Annual Report Laporan Tahunan
Annual Report
2008
Vision & Mission Statement VISION To be the leading banking and financial group in Brunei Darussalam
MISSION As a truly local entity in Brunei Darussalam, the Group is committed to provide innovative and comprehensive financial products and services to the Bruneian community
Contents Vision and Mission Statement Chairperson’s Statement Corporate Information 2008 Key Financial Figures 2008 Corporate Highlights - Business Highlights - Operations Management - Human Resource Development - Corporate Social Responsibility Financial Statements - Report of the Directors - Independent Auditors’ Report - Balance Sheets - Profit and Loss Statements - Statements of Changes in Equity - Cash Flow Statements - Notes to Financial Statements Offices, Branches and ATM Network
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Chairperson’s Statement Compared to 2007, Baiduri Finance increased its net income by 19.44% to BND 43 million. Net profit after tax reached BND 16 million, an increase of 45.45% over the previous year. Baiduri Finance maintained its position as the market leader in automobile financing. DEVELOPMENTS IN 2008 In 2008, we focused on organizational development and product enhancement with emphasis on investment products. Upgrading Facilities
On behalf of the Board of Directors, I am pleased to present the Annual Report and Accounts of Baiduri Bank Berhad for the financial year ending 31st December 2008. GLOBAL FINANCIAL CRISIS The Year 2008 has been a difficult year for the global economy. What started as a sub-prime crisis in the U.S.A. eventually deepened into a global economic recession of unprecedented dimensions. This recession is expected to continue through 2009. Fortunately, in spite of a sharp decline in oil and gas prices, Brunei’s domestic economy has been relatively unaffected.
We continued to upgrade our facilities in order to serve our customers better. In February 2008, we opened the Loan Centre in Kiarong, providing centralized processing of retail loans for speedier approval. During the second half of the year, we set up the Business Services Centre in Kiarong, consolidating three departments in one, thus providing centralized operational support for all departments within Baiduri Bank Group. In December 2008, we moved our subsidiary Baiduri Finance to new premises in Beribi, bringing it closer to the automobile district. We opened an adjacent branch of Baiduri Bank for the convenience of our corporate customers. Technological Development We continued developing technology. We upgraded our IT operations; we consolidated the Data Centre and Information System teams and relocated them under one roof to a new state-ofthe-art Data Centre in Kiarong. Enhancing Products and Customer Experience Under Wealth Management, we introduced Structured Deposits and other investment products to diversify what we were offering to customers.
SATISFACTORY FINANCIAL RESULTS In an unfavourable international environment, however, the Baiduri Bank Group was still able to expand its business and achieve satisfactory financial results. Both Baiduri Bank and Baiduri Finance, its wholly-owned subsidiary, contributed to this. In 2008, Baiduri Bank recorded a net income of BND 110 million against BND 82 million in 2007, an increase of 34%. Profit after tax amounted to BND 28 million, an increase of 10.67% over the previous year. 4
Baiduri Bank Annual Report 2008
The second Baiduri Expo with the theme “Saving for a Brighter Future” was held in June at the International Convention Centre, showcasing products and services of the Baiduri Bank Group with an emphasis on savings and investment. Free financial health checks and consultations were provided to customers. The Baiduri Prestige programme held several lifestyle activities for its members in 2008. We continued to develop our specialized and structured lending services to small, medium
Chairperson’s Statement and large corporate customers in support of the country’s economic diversification objectives. Baiduri Bank continued to make special efforts to assist the growth of local small businesses under its various SME programmes with private and government bodies as partners.
people of Brunei, we plan the following in 2009: •
The upgrading of premises and facilities as part of our ongoing large-scale improvement project;
HUMAN RESOURCES
•
The provision of new techniques to assist our customers in line with the most up-to-date standards of information technology;
Over the years, we have stressed the importance of staff development. In 2008, the first batch of 13 employees underwent studies leading to the Diploma in Financial Planning. Regular training and seminars were organized in order to improve service quality and operating processes.
•
The widening of our range of products especially in Retail Banking, to make them better adapted to the needs and expectations of our customers;
•
The continued enhancement of our staff’s performance, especially in providing customer services by undertaking professional studies in financial planning.
CORPORATE SOCIAL RESPONSIBILITY Baiduri Bank has been an active and regular supporter of local charities, such as Pusat Ehsan, Child Development Centre and SMARTER. The Baiduri Masters, our annual golf event organized to raise funds for charity, remains the biggest golfing event in Brunei. We also offer education grants to deserving children from less-privileged families to help them achieve their educational goals. In support of community education, Baiduri Bank has sponsored the World Blood Donor Day and Universal Children’s Day annually. AWARDS For the sixth time in seven years, Baiduri Bank won the Bank of the Year Award for Brunei from The Banker magazine, UK in November 2008.
APPRECIATION On behalf of the Board of Directors, I would like to express our appreciation to the Government of His Majesty the Sultan and Yang Di-Pertuan. I also wish to thank our shareholders and our valued clients for their continued support and confidence. Without our customers, we would not have become the award-winning local bank we are today. In conclusion, I wish to record Baiduri Bank’s appreciation to the management and staff for their hard work and much-valued contributions to a highly successful year.
ECONOMIC OUTLOOK A large part of the Brunei economy has traditionally been driven by public spending and development projects. Major projects currently underway in the Sungai Liang Industrial Park, increased activities in the oil and gas industries, housing resettlement and other projects will generate activities which will contribute to fuelling the economic growth in Brunei. We are confident that Brunei will not be adversely affected by the uncertain global economic situation in 2009.
YTM Pengiran Anak Isteri Pengiran Anak Hajah Zariah Chairperson
OUR PLAN FOR 2009 In line with our global strategy to develop innovative products for our Bruneian customers, and to focus on customer service and efficiency with the aim of bringing the highest of quality services to the Baiduri Bank Annual Report 2008
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Corporate Information Corporate Information SHAREHOLDERS Baiduri Holdings Bhd Royal Brunei Airlines Sdn Bhd Royal Brunei Technical Services Sdn Bhd BNP Paribas BOARD OF DIRECTORS
YTM Pg Anak Isteri Pg Anak Hajah Zariah Binti Almarhum Pg Pemancha Pg Anak Haji Mohamed Alam (Chairperson)
YAM Pengiran Muda Abdul Qawi
YB Pehin Orang Kaya Pekerma Dewa Dato Seri Setia Awang Lim Jock Seng
Francis Caze
6 46
YM Dato Paduka Timothy Ong Teck Mong
Hj Amir Hamzah Hj Hanafi
Claude De Kemoularia
Bertie Cheng Shao Shiong
Baiduri Bank Annual Report 2008 Baiduri Bank Annual Report 2007
Corporate Information MANAGEMENT COMMITTEE
(L to R) Seated: Yvonne Chan, Pierre Imhof, Raymond Bariou, Veronica Chong (L to R) Standing: Pg Azaleen Bin Pg Mustapha, Ti Eng Hui, Hj Haliluddin Bin Dato Hj Talib, Andrew Young
Pierre Imhof Raymond Bariou Ti Eng Hui Andrew Young Chee Ann Hj Haliluddin Bin Dato Hj Talib Yvonne Chan Eng Pheng Pg Azaleen Bin Pg Mustapha Veronica Chong Nyet Hwa
General Manager Senior Deputy General Manager Deputy General Manager, Retail Banking & Branch Network Deputy General Manager, Operations General Manager, Baiduri Finance Senior Manager, Corporate Banking Senior Manager, Treasury Senior Manager, Personnel & Finance
Baiduri Bank Annual Report 2008
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Corporate Information AWARDS AND ACCOLADES Baiduri Bank won the Bank of the Year Brunei award from The Banker magazine, UK, in 2002, 2003, 2004, 2006 2007 and 2008. The Bank also won in the Marketing, PR or Brand Management Project category of the Asian Banking Awards consecutively in 2004 and 2005. In February 2008, Baiduri Bank received a Special Citation for FAST, the revolutionary mobile suite of services at the Financial Insights Innovation Awards.
The award ceremony for Bank of the Year 2008 took place at the Dorchester Hotel, London on 26th November 2008. Mr Pierre Imhof (2nd left), General Manager and Mr Ti Eng Hui, Deputy General Manager, Retail Banking and Branch Network (2nd right) received the award on behalf of the Bank
Baiduri Bank’s FAST won a Special Citation for Innovation at the Financial Insights Innovation Awards held in Singapore on 29th February 2008. Mr Sim Kiem Lee, Cheif Technology Officer, Baiduri Bank (centre) receiving the plaque from Mr Cort Isemhagen, Vice President of the IDG Group (right)
Baiduri Bank’s wholly-owned subsidiary, Baiduri Finance obtained the internationally recognized ISO9001:2000 quality certification in 2003. In 2007, the Bank’s Credit Administration Department became the first department within the Bank to have achieved this prestigious recognition. These two units remain the only two bodies within the banking and finance sector in Brunei certififed to ISO 9001.
