CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD(Incorporated in Malaysia)
Company No. 201601032761 (1203702-U)
Risk-Weighted Capital Adequacy Framework (Basel II)
Pillar 3 Disclosure
31 December 2022

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
Table of Contents

Page

1.0 Introduction

1

2.0 Scope of Application

1

3.0 Capital
3.1 Capital Adequacy
3.2 Capital Structure22
5

4.0 Risk Management

6

5.0 Credit Risk
5.1 Geographical Analysis
5.2 Industry/Sector Analysis
5.3 Maturity Analysis (Residual Contractual Maturity)
5.4 Impaired loans and impairment provision by economic sector
5.5 Impaired loans and impairment provision by geographical area
5.6 Reconciliation of changes to loan impairment provisions

7
10
11
13
14
15
17

6.0 Credit Rating
6.1 Credit Risk : Disclosure on risk weights under Standardised Approach
6.2 Rated Exposures according to Ratings by ECAIs

18
19
20

7.0 Credit Risk Mitigation
7.1 Disclosure on Credit Risk Mitigation

2224

8.0 Off-balance sheet exposures and counterparty credit risk (CCR)

26

9.0 Securitisation31

10.0 Market Risk

31

11.0 Liquidity Risk

33

12.0 Operational Risk

33

13.0 Interest Rate Risk in the Banking Book

35

14.0 Internal Capital Adequacy Assessment Process (ICAAP)

37

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
1.0 Introduction
China Construction Bank (Malaysia) Berhad (“CCBM” or “the Bank”) computes capital
adequacy ratios pursuant to the requirements of the Bank Negara Malaysia’s (“BNM”) Risk
Weighted Capital Adequacy Framework (“RWCAF”), and presents the Pillar 3 disclosure
twice a year (i.e. semi-annual and annual), which is consistent with the Basel II requirement
issued by the Basel Committee on Banking Supervision (“BCBS”). The following information
is provided in order to highlight CCBM’s capital adequacy and details of risk exposures.

2.0 Scope of Application
CCBM is a wholly-owned subsidiary of China Construction Bank Corporation (“CCB”). The
Bank is mainly engaged in commercial banking and related financial services in Malaysia.
The Bank does not offer Islamic financial services nor is it involved in Islamic banking
operations.
BNM disclosure requirement (“Pillar 3”) is applicable to all banking institutions licensed
under the Financial Services Act 2013 (“FSA”) and Islamic Financial Services Act 2013(“IFSA”). The purpose of Pillar 3 disclosure requirements is to enhance the transparency ofbanks’ risk management practices and capital adequacy.
CCBM adopts the Standardised Approach (“SA”) in computing the capital requirement for
credit risk and market risk while adopting the Basic Indicator Approach (“BIA”) in computing
the operational risk of the Pillar 1 under BNM’s RWCAF. Standard risk weights under SA
are used to assess the capital requirements for credit risk and market risk exposures. The
capital requirement for operational risk under BIA is computed based on the fixed
percentage over average gross income.
The following information have been reviewed by the independent party and certified by the
Bank’s Chief Executive Officer.

Page 1 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
3.0 Capital
CCBM uses stress testing and scenario analysis to assess capital adequacy under a wide
range of extreme but plausible scenarios. This exercise provides insight into potential
vulnerabilities and allows CCBM to implement mitigation measures.
CCBM risk appetite is closely integrated with its strategy, business planning and capitalassessment processes. CCBM risk appetite incorporates senior management’s views on thelevel of capital required to support business activities.
The Bank conducts a bank-wide exercise to identify the material risks to the organisation.
Each material risk is assessed to identify relevant mitigation actions and appropriate levelsof capital determined.
The Bank has in place processes and controls to monitor and manage capital adequacy
across the organisation.
In accordance to the BNM's Capital Adequacy Framework (Capital Components), CCBM
has elected for the transitional arrangement of provision for expected credit loss (ECL) to be
applied for three financial years beginning 1 January 2021. The first reporting period of thetransitional arrangement was for 31 January 2021 reporting.
As at 31 December 2022, there are no difference in the capital ratios computed inaccordance with or without the application of transitional arrangements.

3.1 Capital Adequacy
The Bank’s capital adequacy ratio is computed in accordance with the BNM’s Capital
Adequacy Framework. The following information shows the capital adequacy ratio of the
Bank and the breakdown of risk-weighted asset ("RWA") as of 31 December 2022.
31 December
2022
33.633%33.633%68.186%

CET I Capital Ratio
Tier I Capital Ratio
Total Capital Ratio

Page 2 of 38

31 December
2021
34.596%34.596%68.369%

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
3.1 Capital Adequacy (continued)
The RWA by exposures are breakdown based on the following major risk category:

31 December 2022
Risk Type

Credit Risk
On-balance sheet
exposures
Sovereign/Central Banks
Banks, development
financial institutions& MDBsCorporates
Other assets
Total on-balance
sheet exposures
Off-balance sheet
exposures
OTC derivatives
Credit-related off-balance
sheet exposures
Total off-balance
sheet exposures
Total Credit Risk
Market Risk

Interest rate risk
Foreign currency risk

Gross
exposure/
EAD before
CRM(RM'000)

Net
exposure/
EAD after
CRM(RM'000)

Riskweighted
AssetsCapitalrequirement
at 8%(RM'000)(RM'000)

1,361,206

1,361,206--

2,221,035
2,306,386-

2,221,035
2,306,386-

474,259
1,310,652-

37,941
104,852-

5,888,627

5,888,627

1,784,911

142,793

467,339

467,339

264,908

21,193249,011

249,011

225,549

18,044

716,350
6,604,977

716,350
6,604,977

490,457

39,237Gross exposures/
EAD before
CRM(RM'000)
Long position
Short position
275,130
272,791
40,016
124,984

Riskweighted
Assets(RM'000)

Capitalrequirement
at 8%(RM'000)

