Southern Bank Berhad 1998 Annual Report

“At Southern Bank Berhad,
we are committed to customer
service excellence in all markets
we seek to serve, creating and
maximising value for all
constituents.”
SOUTHERN␣ BANK␣ BERHAD␣ (5303-W)
Contents
Notice of Annual General Meeting 2-3 Southern Bank as Change Catalyst 31
Board of Directors 4 Corporate Restructuring 32-34
Corporate Information 4 Channel Strategies 35-37
Corporate Structure 5 Strategic Alliances:

MIMOS and SCANS 38-39
Five Year Group Financial Highlights 6
Subsidiary Companies of the Bank 40-42
Management of the Bank 7
Corporate Events 43-45
Management of Subsidiary Companies 8
Financial Network
Audit Committee 9 Southern Bank Berhad Branches 46-47
Subsidiary Companies
Message to Shareholders 10-16 of the Bank 48
Performance at a Glance 17 Financial Statements 49-102
Lending Directions 18-23 List of Bank Group’s Properties 103
Treasury Management 24-27 Analysis of Shareholdings 104-105
IT Industry Leadership 28-30 Form of Proxy

2 SOUTHERN␣ BANK␣ BERHAD␣ (5303-W)
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Thirty-Seventh Annual General

Meeting of Southern Bank Berhad will be held at Ballroom A, First Floor,
Renaissance Kuala Lumpur Hotel, Corner of Jalan Sultan Ismail and
Jalan Ampang, 50450 Kuala Lumpur on Wednesday, 16 June 1999, at 9.30 a.m.
for the purpose of considering and, if thought fit, passing the following resolutions:
1. “That the Report of the Directors and the Accounts for the year ended
31 December 1998 of the Bank, together with the Report of the Auditors
therein as presented be and are hereby received and adopted”. Resolution 1
2. “That the Directors’ remuneration of Ringgit One Million Seventy Thousand

Eight Hundred And Forty Only (RM1,070,840) for the year ended 31 December
1998 be and is hereby approved”. Resolution 2
3. “That Dr Maisarah bte Abdullah who retires under Article 116 of the Bank’s
Articles of Association be and is hereby re-elected as a Director of the Bank”.
Resolution 3
4. (a) “That pursuant to Section 129(6) of the Companies Act, 1965, Mr Lim
Pak Tow be re-appointed as a Director of the Bank to hold office until
the conclusion of the next Annual General Meeting”. Resolution 4(a)
(b) “That pursuant to Section 129(6) of the Companies Act, 1965, Dato’
Dr Yahya bin Ismail be re-appointed as a Director of the Bank to hold
office until the conclusion of the next Annual General Meeting”.
Resolution 4(b)
5. “That a first and final dividend of 4.5 % gross in respect of the financial year
ended 31 December 1998, payable to entitled shareholders of the Bank, based
on the share capital of Ringgit Seven Hundred Ninteen Million Five Hundred
Five Thousand Six Hundred Eighty Nine Only (RM719,505,689), be and is
hereby approved. Resolution 5
6. “That Messrs Kassim Chan & Co., the retiring auditors, be and are hereby
re-appointed auditors of the Bank to hold office until the conclusion of the next
Annual General Meeting of the Bank at which Accounts are laid before the Bank,
and that the Directors be authorised to fix their remuneration”. Resolution 6
SOUTHERN␣ BANK␣ BERHAD␣ (5303-W) 3
NOTICE OF CLOSURE OF BOOKS
NOTICE IS ALSO HEREBY GIVEN THAT the Transfer Books and Register of
Members of the Company will be closed on 23 June 1999 and that duly completed
transfers received by the Company’s Share Registrars, Panama Resources Sdn Bhd,
No. 23, Jalan Sri Hartamas 7, Sri Hartamas, 50480 Kuala Lumpur up to 5.00 p.m. on
23 June 1999 will be registered before shareholders’ entitlement to the dividend is
determined. If approved, the first and final dividend will be paid on 20 July 1999.
A depositor shall qualify for entitlement to the dividend only in respect of:
a. Shares deposited into the Depositor’s Securities Account on or before 12.30 p.m. on
21 June 1999 (in respect of shares which are exempted from mandatory deposit);
b. Shares transferred to the Depositor’s Securities Account on or before 12.30 p.m. on
23 June 1999;
c. Shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis
according to the Rules of the Kuala Lumpur Stock Exchange.
By Order Of The Board
Tan Ghee Kay