AUDITORS Deloitte and Touche CORPORATE SECRETARIAL SERVICE PROVIDER Deloitte & Touche Management Services Pte Ltd
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Baiduri Bank Annual Report 2008
Baiduri Bank Annual Report 2007
2008 Key Financial Figures OPERATING RESULTS
Year Ended December 31 2008 2007
(B$ in thousands, except per share information)
For the Year Revenue (1) Net Income Return on assets Return on shareholders’ equity Shares issued and paid (in millions)
135,054 110,415 1.42% 22.20% 100,000
109,710 82,052 1.28% 23.89% 60,000
1,961 738 1,623 125
1,973 7.30 1,526 106
At Year End Total Assets Total Loans and advances (net) Total deposits Total shareholders’ equity
Contents Includes interest and non-interest income, excludes interest expenses
(1)
TOTAL REVENUE (GROUP - 2008) ($'000)
Hire Purchase & Leasing B$58,177 Consumer & Commercial Banking B$98,572
Others B$21,695
Baiduri Bank Annual Report 2008
9
2008 Key Financial Figures Group Customer Deposits
3000
2500
2500
2000
2000
1500 B$Mil
B$Mil
Group Assets
1500 1000
1000 500
500
0
0 2005
2006
2007
2005
2008
2006
Group Customer Loans (net)
2008
Group Shareholders’ Funds
1600
160
1400
140
1200
120
1000
100 B$Mil
B$Mil
2007
Years
Years
800 600
136.71 119.3 95.06
83
80 60
400
40
200
20
0 2005
2006
2007
0
2008
2005
2006
Years
2007
2008
Years
Capital Adequacy Ratios (Bank) Group Net Profit After Tax 31.34
30
25.806
B$Mil
25 18.763
20 15
10.227
10 5 0 2005
2006
2007
% 15.00 14.00 13.00 12.00 11.00 10.00 9.00 8.00 7.00 6.00 5.00 2005
2008
2006
2007
Years
Total Capital
Group Return On Total Assets
24.5
140 22.6
120 14.8
100 80
14.0
2007
2008
0
77.7
2006
64.7
20
2005
2006
Years
2007
2008
Years Net Interest Income
Baiduri Bank Annual Report 2008
90.0
60 40
2005
10
Tier 1
Group Total Income
B$'Mil
% 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30
2008
Years
110.4
35
Non-Interest Income
2008 Corporate Highlights
Baiduri Bank Annual Report 2008
Business Highlights Corporate Banking Division In 2008, the Corporate Banking Division participated in pioneering and innovative corporate financing schemes for a number of leading companies in the oil and gas, aviation and telecommunications industries. This included a syndicated finance scheme with other leading international banks to finance a tanker and a major national housing project. For the fifth year in 2008, Baiduri Bank continued to work hand-in-hand with Brunei Shell Petroleum, Brunei Economic Development Board and Asia Inc Forum on an SME partnership programme aimed to continuously nurture and groom Brunei SME’s through business awards, networking gathering, business forums and workshops. Under the Enterprise Facilitation Scheme and the Micro-Credit Scheme, both in collaboration with the Ministry of Industry and Primary Resources, Baiduri Bank has since 2001, been providing assistance to local entrepreneurs to give them a head start in their business. Retail Banking Division The setting up of a new Loan Centre in Kiarong in February 2008 provided centralized processing of retail loans, thus helping achieve a much improved turnaround time for loan applications. Through active marketing and cross-selling, Mortgage Loans and SME financing also saw a major increase despite stiff competition from other banks. With a comprehensive range of investment products, Wealth Management sales increased across the product range. The first series of Structured Deposits was launched in April 2008, and was fully subscribed before the end of the offer period. This is a strong achievement despite a volatile global outlook for investors. Investor education, customer risk profiling, ethical consultative selling, professional staff training and details to sales process were key ingredients for success. The second Baiduri Expo themed “Saving for a Brighter Future” held at the International Convention Centre in June emphasized savings and investment and showcased products and services of the Baiduri Bank Group. Free financial health checks and consultation were provided to customers. Thanks to excellent credit and operation control combined with substantial increase in operating profits, Baiduri Card Centre continued to deliver excellent financial performance in 2008. Leveraging on the latest technology, Baiduri Bank’s card merchants were the first in Brunei to be provided with VeriFone wireless card terminals. Using GPRS technology, and incorporating the latest protections against fraud and tampering with in-built verification and authentication features, the VeriFone is battery-powered with a sleek compact design which makes it extremely portable and safe, allowing transactions to be processed just about anywhere and at any time of the day, providing extreme versatility to business operators such as car-hiring companies and food delivery service. Established in 2005, Baiduri Bank’s partnership with Western Union Financial Services continued to be the preferred remittance service in Brunei because of its reputation for speed and security. Offering worldwide person-to-person remittance service through the bank’s branch network, it is especially popular with immigrant workers from other Asian countries. Baiduri Bank remains the first and only bank in Brunei to launch a partnership agreement with a global remittance company.
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Baiduri Bank Annual Report 2008
Business Highlights Established in June 1999 and enhanced in 2007, Baiduri Prestige offers exclusive banking privileges to the mass affluent customer segment and high net worth individuals. In 2008, Baiduri Prestige organized several lifestyle events exclusively for their members. These included a health and beauty seminar and exhibition held at the Rizqun International Hotel in April; an exclusive preview of the d’Banyan Residency @ Sutra luxury designer homes held at the Empire Hotel and Country Club in May; Barbara Harris Water Jewels preview held at the Empire Hotel and Country Club in August. The Prestige event of the year was the screening of the movie “Butterfly Lovers” at the Mall Cineplex, Gadong exclusively for Baiduri Prestige members. The movie starred Brunei’s home-grown superstar Wu Chun alongside Hong Kong’s Charlene Choi. The evening exclusive included a “Meet the Stars” session where guests were given the opportunity to meet the stars in person.
DISTRIBUTION CHANNELS To broaden its distribution footprints as well as enrich channels to improve customer experience, Baiduri Bank invested substantially in self-service banking channels, including the ATM network, internet banking and mobile phone banking. Enhancements to the website and cash deposit machines were carried out in 2008. Through a series of campaigns to encourage e-channels usage, increases in the usage of electronic channels were seen over the 12 month period till end 2008. ATM usage as a percentage of all transactions increased by 12.66% from 2007; transactions via internet banking saw an impressive 207% increase from January to December 2008. FAST mobile payment services, which was first launched in October 2007 saw increasing take-up through the months, and recorded a 94.5% increase in December 2008 compared to twelve months earlier. In addition to developing the electronic channels, Baiduri Bank Group also embarked on a plan to renovate all its premises and branches with the aim of enhancing the total customer experience and to create a more conducive sales environment. The project started in 2007 and is expected to be finished by 2010. In 2008, a new branch at Beribi was added, bringing to 12 the total number of branches in the network.
Baiduri Bank Annual Report 2008 13
Business Highlights Baiduri Finance Leveraging on Baiduri Bank’s multi-channel delivery systems, Baiduri Bank’s wholly-owned subsidiary, Baiduri Finance continued to grow its business volume and increase its hire-purchase portfolio in 2008. Besides automobile finance, Baiduri Finance also offers attractive savings schemes. To encourage savings and to reward its customers, Baiduri Finance successfully held a 3-month promotion on the popular Multi-Tier Savings Account from April to June 2008 where depositors stood the chance to win lucky draw cash prizes of $50,000, $30,000 and $20,000 in addition to monthly cash and novelty prizes. Baiduri Finance moved its head office to new premises at Sumbangsih Bahagia in December 2008, reflecting Baiduri Finance’s growth and success over the years. Located in the heart of the automobile district in Beribi, it was a strategic move to meet the demands of a burgeoning local population, to serve customers better and be closer to clients and partners in Beribi. The new premises are equipped with ultra-modern facilities such as dedicated counters for hire purchase, insurance renewal, blue card collection and other services. It also has a Prestige Centre to cater for its high net worth customers. The new office was officially opened on 17th December by Yang Berhormat Pehin Orang Kaya Laila Setia Dato Seri Awang Haji Abd Rahman bin Haji Ibrahim, Minister of Finance II.