2,387
124,984

191
9,999

203,581

16,2862,606,320

208,506

Operational Risk
Total RWA and capitalrequirement

Page 3 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
3.1 Capital Adequacy (continued)
The risk-weighted asset (“RWA”) by exposures are breakdown based on the following majorrisk category:
31 December 2021
Risk Type

Credit Risk
On-balance sheet
exposures
Sovereign/Central Banks
Banks, development
financial institutions& MDBsCorporates
Other assets
Total on-balance
sheet exposures
Off-balance sheet
exposures
OTC derivatives
Credit-related off-balance
sheet exposures
Total off-balance
sheet exposures
Total Credit Risk
Market Risk

Interest rate risk
Foreign currency risk

Gross
exposure/
EAD before
CRM(RM'000)

Net
exposure/
EAD after
CRM(RM'000)

Riskweighted
AssetsCapitalrequirement
at 8%(RM'000)(RM'000)

1,991,221

1,991,221--

617,500
2,259,330-

617,500
2,259,330-

123,500
1,616,994-

9,880
129,360-

4,868,051

4,868,051

1,740,494

139,240

476,486

476,486

283,122

22,650293,699

293,699

206,674

16,534

770,185
5,638,236

770,185
5,638,236

489,796

39,184Gross exposures/
EAD before
CRM(RM'000)
Long position
Short position
5,334
5,331
115,364-

Riskweighted
Assets(RM'000)

Capitalrequirement
at 8%(RM'000)

115,364

9,229

203,485

16,2792,549,139

203,932

Operational Risk
Total RWA and capitalrequirement

Page 4 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
3.2 Capital Structure
Paid-up ordinary share capital is the capital issued by an entity to an investor, which is fully
paid-up where the proceeds of the issue are available and received immediately by theentity. The entity has no obligation to pay a coupon or dividend to the equity holder ofordinary shares. The capital is available for unrestricted and immediate use to cover risks
and losses, and enables the entity to continue the operation as usual.
The Bank’s total capital according to BNM’s Capital Adequacy Framework (Capital
Components) are as follows:

CET I Capital
Paid-up ordinary share capital
Retained profits
Regulatory reserves
Other reserves
Regulatory adjustments applied in the calculation of
CET I Capital
Total CET I/Tier I Capital
Tier II Capital
Tier II capital instruments meeting all relevant criteria
Loss provisions
Regulatory reserves
Total Tier II Capital
Total Capital

Page 5 of 38

31 December
2022(RM'000)

31 December
2021(RM'000)

822,600
114,957
2,800(26,361)

822,600
105,486(11,171)(37,401)
876,595(35,004)
881,911

878,000
19,763
2,800
900,563

833,500
27,403860,903

1,777,158

1,742,814

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
4.0 Risk Management
The Bank’s risk management framework sets the overarching principles to enable theidentification, measurement, and continuous monitoring of all relevant and material risks onbank-wide basis, supported by robust management information systems that facilitate
timely and reliable reporting of risks and the integration of information across the Bank.
The Bank’s risk management framework emphasis on strong risk culture and a welldeveloped risk appetite. Effective and efficient risk management safeguards the Bank’s
continuous existence and enables it to achieve its long term corporate goals.
The Board of Directors (“BOD”) has overall responsibility for the establishment andoversight of the Bank’s risk management framework. The BOD has established the Board
Risk Management Committee (“BRMC”) which is responsible for developing risk
management strategies and policies, monitoring the implementation and evaluating theBank's overall risk profile on a regular basis.
The Senior Management is responsible for establishing the risk management framework
and provides input to assist the BOD in discharging its oversight responsibilities.
Management Committees i.e. Assets and Liabilities Committee (“ALCO”) and the Risk
Management Committee (“RMC”) play a significant role in reviewing the development ofrisk management policies, defining the strategies and ensuring the risk management
outcomes are aligned with the Bank’s business strategies.
The main risks the Bank is exposed to are:
Credit risk
Market risk
Operational risk
Liquidity risk
Credit concentration risk (“CCR”)
Interest rate risk in the banking book (“IRRBB”)
Internal Audit Division provides assurance on adequacy and effectiveness of thegovernance process, risk management and internal control systems. The Risk
Management Division (“RMD”) provides support to the BOD and RMC by monitoring,
reviewing, reporting associated risks, implementing and coordinating the risk management
policies. RMD is also responsible in ensuring that the Bank’s risk management objectives
are aligned with the current business operating environment.

Page 6 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.0 Credit Risk
The credit risk management process is depicted as follows:

Credit risk is the risk of loss that arises from the failure of a counterparty to discharge its
contractual obligations or commitments to the Bank. The Bank’s exposure to credit riskarises primarily from the Bank’s lending, trade finance and its funding, investment andtrading activities from both on and off balance sheet transactions.
The Bank has established the Risk Management Committee (“RMC”) to monitor credit risk
exposure trends, asset quality, portfolio concentration analysis and credit related limits
controls. The RMC ensures that the Bank practices prudent underwriting standards that areconsistent with the Bank’s risk appetite and lending strategies.
The Bank has also established the Credit Committee to review and evaluate the borrowers’
credit ratings based on internal rating criteria and the suitability of credit risk mitigation suchas specific types of collaterals. Pre-emptive risk management tools such as collateralmanagement, watch list and management-action-triggers have been put in place toproactively monitor for signs of possible credit deterioration.

