak SARIKEI No. 22 & 22A, Lorong Tun Razak 1 96100 Sarikei, Sarawak SATOK Lot 504, Section 6 KTLD, Jalan Kulas Tengah 93400 Kuching, Sarawak SIBU Lot 12 E & 12 F, Blok 4 Jalan Kampung Datu 96000 Sibu, Sarawak SIMPANG TIGA Tingkat Bawah & 1, No. 9 & 10 Blok 16, KCLD, Jalan Tun Jugah 93350 Kuching, Sarawak SRI AMAN Lot 1467 & 1468 Seksyen 3 S.T.D, Jalan Hospital 95000 Sri Aman, Sarawak REGION OFFICE (SABAH) Tingkat 5, Blok B, Harbour City Lot 20 & 21, Jalan Pantai Baru Sembulan 88000 Kota Kinabalu, Sabah KOTA BELUD Lot 3 & 4, Block E Yick Ming Commercial Centre 89157 Kota Belud, Sabah KOTA MARUDU No. 6 & 7, WTK Phase 2 89108 Kota Marudu, Sabah LABUAN Unit No. E001, Tingkat Bawah Financial Park Labuan Complex Jalan Merdeka 87000 Wilayah Persekeutuan, Labuan LAHAD DATU Lot 27 & 28, Block D, Airport Plaza Fajar Centre, Jalan Segama 91100 Lahad Datu, Sabah KENINGAU Lot 7 & 8, Blok C Keningau Plaza, Peti Surat 910 89008 Keningau, Sabah LIKAS No. 1, Block A, Plaza Juta Jalan Tuaran 88400 Kota Kinabalu, Sabah PENAMPANG No. 49 & 50, Block H Donggongan Square, Penampang 89500 Kota Kinabalu, Sabah PUTATAN Lot 5 & 6, Tapak Putatan Baru Jalan Putatan 88300 Kota Kinabalu, Sabah SANDAKAN Lot 4 & 5, Fasa 2 Sandakan Square, Jalan Prayer 90000 Sandakan, Sabah SEMPORNA Lot D2 & A19, Jalan Bubul Bandar Utama Semporna 91308 Semporna, Sabah TAWAU TB 4615-4617 Pusat Komersial Ba Zhong Jalan Tawau Lama 91000 Tawau, Sabah KEDAH AR-RAHNU X'CHANGE CHANGLUN No. 61-B, Pekan Baru Jalan Kodiang 06010 Changlun, Kedah AR-RAHNU X'CHANGE LANGKAWI No. 66, Persiaran Dayang 1 Pusat Perniagaan Dayang 07000 Langkawi, Kedah AR-RAHNU X'CHANGE MERGONG No. 19, Lorong Putih 9 Taman Rakyat Mergong 05150 Alor Setar, Kedah PERAK KOTA KINABALU Lot 20 & 21, Blok B, Harbour City Jalan Pantai Baru, Sembulan 88000 Kota Kinabalu AR-RAHNU X'CHANGE BATU GAJAH No. 5, Tingkat Bawah Jalan Dewangsa 31000 Batu Gajah, Perak BEAUFORT Lot 21 & 22, Block C At Commercial Lot New Beaufort Jaya Near Beaufort Bridge 89800 Beaufort, Sabah AR-RAHNU X'CHANGE SITIAWAN No. 25, Tingkat Bawah Taman Sentosa, Jalan Lumut 32000 Sitiawan, Perak AR-RAHNU X'CHANGE TELUK INTAN Jalan Selat 36000 Teluk Intan, Perak AR-RAHNU X'CHANGE TAIPING No. 31, Tingkat Bawah Susur Simpang Jalan Kg. Dew 34700 Simpang, Perak SELANGOR AR-RAHNU X'CHANGE AMPANG No. 6-G, Tingkat Bawah Jalan Dagang 1/1A Taman Dagang 68000 Ampang, Selangor AR-RAHNU X'CHANGE BALAKONG No. 7G, Jalan Cheras Maju Pusat Perniagaan Cheras Maju 43200 Balakong, Selangor AR-RAHNU X'CHANGE MELAWATI No. G-1, Melawati Corporate Centre Taman Melawati 53100 Kuala Lumpur AR-RAHNU X'CHANGE SHAH ALAM No. 9 & 11 Jalan Tuanku Ampuan Zabedah H/9H Seksyen 9 40000 Shah Alam, Selangor AR-RAHNU X'CHANGE BATANG KALI No. 37, Jalan Mahogani 7/1, Seksyen 4 Bandar Utama Batang Kali 44300 Batang Kali, Selangor WILAYAH PERSEKUTUAN AR-RAHNU X'CHANGE JALAN RAKYAT Tingkat GB, Menara 1 Menara Kembar Bank Rakyat