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Baiduri Bank Annual Report 2008
Operations Management The role of the Operations Management Division (OMD) is to provide support to the business units, leveraging on information technology to achieve optimum operational efficiency. The Division utilizes an integrated management system and engages employees in continuous improvement programs with the ultimate aim to achieve total customer satisfaction. In 2008, a Quality Control Circle (QCC) initiative was launched seeking to set new standards through quality improvements with the aim to achieve ISO9001 by year 2010 for Operations Management Division and ISO 27001 certification for IT Department by 2011. Under the current large-scale premises improvement project, the Property Department undertook three major premises improvement projects. This involved refurbishing premises to reflect a modern professional image and to provide comfortable working environment to the growing number of staff. A new Loan Centre was set up at Kiarong Complex in February providing centralized processing of retail loans. In December, Baiduri Finance’s head office was relocated to bigger and more modern premises in Beribi and a new branch of Baiduri Bank was set up adjacent to Baiduri Finance. In addition, a Business Services Centre was set up with the aim to streamline workflow to improve turnaround time and provide a one-stop centre for customers. The centre began operations during the third quarter of 2008 and was officially opened in early 2009. It involved the merger of three distinct departments into one and provides operating support for all departments under the Bank and Baiduri Finance. Work on relocating the Seria Branch began in late 2008 and was completed in early 2009. The new premises included a new Prestige Centre to serve members in the Belait District. Refurbishment work on the Head Office at Kiarong has already started and is expected to be completed by the beginning of 2010. In 2008, the Bank’s IT operations was upgraded and relocated to a new state-of-the-art Data Centre in Kiarong and a new IT structure was implemented. This close integration of various functions also allowed for multi-skilling of staff. Under the e-Banking Department, improvements were made to ATM network with several new ATMs and CDMs added to meet the growing needs of customers and to serve the growing customer base. Plans are underway for new and improved services to be introduced via electronic channels in 2009, and include the launch of an enhanced personal internet banking service.
Mr Pierre Imhof (right) Baiduri Bank’s GM and Mr Song Kin Koi, Managing Director of TelBru signing a Value Added Service Agreement (VASA) on provision of a comprehensive range of bill payment services to TelBru customers via electronic channels as well as over the counter. The ceremony was held at TelBru Headquarters on 11th June 2008
Baiduri Bank Annual Report 2008 15
Human Resource Development In line with the Group’s vision to continually increase the skills and competencies of the whole workforce, the Human Resources Department of the Group seeks to build a quality team with the right skills and talents to meet our current and future needs. Continuously Building the Service Quality Culture With emphasis on the delivery of excellent customer service to our clients in line with the Group’s Service Standards, a total of 112 training workshops were developed and conducted in-house which covered all aspects of customer service, products and services, generating an average of 2.5 training days per staff member during the year. Enhancing Competency Based Skills In 2008, 13 holders of the Certificate in Financial Planning (CertFP) underwent studies leading to the Diploma in Financial Planning and received their diplomas from the Singapore College of Insurance in early 2009. This brings to 37 the total number of personnel professionally trained in financial planning, out of which, 4 hold the Chartered Financial Consultant (ChFC) qualifications; 13 with the Diploma in Financial Planning (DipFP) and the rest with the Certificate in Financial Planning (Cert FP). The Diploma in Financial Planning (DipFP) is part of the route to the Chartered Financial Consultant (ChFC), the premier designation in financial consulting and is offered to CertFP holders wishing to acquire in-depth knowledge of the principles and tools involved in the various aspects of financial planning process. To equip all front line personnel with full knowledge of the Bank Group’s products and services, product briefings and updates were continuously conducted throughout the year. As part of staff welfare, basic fire, safety and health awareness courses were also offered with more than 10 personnel having received the highest award of the CPR Instructor course to date. Compensation and Benefits Strategy In order to improve Employee Value Proposition and in line with the organization’s performance driven culture, the Group is constantly reviewing the employees’ compensation and benefits strategy. As a result, a number of financial and other incentives have been introduced during the year linking achievement of financial targets. Sales incentives were further enhanced and in addition, eight top achievers in Wealth Management business for 2008 were rewarded with an incentive trip to attend the 31st IFPAS (Insurance and Financial Practitioners Association of Singapore) National Congress held in Singapore in March 2009. 16
Baiduri Bank Annual Report 2008
Corporate Social Responsibility Baiduri Bank Group has benefited from the support of the community and wants to give back to society wherever possible. Some of the community programmes supported by the Group in 2008 were: Caring for the Less Fortunate Baiduri Bank has been an active and regular supporter of local charities since its inception. The Bank has a policy of donating in kind, usually in response to a specific need that has been identified. The Bank aims to raise public awareness about the needs of special people and to promote activities that would contribute towards special people gaining acceptance in the wider society. Among the contributions made by Baiduri Bank Group in 2008 to this group were: • •
Donation of 10 units of specially designed personal computers for visually impaired students presented to the Special Education Section of the Ministry of Education.
•
The cost of salaries for two teachers in Pusat Ehsan AlAmeerah for a year.
•
Donation of a specially designed wheelchair to an 18-year old man suffering from Spastic Quadriplegic Cerebral Palsy and Epilepsy.
•
Donation to the Ministry of Culture Youth and Sports to help meet the cost of hosting the Special Olympics Asia Pacific Bocce Competition held in Brunei from 18th to 24th August 2008.
Donation of BND8,000 towards the purchase of a van for SMARTER.
Participants at the popular annual charity golf event, the Baiduri Masters
The annual charity golf event, The Baiduri Masters is the main activity in which public participation is invited to help raise funds for charity. The golf tournament, which started in 1996, is the most prestigious and widely attended in Brunei. In 2008, more than 720 players participated, the highest in its history. It also recorded another first, with a player striking a hole-in-one, winning himself a brand new BMW 730Li. All surplus from this event were donated to charities and welfare bodies. Helping Less-Privileged Children Achieve Their Education Goals Baiduri Bank offers education grants to deserving children from less privileged homes to assist them in meeting the cost of their school fees. In 2008, several children from throughout the country received such grants.
Mr Pierre Imhof presenting an education grant to a school principal during the Chinese New Year Dinner in Kuala Belait.
Baiduri Bank Annual Report 2008 17
Corporate Social Responsibility Promoting Conservation As part of Baiduri Bank’s commitment to promoting sustainable development, Baiduri Bank Group carried out several conservation initiatives in 2008 • •
In June 2008, Baiduri Bank, in partnership with the Energy Division of the Prime Minister’s Department launched an initiative to promote energy efficiency and conservation among the bank staff and customers. It involved distribution of stickers and booklets on the theme.
•
At the Hari Raya Aidilfitri Gala Dinner for customers and business associates held at the Jerudong Park Amphitheatre in October 2008, Baiduri Bank Group made a pledge in support conservation of i ni t i at i v e s f o r K a m p o n g Ay e r wh ich aimed to maintain its cleanliness to preserve the village’s unique qualities as a national heritage.
The Baiduri Expo 2008, which was held from 26th to 29th June, showcased measures that can be taken by the public to conserve energy in line with the theme “Saving for a Brighter Future”.
Making a Difference at RIPAS Hospital On 25th September 2008, in keeping with the spirit of Ramadhan, a group of senior management personnel from Baiduri Bank led by the General Manager, Mr Pierre Imhof, took time off their busy schedule to pay a pre-Hari Raya visit to patients at RIPAS Hospital. Together with the Acting Minister of Health, YDM Pehin Orang Kaya Pekerma Laila Diraja Dato Paduka Awang Haji Hazair bin Haji Abdullah, Mr Imhof presented food hampers to more than 80 patients who due to their illnesses, would have to be away from their loved ones during the Hari Raya season.
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Baiduri Bank Annual Report 2008
Baiduri Bank’s Chairperson, YTM Pengiran Anak Isteri Pengiran Anak Hajah Zariah presenting Baiduri Bank Group’s pledge of support on Kampong Ayer conservation initiatives to a representative of a student group.