Page 7 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.0 Credit Risk (continued)
The Bank’s credit risk management process is independent of the business to protect the
integrity of the risk assessment process and decision making. Credit risk in respect of
exposures to corporate borrowers is measured and managed at both individual
counterparty level as well as at a portfolio level.
The Bank controls its concentration risk by means of appropriate structural limits andborrower limits based on creditworthiness. The exposures to individual clients or group arebased on the internal rating of the counterparty as well as group-wide borrowing limits andcapped by the regulatory ceiling.
In addition, the Bank has established limits to mitigate concentration risk within different
industry sectors so that the Bank’s exposures are evenly spread over various sectors withrefrainment from undesirable sectors.
A loan is considered past due when the counterparty has failed to make a principal orinterest payment when it is contractually due, whilst individual loan of more than 90 days
past due is classified as impaired and any other events occurred as per the policies. The
classification of impaired loans/financing and provision of the Bank for loans/financing
impairment is consistent with the standard under Malaysian Financial Reporting Standards.
Where individual loans are impaired, the individual impairment provision is set aside whenthe estimated recoverable amount is lower than the net book value of the loan. Additionally,
the Bank has applied the Expected Credit Loss based on local regulatory requirements.
BOD plays a crucial role in ensuring the proper oversight of the credit risk management in
CCBM, in line with the Bank’s capital strength, management expertise, risk appetite,business strategies and lending strategies. The BRMC assists BOD in evaluating andassessing the adequacy of strategies to manage the risks associated with CCBM’s
activities. The BRMC is also responsible with reviewing and evaluating the credit products
engaged by CCBM to ensure that it is conducted within the standards and policies set by
the BOD.
The RMC is responsible in reviewing the development of credit risk management policies,
defining the strategies and ensuring the outcomes are aligned with the Bank’s businessstrategies. The RMD constantly monitor the credit limit and assess the risks within credit
proposals, as well as preparing credit risk management related reporting to
BOD/management, Parent Bank and BNM as required.

Page 8 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.0 Credit Risk (continued)
The effective credit monitoring and review process is vital to ensure that CCBM is aware of
the condition of its credit exposures vis-à-vis its approved risk appetite and to facilitate early
identification of potential problem credits on a timely basis. All credit exposures will go
through a review process at least once a year. The Credit Management Division (“CMD”)
may initiate an ad-hoc review on any existing borrower if the market conditions associatedwith the borrower has changed in a way that may affect the borrower’s risk profile.

Page 9 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.1 Geographical Analysis
The gross credit exposures of financial assets are breakdown based on the geographical location where the credit risk resides, as follows:
31 December 2022
Credit Exposure

Malaysia(RM'000)

Hong Kong(RM'000)

China(RM'000)

Philippines(RM'000)

UAE(RM'000)

USA(RM'000)

Others(RM'000)

Sovereigns/Central Banks
Banks, development financial
institutions and MDBs
Corporates
Other assets
Total

1,361,206

-

-

-

-

-

-

2,221,819
2,466,097
6,049,122

95
197,536
197,631326,293326,293--

31,89331,89338
38

31 December 2021
Credit Exposure

Malaysia(RM'000)

Hong Kong(RM'000)

China(RM'000)

Philippines(RM'000)

UAE(RM'000)

USA(RM'000)

Others(RM'000)

Sovereigns/Central Banks
Banks, development financial
institutions and MDBs
Corporates
Other assets
Total

1,991,221

-

-

-

-

592,496
2,236,123
4,819,840

30
220,311220,341

296,522
133,338
429,860-

56,651
56,651Page 10 of 38

-

-

-

111,464
111,46480
80

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.2 Industry/Sector Analysis
The table below shows the breakdown of gross credit exposures by industry/sectors:
31 December 2022
Credit Exposure
SectorSovereigns& Central
Banks(RM'000)
Agriculture, hunting,forestry and fishing
Administrative andsupport service activities
Construction
Education, health andothersElectricity, gas and water
Finance, insurance andbusiness services
Government
Manufacturing
Real estate
Sector N.E.C
Telecommunications
Transport, storage
and communication
Wholesale & retail tradeand restaurant & hotel
Other business activities
Total

Category
Banks, Corporates
development
financial
institutions &MDBs(RM'000)(RM'000)

Total
Other
assets(RM'000)(RM'000)--

40,350-40,350--3,000
682,424-3,000
682,424--

126,780
131,929-

126,780
131,929

1,361,206-

2,580,138-

535,245717,857
194,202--4,476,589
717,857
194,202---231,572-

231,572

1,361,206

2,580,138

274
2,663,633-

274
6,604,977

Page 11 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.2 Industry/Sector Analysis (continued)
The table below shows the breakdown of gross credit exposures by industry/sectors:
31 December 2021
Credit Exposure
SectorSovereigns& Central
Banks(RM'000)
Agriculture, hunting,forestry and fishing
Administrative andsupport service activities
Construction
Education, health andothersElectricity, gas and water
Finance, insurance andbusiness services
Government
Manufacturing
Real estate
Sector N.E.C
Telecommunications
Transport, storage
and communication
Wholesale & retail tradeand restaurant & hotel
Other business activities
Total

Category
Banks, Corporates
development
financial
institutions &MDBs(RM'000)(RM'000)

Total
Other
assets(RM'000)(RM'000)

-

-

-

-

-

-

-

32,416653,997-

32,416653,997--

147,859
125,091-

147,859
125,091

1,991,221-

1,000,592-

353,906
674,861
220,459--

3,345,719
674,861
220,459---

435,423-

435,423

1,991,221

1,000,592

2,407
4
2,646,423

-

2,407
4
5,638,236

Page 12 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.3 Maturity Analysis (Residual Contractual Maturity)
The table below shows the breakdown of residual contractual maturity by different types of gross credit
exposures:
31 December 2022
Credit Exposure
Category

Sovereigns/Central Banks
Banks, development financial
institutions and MDBs
Corporates
Other assets
Total
31 December 2021
Credit Exposure
Category

Sovereigns/Central Banks
Banks, development financial
institutions and MDBs
Corporates
Other assets
Total

Up to oneyear
(RM'000)

Maturity
1-5 years(RM'000)> 5 years

Total(RM'000)(RM'000)

1,269,854

91,352-

1,361,206

2,481,139
791,941
4,542,934

98,999786,748
977,099

1,084,944
1,084,944

2,580,138
2,663,633
6,604,977

Up to oneyear
(RM'000)

Maturity
1-5 years(RM'000)> 5 years

Total(RM'000)(RM'000)