Company Secretary
Kuala Lumpur
1 June 1999
NOTES:
The rights of Foreigners to vote in respect of their deposited securities is subject to Section 41(1)(e) and Section 41(2) of the
Securities Industry (Central Depositories) Act, 1991 and Securities Industry (Central Depositories) (Foreign Ownership)
Regulations, 1996.The position of such Depositors in this regard will be determined based on the General Meeting Record
of Depositors. Such Depositors, whose shares exceed the Company’s foreign shareholding limit of 30% as at the date of the
General Meeting Record of Depositors, may attend the above Meeting but are not entitled to vote. Consequently, a proxy
appointed by such Depositor who is not entitled to vote will also not be entitled to vote at the above Meeting.
A member of the Company entitled to attend and vote at the above Meeting is entitled to appoint a proxy to vote on his
behalf. A proxy need not be a member of the Company but shall be either an advocate, an approved company auditor
or a person approved by the Registrar of Companies. The instrument appointing the proxy shall be in writing under the
hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, under its Common Seal.
An instrument appointing a proxy executed in Malaysia need not be witnessed. The signature to an instrument appointing
a proxy executed outside Malaysia shall be attested by a solicitor, notary public, consul or magistrate.
Where a member appoints two proxies, the appointment shall be invalid unless he specifies the proportion of his holdings
to be represented by each proxy. In the case of joint holdings, the signatures of all joint holders are required.
The instrument appointing a proxy must be deposited at the Registered Office of the Company, 20th Floor,
Wisma Genting, 28 Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time set for the Meeting
and any adjournment thereof.
Corporate Information
BOARD OF DIRECTORS Chairman

YBhg Tan Sri Osman S Cassim
PSM., JSM., KMN.
Chief Executive Director

YBhg Dato’ Tan Teong Hean
SIMP., DSAP., DIMP., FIBM.
Directors
YBhg Dato’ Dr Yahya bin Ismail
DPCM., DPMJ., DPMP., KMN.
YBhg Dato’ Dr Salim Cassim

DPMT., DSM.
Lim Pak Tow

Sim Kee Boon
Dr Maisarah bte Abdullah
C O R P O R AT E I N F O R M AT I O N Secretary
Tan Ghee Kay
Auditors
Kassim Chan & Co Public Accountants
Level 19, Uptown 1
1, Jalan SS21/58
Damansara Uptown, 47400 Petaling Jaya
Selangor, Malaysia
Registrars
Panama Resources Sdn Bhd
23, Jalan Sri Hartamas 7
Sri Hartamas
50480 Kuala Lumpur
Tel: (03) 6511120 / 6515451
Fax: (03) 6513121
Registered Office
Corporate Headquarters
20th Floor, Wisma Genting
28, Jalan Sultan Ismail
50250 Kuala Lumpur
Tel: (03) 2637000
Fax: (03) 2320651
Web: http://www.sbbgroup.com.my
E-mail: info@sbbgroup.com.my
Listing
Kuala Lumpur Stock Exchange Main Board
Corporate Structure
100% Southern Finance Company Berhad

Core businesses amalgamated with
the businesses of the Bank
100% SBB Unit Trust Management Bhd
Unit Trust Services
100% SBB Asset Management Sdn Bhd

Fund Management Services
100% SBBAM Nominees (Tempatan) Sdn Bhd

Nominee Services for Locals
100% SBBAM Nominees (Asing) Sdn Bhd
Nominee Services for Foreigners
100% S.B. Venture Capital Corporation Sdn Bhd

Venture Capital
100% Southern Nominees (Asing) Sdn Bhd

100% Southern Nominees (Tempatan) Sdn Bhd

100% SBB Futures Sdn Bhd

Dormant
100% S.B. Properties Sdn Bhd

Property Management
100% Elite Constant Development Sdn Bhd
Building Construction
100% SBB Capital Markets Sdn Bhd

Investment in Capital Markets
70% SBB Securities Sdn Bhd
Stockbroking
100% RC Nominees (Tempatan) Sdn Bhd
100% RC Nominees (Asing) Sdn Bhd
51% Investil - Investimentos Associados Limitada

Investment Holding
60% Banco Austral S.A.R.L.