Corporate Social Responsibility Promoting Arts, Culture and Local Talent Baiduri Bank Group is committed to promoting cultural exchange and expanding the local talent pool in the fields of arts and culture. In June 2008, in promoting cultural exchange, the Group sponsored the French SOAP collective artists, which specializes in spray painting using environmentally friendly spray paint. Spray painters Migwel, Deser and Keflione drew huge interest and participation in their workshops and conference on their unique line of street art. Organized by Alliance Francaise, the project aimed at providing cultural and educational exchange for free to the people of Brunei and foster closer relations among the different ethnic groups. Under the same cause, Baiduri Bank Group made a donation to the Bandar Seri Begawan Indian Association at the Deepavali Dinner held in November 2008 in honour of the Bank’s Indian customers and business associates. In support of the advancement of local musical and singing talent, Baiduri Bank Group sponsored the production of a music CD featuring finalists of Season 2 of the most anticipated reality show in Brunei, Passport to Fame (P2F) which took place from June to December 2008. Beginning with over 250 contestants, those who did not meet the grades were eliminated during each round, bringing to just 22 the number of finalists in the various categories. The final round was a grand finale held at the Jerudong Park Amphitheatre in December where winners were picked through SMS voting, in similar fashion as Malaysia’s “Akademi Fantasia”. In collaboration with leading radio station Pelangi FM, the Bank also sponsored the production of “Rentak 914”, Volume 3, a music CD featuring 18 songs by up and coming local singers which included names like Maria, winner of Pelangi Awards for two years running. Supporting Community Development In 2008, Baiduri Bank Group together with its employees carried out several projects in support of community development: •
World Blood Donor Day – On 14th June 2008, Baiduri Bank again became the main sponsor for the World Blood Donor Day. The event, held at the Yayasan Sultan Hassanal Bolkiah Complex, was aimed to create wider awareness of the importance of voluntary blood donation and encourage more people to become regular blood donors. It was also designed to thank individuals who voluntarily donated their blood without any reward to help save lives. This was the second year that Baiduri Bank had sponsored the event.
•
Blood Donation Drive – On 19th June 2008, in collaboration with RIPAS Blood Donation Centre, Baiduri Bank Group held a blood donation drive at the Group’s Training Centre with the purpose to replenish stock of the stock of the blood bank. A total of 58 employees from various departments of Baiduri Bank and Baiduri Finance participated.
Mr Raymond Bariou with a participant of a blood donation drive held on 19th June 2008 at the Training Centre.
Baiduri Bank Annual Report 2008 19
Corporate Social Responsibility •
Pusat Ehsan Charity Bazaar - On 3rd August 2008, in support of efforts to raise funds for Pusat Ehsan, staff of Baiduri Bank participated in the annual Charity Bazaar held at the Centre’s premises in Kampong Bengkurong. They sold food and drinks and organized fun activities such as water gun shooting, face painting, tattooing and lucky dips with the aim to raise as much funds as possible within the day at the Centre. Proceeds from the activities were donated to Pusat Ehsan.
•
Universal Children’s Day – On 25th November 2008, Baiduri Bank was the main sponsor of this annual event organized by the Ministry of Culture Youth and Sports. Held at the Mumong Sports Complex in the Belait District, the event saw more than 600 primary school children from various schools in the district enjoy a carnival morning packed with fun and games in line with the theme “The Right to Play” set by UNICEF. Senior officials and staff of Baiduri Bank joined officials from the Ministry to share their morning with the children.
Nurturing Bruneian Entrepreneurs Baiduri Bank continued its SME Partnership Programme with Asia Inc Forum, aimed to continuously nurture Brunei SMEs. The key programs carried out during the year included a “Women in Business” Forum and a workshop on franchising.
Senior Deputy General Manager, Mr Raymond Bariou speaking at the Launching Ceremony of the 2008 SME Programme
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Baiduri Bank Annual Report 2008
Financial Statements For the year ended 31st December 2008
Baiduri Bank Annual Report 2008
Report of the Directors The directors have pleasure in presenting their annual report and audited financial statements of the Company and of the Group for the financial year ended December 31, 2008. PRINCIPAL ACTIVITIES The principal activities of the Company and the Group are to carry on the business of banking and related financial services including dealing in investment securities, stock broking and e-financial services. There have been no significant changes in the nature of these activities during the financial year. One of the Company’s subsidiaries, Baiduri Securities Sdn Bhd, had remained dormant throughout the financial year ended December 31, 2008.
Results
Balance at December 31, 2007 Total profits for the financial year Transferred from retained profits to: - Share capital - Statutory reserve Dividends paid Balance at December 31, 2008
The Group The Company B$’000 B$’000 17,626 25,806
9,790 27,770
(5,000) (18,689) (8,400)
(5,000) (13,885) (8,400)
11,343
10,275
RESERVES AND PROVISIONS There were no other material transfers to or from reserves and provisions during the financial year other than those disclosed in the financial statements. SHARE CAPITAL On February 25, 2008, the issued share capital was increased to B$100,000,000 by the issue of 40,000,000 ordinary shares of B$1 each. The newly issued shares rank pari passu in all respect with the existing shares of the Company. FINANCIAL STATEMENTS The state of affairs of the Company as at December 31, 2008 is set out in the balance sheet. These financial statements were approved by the Board of Directors on March 5, 2009. DIVIDENDS Dividends paid in respect of the financial year ended December 31, 2007
B$ 8,400,000
At the forthcoming Annual General Meeting, a total dividend of B$8,900,000 in respect of the current financial year ended December 31, 2008 will be proposed for shareholders’ approval. Such dividend, if approved by the shareholders, will be accounted for as an appropriation of retained profits of the shareholders’ equity in the next financial year ending December 31, 2009.
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Baiduri Bank Annual Report 2008
Report of the Directors Directors The directors in office during the financial year and at the date of this report are: YTM Pengiran Anak Isteri Pengiran Anak Hajah Zariah YAM Pengiran Muda Abdul Qawi YB Pehin Orang Kaya Pekerma Dewa Dato Seri Setia Lim Jock Seng (appointed on November 13, 2008) YM Dato Paduka Timothy Ong Teck Mong Claude De Kemoularia Francis Caze Haji Amir Hamzah Haji Hanafi Bertie Cheng Shao Shiong (appointed on August 22, 2008) Pengiran Dato Paduka Haji Abu Bakar bin Pengiran Seri Indera Pengiran Haji Ismail (resigned on November 13, 2008) Victor Chua Beng Khoon (resigned on July 8, 2008)
Auditors The auditors, Deloitte & Touche, have indicated their willingness to accept re-appointment. On behalf of the board
________________________________________ Director
________________________________________ Director
________________________________________ Director
Brunei Darussalam Date: 5th March 2009
Baiduri Bank Annual Report 2008 23
Independent Auditors’ Report to the members of Baiduri Bank Berhad and subsidiaries We have audited the accompanying financial statements of Baiduri Bank Berhad (the Company) and its subsidiaries (the Group) which comprise the balance sheets of the Company and the Group as at December 31, 2008, the profit and loss statements, statements of changes in equity and cash flows statements of the Company and the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on page 65 to 78. Directors’ Responsibility The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Brunei Darussalam Companies Act, Cap. 39 (the “Act”), the Brunei Darussalam Banking Order 2006 (the “Order”), and generally accepted accounting principles in Brunei Darussalam. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, a) the financial statements of the Company and consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act, the Order and generally accepted accounting principles in Brunei Darussalam so as to give a true and fair view of the state of affairs of the Company and the Group as at December 31, 2008 and of the results, changes in equity and cash flows of the Company and the Group for the year ended on that date; b) the accounting and other records required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act; and c)
we have obtained all the information and explanations that we required.