1,330,629

660,592-

1,991,221

774,272
874,306
2,979,207

226,320758,867
1,645,779

1,013,251
1,013,251

1,000,592
2,646,423
5,638,236

Page 13 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.4 Impaired loans and impairment provision by economic sector
The tables below show the breakdown of impaired loans and impairment provision by economic sector:a) Impaired loans by sector

Finance, insurance, real estate and business activities
Manufacturing
Construction
Wholesale and retail trade, and restaurant and hotels
Government and government agencies
Education, health and others
OthersTotal

31 December
2022(RM'000)-

31 December
2021(RM'000)-

31 December
2022(RM'000)-

31 December
2021(RM'000)-

31 December
2022(RM'000)-

31 December
2021(RM'000)-b) Past due loans by sector

Finance, insurance, real estate and business activities
Manufacturing
Construction
Wholesale and retail trade, and restaurant and hotels
Government and government agencies
Education, health and others
OthersTotalc) Individual impairment provisions by sector

Finance, insurance, real estate and business activities
Manufacturing
Construction
Wholesale and retail trade, and restaurant and hotels
Government and government agencies
Education, health and others
Others
Total

Page 14 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.4 Impaired loans and impairment provision by economic sector (continued)
The tables below show the breakdown of impaired loans and impairment provision by economic sector:d) Expected Credit Loss by sector
31 December
2022(RM'000)
396
8
660
1,296
3,470
7,601
2,729
3,603
19,763

Agriculture, hunting, forestry and fishing
Administrative and support service activities
Construction
Education, health and others
Electricity, gas and water
Finance, insurance and business services
Government
Manufacturing
Real Estate
Sector N.E.C
Telecommunications
Transportation, storage and communication
Wholesale & retail trade and restaurant & hotel
OthersTotal

31 December
2021(RM'000)
1,045
8,310
1,147
1,455
4,082
6,493
4,857
14
27,403

5.5 Impaired loans and impairment provision by geographical area
The tables below show the breakdown of impaired loans and impairment provision by geographical area:a) Impaired loans by geographical area
31 December
2022(RM'000)-

Malaysia
Hong Kong
China
Philippines
UAE
USA
Others
Total

Page 15 of 38

31 December
2021(RM'000)-

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.5 Impaired loans and impairment provision by geographical area (continued)
The tables below show the breakdown of impaired loans and impairment provision by geographical area:b) Past due loans by geographical area

Malaysia
Hong Kong
China
Philippines
UAE
USA
OthersTotal

31 December
2022(RM'000)-

31 December
2021(RM'000)-

31 December
2022(RM'000)-

31 December
2021(RM'000)-

31 December
2022(RM'000)
17,2342,271
233
25
19,76331 December
2021(RM'000)
23,945
2,052
1,020
379
7
27,403c) Individual provision by geographical area

Malaysia
Hong Kong
China
Philippines
UAE
USA
OthersTotald) Expected Credit Loss by geographic area

Malaysia
Hong Kong
China
Philippines
UAE
USA
Others
Total

Page 16 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
5.6 Reconciliation of changes to loan impairment provisions
31 December
2022(RM'000)

31 December
2021(RM'000)

Impaired loans and advances
At the beginning of the financial year
Classified as impaired during the financial year
Amount recovered
Amount written-off
Amount reclassified as performing
At the end of the financial year
Individual impairment allowance
Net impaired loans and advances--

Individual impairment allowance
At the beginning of the financial year
Allowance made during the financial year
Allowance written back during the financial year
At the end of the financial year--

Expected Credit Loss*At the beginning of the financial year
Allowance made during the financial year
Allowance written back during the financial year
At the end of the financial year

27,403
16,179(23,819)
19,76347,89928,511(49,007)
27,403

Page 17 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
6.0 Credit Rating
CCBM applies the credit ratings assigned by the External Credit Assessment Institutions(“ECAIs”), e.g. Standard & Poor’s Rating Services (S&P) and Moody’s Investors Service(Moody’s), that are recognised by BNM in its calculation of credit risk weighted assets forcapital adequacy purposes. The Bank applies external ratings for capital adequacy purposes
on a consistent basis as stipulate in BNM’s Capital Adequacy Framework (Basel II – Riskweighted Assets).
In addition, CCBM uses an internal rating model which is the Credit Risk Rating system toassist with the credit decision process. The Credit Risk Rating system has been developed
by CCB Parent Bank and is used across its global operations. It uses a combination ofquantitative and qualitative measures to determine the applicant’s credit rating.

Page 18 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
6.1 Credit Risk : Disclosure on risk weights under Standardised Approach
31 December 2022
Risk
Weights

0%
20%
35%
50%
75%
100%
150%
Average Risk Weights
Deduction from Capital Base
31 December 2021
Risk
Weights

0%
20%
35%
50%
75%
100%
150%
Average Risk Weights
Deduction from Capital BaseSovereigns &Central Banks(RM'000)
1,361,206-

Sovereigns &Central Banks(RM'000)
1,991,221-

Exposures after Netting and Credit Risk Mitigation
Banks,
Corporates
Regulatory
Residential
Development
Retails
Mortgages
Financial
Institutions& MDBs(RM'000)(RM'000)(RM'000)(RM'000)
684,705
2,246,669
399,535
333,469
1,579,393
-

-

-

-

Exposures after Netting and Credit Risk Mitigation
Banks,
Corporates
Regulatory
Residential
Development
Retails
Mortgages
Financial
Institutions& MDBs(RM'000)(RM'000)(RM'000)(RM'000)
379,383
775,240
297,256
225,352
133,338
1,836,446--

Page 19 of 38

-

-

Other
Assets(RM'000)-```
Exposures
after Netting &Credit Risk
Mitigation(RM'000)
2,045,911
2,646,204
333,469
1,579,393
6,604,977

Total Risk
Weighted
Assets

Total
Exposures
after Netting &Credit Risk
Mitigation(RM'000)
2,370,604
1,072,496
358,690
1,836,446
5,638,236