No. 33, Jalan Rakyat, KL Sentral 50470 Kuala Lumpur AR-RAHNU X'CHANGE SENTUL No. 22, Jalan 14/48 A Sentul Raya Boulevard 51000 Kuala Lumpur NEGERI SEMBILAN AR-RAHNU X'CHANGE REMBAU No. 990, Tingkat Bawah, Jalan Terentang 71300 Rembau, Negeri Sembilan MELAKA AR-RAHNU X'CHANGE MELAKA SENTRAL No. 24, Jalan Cempaka 1 Taman Seri Cempaka Peringgit 75400 Melaka AR-RAHNU X'CHANGE SUNGAI UDANG No. 2, Tingkat Bawah, Jalan Pahlawan 7 Taman Pahlawan 76300 Sungai Udang, Melaka JOHOR AR-RAHNU X'CHANGE KLUANG No. 22, Tingkat Bawah, Jalan Pesona 2 Taman Pesona 86000 Kluang, Johor AR-RAHNU X'CHANGE MASAI No. 16, Jalan Sejambak 14 Taman Bukit Dahlia 81700 Pasir Gudang, Johor 339 AR-RAHNU X'CHANGE MUAR No. 25-2, Jalan Majidi 84000 Muar, Johor AR-RAHNU X'CHANGE TANGKAK No. 9, Tingkat Bawah & Mezzanine Jalan Muar 84900 Tangkak, Johor AR-RAHNU X'CHANGE ULU TIRAM No. 1, Jalan Ledang 25 Taman Bukit Tiram 81800 Ulu Tiram, Johor PAHANG AR-RAHNU X'CHANGE KUANTAN No. 43A, Ground Floor, Jalan Haji Abdul Aziz 25000 Kuantan, Pahang TERENGGANU AR-RAHNU X'CHANGE KEMAMAN Kedai Ar-Rahnu Kemaman No. 22, Jalan Sulaimani Chukai 24000 Kemaman, Terengganu KELANTAN AR-RAHNU X'CHANGE JELAWAT Lot 164, Pekan Jelawat 16070 Bachok, Kelantan AR-RAHNU X'CHANGE KOTA BHARU Tingkat Bawah, Lot PT 68 Bangunan Yamud Jalan Kebun Sultan 15350 Kota Bharu, Kelantan SARAWAK AR-RAHNU X'CHANGE SATOK Lot 497, Seksyen 6 KTLD Jalan Kulas Tengah 93400 Kuching, Sarawak ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
172. ANNUAL REPORT 2021 340 Rakyat Xcess and Ar-Rahnu X ’Change KEDAH AR-RAHNU X’CHANGE ALOR SETAR No. 33 & 34, Jalan SPK 1 Pekan Simpang Kuala 05400 Alor Setar, Kedah AR-RAHNU X’CHANGE SUNGAI PETANI No. 21-F, Jalan Ibrahim 08000 Sungai Petani, Kedah ADDITIONAL INFORMATION AND DIRECTORY AR-RAHNU X’CHANGE SIK No. 1A & 1B, Susur Alamanda 2 Pusat Perniagaan Alamanda 08200 Sik, Kedah RAKYAT XCESS ALOR SETAR No. 33 & 34, Jalan SPK 1 Pekan Simpang Kuala 05400 Alor Setar, Kedah RAKYAT XCESS SUNGAI PETANI No. 21-F, Jalan Ibrahim 08000 Sungai Petani, Kedah RAKYAT XCESS SIK No. 1A & 1B, Susur Alamanda 2 Pusat Perniagaan Alamanda 08200 Sik, Kedah PERAK AR-RAHNU X’CHANGE KAMPAR No. 7 & 8, Jalan Siswa 3 Taman Siswa 31900 Kampar, Perak AR-RAHNU X’CHANGE SUNGAI SIPUT No. 15, Jalan Ipoh 31100 Sungai Siput (U), Perak RAKYAT XCESS KAMPAR No. 7 & 8, Jalan Siswa 3 Taman Siswa 31900 Kampar, Perak RAKYAT XCESS SUNGAI SIPUT No. 15, Jalan Ipoh 31100 Sungai Siput (U), Perak SELANGOR AR-RAHNU X’CHANGE BANDAR TASIK PUTERI No. 69-G & 1, Jalan 7A/3 Bandar Tasik Puteri 48020 Rawang, Selangor AR-RAHNU X’CHANGE BANGI Lot 1.01, Tingkat Bawah Wisma UNIKEB 43609 Bangi, Selangor AR-RAHNU X’CHANGE BERANANG No. 27-G & 1, Jalan TPS 2/1 Taman Pelangi Semenyih 2 43700 Beranang, Selangor AR-RAHNU X’CHANGE SAUJANA UTAMA No. 1-G-52, Jalan Bidara 6/3 Saujana Utama 3 47000 Sungai Buloh, Selangor RAKYAT XCESS BANDAR TASIK PUTERI No. 69-G, Jalan 