Common use of Basis of preparation Clause in Contracts

Basis of preparation. (Continued) The following MFRSs and IC Interpretations have been issued by the MASB and are not yet effective: Presentation of Items of Other Comprehensive income (Amendments to MFRS 101) MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (as amended by IASB in June 2011) MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) Amendments to MFRSs contained in the documents entitled "Annual Improvements 2009-2011 Cycle" Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10, MFRS 11 and MFRS 12) MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) IC Interpretation 20 will not have any financial impact to the Group as it is not relevant to the Group's operations. The financial effects of the above MFRSs and Amendments to MFRSs are still being assessed due to the complexity of these new MFRSs and Amendments to MFRSs, and their proposed changes. During the financial period, the Islamic banking subsidiary company of the Group adopted the Guidelines on Profit Equalisation Reserve issued by Bank Negara Malaysia, which addresses the management of displaced commercial risk by Islamic banking institutions. A discussion of the financial effects of adoption of these guidelines is provided in Note A30 Changes in Accounting Policies.

Basis of preparation. (Continued) IC Interpretation 20 is not applicable to the Group and the Bank as it is not relevant to the Group's operations. Government Loans (Amendments to MFRS 1) has no financial impact to the Group and the Bank as the Group and the Bank do not hold any government grants or receive any government assistance. The adoption of all the other MFRSs and amendments to MFRSs did not have any financial impact to the Group and the Bank. With effect from 1 January 2013, the Group and the Bank have adopted the Bank Negara Malaysia's Capital Adequacy Framework (Capital Components and Basel II - Risk-weighted Assets) ("the Framework") issued on 28 November 2012. This Framework outlines the general requirements on regulatory capital adequacy ratios, the components of eligible regulatory capital as well as the levels of those ratios at which banking institutions are required to operate. The Framework has been developed based on internationally agreed standards on capital adequacy promulgated by the Basel Committee on Banking Supervision. Under the Framework, the minimum capital adequacy ratios are progressively increased from 1 January 2013 to 1 January 2019, and includes a phased introduction of a new capital conservation buffer of 2.5%. Additional capital requirements, including a new counter-cyclical buffer ranging from 0% to 2.5% will be detailed out at a later stage. On 28 June 2013, Bank Negara Malaysia issued policy documents on Financial Reporting and Financial Reporting for Islamic Banking Institutions (“Policy Documents”) to replace the Guidelines on Financial Reporting for Banking Institutions and Guidelines on Financial Reporting for Islamic Banking Institutions (BNM/GP8-i) respectively. The Policy Documents set minimum expectations for the application of the MFRSs and aim to ensure adequate disclosures in the financial statements of banking institutions. The Bank and the Domestic banking subsidiaries of the Group have adopted the Policy Documents with effect from 30 June 2013. There is no financial impact from the adoption of the Policy Documents. Since the adoption of the Policy Documents only affect disclosures in the financial statements, there is no impact on the financial results of the Group and the Bank. The following MFRSs and IC Interpretations Amendments to MFRSs have been issued by the MASB and but are not yet effectiveeffective to the Group and the Bank: Presentation of Items of Other Comprehensive income (Amendments to MFRS 101) MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (as amended by IASB in June 2011) MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) Amendments to MFRSs contained in the documents entitled "Annual Improvements 2009-2011 Cycle" Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10, MFRS 11 and MFRS 12) MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) Investment Entities (Amendments to MFRS 10, MFRS 12 and MFRS 127) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) IC Interpretation 20 will Mandatory Effective Date of MFRS 9 and Transition Disclosures (Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009), MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7) MFRS 9 introduces significant changes in the way the Group accounts for financial instruments. Due to the complexity of this standard and its proposed changes, the financial effects of its adoption are still being assessed by the Group. The adoption of Amendments to MFRS 132 is not expected to have any financial impact to the Group and the Bank as the current practice for offsetting arrangements remained unchanged. The adoption of Amendments to MFRS 10, MFRS 12 and MFRS 127 is not expected to have any financial impact to the Group as it the Bank is not relevant to the Group's operations. The financial effects of the above MFRSs and Amendments to MFRSs are still being assessed due to the complexity of these new MFRSs and Amendments to MFRSs, and their proposed changes. During the financial period, the Islamic banking subsidiary company of the Group adopted the Guidelines on Profit Equalisation Reserve issued by Bank Negara Malaysia, which addresses the management of displaced commercial risk by Islamic banking institutions. A discussion of the financial effects of adoption of these guidelines is provided an investment entity as defined in Note A30 Changes in Accounting PoliciesMFRS 10.

Basis of preparation. (Continued) IC Interpretation 20 is not applicable to the Group and the Bank as it is not relevant to the Group's operations. Government Loans (Amendments to MFRS 1) has no financial impact to the Group and the Bank as the Group and the Bank do not hold any government grants or receive any government assistance. The adoption of all the other MFRSs and amendments to MFRSs did not have any financial impact to the Group and the Bank. With effect from 1 January 2013, the Group and the Bank have adopted the Bank Negara Malaysia's Capital Adequacy Framework (Capital Components and Basel II - Risk-weighted Assets) ("the Framework") issued on 28 November 2012. This Framework outlines the general requirements on regulatory capital adequacy ratios, the components of eligible regulatory capital as well as the levels of those ratios at which banking institutions are required to operate. The Framework has been developed based on internationally-agreed standards on capital adequacy promulgated by the Basel Committee on Banking Supervision. Under the Framework, the minimum capital adequacy ratios are progressively increased from 1 January 2013 to 1 January 2019, and includes a phased introduction of a new capital conservation buffer of 2.5%. Additional capital requirements, including a new counter-cyclical buffer ranging from 0% to 2.5% will be detailed out at a later stage. The following MFRSs and IC Interpretations Amendments to MFRSs have been issued by the MASB and but are not yet effectiveeffective to the Group and the Bank: Presentation of Items of Other Comprehensive income (Amendments to MFRS 101) MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (as amended by IASB in June 2011) MFRS 127 Separate Financial Statements (as amended by IASB in May 2011) MFRS 128 Investments in Associates and Joint Ventures (as amended by IASB in May 2011) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) Amendments to MFRSs contained in the documents entitled "Annual Improvements 2009-2011 Cycle" Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to MFRS 10, MFRS 11 and MFRS 12) MFRS 127 Consolidated and Separate Financial Statements (IAS 27 Consolidated and Separate Financial Statements revised by IASB in December 2003) Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132) Investment Entities (Amendments to MFRS 10, MFRS 12 and MFRS 127) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) IC Interpretation 20 will Mandatory Effective Date of MFRS 9 and Transition Disclosures (Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009), MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7) MFRS 9 introduces significant changes in the way the Group accounts for financial instruments. Due to the complexity of this standard and its proposed changes, the financial effects of its adoption are still being assessed by the Group. The adoption of Amendments to MFRS 132 is not expected to have any financial impact to the Group and the Bank as the current practice for offsetting arrangements remained unchanged. The adoption of Amendments to MFRS 10, MFRS 12 and MFRS 127 is not expected to have any financial impact to the Group as it the Bank is not relevant to the Group's operations. The financial effects of the above MFRSs and Amendments to MFRSs are still being assessed due to the complexity of these new MFRSs and Amendments to MFRSs, and their proposed changes. During the financial period, the Islamic banking subsidiary company of the Group adopted the Guidelines on Profit Equalisation Reserve issued by Bank Negara Malaysia, which addresses the management of displaced commercial risk by Islamic banking institutions. A discussion of the financial effects of adoption of these guidelines is provided an investment entity as defined in Note A30 Changes in Accounting PoliciesMFRS 10.