Total Risk
Weighted
Assets(RM'000)
529,241
166,734
1,579,393
2,275,368-

Other
Assets(RM'000)-(RM'000)
214,499
179,345
1,836,446
2,230,290

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
6.2 Rated Exposures according to Ratings by ECAIs
31 December 2022
Exposure ClassOn and Off Balance Sheet Exposures
Sovereign/Central Banks
Total
31 December 2022
Exposure ClassOn and Off Balance Sheet Exposures
Banks, MDBs and DFIs
Corporates
Total

Moody's
S& P
Fitch

Aaa to Aaa3
AAA to AAAAA to AA(RM'000)--

Moody's
S& P
Fitch
RAM
MARC

Aaa to Aaa3
AAA to AAAAA to AAAAA to AA3
AAA to AA(RM'000)-

1,161,416
399,535
1,560,951

A1 to A3
A+ to AA+ to A(RM'000)
1,361,206
1,361,206

A1 to A3
A+ to AA+ to AA to A3
A+ to A(RM'000)

Page 20 of 38

1,307,333
1,307,333

Baa1 to Baa3
BBB+ to BBBBBB+ to BBB(RM'000)

Ba1 to B3
BB+ to BBB+ to B(RM'000)

Caa1 to C
CCC to D
CCC to D(RM'000)

Unrated
Unrated
Unrated
(RM'000)---

Baa1 to Baa3
BBB+ to BBBBBB+ to BBBBBB+ to BBBBBB+ to BBB(RM'000)

Ba1 to B3
BB+ to BBB+ to BBB1 to B3
BB+ to B(RM'000)

Caa1 to C
CCC to D
CCC to D
C1 to D
C+ to D
(RM'000)

Unrated
Unrated
Unrated
Unrated
Unrated
(RM'000)

44,56344,563---

66,8262,264,098
2,330,924

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
6.2 Rated Exposures according to Ratings by ECAIs (continued)
31 December 2021
Exposure ClassOn and Off Balance Sheet Exposures
Sovereign/Central Banks
Total
31 December 2021
Exposure ClassOn and Off Balance Sheet Exposures
Banks, MDBs and DFIs
Corporates
Total

Moody's
S& P
Fitch

Aaa to Aaa3
AAA to AAAAA to AA(RM'000)--

Moody's
S& P
Fitch
RAM
MARC

Aaa to Aaa3
AAA to AAAAA to AAAAA to AA3
AAA to AA(RM'000)-

200,705
297,255
497,960

A1 to A3
A+ to AA+ to A(RM'000)
1,991,221
1,991,221

A1 to A3
A+ to AA+ to AA to A3
A+ to A(RM'000)

Page 21 of 38

741,401
741,401

Baa1 to Baa3
BBB+ to BBBBBB+ to BBB(RM'000)

Ba1 to B3
BB+ to BBB+ to B(RM'000)

Caa1 to C
CCC to D
CCC to D(RM'000)

Unrated
Unrated
Unrated
(RM'000)---

Baa1 to Baa3
BBB+ to BBBBBB+ to BBBBBB+ to BBBBBB+ to BBB(RM'000)

Ba1 to B3
BB+ to BBB+ to BBB1 to B3
BB+ to B(RM'000)

Caa1 to C
CCC to D
CCC to D
C1 to D
C+ to D
(RM'000)

Unrated
Unrated
Unrated
Unrated
Unrated
(RM'000)

50,08650,086

-

-

-

8,400
2,349,168
2,357,568

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
7.0 Credit Risk Mitigation
The Bank has established sound internal processes and procedures that support reliablevaluation, adequate monitoring of the collateral’s allocation and utilization, timely liquidation,marketability as well as identifying any potential encumbrances in securing control over thecollateral. All processes and procedures are reviewed at least annually.
Credit risk identified during the risk identification process must be adequately assessed tomitigate/control the risk of loss. CCBM established a few methods in order to mitigate credit
risks, such as lending criteria, collateral acceptance criteria, limits setting and loan
covenants.
The repayment ability of the borrower is of paramount importance. The acceptance of
acceptable collateral/securities must never be regarded as a substitute for repayment ability
and collaterals are taken as secondary source of repayment in case the counterparty
cannot meet its contractual obligations.
The acceptable collaterals/securities for CCBM are, but not limited to,• Cash security• Freely tradeable Malaysia Quoted Shares• Freely tradeable Malaysia Government Securities• Freely tradeable Corporate Bonds• Residential, Commercial or Industrial Property• Plant and machineries• Motor vehicles, planes and vessels
Financing or loan may also be granted by the Bank on clean basis if the customer’s risk
profile is acceptable within the risk appetite of the Bank.
Guarantee support
Guarantee support is accepted as a risk mitigating measure to improve the risk profile ofthe borrower and to mitigate inherent risk. The Bank ensures proper assessment on thecorrelation between the value of collateral and the strength of the guarantor, vis-à-vis thecreditworthiness of the original counterparty.
Guarantees that are recognised by the Bank include personal guarantee, corporate
guarantee and bank guarantee. The strength of the guarantor is subject to the financial
standing and internal credit rating model. The Bank has in place a sound and well-defined
credit acceptance criteria for the guarantee support.

Page 22 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
7.0 Credit Risk Mitigation (continued)
Loan structuring techniques to mitigate identified credit risks
Apart from the collateral requirement and guarantee support, the Bank emphasises soundstructuring techniques to fulfil the financing requirements of the borrower while
simultaneously attempting to protect the Bank against loss resulting from the failure of theborrower in repayment. These include but are not limited to loan/financing covenant,
repayment schedule and preferred types of loans/facilities.
Simple Approach
CCBM adopts Simple Approach within the banking book on a consistent basis in granting
credit facilities to customers. As at the reporting date, the main types of collateral obtained tomitigate credit risks are in the form of cash deposit and guarantee (bank and government).
In applying the credit risk mitigation, CCBM adopts clear and robust procedures for timely
liquidation of collateral to ensure it meets minimum conditions for the Recognition of Credit
Risk Mitigation Techniques, as guided by the BNM’s guideline “Capital Adequacy Framework(Basel II – Risk-Weighted Assets)”.