7A/3 Bandar Tasik Puteri 48020 Rawang, Selangor RAKYAT XCESS BANGI Lot 1.01, Tingkat Bawah Wisma UNIKEB 43609 Bangi, Selangor RAKYAT XCESS BERANANG No. 27-G, Jalan TPS 2/1 Taman Pelangi Semenyih 2 43700 Beranang, Selangor RAKYAT XCESS SAUJANA UTAMA No. 1-G-50, Jalan Bidara 6/3 Bandar Saujana Utama 47000 Sungai Buloh, Selangor NEGERI SEMBILAN AR-RAHNU X’CHANGE GEMAS Lot 4642, Tingkat Bawah, Pekan Gemas 73400 Gemas, Negeri Sembilan AR-RAHNU X’CHANGE ENSTEK No. 78-1 & 78-2 Mercato Jalan Timur 6/1B, Bandar Enstek 71800 Bandar Enstek, Negeri Sembilan RAKYAT XCESS GEMAS Lot 4642, Tingkat Bawah, Pekan Gemas 73400 Gemas, Negeri Sembilan RAKYAT XCESS ENSTEK No. 78-1 & 78-2 Mercato Jalan Timur 6/1B, Bandar Enstek 71800 Bandar Enstek, Negeri Sembilan JOHOR AR-RAHNU X’CHANGE BENUT No. 40, Tingkat Bawah, Jalan Mutiara 4 Pusat Perniagaan Benut 82200 Pontian, Johor AR-RAHNU X’CHANGE PARIT RAJA No. 53, Jalan Universiti 1 Taman Universiti, Parit Raja 86400 Batu Pahat, Johor RAKYAT XCESS BENUT No. 39, Tingkat Bawah, Jalan Mutiara 4 Pusat Perniagaan Benut 82200 Pontian, Johor 341 Rakyat Xcess and Ar-Rahnu X’Change PAHANG AR-RAHNU X’CHANGE MENTAKAB No. 119, Tingkat Bawah Jalan Temerloh 28400 Mentakab, Pahang AR-RAHNU X’CHANGE KUALA ROMPIN No. 70 & 71, Jalan Pasar Bandar Baru Rompin 26800 Kuala Rompin, Pahang RAKYAT XCESS MENTAKAB No. 121, Tingkat Bawah Jalan Temerloh 28400 Mentakab, Pahang RAKYAT XCESS KUALA ROMPIN No. 70 & 71, Jalan Pasar Bandar Baru Rompin 26800 Kuala Rompin, Pahang TERENGGANU AR-RAHNU X’CHANGE CHABANG TIGA No. 2 & 3, Tingkat Bawah Wisma KY, Kg. Chabang 3 Simpang Tok Ku 21000 Kuala Terengganu, Terengganu RAKYAT XCESS CHABANG TIGA No. 2 & 3, Tingkat Bawah Wisma KY, Kg. Chabang 3 Simpang Tok Ku 21000 Kuala Terengganu, Terengganu RAKYAT XCESS PARIT RAJA No. 52, Jalan Universiti 1 Taman Universiti, Parit Raja 86400 Batu Pahat, Johor KELANTAN AR-RAHNU X’CHANGE JELI Lot 6491, Tingkat Bawah & Atas Hadapan Balai Bomba & Penyelamat Taman Haji Hamat 17600 Jeli, Kelantan RAKYAT XCESS JELI Lot 6491, Tingkat Bawah & Atas Hadapan Balai Bomba & Penyelamat Taman Haji Hamat 17600 Jeli, Kelantan SARAWAK AR-RAHNU X’CHANGE BETONG Tingkat 1, SL 8, Lot 1936 Bandar Baru Betong Phase 1 95700 Betong, Sarawak AR-RAHNU X’CHANGE LUNDU Tingkat 1, No. 76 Lundu Bazaar 94500 Lundu, Sarawak AR-RAHNU X’CHANGE SERIAN Lot 1401 & 1402 Tingkat Bawah Blok 9, STLD, Jalan Serian By-Pass Serian Jaya Commercial Centre 94700 Serian, Sarawak AR-RAHNU X’CHANGE SEBUYAU Lot 120 Pasar Sebuyau 94850 Sebuyau, Sarawak RAKYAT XCESS LUNDU Tingkat Bawah, No. 76 Lundu Bazaar 94500 Lundu, Sarawak RAKYAT XCESS SERIAN Lot 1401 & 1402 Tingkat Bawah Blok 9, STLD, Jalan Serian By-Pass Serian Jaya Commercial Centre 94700 Serian, Sarawak RAKYAT XCESS SEBUYAU Lot 120 Pasar Sebuyau 94850 Sebuyau, Sarawak RAKYAT XCESS BETONG Tingkat Bawah, SL 8, Lot 1936 Bandar Baru Betong Phase 1 95700 Betong, Sarawak Rakyat Xcess