_____________________________________ DELOITTE & TOUCHE Certified Public Accountants Brunei Darussalam Date: 5th March 2009
24
Baiduri Bank Annual Report 2008
_____________________________________ NG HUI HUA Brunei Darussalam Authorised Auditor
Balance Sheets December 31, 2008 Note
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Assets Cash, deposits and balances with banks 792,117 832,921 790,046 831,535 Cash deposits and reserve 4 118,069 97,790 82,617 66,662 Loans and advances (net) 5 1,339,201 1,259,366 737,648 730,003 Due from related parties 6 116,759 94,114 116,795 94,114 Other assets 7 53,967 34,297 53,503 33,852 Investment in subsidiaries 8 - - 25,249 25,249 Other investments 9 136,478 174,767 136,478 174,767 Goodwill on consolidation 10 100 124 - Property, plant and equipment 11 20,828 17,983 18,920 16,986 Total assets
2,577,555
2,511,362
1,961,256
1,973,168
LIABILITIES AND EQUITY Amount due to subsidiaries (net) 12 - Amount due to related parties 13 37,700 Current, fixed, savings and other deposits 14 2,299,523 Deposits and balances with banks 53,397 Other liabilities and provisions 15 35,743 Income tax payable 16 9,221 Deferred tax liabilities 16 3,557 Provision for retirement benefits 17 1,688
- 50,815 2,166,661 127,601 31,923 13,557 302 1,203
81,432 37,499 1,623,222 53,397 31,638 3,727 3,540 1,688
124,305 50,614 1,525,747 127,601 29,066 8,649 240 1,203
Total liabilities
2,440,849
2,392,062
1,836,143
1,867,425
CAPITAL, RESERVES AND MINORITY INTEREST Share capital 18 Statutory reserve 19 Retained profits
100,000 25,577 11,343
60,000 41,888 17,626
100,000 14,838 10,275
60,000 35,953 9,790
Equity attributable to equity holders of the parent Minority interest
136,920 (214)
119,514 (214)
105,743 -
105,743 -
Total equity
136,706
119,300
125,113
105,743
Total liabilities and equity
2,577,555
2,511,362
1,961,256
1,937,168
193,734
181,267
193,734
181,267
Commitments and contingencies
20
_____________________________________ Director
_____________________________________ Director
_____________________________________ Director
_____________________________________ General Manager
See accompanying notes to financial statements. Baiduri Bank Annual Report 2008 25
Profit And Loss Statements
Year Ended December 31, 2008
Note
The Company 2008 2007 B$’000 B$’000
Interest income 21 Less: Interest expense Fees, commission and service charges Foreign exchange profit and other income Gain from investments
150,419 (40,040)
132,587 (42,677)
92.205 (24,639)
81,711 (27,658)
110,379 7,002 15,726 1,820
89,910 6,336 14,736 1,558
67,566 7,002 34,027 1,820
54,053 6,336 20,105 1,558
Net income Other administrative expenses 22 Allowances on loans, advances and investment
134,927 (52,804)
112,540 (47,462)
110,415 (36,180)
82,052 (32,354)
(47,619)
(20,268)
(42,823)
(15,868)
Operating income Goodwill amortisation
34,504 (24)
44,810 (25)
31,412 -
33,830 -
Profit before tax Income tax 16
34,480 (8,674)
44,785 (13,445)
31,412 (3,642)
33,830 (8,563)
Profit after taxation Transfer to statutory reserve 19
25,806 (18,689)
31,340 (16,050)
27,770 (13,885)
25,267 (12,634)
7,117
15,290
13,885
12,633
Profit for the year after transfer to statutory reserve
See accompanying notes to financial statements. 26
The Group 2008 2007 B$’000 B$’000
Baiduri Bank Annual Report 2008
Statements of Changes in Equity Year Ended December 31, 2008 The Group Issued Note Capital B$’000 Balance at January 1, 2007 60,000 Total profits for the financial year - Transferred from retained profits to statutory reserve 19 - Dividends paid 23 - Balance at December 31, 2007 60,000 Total profits for the financial year -
Attributable to equity holders of the parent Statutory Retained Minority Reserves Profits Total Interest B$’000 B$’000 B$’000 B$’000 25,838 -
9,436 31,340
95,274 31,340
16,050 -
(16,050) (7,100)
- (7,100)
41,888 -
17,626 25,806
119,514 25,806
(5,000)
-
-
- (8,400)
- -
Transferred to issued capital 4 0,000 Transferred from retained profits to statutory reserve 19 - Dividends paid 23 -
(35,000) 18,689 -
(18,689) (8,400)
Balance at December 31, 2008
25,577
11,343 136,920
100,000
Total Equity B$’000
(214) 95,060 - 31,340 - -
(7,100)
(214) 119,300 - 25,806 (8,400)
(214) 136,706
The Company Issued Statutory Retained Total Note Capital Reserve Profits Equity B$’000 B$’000 B$’000 B$’000 Balance at January 1, 2007 60,000 23,319 4,257 87,576 Net profits for the year - - 24,267 25,267 Transferred from retained profits to statutory reserve 19 - 12,634 (12,634) Dividends paid 23 - - (7,100) (7,100) Balance at December 31, 2007 Net profits for the year Transferred to issued capital Transferred from retained profits to statutory reserve 19 Dividends paid 23 Balance at December 31, 2008
60,000 35,953 - - 40,000 (35,000) - -
13,885 -
100,000
14,838
9,790 105,743 27,770 27,770 (5,000) - (13,885) (8,400)
(8,400)
10,275 125,113
See accompanying notes to financial statements. Baiduri Bank Annual Report 2008 27
Cash Flow Statements
Year Ended December 31, 2008
Note Cash flows from operating activities: Profit before income tax Adjustments for: Amortisation of goodwill on consolidation Depreciation Gain on disposal property, plant and equipment (net) Gain from investments
The Company 2008 2007 B$’000 B$’000
34,480
44,785
31,412
33,830
24 4,320
25 3,710
- 3,934
3,412
(14) (1,820)
(38) (1,558)
(12) (1,820)
(38) (1,558)
36,990 (79,835) (22,681) (19,670) - (13,115) 132,862 4,305
46,924 (194,082) (54,621) 10,139 - 10,941 423,805 4,923
33,514 (7,645) (22,681) (19,651) (42,873) (13,115) 97,475 3,057
35,646 (102,628) (54,621) 10,056 38,533 10,941 302,286 5,281
Cash generated from operations Income tax paid
38,856 (9,735)
248,029 (7,934)
28,081 (5,264)
263,494 (5,209)
Net cash from operating activities
29,121
240,095
22,817
258,285
Operating cash flows before movements in working capital Loans and advances (net) Due from related parties Other assets Due to subsidiaries Due to related parties Current, fixed, savings and other deposits Other liabilities and provisions
Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Gain from investments Investment in subsidiaries Net (additions) / disposal of investments
(7,230)
(4,757)
(5,933)
(4,465)
79 1,820 - 38,289
301 1,558 - 41,363
77 1,820 - 38,289
301 1,558 (23,000) 41,363
Net cash from investing activities
32,958
38,465
34,253
15,757
Cash flows from financing activity: Dividends paid
(8,400)
(7,100)
(8,400)
(7,100)
Net increase in cash and cash equivalents
53,679
271,460
48,670
266,942
803,110
531,650
770,596
503,654
856,789
803,110
819,266
770,596
Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year
See accompanying notes to financial statements. 28
The Group 2008 2007 B$’000 B$’000
Baiduri Bank Annual Report 2008
24
Notes to Financial Statements December 31, 2008 1 OPERATIONS
The principal activities of the Company and the Group are to carry on the business of banking and related financial services including dealing in investment securities, stock broking and e-financial services. There have been no significant changes in the nature of these activities during the financial year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting
The financial statements have been prepared in accordance with the historical cost convention, with the provisions of the Brunei Darussalam Companies Act, Cap. 39, the Brunei Darussalam Banking Order 2006 and generally accepted accounting principles in Brunei Darussalam, and are expressed in Brunei Darussalam dollars. Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the financial year December 31, 2008. The subsidiaries consolidated are entities in which the Group has an equity interest of more than 50% in the issued share capital at the balance sheet date or has power to exercise control over the operations. Subsidiaries are consolidated from the date on which effective control is acquired by the Group. Intra group transactions, balances, income and expenses are eliminated on consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. Minority interests in the net assets of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interest at the date of the origin business combination and the minority’s share of changes in equity since the date of combination. Goodwill
Goodwill arising on consolidation represents the excess of cost of acquisition over the fair values of the net identifiable assets acquired. Goodwill is stated at cost less accumulated amortization.
Goodwill is amortised through the Group income statement over 10 years.
Interest Income and Expense
(i) Interest income and expenses are recognized in the profit and loss statements on an accrual basis. When an account becomes non-performing, interest is suspended until it is realised on a cash basis.
(ii)
For the finance subsidiary, interest earned on hire purchase and leasing transactions are spread over the period of the agreements, using the commonly accepted method known as the “Rule-of78” so as to produce a constant periodic rate of interest. The income arising therefrom each year comprises interest in respect of those installments which have become due for payment during the financial year. The remainder is carried forward as a provision for unearned income.
Baiduri Bank Annual Report 2008 29
Notes to Financial Statements
December 31, 2008
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans and Allowance for Bad and Doubtful Receivables All loans and financing are recognised when cash is advanced to borrowers. Legal fees incurred in securing a loan and financing are treated as part of the cost of the transaction.
Loans and financing are stated after deduction of allowance for possible losses. These allowances comprise specific allowances against non-performing receivables and financing and the related interestin-suspense. Specific allowance and suspension of interest are made for doubtful receivables and financing which have been individually reviewed and specifically identified as bad or doubtful. Known bad receivables are written off. An uncollectible loan and financing or portion of a loan and financing classified as bad or doubtful is either written off or provided for after taking into consideration the realizable value of collateral, if any, when in the judgement of the management there is no prospect of recovery. Depreciation Depreciation is calculated to write off the cost of the property, plant and equipment over their estimated useful lives by the straight line method. The estimated useful lives are as follows:-
30
Freehold lands and buildings 50 years Leasehold lands and buildings Over period of the lease Leasehold improvements 5 years Computers 5 – 8 years Office equipment 5 years Office furniture and fittings 5 – 10 years Household furniture and equipment 5 – 10 years Motor vehicles 5 years
Gains and losses on disposal of property, plant and equipment are determined by reference to their net book value and are taken into account in determining operating profit.