Banking
Five Year Group Financial Highlights
1994 1995 1996 1997 1998

Results (RM’000)
Profit before tax and zakat 95,809 111,202 173,725 122,201 78,489
Profit after tax, zakat and
minority interests 60,018 68,489 108,184 83,430 37,186
……………………………………………………………………………………………………………………………
Balance Sheet (RM’000)
Total assets (excluding contra) 4,981,103 5,617,676 7,324,446 9,203,476 9,075,128
Net tangible assets 321,281 585,523 675,960 1,176,759 1,176,511
Loans and advances 2,712,136 3,346,691 4,508,906 5,437,417 6,067,600
Deposits from customers 4,148,357 4,379,095 5,594,797 6,781,038 6,430,621
Paid-up capital 146,125 213,171 319,757 719,506 719,506
Shareholders’ funds 326,768 590,749 680,925 1,181,463 1,197,554
……………………………………………………………………………………………………………………………
Ratio :
Dividend rate (Gross) 12% 12% 12% 10% 4.5%
Net tangible assets
per RM1 share (RM) 2.20 2.75 2.11 1.64 1.64
Net return on average
shareholders’ funds 19.9% 14.9% 17.0% 9.0% 3.1%
Basic earnings per share (sen) 18.3 15.2 22.6 17.4 5.2
Net return on average assets 1.4% 1.3% 1.7% 1.0% 0.4%
Loans and advances to deposits 65.4% 76.4% 80.6% 80.2% 94.4%
Management of the Bank
Chief Executive Director Loans

Dato’ Tan Teong Hean General Manager
Chan Hon Thiam
Corporate Advisory Division – Secretariat / Legal
Company Secretary / General Counsel Corporate Banking
Tan Ghee Kay General Manager, Local Corporate
Chan Hon Thiam
Chief Executive Planning Group
Manager, National Banking
Manager, Special Projects
Winston Lai Tak Kong
(Special Assignments 1)
Teh Beng Hooi Manager, Loan Administration
Rosalind Lee Eng Peng
Manager, Special Projects
Seah Chong Leng
Consumer Banking
Manager, Personal Banking
Corporate Services & Information
Mohammad Tahir Haji Hashim
General Manager
Nordin bin Yahaya
International Banking
Manager, Administration & Properties Deputy Manager
Lee Bee Suan Lam Kam Wah
Group Financial Control Division Direct Banking

Chief Accountant Manager, Marketing & Product Development
Ng Gek Siu Helen Yeoh
Manager, Credit & Risk Management
Group Finance
Foo Meng Heng
Manager
Yap Choi Foong
Enterprise Banking
Manager
Group Information Technology
Constance Goh
Senior Manager
Tan Hui Khim
Electronic Banking
Manager
Corporate Human Resources
Cheong Weng Seng
Deputy Manager
Irene Loke
Islamic Banking Division
General Manager
Retail Banking
Nordin bin Yahaya
General Manager
Tengku Zaitun bt Tengku Mahadi
Corporate Finance
Manager
Payment Systems
Rodney Koh Ngiap Teik
General Manager
Wong Pin Siong
Internal Audit
Chief Internal Auditor
Selvarajah s/o Namasiwayam
Management of Subsidiary Companies
SBB Securities Sdn Bhd S.B. Properties Sdn Bhd
Chief Executive Officer General Manager

James Lau Yew Kong Terry James Pilbeam
Manager
SBB Asset Management Sdn Bhd Lee Bee Suan
Chief Executive Officer

Pearl Wong Southern Nominees (Tempatan) Sdn Bhd
Southern Nominees (Asing) Sdn Bhd

SBB Unit Trust Management Berhad Company Secretary
General Manager Tan Ghee Kay
Geoff Stecyk
Banco Austral S.A.R.L.