NEGERI SEMBILAN RAKYAT XCESS SEREMBAN 2 No. 115, Tingkat Bawah Jalan S2 F2, Garden Homes Seremban 2 70000 Seremban, Negeri Sembilan JOHOR RAKYAT XCESS BUKIT GAMBIR No. 6, Jalan Gambir 5 Pusat Komersil Gambir 84800 Bukit Gambir, Johor RAKYAT XCESS LARKIN PERDANA No. 61, Susur Larkin Perdana 1 Persiaran Larkin Perdana Taman Larkin Perdana 81100 Johor Bahru, Johor PAHANG RAKYAT XCESS CAMERON HIGHLANDS No. 6-1, Marigold Square Tanah Rata 39000 Cameron Highlands, Pahang ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
173. ANNUAL REPORT 2021 Bank Rakyat Service Agents 342 PERLIS KOPERASI UNIMAP PERLIS (KOUNIMAP) BERHAD No. 8, 10 dan 12, Jalan M.U. Satu Medan Universiti 02600 Arau, Perlis Tel : 019-481 5686 ADDITIONAL INFORMATION AND DIRECTORY KOPERASI GURU-GURU MELAYU PERLIS BERHAD No. 11, Jalan Syed Saffi 01000 Kangar, Perlis Tel : 04-976 5282 Fax : 04-976 5096 KEDAH KOPERASI GURU-GURU MELAYU KEDAH BERHAD (KGMKB) Menara Guru Persiaran Sultan Abdul Hamid 05050 Alor Setar, Kedah Tel : 04-777 3373 Fax : 04-771 1215 KOPERASI PASAR MINGGUAN GUAR CHEMPEDAK BERHAD No. 3, Level 1, Bangunan Arked 08800 Guar Chempedak, Kedah Tel : 04-468 1697 Fax : 04-468 1697 KOPERASI PEKEBUN KECIL DAERAH KUBANG PASU BERHAD No. 167, Jalan Hosba 7 Taman Sri Hosba KM 18, Lebuhraya Utara-Selatan Pekan Napoh 06000 Jitra, Kedah Tel : 04-917 2172 KOPERASI PESERTA-PESERTA RANCANGAN FELCRA PULAU BELANTIK SIK BERHAD Felcra Pulau Belantik, Kota Aur 08210 Sik, Kedah Tel : 04-752 1440 KOPERASI UNIVERSITI UTARA MALAYSIA (UUM) BERHAD Pejabat Urusan, No. 66, Tingkat 1 Pekan Changlun 2 06010 Changlun, Kedah Tel : 04-928 5507 Fax : 04-924 2539 KOPERASI INSTITUT PERGURUAN SULTAN ABDUL HALIM SUNGAI PETANI KEDAH BERHAD Institut Perguruan Sultan Abdul Halim Jalan Kuala Ketil 08000 Sungai Petani, Kedah Tel : 04-421 8621 Fax : 04-421 8582 PULAU PINANG KOPERASI GURU AGAMA KERAJAAN NEGERI PULAU PINANG BERHAD No. 2640, Tingkat 1 Taman Haji Ahmad Jamil Tasek Gelugor 13300 Seberang Perai, Pulau Pinang Tel : 04-575 9566 Fax : 04-575 9566 KOPERASI KOLEJ KEMAHIRAN TINGGI BALIK PULAU BERHAD Jalan Genting 11000 Balik Pulau, Pulau Pinang Tel : 04-866 5805 Fax : 04-866 5741 KOPERASI PEKERJA PRASARANA MALAYSIA BERHAD Block 228A-2-1, Fortune Court Bandar Baru Farlim, Jalan Thean Teik 11400 Pulau Pinang Tel : 04-827 9006 Fax : 04-829 6007 KOPERASI POS DAN TELEKOM PULAU PINANG BERHAD No. 80, Jalan Rangoon 10400 Georgetown, Pulau Pinang Tel : 04-226 1346 Fax : 04-227 1346 KOPERASI UNIVERSITI SAINS MALAYSIA (USM) BERHAD Universiti Sains Malaysia 11800 Minden, Pulau Pinang Tel : 04-653 3888 Fax : 04-657 5688 343 Bank Rakyat Service Agents PERAK KOPERASI BINA BERSAMA KAMPONG GAJAH PERAK BERHAD No. 14A, Medan Koperasi 36800 Kampong Gajah, Perak Tel : 05-631 1368 Fax : 05-631 1368 KOPERASI KAKITANGAN KERAJAAN HULU PERAK BERHAD No. 8281, Tingkat Bawah Jalan Suda Bahagia Jalan Sultan Iskandar 33300 Grik, Perak Tel : 05-791 