Repairs and maintenance are charged to the profit and loss statements when the expenditure is incurred.
Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use.
Investments
(i)
Investments in subsidiaries
Investments in subsidiaries in the Company’s financial statement are stated at cost less amounts written off in recognition of any permanent fall in value.
Dividend income is recorded in the profit and loss statements when received in the financial year or in which a dividend has been approved by the shareholders in the investee company.
Other investments
(ii)
Quoted and unquoted investments intended to be held for long term are stated at cost less impairment in value that is other than temporary, determined on an individual investment basis, except for situation in which the Company is able to realize a profit in these investments, the realized profits are taken to the profit and loss statements.
Interest earned on other investment is reported as interest income.
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Treasury Related Off-Balance Sheet Financing Instruments
Transactions in treasury related off-balance sheet financial instruments including foreign exchange contracts are valued at market prices if they are for trading purposes and the resultant profits and losses are taken to the profit and loss statements. Transaction entered into for hedging purposes are accounted for in a manner consistent with the accounting treatment of the item being hedged.
Acceptances
Acceptances comprise undertakings by the Company to pay bills of exchange drawn on customers. The Company expects the acceptance to be settled simultaneously with the reimbursement from the customers. Acceptances are disclosed liabilities with corresponding contra-assets.
Foreign Currency Transactions
Transactions in foreign currencies are recorded in Brunei Darussalam dollars at the rates ruling at the dates of the transactions. At each balance sheet date, recorded monetary balances that are denominated in foreign currencies are reported at the rates ruling at the balance sheet date. All realised and unrealised exchange adjustment gains and losses are dealt with in the profit and loss statements.
Income Tax
Tax expense is determined on the basis of tax effect accounting, using the liability method and it is applied to all significant timing differences except that a debit balance or a debit to the deferred tax balance is not carried forward unless there is a reasonable expectation of its realisation.
Employee Benefits
The Company and the Group contribute to the Tabung Amanah Pekerja (“TAP”), a defined contribution plan regulated and managed by the Government of Brunei Darussalam, which applies to all local employees. The contributions to TAP are charged to the income statements in the period to which the contribution relate.
The Company also operates a defined retirement fund scheme for its employees, which requires provisions to be made periodically based on the entitlements of the employees. The provisions are calculated on the basis of the number of years service of the employees and are charged to the income statements in the period in which the entitlements arise.
3
Related Parties transactions
Related parties in these financial statements refer to members of the holding company’s group of companies.
Some of the Company’s transactions and arrangements are with related parties and subsidiary companies and the effect of these on the basis determined between the parties are reflected in these financial statements. Significant related companies’ transactions are as follows: Interest income Interest expenses Net interest expense paid to subsidiary
The Company 2008 2007 B$’000 B$’000 5,280 577 482
3,008 767 2,284
Baiduri Bank Annual Report 2008 31
Notes to Financial Statements December 31, 2008
4
CASH DEPOSITS AND RESERVE The reserve is maintained in accordance with Section 45 of the Brunei Darussalam Banking Order 2006 and a directive issued by the Brunei Government Ministry of Finance in accordance with Section 25(2) of the Finance Companies Act, Cap. 89. The reserve is not available for use in the Company and its subsidiaries’ day to day operations.
5 LOANS AND ADVANCES (NET)
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
a) Loan to individuals Loan to corporate entities Less: Allowance for bad and doubtful receivables Allowance for interest in suspense
447,287 443,903
439,608 437,507
447,287 443,903
439,608 437,507
891,190
877,115
891,190
877,115
(60,341) (93,201)
(56,560) (90,552)
(60,341) (93,201)
(56,560) (90,552)
737,648
730,003
737,648
730,003
Hire purchase receivables Finance leases of equipment Less: Allowance for doubtful receivables Less: Allowance for interest in suspense
603,065 457
530,226 580
- -
-
603,522
530,806
-
-
(1,441) (528)
(924) (519)
- -
-
601,553
529,363
-
-
1,339,201
1,259,366
737,648
730,003
Balance at end of year
The Group and the Company classify loans in accordance with its own internal loans grading policies. The Group and the Company make specific allowances for non-performing loans and financing in accordance with its policy set out in Note 2. Interest income is suspended when the account is classified as non-performing until it is realised on a cash basis.
32
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 5
Loans and advances (NET) (continued) Movements in allowance for bad and doubtful receivables on loans are as follows: -
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
b)
Balance at the beginning of the year Addition Written back Written off
56,560 10,448 (2,819) (3,848)
81,373 7,670 (429) (32,054)
56,560 10,448 (2,819) (3,848)
81,373 7,670 (429) (32,054)
Balance at the end of the year
60,341
56,560
60,341
56,560
Movements in allowance for interest in suspense on loans are as follows: c)
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Balance at the beginning of the year Addition Written back Written off
90,552 13,075 (5,082) (5,344)
91,429 18,764 (383) (19,258)
90,552 13,075 (5,082) (5,344)
91,429 18,764 (383) (19,258)
Balance at the end of the year
93,201
90,552
93,201
90,552
Movements in allowance for bad and doubtful receivables on hire purchase are as follows:
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
d) Balance at the beginning of the year 924 2,176 Addition 7,155 6,935 Written off (4,276) (8,187) Recoveed (2,359) - Balance at the end of the year 1,441 924 Movements in allowance for interest in suspense on hire purchase are as follows: e)
The Group 2008 2007 B$’000 B$’000
- - - -
-
-
-
The Company 2008 2007 B$’000 B$’000
Balance at the beginning of the year Addition Written back
519 23 (14)
623 52 (156)
- - -
-
Balance at the end of the year
528
519
-
-
Baiduri Bank Annual Report 2008 33
Notes to Financial Statements
December 31, 2008
6
Due from related parties The Group/The Company 2008 2007 B$’000 B$’000
Overdrafts Commercial term loans and others
7 OTHER ASSETS
11,937 104,858
12,699 81,415
116,795
94,114
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Prepayments Interest receivable Refundable deposits Others
1,170 14,406 32,380 6,011
1,066 13,152 16,041 4,038
740 14,406 32,347 6,010
640 13,152 16,007 4,053
53,967
34,297
53,503
33,852
8
SUBSIDIARY COMPANIES The Company 2008 2007 B$’000 B$’000 a) Unquoted shares, at cost 25,249 25,249 b) The following are the subsidiaries of the Company: Name of Company Principal Activities Percentage of Paid and Place of Incorporation Up Capital Held 2008 2007 Baiduri Finance Berhad Finance Company 100% 100% (Brunei Darussalam) Baiduri Securities Sdn Bhd Share brokers and dealers in securities 51% 51% (Brunei Darussalam) and investments of all kinds Baiduri Securities Sdn Bhd ceased operations after January 31, 2002 and has been dormant since then. Full provision has been made for the cost of this investment.
34
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 9
OTHER INVESTMENTS The investments consist of: - Quoted investments, at cost Unquoted investments, at cost
The Group/The Company 2008 2007 B$’000 B$’000 181,478 -
183,767 -
Less: Allowance for impairment
181,478 (45,000)
183,767 (9,000)
136,478
174,767
The quoted investments with cost amounting $170,474,130 (2007:$134,340,000), coupon rate ranging 1.25% to 4.91% (2007: 2.187% to 4.91%) per annum and maturity dates ranging from August 15, 2010 to October 10, 2011 (2007: January 24, 2008 to December 20, 2012) are held to maturity.