S.B.Venture Capital Corporation Sdn Bhd Chief Executive Officer
Manager K Muganthan
Eu Sim Wai
Audit Committee
MEMBERS
The Audit Committee comprises the following directors:

YBhg Tan Sri Osman S Cassim (Chairman)
(Independent Non-executive Director)
YBhg Dato’ Dr Yahya bin Ismail
(Non-Executive Director)
Mr Lim Pak Tow
(Independent Non-executive Director)
MEETINGS
The Audit Committee meets on a quarterly basis or at more frequent intervals as required
to carry out its duties.
DUTIES
The duties of the Audit Committee are:

1. To review:
(a) with the auditor, the audit plan;
(b) with the auditor, the auditor’s evaluation of the system of internal
accounting controls;
(c) with the auditor, the auditor’s audit report;
(d) the assistance given by the Company’s officers to the auditors;
(e) the scope and results of the internal audit procedures;
(f) the balance sheet and profit and loss account of the Company and
the consolidated balance sheet and profit and loss account, submitted to
it by the Company, and thereafter to submit them to the Board of Directors
of the Company; and
(g) any related party transactions that may arise within the Company or Group;
2. To nominate a person or persons as auditors;
3. (a) To review the Company’s financial condition, internal controls, as well

as the perfor mance and findings of the Company’s internal audit
department; and
(b) To make recommendations pertaining to corrective actions, where
appropriate; and
4. Such other functions as may be agreed to by the Audit Committee and the Board
of Directors.
Message to
Shareholders
OVERVIEW
1998 was a difficult year, a time that brought wrenching change

to the Malaysian financial services industry. After more than a decade
of strong growth the full knock-on effects of the Asian economic
turmoil made their impact on the domestic economy. It went into
recession. The financial sector was subject to a number of shocks,
chief amongst which were the non-performing loans (“NPLs”) of
financial institutions. Net NPLs of the banking industry jumped
to 13.2% in 1998 (97: 4.1%). Doubtless, rising NPLs accompany any
economy in recession. They have a major impact on bank earnings.
The government to counter negative economic growth introduced

a number of monetary and fiscal responses. Key amongst the
measures was a rapid lowering of the interest rates that saw a high of
11% in February of 1998 to 6% in December of 1998 to redress
deflationary pressures and to spur lending in the financial system.
These measures augur well for the year ahead. However, while they
will bring significant longer-term gains, due to repricing rigidities,
the immediate impact on earnings of the financial sector is
unfavourable. Excess capacities became evident as branch networks
and people built up in the preceding years of strong economic growth
contributed to costs without matching revenue growth. Managing
profitability never easy in a downturn, is even more difficult with
the region in recession and in financial crisis.
TAN SRI OSMAN S CASSIM D AT O ’ TAN TEONG HEAN

Chairman Chief Executive Director
THE BANK Danaharta, the Special Purpose Vehicle established