Page 23 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
7.1 Disclosure on Credit Risk Mitigation
The tables below illustrate the credit mitigation condition:
31 December 2022
Exposure Class

Gross
exposure
before CRM(RM'000)
Credit Risk
On-Balance Sheet
Exposures
Sovereigns/Central Banks
Banks, development
financial institutions
and MDBs
Corporates
Regulatory retails
Residential mortgages
Higher risk assets
Other assets
Specialised Financing/
Investment
Equity exposures
Securitisation exposures
Defaulted exposures
Total On-Balance
Sheet Exposure
Off-Balance Sheet
Exposures
OTC derivatives
Credit derivatives
Off-balance sheet
exposures other thanOTC derivatives or
credit derivatives
Defaulted exposures
Total Off-Balance
Sheet Exposure
Total On and Off Balance
Balance Sheet
Exposures

Exposurescovered byguarantees/creditderivatives(RM'000)

Exposurescovered byeligiblefinancialcollateral(RM'000)

Exposurescovered byothereligiblecollateral(RM'000)

1,361,206---

2,221,035
2,306,386-

670,363
-

5,744
-

-

-

-

-

5,888,627

670,3635,744-

467,339----

249,011
-

-

8,599
-

-

716,350

-

8,599

-

6,604,977

670,363

14,343--

Page 24 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
7.1 Disclosure on Credit Risk Mitigation (continued)
The tables below illustrate the credit mitigation condition:
31 December 2021
Exposure Class

Gross
exposure
before CRM(RM'000)
Credit Risk
On-Balance Sheet
Exposures
Sovereigns/Central Banks
Banks, development
financial institutions
and MDBs
Corporates
Regulatory retails
Residential mortgages
Higher risk assets
Other assets
Specialised Financing/
Investment
Equity exposures
Securitisation exposures
Defaulted exposures
Total On-Balance
Sheet Exposure
Off-Balance Sheet
Exposures
OTC derivatives
Credit derivatives
Off-balance sheet
exposures other thanOTC derivatives or
credit derivatives
Defaulted exposures
Total Off-Balance
Sheet Exposure
Total On and Off Balance
Balance Sheet
Exposures

Exposurescovered byguarantees/creditderivatives(RM'000)

Exposurescovered byeligiblefinancialcollateral(RM'000)

Exposurescovered byothereligiblecollateral(RM'000)

1,991,221---

617,500
2,259,330-

465,625
-

5,576
-

-

-

-

-

4,868,051

465,6255,576-

476,486----

293,699--

41,520--770,185-

41,520-5,638,236

465,625

47,096--

Page 25 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
8.0 Off-balance sheet exposures and counterparty credit risk (CCR)
Off-Balance sheet exposures are measured according to counterparty credit limit granted. In theevent where credit limit is insufficient or not granted, the Bank will require counterparty to provide
collateral, typically cash.
Off-Balance Sheet exposures of the Bank are mainly composed of the following:• Bank Guarantee and Standby Letter of Credit• Documentary Letter of Credit• Commitments to extend credit including the unutilised or undrawn portion of credit facilities• Derivative financial instruments e.g. FX contracts, interest rate swaps, cross currency swaps
To mitigate the CCR, the creditworthiness of the counterparty is thoroughly assessed, coupledwith the establishment and monitoring of credit limits for counterparty credit exposure that are inline and consistent with CCBM’s overall credit risk strategies and appetites.
However, the Bank engages in netting and margining agreements with major trading
counterparties to mitigate CCR. Under these arrangements, CCBM levies on collateral (cash only)
from counterparty whenever the exposures exceed the threshold.

Off-balance sheet and CCR
31 December 2022
Description

Principal
AmountDirect credit subsitutes(RM'000)
4,996

Transaction related
contingent items

185,970

Short term selfliquidating traderelated contingencies
Foreign exchange related
contracts
One year or lessOver one year to five years
Over five years

Gross
Positive Fair
Value ofContracts(RM'000)-

CreditEquivalent
AmountRisk
Weighted
Assets(RM'000)
4,996(RM'000)
4,996-

92,98469,523

13,723

-

2,746

2,745

9,822,457
1,159,643
511,678

108,816
41,574-

237,179
108,788
56,02099,68955,44056,020Page 26 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
8.0 Off-balance sheet exposures and counterparty credit risk (CCR) (continued)
Off-balance sheet and CCR
31 December 2022
Description

Interest/Profit rate
related contracts
One year or lessOver one year to five years
Over five years

Principal
AmountCreditEquivalent
AmountRisk
Weighted
Assets(RM'000)

Gross
Positive Fair
Value ofContracts(RM'000)(RM'000)(RM'000)

1,394,500
1,234,643
511,678

3,592
1,745
-

4,982
22,757
37,613

1,642
14,504
37,613Equity related contracts
One year or lessOver one year to five years
Over five years

-

-

-

-

Credit derivatives contracts
One year or lessOver one year to five years
Over five years

-

-

-

-

OTC derivative transactions
and credit derivatives
contracts subject to valid
bilateral netting agreements

-

-

-

-

Other commitments, such asformal standby facilities andcredit lines, with an original
maturity of up to one year

254,106-

127,053

127,053

Other commitments, such asformal standby facilities andcredit lines, with an original
maturity of over one year

106,160-

21,232

21,232

Page 27 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
8.0 Off-balance sheet exposures and counterparty credit risk (CCR) (continued)
Off-balance sheet and CCR
31 December 2022
Description

Principal
Amount(RM'000)
Any commitments that areunconditionally cancelled at
any time by the bank without
prior notice or that effectively
provide for automatic
cancellation due todeterioration in a borrower's
creditworthiness

Gross
Positive Fair
Value ofContracts(RM'000)