1887 Fax : 05-791 1887 KOPERASI PESERTA-PESERTA RANCANGAN FELCRA SEBERANG PERAK BERHAD Lot 4271, Co-op Business Centre (CBC) Lebuh Paduka Bandar Seberang Perak 36800 Kampung Gajah, Perak Tel : 05-655 8101 Fax : 05-655 8100 KOPERASI SELAMA PERAK BERHAD Lot No. 4, Jalan Besar Selama 34100 Selama, Perak Tel : 05-839 4532 Fax : 05-839 2940 KOPERASI BUKIT SEMANGGOL BERHAD No. 16, Jalan Besar Gunung Semanggol 34400 Simpang 4 Semanggol, Perak Tel : 05-890 4320 Fax : 05-890 4320 SELANGOR KOPERASI KAKITANGAN UNIKL MIAT SEPANG BERHAD Lot 2891, Jalan Jenderam Hulu 43800 Dengkil, Selangor Tel : 03-8768 0804 Fax : 03-8768 8485 KOPERASI KAKITANGAN UNIVERSITI TEKNOLOGI MARA (UiTM) BERHAD No. B13-2, Jalan Lazuardi 7/9, Seksyen 7 40000 Shah Alam, Selangor Tel : 03-5519 5912 Fax : 03-5513 0540 KOPERASI MEMBELI DAN MEMBUKA TANAH SERI CHEEDING BERHAD Lot 6665, Jalan Merak Kampung Seri Cheeding 42700 Banting, Selangor Tel : 03-3191 4729 Fax : 03-3191 4729 KOPERASI PELABURAN PEKERJA PROTON BERHAD Kedai Koperasi Pelaburan Pekerja Proton Berhad, Seksyen 26 40400 Shah Alam, Selangor Tel : 03-5192 5611 Fax : 03-5102 6148 KOPERASI PENEROKA SUNGAI TENGI BERHAD Bangunan Stesen Minyak BH Petrol Jalan Merdeka Desa Maju Sungai Tengi 44010 Kuala Kubu Bharu, Selangor Tel : 03-6042 1034 Fax : 03-6042 1034 KOPERASI PEMBANGUNAN PEKERJA INDUSTRI SELANGOR BERHAD (KOPEKERJA) Suite 1-17, Jalan Dagang B/3A Taman Dagang 68000 Ampang, Selangor Tel : 03-4270 4331 Fax : 03-4270 7659 KOPERASI PEMBANGUNAN PULAU LUMUT BERHAD No. 24A, Jalan Batu Unjur 1 Bayu Perdana 41200 Klang, Selangor Tel : 03-3324 2728 Fax : 03-3324 2558 KOPERASI TERAS SEMENYIH SELANGOR BERHAD No. 24 & 25, Seksyen 2, Jalan Besar 43500 Semenyih, Selangor Tel : 03-8723 8615 Fax : 03-8723 4479 KOPERASI UNIKEB BERHAD Wisma UNIKEB Universiti Kebangsaan Malaysia 43600 Bangi, Selangor Tel : 03-8925 2540 Fax : 03-8925 7177 KOPERASI UNIVERSITI PUTRA MALAYSIA BERHAD Tingkat 1, Bangunan Pusat Perniagaan Beg Berkunci 260, Pejabat Pos UPM Universiti Putra Malaysia 43400 Serdang, Selangor Tel : 03-8946 7980 Fax : 03-8948 9796 KOPERASI PEGAWAI-PEGAWAI KERAJAAN MALAYSIA BERHAD No. 54G-1, Jalan SS1/22 Kampung Tunku 47300 Petaling Jaya, Selangor Tel : 03-7876 2167 Fax : 03-7876 2167 WILAYAH PERSEKUTUAN KOPERASI KAKITANGAN BANK RAKYAT BERHAD (SEKATARAKYAT) Tingkat 2A, Menara 2 Menara Kembar Bank Rakyat No. 33, Jalan Rakyat, KL Sentral 50470 Kuala Lumpur Tel : 03-2273 3314 Fax : 03-2274 1314 KOPERASI KEDAI BUKU UNIVERSITI MALAYA BERHAD (KKUM) Bangunan Perdana siswa Universiti Malaya Peti Surat 1127, Jalan Pantai Baru 59700 Kuala Lumpur Tel : 03-7956 5000 Fax : 03-7954 7040 KOPERASI PEKERJA FELDA MALAYSIA BERHAD (KOGUNA) No. 2F, Jalan Gurney 54000 Kuala Lumpur Tel : 03-2698 4202 Fax : 03-2693 4511 KOPERASI PEKERJA-PEKERJA BANK MALAYSIA BERHAD (KOBANK) Lot No. 1108-1109B Level 11, Wisma MPL Jalan Raja Chulan 50200 Kuala Lumpur Tel : 03-2031 4933 Fax : 