The unquoted investments consist of the following: Name of Company Principal Activities and Place of Incorporation SBI Garment Industries Sdn Bhd (Brunei Darussalam)
10 GOODWILL ON CONSOLIDATION At cost Accumulated amortisation Balance at the beginning of the year Amortisation charge for the year Balance at the end of the year Net book value at the end of the year
Garment manufacturer
Percentage of Paid Up Capital Held 2008 2007 100%
100%
The Group 2008 2007 B$’000 B$’000 249
249
125 24
100 25
149
125
100
124
Baiduri Bank Annual Report 2008 35
Notes to Financial Statements December 31, 2008
11 Property, plant and equipment The Group
Leasehold Lands & Leasehold Buildings Improvements Computers B$’000 B$’000 B$’000
Office Equipment B$’000
Cost At the beginning of the year Additions Reclassification Disposal/written off
3,175 1,614 - -
4,368 43 19 -
5,814 2,662 (19) (59)
23,237 2,144 - (9)
3,508 488 - (104)
At the end of the year
4,789
4,430
8,398
25,372
3,892
Accumulated depreciation At the beginning of the year Depreciation for the year Disposal/written off
203 73 -
1,112 257 -
4,064 760 -
14,749 2,670 (8)
2,590 367 (100)
At the end of the year
276
1,369
4,824
17,411
2,857
Depreciation for prior year
60
251
466
2,467
285
Net book value: At the beginning of the year
2,972
3,256
1,750
8,488
918
At the end of the year
4,513
3,061
3,574
7,961
1,035
Office Furniture and Fittings B$’000
Household Furniture & Equipment B$’000
Motor Vehicles B$’000
36
Freehold Lands & Buildings B$’000
Total B$’000
Cost At the beginning of the year Additions Reclassification Disposal/written off
681 206 - (1)
87 14 - -
792 59 - (60)
41,662 7,230 (233)
At the end of the year
886
101
791
48,659
Accumulated depreciation At the beginning of the year Depreciation for the year Disposal/written off
470 40 -
33 15 -
458 138 (60)
23,679 4,320 (168)
At the end of the year
510
48
536
27,831
Depreciation for prior year
40
14
127
3,710
Net book value: At the beginning of the year
211
54
334
17,983
At the end of the year
376
53
255
20,828
The period of lease of the leasehold lands and buildings ranging from 15 to 82 years, expire ranging from April 2016 to March 2088.
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 11 Property, plant and equipment (continued) The Company
Freehold Lands & Buildings B$’000
Leasehold Lands & Leasehold Buildings Improvements Computers B$’000 B$’000 B$’000
Office Equipment B$’000
Cost At the beginning of the year Additions Reclassification Disposal/written off
3,175 1,614 - -
4,368 43 19 -
5,241 1,748 (19) (59)
21,610 1,958 - (9)
3,238 362 - (99)
At the end of the year
4,789
4,430
6,911
23,559
3,501
Accumulated depreciation At the beginning of the year Depreciation for the year Disposal/written off
203 73 -
1,112 257 -
3,592 675 -
13,838 2,426 (8)
2,411 332 (95)
At the end of the year
276
1,369
4,267
16,256
2,648
Depreciation for prior year
60
251
429
2,263
253
Net book value: At the beginning of the year
2,972
3,256
1,649
7,772
827
At the end of the year
4,513
3,061
2,644
7,303
853
Office Furniture and Fittings B$’000
Household Furniture & Equipment B$’000
Motor Vehicles B$’000
Total B$’000
Cost At the beginning of the year Additions Reclassification Disposal/written off
580 135 - (1)
87 14 - -
696 59 - (60)
38,995 5,933 (228)
At the end of the year
714
101
695
44,700
Accumulated depreciation At the beginning of the year Depreciation for the year Disposal/written off
408 37 -
33 15 -
412 119 (60)
22,009 3,934 (163)
At the end of the year
445
48
471
25,780
Depreciation for prior year
33
14
109
3,412
Net book value: At the beginning of the year
172
54
284
16,986
At the end of the year
269
53
224
18,920
The period of lease of the leasehold lands and buildings ranging from 15 to 50 years.
Baiduri Bank Annual Report 2008 37
Notes to Financial Statements December 31, 2008
12 AMOUNT DUE TO SUBSIDIARIES
The Company 2008 2007 B$’000 B$’000
Amount due to subsidiaries (net)
13 AMOUNT DUE TO RELATED PARTIES
81,432
The Group 2008 2007 B$’000 B$’000
Current accounts Savings accounts Term deposits Others
124,305
The Company 2008 2007 B$’000 B$’000
5,899 2,083 29,517 201
7,763 10,758 32,093 201
5,899 2,083 29,517 -
7,763 10,758 32,093 -
37,700
50,815
37,499
50,614
14 CURRENT, FIXED, SAVINGS AND OTHER DEPOSITS
The Company 2008 2007 B$’000 B$’000
Current accounts Saving accounts Term deposits
216,554 700,986 1,381,983
173,297 659,094 1,334,270
216,554 145,216 1,261,452
173,297 134,020 1,218,430
2,299,523
2,166,661
1,623,222
1,525,474
15 OTHER LIABILITIES AND PROVISIONS
38
The Group 2008 2007 B$’000 B$’000
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Interest payable Accruals Provisions and sundry creditors Advance receipts
9,114 2,683 19,420 4,526
8,832 3,047 16,428 3,616
8,800 1,996 16,316 4,526
9,023 2,436 14,085 3,522
35,743
31,923
31,638
29,066
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 16 INCOME TAX (a)
8,699 (25)
13,461 (16)
3,642 -
8,563 -
Net
8,674
13,445
3,642
8,563
Movement in provision for tax Balance at the beginning of the financial year Income tax paid Current financial year’s tax expense on profit Transfer to deferred taxation
(c)
The Company 2008 2007 B$’000 B$’000
Tax expense Income tax expense attributable to profit is made up of: Current income tax provision - Brunei Deferred taxation
(b)
The Group 2008 2007 B$’000 B$’000
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
13,557 (9,735) 8,699 (3,300)
8,030 (7,934) 13,461 -
8,649 (5,264) 3,642 (3,300)
5,295 (5,209) 8,563 -
9,221
13,557
3,727
8,649
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Deferred taxation Balance at the beginning of the year Transfer from/ (to) current income tax
302 3,275
318 (16)
240 3,300
240 -
Balance at the end of the year
3,577
302
3,540
240
17 PROVISION FOR RETIREMENT BENEFITS
The Group/The Company 2008 2007 B$’000 B$’000
Balance at the beginning of the year Charge for the year Utilised
1,203 500 (15)
753 450 -
Balance at the end of the year
1,688
1,203
Baiduri Bank Annual Report 2008 39
Notes to Financial Statements December 31, 2008
18 SHARE CAPITAL
The Group/The Company 2008 2007 ’000 ’000
The Group/The Company 2008 2007 B$’000 B$’000
(Number of ordinary shares of B$1 each)
Authorised:
120,000
120,000
120,000
120,000
Issued and fully paid:
100,000
60,000
100,000
60,000
On February 25, 2008, the issued share capital was increased to B$100,000,000 by the transfer of $35,000,000 from statutory reserve and $5,000,000 from retained profits. The newly issued shares rank pari passu in all respect with the existing shares of the Company.
19 STATUTORY RESERVE Balance at the beginning of the year Transferred to capital Transferred from profit and loss statements Balance at the end of the year
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
41,888 (35,000) 18,689
25,838 - 16,050
35,953 (35,000) 13,885
23,319 12,634
25,577
41,888
14,838
35,953
The transfer from profit and loss statements is to comply with Section 24 of the Brunei Darussalam Banking Order 2006 and Section 13 of the Finance Companies Act, Cap. 89. 20 COMMITMENTS AND CONTINGENCIES In the normal course of business, the Company and the Group make various commitments and incur certain contingent liabilities with legal recourse to its customers. No material losses are anticipated as a result of these transactions. The commitments and contingencies constitute the following: -
40
The Group/The Company 2008 2007 B$’000 B$’000
Letter of credit and bills for collection Guarantees Acceptances and other obligations Foreign exchange contracts
61,424 120,247 877 11,186
55,402 120,401 790 4,674
193,734
181,267
Baiduri Bank Annual Report 2008
Notes to Financial Statements December 31, 2008 21 INTEREST INCOME
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Interest income from various types of lending and instrument activities Less: Interest in suspense
158,291 (7,872)
151,020 (18,433)
100,053 (7,848)
100,092 (18,381)
150,419
132,587
92,205
81,711
22 OTHER ADMINISTRATIVE EXPENSES Directors’ fees Depreciation of property, plant and equipment Rental Salaries, allowances and bonuses
The Group 2008 2007 B$’000 B$’000 1,920 4,320 1,497 18,729
1,419 3,710 1,391 17,007
The Company 2008 2007 B$’000 B$’000 1,920 3,934 1,282 15,518
1,419 3,412 1,176 14,059
23 DIVIDENDS The Group/The Company 2008 2007 B$’000 B$’000 Dividend paid during the financial year
8,400
7,100
Dividend for Dividend for the year 2007 the year 2006
At the forthcoming Annual General Meeting, a total dividend of B$8,900,000 in respect of the current financial year ended December 31, 2008 will be proposed for shareholders’ approval. Such dividend, if approved by the shareholders, will be accounted for as an appropriation of retained profits of the shareholders’ equity in the next financial year ending December 31, 2009.