1,091,333

CreditEquivalent
AmountRisk
Weighted
Assets(RM'000)(RM'000)---

Unutilised credit card lines

-

-

-

-

Off-balance sheet items forsecuritisation exposures

-

-

-

-

Off-balance sheet exposuresdue to early amortization
provisions

-

-

-

-

155,727

716,350

490,457

Total

16,290,887

Page 28 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
8.0 Off-balance sheet exposures and counterparty credit risk (CCR) (continued)
Off-balance sheet and CCR
31 December 2021
Description

Principal
AmountDirect credit substitutes(RM'000)-

Transaction related
contingent items

232,520

Short term selfliquidating traderelated contingencies

64,260Gross
Positive Fair
Value ofContracts(RM'000)-

CreditEquivalent
AmountRisk
Weighted
Assets(RM'000)-(RM'000)--

116,260

39,690-12,852

2,397

Foreign exchange related
contracts
One year or lessOver one year to five years
Over five years

10,618,901
1,584,461
589,998

32,720-212,347
109,216
71,02580,57863,52971,025Interest/Profit rate
related contracts
One year or lessOver one year to five years
Over five years

997,329
1,984,512
589,998

7,868
5,190
4,619

1,315
35,40447,179811
20,00047,179Equity related contracts
One year or lessOver one year to five years
Over five years

-

-

-

-

Credit derivatives contracts
One year or lessOver one year to five years
Over five years

-

-

-

-

OTC derivative transactions
and credit derivatives
contracts subject to valid
bilateral netting agreements

-

-

-

-

Page 29 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
8.0 Off-balance sheet exposures and counterparty credit risk (CCR) (continued)
Off-balance sheet and CCR
31 December 2021
Description

Principal
Amount(RM'000)

Gross
Positive Fair
Value ofContracts(RM'000)

CreditEquivalent
AmountRisk
Weighted
Assets(RM'000)(RM'000)

Other commitments, such asformal standby facilities andcredit lines, with an original
maturity of up to one year

329,173-

164,587

164,587

Other commitments, such asformal standby facilities andcredit lines, with an original
maturity of over one year

-

-

-

-

Any commitments that areunconditionally cancelled at
any time by the bank without
prior notice or that effectively
provide for automatic
cancellation due todeterioration in a borrower's
creditworthiness

500,031---

Unutilised credit card lines

-

-

-

-

Off-balance sheet items forsecuritisation exposures

-

-

-

-

Off-balance sheet exposuresdue to early amortization
provisions

-

-

-

-

50,397770,185489,796

Total

17,491,183

Page 30 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
9.0 Securitisation
CCBM does not engage in securitisation activities.

10.0 Market Risk
The market risk management process is depicted as follows:

Market risk is defined as the risk of losses in on and off-balance sheet positions arisingfrom movements in market prices in the Trading book. Market risk is also applicable to theInvestment book, where CCBM invests in bonds, money market instruments andderivatives.
The RMC is responsible for leading the establishment of market risk management policies
and rules, developing market risk measurement tools, monitoring and reporting the market
risk. In addition, the Assets and Liabilities Committee (“ALCO”) is responsible for managing
interest rate risk, exchange rate risk and the size and structure of the Bank’s assets andliabilities in response to market conditions.
The Bank’s interest rate risk mainly comprises repricing risk and basis risk arising frommismatch of term structure and pricing basis of assets and liabilities. The Bank uses
multiple tools such as repricing gap analysis, sensitivity analysis, scenario analysis andstress testing, etc. to monitor the interest rate risk on regular basis.

Page 31 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
10.0 Market Risk (continued)
The Bank's foreign exchange exposure mainly comprises exposures from customers driven
portfolios and the subordinated loan, and manages this risk by entering into offsetting
transactions with other banks and non-bank financial institutions.
The BOD has the ultimate responsibility to ensure that market risks are properly governedand managed within CCBM, as well as deciding on the overall framework for management
and controlling market risks. The ALCO and RMC are responsible in reviewing thedevelopment of market risk management policies, defining the strategies and ensuring theoutcomes are aligned with the Bank’s business strategies.
The RMD plays a key role in supporting and guiding the business units in theimplementation of CCBM’s market risk management policy and tools, particularly inpromoting and inculcating market risk awareness culture across the Bank.
Financial Markets Division is responsible for daily management of the interest rate andforeign currency position of CCBM within the predetermined limits and is responsible for
initiating all required hedging transactions. The internal audit division is responsible forproviding ongoing focus on the internal control system and periodic reviews, i.e. regularreview of the market risk management processes, in compliance with approved policies.
Among the methods adopted in the monitoring and management of market risk are portfolio
analysis, limits setting, open position monitoring and stress testing. Any anomalies
observed will be discussed with the front office and where relevant escalated to Senior
Management for exception management.
For capital requirement, the Bank has adopted the Standardised Approach.
Capital Charge Requirement

Interest rate risk
Equity position risk
Foreign exchange risk
Commodity risk
OthersTotal capital charge requirement
Total RWA for Market Risk

Page 32 of 38

31 December
2022(RM'000)
191
9,999
10,19031 December
2021(RM'000)
9,229
9,229

127,371

115,364

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
11.0 Liquidity Risk
Liquidity risk is the risk that occurs when the Bank cannot obtain sufficient funds in time andat a reasonable cost to repay debts when they are due, fulfil other payment obligations, ormeet the other funding needs in its regular business.
The Bank’s objective for liquidity risk management is to ensure the Bank’s payment andsettlement security and maintain an optimal balance between liquidity position andprofitability.
The Bank’s ALCO takes the lead in managing the Bank’s liquidity risks. Financial Markets
Division will ensure proper execution of liquidity risk management actions based on
management's decisions. ALCO is responsible for the formulation of liquidity risk
management guidelines including limit management and contingency planning. Stresstesting is conducted periodically to gauge the Bank’s risk tolerance in adverse situations
including extreme scenarios. The Bank uses a variety of liquidity risk measurement tools
including liquidity coverage ratio (“LCR”), net stable funding ratio (“NSFR”), cashflow
analysis, remaining contractual maturities and deposits concentration analysis.