03-2031 7298 KOPERASI SIMPANAN DAN KREDIT BERSATU MALAYSIA BERHAD Suite 10.03, Level 10 The Gardens South Tower Mid Valley City, Lingkaran Syed Putra 59200 Kuala Lumpur Tel : 2282 7233 KOPERASI RANGKAIAN GLOBAL MALAYSIA BERHAD No. 31, Tingkat 1 Jalan Dewan Sultan Sulaiman Satu Off Jalan Tuanku Abdul Rahman 50300 Kuala Lumpur Tel : 013-628 2434 Fax : 03-2697 8305 KOPERASI KEMENTERIAN SUMBER MANUSIA (KOKESUMA) Tingkat 7, Menara PERKESO 281 Jalan Ampang 50450 Kuala Lumpur Tel : 03-4253 1606 Fax : 03-4257 6995 KOPERASI MODAL DAN AMANAH MALAYSIA BERHAD A-G-5, Blok A Glomac Damansara No. 699 Jalan Damansara 60000 Kuala Lumpur Tel : 03-7731 3699 ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
174. ANNUAL REPORT 2021 344 Bank Rakyat Service Agents NEGERI SEMBILAN ADDITIONAL INFORMATION AND DIRECTORY KOPERASI JELAI TIGA GEMAS BERHAD Stesen Minyak Koperasi Kampung Felda Jelai Tiga 73480 Gemas , Negeri Sembilan Tel : 06-434 7495 Fax : 06-434 7495 KOPERASI MELAYU BERJAWATAN KERAJAAN NEGERI SEMBILAN BERHAD (KOMBEK) No. 39 & 40, Wisma Bukti Taman Bukti Ampangan 70400 Seremban, Negeri Sembilan Tel : 06-679 1633 Fax : 06-679 1733 KOPERASI SERBAMAJU DAERAH JEMPOL BERHAD No. 10 (Tingkat Atas), Jalan Beringin 2 72200 Batu Kikir, Negeri Sembilan Tel : 06-454 8621 KOPERASI PEMBANGUNAN MUKIM JOHOL NEGERI SEMBILAN BERHAD No. 82, Jalan Besar Pekan Johol 73100 Johol, Negeri Sembilan Tel : 06-436 9254 Fax : 06-436 9254 MELAKA KOPERASI KAKITANGAN PENJARA MELAKA BERHAD Tingkat Bawah Pasar Mini Koperasi Sekolah Henry Gurney Telok Mas 75450 Melaka Tel : 06-261 7429 Fax : 06-261 9261 JOHOR KOPERASI FELDA LOK HENG TIMUR BERHAD Bangunan Koperasi Felda Lok Heng Timur 81909 Kota Tinggi, Johor Tel : 07-894 7889 Fax : 07-894 7452 KOPERASI KONTRAKTOR DAN USAHAWAN MELAYU LEDANG BERHAD No. 166, Tingkat Bawah, Jalan Muar 84900 Tangkak, Johor Tel : 06-978 3719 Fax : 06-979 1119 KOPERASI GURU-GURU MELAYU PAHANG BARAT BERHAD No. 3C, Tingkat 2, Bangunan KGMPB Kompleks Lipis Inn 27200 Kuala Lipis, Pahang Tel : 09-312 1800 Fax : 09-312 3877 KOPERASI PELABURAN PEKERJAPEKERJA KEJORA BERHAD No. 15, Bangunan Kedai, Pusat Bandar Bandar Penawar 81930 Kota Tinggi, Johor Tel : 07-822 1394 Fax : 07-822 1394 KOPERASI MUKMIN CAMERON HIGHLANDS BERHAD Pejabat Agama Islam Daerah Cameron Highlands, Tanah Rata 39000 Cameron Highlands, Pahang Tel : 05-491 1425 KOPERASI PENULIS DAN PEMBACA MUAR BERHAD TL MBP 115, Parit Raja KM5, Jalan Temenggong Ahmad 84000 Muar, Johor Tel : 06-981 1226 Fax : 06-981 1292 KOPERASI PENEROKA FELDA TEMBANGAU SATU KEMAYAN PAHANG BERHAD Pejabat Koperasi Felda Tembangau Satu 28380 Kemayan, Pahang Tel : 06-468 5406 Fax : 06-468 5406 KOPERASI PERUNDING TAKAFUL IKHLAS MALAYSIA BERHAD No. 3, Jalan Langsat, Peti Surat 142 88000, Kluang, Johor Tel : 07-771 9788 Fax : 07-774 4788 KOPERASI PEMBANGUNAN DAERAH MARAN BERHAD No. 2, Tingkat 2 Bangunan Wisma Pemuda UMNO Jalan Perpustakaan 26500 