24 CASH AND CASH EQUIVALENTS
The Group 2008 2007 B$’000 B$’000
The Company 2008 2007 B$’000 B$’000
Cash, deposits and balance with Banks Cash reserve Deposits and balances with banks
792,117 118,069 (53,397)
832,921 97,790 (127,601)
790,146 82,617 (53,397)
831,535 66,662 (127,601)
856,789
803,110
819,266
770,596
Baiduri Bank Annual Report 2008 41
Notes to Financial Statements December 31, 2008
25 RISK MANAGEMENT OBJECTIVES AND POLICIES Accepting and managing risk is central to the business of the Group and is an important source of competitive advantage.
The Board of Directors are accountable for establishing and maintaining an environment that manages risk in an effective and efficient manner. This includes a robust system of limits, controls and reporting processes. Management and senior executives track key performance indicators, investigates and reports on effectiveness of risk management systems to the Board of Directors. The Group’s internal audit department also provide an independent assessment of this process.
The following discussion on risk management concentrates on the Group’s main areas of risk: (i) Credit risk Credit risk is the risk of financial loss that results from customers failing to meet their obligations. Credit risk arises primarily from lending-related activities and represents Group’s major risk type. The Board of Directors approves major prudential policies and limits that govern large customer exposures and industry concentration. The Board of Directors also appoints independent credit officers in each business areas. These credit officers would work with the line managers to ensure that approved policies are applied appropriately and achieve optimal returns on the Group’s risk exposure.
In respect of its lending-related activities, management regularly review the amount of risk accepted in related to one borrower or groups of borrowers, industry segments, level of non-performing loans and adequacy of provisioning requirements.
Exposure to credit risk is also managed in part by obtaining collateral. Some of the assets typically included as collateral are property, assignment of rental income, salary and deposit placement.
(ii) Liquidity risk Liquidity risk is the risk that the Group is unable to meet its cashflow obligations as and when they fall due.
To manage the risk, the Group monitors and maintains sufficient liquid assets to ensure that the liquidity risk exposure is managed and minimised.
Additionally, the Group has to comply with the regulations and guidelines of Ministry of Finance in maintaining minimum cash balances with the Ministry of Finance.
(iii) Interest/Financing rate risk Interest/financing rate risk is the risk of earnings and value of financial instruments caused by fluctuations in interest/financing rates.
42
Sensitivity to interest/financing rates arises from the differences in the maturities and re-pricing dates of assets and liabilities. These differences are monitored and managed by management to ensure that the risk exposure is minimised. These includes actively reviewing its interest/financing rate to ensure that the Group receives an optimal and yet competitive interest/financing spread.
Baiduri Bank Annual Report 2008
Offices, Branches and ATM Network BAIDURI BANK GROUP
Prestige Centres
Postal Address
Yayasan G.02, Ground Floor, Block A Yayasan Sultan Haji Hassanal Bolkiah Complex Bandar Seri Begawan BS8711 Tel No: (673) 223 3111, 220 8206 Fax No: (673) 222 1891
Kiulap Unit 10, 1st Floor Seri Kiulap Complex Bandar Seri Begawan BE1518 Tel No: (673) 223 6905 / 6 / 10 Fax No: (673) 223 6940
Beribi Unit 1, Ground Floor, Sumbangsih Bahagia Kompleks Perindustrian Beribi Bandar Seri Begawan BE1118 Tel No: (673) 242 6800 Fax No: (673) 245 0877
Seria Unit 10, 1st Floor, Jalan Sultan Omar Ali, Seria KB2733 Tel: (673) 322 2450, Ext 213 / 215 Fax: (673) 322 1070
Bandar Seri Begawan P. O. Box 2220, BSB BS8674, Negara Brunei Darussalam Kuala Belait P. O. Box 1368, Kuala Belait KA1131, Negara Brunei Darussalam Seria P. O. Box 25, Seria KB1133, Negara Brunei Darussalam Website Address www.baiduri.com E-mail Address
[email protected] BAIDURI BANK BERHAD - List of Offices/Branches Head Office Block A, Units 1-4, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8300 Fax No: (673) 245 5599 Corporate Communications & Marketing Department Block A, Units 1-4, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8300 Fax No: (673) 245 5572 Card Centre Block A, Unit 8, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8300 Fax No: (673) 245 4184 Customer Helpdesk: (673) 245 4187 Loan Centre Block A, Unit 6, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8433 Fax No: (673) 245 4183 Wealth Management Centre Unit 10, Level 2, Seri Kiulap Complex, Kg Kiulap, Bandar Seri Begawan Tel No: (673) 223 2153 / 54 Fax No: (673) 223 2155 Business Services Centre Block B, Units 1-5, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8300 Fax No: (673) 245 5599 E-Banking Centre Block B, Units 1-5, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8386 Fax No: (673) 242 5741 Customer Helpdesk: (673) 242 5644 Email:
[email protected]
Beribi Branch Unit 1, Ground Floor, Sumbangsih Bahagia Kompleks Perindustrian Beribi Bandar Seri Begawan BE1118 Tel No: (673) 242 6827 Fax No: (673) 242 6829 Kiarong Branch Ground Floor, Block A, Unit 1, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Tel No: (673) 226 8300 Fax No: (673) 245 2888 Kiulap Branch Unit 10, Ground & 1st Floor, Seri Kiulap Complex Kg Kiulap BE1518 Tel No: (673) 223 6905 / 6 / 10 Fax No: (673): 223 6904 Kuala Belait Branch Units 2 & 3, Tang Ching Ying Bldg Jalan Sungai, Kuala Belait KA2331 Tel No: (673) 333 0650 Fax No: (673) 334 2297 Muara Town Branch Ground Floor, Bangunan Tiga Tingkat Pekan Muara BT1128 Negara Brunei Darussalam Tel No: (673) 277 1700 / 1 Fax No: (673) 277 1702 Sengkurong Branch Units 1 & 2, Ground Floor, Sengkurong Complex Kg Sengkurong A BG1121 Tel No: (673) 266 3960 Fax No: (673) 266 3959 Seria Branch Unit 10, Jalan Sultan Omar Ali, Seria Tel No: (673) 322 2450 / 438 / 960 / 963 Fax No: (673) 322 2433
Baiduri Bank Annual Report 2008 43
Offices, Branches and ATM Network
Serusop Branch Unit 1, Block A, Komplex Delima Jaya, Simpang 62 Jalan Muara, Kg Delima Satu BB4713 Tel No: (673) 234 3288 Fax No: (673) 234 3285 SupaSave Gadong Branch Units 7 & 8, SupaSave Gadong Kg Mata-Mata BE1718 Tel No: (673) 242 0627 / 29 Fax No: ((673) 242 0909 The Mall Branch Unit G-30, Ground Floor, The Mall Abdul Razak Complex, Gadong BE3519 Tel No: (673) 242 1498, 242 1398/96 Fax No: (673) 242 1415 Tutong Branch Unit 1, Ground & 1st Floor Tutong Central Mall, Kg Petani, Pekan Tutong TA1141 Tel No: (673) 426 0707 Fax No: (673) 426 0714 Yayasan Branch G.02, Ground Floor, Block A Yayasan Sultan Haji Hassanal Bolkiah Complex BS8711 Tel No: (673) 223 3233 Fax No: (673) 222 1891
Baiduri Bank Off-site ATM Locations Brunei International Airport Bunut Post Office Centrepoint, Gadong Giant Hypermarket, Tasik Rimba Grand City Hotel, Batu Bersurat Hua Ho Manggis Mall Hua Ho Mall, Tanjong Bunut Mail Processing Centre, Old Airport Berakas RIPAS Hospital Seri Q-lap Mall, Kiulap Soon Lee Megamart, Kuala Belait Soon Lee, Lambak Kanan Soon Lee, Sungai Liang SupaSave, Mabohai SupaSave, Panaga Petani Mall, Tutong
44
Baiduri Bank Annual Report 2008
BAIDURI FINANCE BERHAD (a wholly-owned subsidiary of Baiduri Bank) Head Office Sumbangsih Bahagia, Units 1-3 Ground and 1st Floor, Kompleks Perindustrian Beribi Highway End, Gadong BE1118 Tel No: (673) 242 6800 Fax No: (673) 245 0877 Kuala Belait Unit G20, Ground Floor Kompleks Harapan Jalan Setia Diraja, Kuala Belait KA3131 Tel No: (673) 333 0570 Fax No: (673) 333 0572 Website Address www.baidurifinance.com E-mail Address
[email protected]
Head Office: Block A, Units 1-4, Kiarong Complex Lebuhraya Sultan Hassanal Bolkiah BE1318 Brunei Darussalam Tel: (673) 226 8300 Fax: (673) 245 5599 Email:
[email protected]
www.baiduri.com