12.0 Operational Risk
Operational Risk is defined as the risk of incurring losses arising from inadequate or failed
internal processes, people and systems or from external events. It includes a wide
spectrum of heterogeneous risks such as fraud, physical damage, business disruption,transaction failures, legal and regulatory breaches as well as employee health and safety
hazards.
The RMC is responsible for developing the operational risk management policies,
framework and methodologies, and put in place operational risk management tools such as
Key Risk Indicators, and incident and loss event management. The Bank adopts the 3-linesof defence model for holistic oversight on operational risk management.
The Bank carries out periodical risk and business impact analysis through its material risk
assessment and established its Business Continuity and Disaster Recovery plans which are
subject to regular testing.
The Bank has established risk appetite to monitor and control operational risk lapses
including those related to system availability.

Page 33 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
12.0 Operational Risk (continued)
The BOD is responsible for the oversee of all risks of CCBM including any operational riskthat arises and ensure that operational risks are properly governed and managed within
CCBM. The BRMC is responsible for, and provides the overall direction and supervision forthe operational risk management of CCBM. Senior Management is responsible to ensurethat all necessary risk management tools, methodologies, policies, operational manuals
and technology infrastructure are in place and applied through the combination of top-down
and bottom-up approach in risk identification and assessment methodologies.
The RMD plays a key role in supporting and guiding the business/ support units in theimplementation of CCBM’s operational risk management policy and tools, particularly inpromoting and inculcating operational risk awareness culture across the Bank. Regular
operational risk reporting is submitted to Senior Management and BOD on timely basis.
The Bank currently adopts Basic Indicator Approach (BIA) for the computation of
Operational Risk is in line with BNM’s guidelines.

Page 34 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
13.0 Interest Rate Risk in the Banking Book
Interest rate risk in the Banking Book (“IRRBB”) is the risk to earnings or capital arisingfrom movement of interest rates. In order to maintain interest rate risk at prudent level, it isessential for CCBM to maintain an effective measurement system.
The Senior Management is responsible for establishing the interest rate risk framework andprovides input to assist the BOD in discharging its oversight responsibilities. Management
Committees i.e. Assets and Liabilities Committee (“ALCO”) and the Risk Management
Committee (“RMC”) are responsible for reviewing the development of risk management
policies, defining the strategies and ensuring the risk management outcomes are alignedwith the Bank’s business strategies.
In monitoring the Bank’s earnings based on interest rate risk framework, the Bank uses there-pricing gap analysis as the primary tool. The rate sensitive assets and liabilities are
profiled based on the re-pricing dates and the impact is derived accordingly. The monitoring
is focused on the risk arising from interest rates settled on liabilities which differ from
offsetting assets in the respective repricing/maturity periods.
In addition, the Bank is also monitoring the re-pricing risk arising from repricing/maturity intiming differences for floating-rate and fixed-rate bank assets, liabilities and off-balancesheet positions.
The primary tool is also used to monitor the interest rate risk impact on the net assets value
is the economic value of equity (“EVE”) analysis.

Page 35 of 38

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
13.0 Interest Rate Risk in the Banking Book (continued)
Interest rate risk in the banking book is computed based on the projection made with theassumption that interest rate moves up and down parallel by 100 basis points (“bps”) across all
maturities buckets for all the interest bearing assets and liabilities. The loan profile was projectedbased on earlier of its repricing tenor or final maturity date.
31 December 2022
Currency

MYR
USD
CNY
EUR
SGD
OthersTotal
31 December 2021
Currency

MYR
USD
CNY
EUR
SGD
Others
Total

Increase/(Decrease) in
Economic Value+100 bps-100 bps(RM'000)(RM'000)(39,711)
9,195
2,857
6
1
(27,652)

39,711(9,195)(2,857)(6)(1)
27,652

Increase/(Decrease) in
Economic Value+100 bps-100 bps(RM'000)(RM'000)(37,154)
8,742
3,356
6
(25,050)

37,154(8,742)(3,356)(6)
25,050Page 36 of 38

Increase/(Decrease) in
Earnings+100 bps-100 bps(RM'000)(RM'000)(9,553)
6,325
3,604
4
1
3
384

9,553
(6,325)(3,604)
(4)
(1)
(3)
(384)

Increase/(Decrease) in
Earnings+100 bps-100 bps(RM'000)(RM'000)(3,433)
5,595
2,623
7
1
2
4,795

3,433
(5,595)(2,623)(7)(1)(2)(4,795)

CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
14.0 Internal Capital Adequacy Assessment Process (ICAAP)
ICAAP is a Pillar 2 process where CCBM conducts internal capital adequacy requirements
under 3-years forward looking scenarios. The Bank’s ICAAP is guided by the ICAAP
manual detailing the roles and responsibilities, approaches, and methodologies for
identifying and measuring risks. Stress testing, governance and capital planning are alsopart of the process. In addition, an independent party is appointed to review the process.
The stress testing scenarios are baseline, exceptional but plausible and worst case. These
scenarios incorporate the Bank's 3 years business plan and forward looking macroeconomic conditions. This exercise enables the Bank to have an insight into its risk profile
and allows it to implement mitigation measures.

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CHINA CONSTRUCTION BANK (MALAYSIA) BERHAD
Company No. 201601032761 (1203702-U)(Incorporated in Malaysia)
PILLAR 3 DISCLOSURE
31 December 2022
CHIEF EXECUTIVE OFFICER ATTESTATION
In accordance with Bank Negara Malaysia’s Risk Weighted Capital Adequacy Framework(Basel II) – Disclosure Requirements (Pillar 3), I hereby attest that to the best of myknowledge, the disclosures contained in China Construction Bank (Malaysia) Berhad Pillar
3 Disclosure report for the financial year ended 31 December 2022 are consistent with themanner the Bank assesses and manages its risk, accurate, complete and not misleading inany particular way.

Wang Qijie
Chief Executive Officer
Date : 29 March 2023

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