Maran, Pahang Tel : 019-966 7186 KOPERASI PERBADANAN JOHOR BERHAD Tingkat 11, Bangunan KOMTAR Johor Bahru City Centre (JBCC) 80000 Johor Bahru, Johor Tel : 07-219 2692 Fax : 07-223 3175 KOPERASI PESERTA-PESERTA FELCRA GUGUSAN SRI MAKMUR BERHAD Felcra Sri Makmur 26030 Kuantan, Pahang Tel : 013-973 8878 Fax : 09-546 1040 KOPERASI MITRA USAHAWAN BERHAD No. 12, Jalan Uda Utama 3/15 Bandar Uda Utama 81300 Skudai, Johor Tel : 07-232 5325 Fax : 07-234 3917 KOPERASI SERBAGUNA FELDA KERATONG TIGA BERHAD Felda Keratong Tiga 26900 Bandar Tun Abdul Razak, Pahang Tel : 09-445 7452 Fax : 09-445 7452 PAHANG KOPERASI FELDA SUNGAI KOYAN III RAUB BERHAD Felda Sungai Koyan 3 27650 Raub, Pahang Tel : 09-340 1442 Fax : 09-340 1442 345 Bank Rakyat Service Agents KOPERASI SERBAGUNA FELDA CHINI TIMUR SATU BERHAD Felda Chini Timur Satu, Chini 26690 Pekan, Pahang Tel : 09-457 1266 Fax : 09-457 1266 KOPERASI FELDA SELANCAR DUA ROMPIN BERHAD Felda Selancar 2 26700 Muadzam Shah, Pahang Tel : 09-438 1435 Fax : 09-438 1159 TERENGGANU SABAH KOPERASI COBE PANTAI TIMUR BERHAD No. 102B, Tingkat 2, Bangunan COBE Jalan Tengku Embong Fatimah 20200 Kuala Terengganu, Terengganu Tel : 09-622 2796 Fax : 09-624 1498 KOPERASI ANAK WATAN RANAU BERHAD Blok B, Lot 10, Bangunan Kedai SEDCO 89300 Ranau, Sabah Tel : 088-879 539 Fax : 088-876 073 KOPERASI FELCRA KAWASAN HULU BERANG HULU TERENGGANU BERHAD Lot 3765, Kg Matang Jalan Felda Mengkawang 21800 Ajil, Hulu Terengganu Terengganu Tel : 09-612 4845 KOPERASI PEMBANGUNAN DAERAH SETIU BERHAD Wisma KPD, Bandar Permaisuri 22100 Setiu, Terengganu Tel : 09-609 2333 Fax : 09-609 2332 KELANTAN KOPERASI PEKEBUN KECIL PASIR PUTEH BERHAD Lot 455, Bangunan PKINK, Jalan Nara 16800 Pasir Puteh, Kelantan Tel : 09-786 7302 Fax : 09-786 2717 KOPERASI PENEROKA FELDA KEMAHANG 1 BERHAD Felda Kemahang 1 17500 Tanah Merah, Kelantan Tel : 09-958 2007 Fax : 09-958 4288 KOPERASI PESERTA-PESERTA FELCRA GUGUSAN BUKIT TANDAK KELANTAN BERHAD Pejabat Felcra Berhad Kawasan Bukit Tandak 17200 Rantau Panjang, Kelantan Tel : 013-933 5259 Fax : 09-958 4288 KOPERASI PESERTA-PESERTA RANCANGAN FELCRA GUGUSAN GEMANG BERHAD PT 2103/C, Bandar Baru Bukit Bunga 17700 Air Lanas, Kelantan Tel : 09-946 8799 Fax : 09-946 8513 KOPERASI ANAK WAWASAN KOTA KINABALU BERHAD Lot 3A 34, Level 3 Central Shopping Plaza Jalan Banjaran 88200 Kota Kinabalu, Sabah Tel : 088-254 534 Fax : 088-254 534 KOPERASI BELIA TENOM BERHAD Asia Rasa Bed & Breakfast Jalan Tun Mustafa, W.D.T 32 89907 Tenom, Sabah Tel : 013-851 6198 KOPERASI PEKERJA YAYASAN SABAH BERHAD Lot 7-3, Tingkat 3 Bunga Raja Shopping Complex Lorong Bunga Raja 5, Off Jalan Lintas 88845 Kota Kinabalu, Sabah Tel : 088-389 258 Fax : 088-383 258 KOPERASI SUKAU KINABATANGAN BERHAD Blok C1, Lot 1 Tingkat 1, Wisma Kosuk Berhad Bandar Lubuk Jaya, Batu 7 90000 Sandakan, Sabah Tel : 089-232 960 KOPERASI UNIVERSITI MALAYSIA SABAH BERHAD (KoUMS) Bangunan Pusat Perkhidmatan Pelajar (Anjung Siswa) Universiti Malaysia Sabah 88999 Kota Kinabalu, Sabah Tel : 088-320 714 KOPERASI KOPIS LABUAN BERHAD Court Light Industrial Durian Tunjung P.O. Box 391 87008 Wilayah Persekutuan Labuan Tel : 087-581 011 Fax : 087-583 011 SARAWAK KOPERASI BUMIPUTERA KANOWIT BERHAD Lot 125, Pekan Kanowit 96700 Kanowit, Sarawak Tel : 019-865 2539 KOPERASI DAERAH JULAU BERHAD Lot 42, Jalan Lim Ah Din 96600 Julau, Sarawak Tel : 019-817 5566 Fax : 084-734 299 KOPERASI KOPERKASA BERHAD (KOPERKASA) No. 16-19, Wisma KOPERKASA Jalan Simpang Tiga 93300 Kuching, Sarawak Tel : 082-415 611 Fax : 082-231 650 KOPERASI PERDAGANGAN DAN PERINDUSTRIAN BARAM MIRI BERHAD Lot 337, Pasar Marudi 98050 Baram, Sarawak Tel : 019-856 1461 Fax : 085-75 6526 KOPERASI SARATOK BERHAD Lot 379, Stesen Minyak Petronas Saratok Town District 95400 Saratok, Sarawak Tel : 083-438 385 KOPERASI SINARAN LAWAS BERHAD Batu 1/4, Jalan Punang 98850 Lawas, Sarawak Tel : 085-284 340 ADDITIONAL INFORMATION AND DIRECTORY BANK KERJASAMA RAKYAT MALAYSIA BERHAD
175. BANK KERJASAMA RAKYAT MALAYSIA BERHAD 346 SME & Cooperative (SMEC) Business Centre SME & COOPERATIVE BUSINESS CENTRE MELAKA/NEGERI SEMBILAN Unit 4-3, Tingkat Tiga Jalan KC 1, Kota Cemerlang 75450 Air Keroh, Melaka Tel : 06-231 0498 ADDITIONAL INFORMATION AND DIRECTORY SME & COOPERATIVE BUSINESS CENTRE KUALA LUMPUR/PUTRAJAYA Tingkat 15, Menara 2 Menara Kembar Bank Rakyat No 33. Jalan Rakyat, KL Sentral 50470 Kuala Lumpur Tel : 03-2600 4751 SME & COOPERATIVE BUSINESS CENTRE SELANGOR No. 9 & 11, Tingkat 1 Jalan Tengku Ampuan Zabedah, U9/9H Seksyen 9 40000 Shah Alam, Selangor Tel : 03-5519 8427 SME & COOPERATIVE BUSINESS CENTRE KEDAH/PERLIS/PULAU PINANG No. 21 & 22, Tingkat 2, Jalan Jati 1/1 Pusat Perniagaan Amanjaya 08000 Sungai Petani, Kedah Tel : 04-441 2565 SME & COOPERATIVE BUSINESS CENTRE KELANTAN/TERENGGANU Tingkat 1 & 2, PT 1711 Jalan Raja Zainab 2 Bandar Baru Kubang Kerian 16150 Kota Bahru, Kelantan Tel : 09-697 3116 SME & COOPERATIVE BUSINESS CENTRE PERAK No. 61, Tingkat Bawah & Tingkat 1 Lengkok Kledang Raya Taman Kledang Raya 30100 Ipoh, Perak Tel : 05-526 3758 SME & COOPERATIVE BUSINESS CENTRE SABAH Lot 5 & 6, Tapak Putatan Baru Jalan Putatan 88300 Kota Kinabalu, Sabah Tel : 088-487 623 SME & COOPERATIVE BUSINESS CENTRE SARAWAK Block E Tower, Lot No. 1654 (SL46) Sentosa Parade Block 46 Kuching Central Land District 7th Mile, Jalan Penrissen 93250 Kuching, Sarawak Tel : 082-237 159 SME & COOPERATIVE BUSINESS CENTRE JOHOR No. 63, Tingkat 1 Susur Larkin Perdana 1 Persiaran Lakin Perdana Taman Larkin Perdana 81100 Johor Bahru, Johor Tel : 07-232 1931 SME & COOPERATIVE BUSINESS CENTRE PAHANG No. 43A, Jalan Haji Abdul Aziz 25000 Kuantan, Pahang Tel : 09-573 2037
176. www .bankrakyat.com.my BANK KERJASAMA RAKYAT MALAYSIA BERHAD (Reg No.2192) Menara 1, Menara Kembar Bank Rakyat No. 33, Jalan Rakyat, KL Sentral, 50470 Kuala Lumpur