by the Government to acquire NPLs of Banks.
Amidst these challenges, the Bank’s operating profit
before provisions at RM210.6 million was up 20%
After-tax profit of the Bank at RM 72.8 million fell
from the previous year. Operating in a weakened
10% when compared to the period previously.
economic environment, pre-tax profit after provisions
at RM111.2 million was down 7%. Provisions during
the year rose to RM99.4 million from RM55.2 THE GROUP
million as net NPLs increased to 5.8 % from 2.8%.
The Bank Group turned in a pre-tax profit of
RM78.5 million, 36% lower than that of the
The financial results fully complied with Bank
previous year. After–tax profit attr ibutable
Negara Malaysia’s GP3 guidelines on loan
to shareholders, at RM37.2 million was down
classification and loan provisions. Adopting a
55% from a year ago.This lower net profit is due to
conservative income recognition policy, however,
higher loan losses and provisions, as well as a higher
a stricter three-month in arrears loan classification
tax charge.
policy for NPLs was maintained at the Bank and
also at the Group.
Not all subsidiaries of the Group were profitable.
Amongst the key subsidiaries, SBB Securities Sdn
Net NPLs of 5.8% at the Bank compares favorably
Bhd incurred a loss of RM19.9 million due to poor
with an industry’s average of 9.7% for commercial
market conditions, reduced turnover and provisions
banks that adopt a three months in arrears loan
for the diminution in value investments.
classification and policy. The bank sold no loans to
Southern Finance Company Berhad (“SFCB”) also strategy of taking market share at the bottom of the
reported a loss of RM12.9 million. This was due business cycle, and retrenching from markets when
to rising NPLs, loan charge-offs, and provisions for the cycle is in boom. It in no way represents a
loan losses. A three months in arrears loan departure from our long-established earnings
classification policy was retained at SFCB, and on philosophy of Income Statement and Balance Sheet
this basis, net NPLs of SFCB rose to 22% of total growth without sacrifice in asset quality.
loans. A lower credit quality at SFCB is not unusual
at this point of the economic cycle. This is because Today, the Bank is one of the best capitalized financial
a finance subsidiary targets businesses with lower institutions in Malaysia and the region. At 18.8%
credit standings. the Bank’s Risk Weighted Capital Ratio (“RWCR”)
is robust. Marginally lower from the previous year
On a Group basis, net NPLs rose to 8.4%. This due to a higher loans base, it has with amalgamation
compares favourably with an industry average of of SFCB increased to 20.9%.This is well beyond the
13.2% for Financial Institutions with a three month banking industry’s average of 11.8% and the
NPL classification policy. minimum 8% as required under banking standards
set by the Bank of International Settlements.
SBB Futures Sdn Bhd having made losses since its
start-up two years ago, was wound down during the The financial strength of the Bank was confirmed
year. On closure of this business, a non-recurring by rating agencies including the domestic rating
loss was reflected at the Group. SBB Unit Trust agency, RAM which reaffirmed our A1 rating as
subsidiary incurred a loss of RM0.2 million. well as Standard and Poor’s, the international rating
agency which also maintained the Bank’s public
On the other hand all other subsidiaries were information rating of BBpi.
profitable: Investimentos Associados Limitada, the
Mozambique Holding Company for Banco Austral
FOCUSING ON CUSTOMER
RM11.4 million; S.B Properties RM4.4 million;
SERVICES
SBB Asset Management RM1.2 million; S.B.Venture
Capital RM0.5 million; and Southern Nominees So as to broaden our product menu, and better serve
(Tempatan) RM0.5 million. our customers, a number of new products and
services were launched in 1998.
Drawing upon an inherent Balance Sheet strength
and a strong and growing deposit base, loans advanced Direct Access, launched the Easy Auto Pay system
18% for the Bank and 16% for the Group, from the allowing all Direct Access customers to pay their bills
period previously.This loan growth reflects our belief to participating utilities such as Telekom Malaysia
to stand solidly behind our customers when they and others.
are deserving of support. It also underscores our
The nation’s first Platinum Mastercard was also Investing in cutting edge technology so as to
launched by Direct Access. This high-end card continuously improve efficiency and effectiveness
product was aimed at providing customized services to better serve our customers is always a priority.
and increased privileges to discerning high net-worth In this regard, a number of initiatives were also
individuals.The Maestro Debit Card was introduced introduced during the year. So as to raise productivity
to provide more convenience for cardholders on a levels, the Auto-posting System was implemented
worldwide basis. to better handle voluminous crediting and debiting
of accounts for customers. SPICK, a project
In another related development, in payment systems, initiated by BNM to process inward clearing of
the Jet Debit Card was launched to facilitate easy cheques using digital images to replace cheques,
repayment by Jaring internet subscribers who was extended to the rest of the country. Several
maintain the Bank’s Max Plus SJM accounts. security systems were implemented to improve on
Customers of Malaysia’s major Internet Service credit card and ATM transactions. These included a
Provider Jaring, may pay their subscription/renewal biometric ATM system to verify ATM cardholders
fees at any SBB branch. which was tested in the KL Main branch for
eventual bank-wide deployment.
The Japanese Card Bureau or JCB card was
also introduced to allow the Bank’s merchants
SIGNIFICANT EVENTS
and our Japanese customers a broader choice of
AND ACTIVITIES
payment card.
A number of special events and occasions during
Apart from debit cards, the Bank broadened its stable the year provided excellent opportunities to showcase
of niche credit cards targeting different consumer our new products and profile our service capabilities.
segments. An especially designed card product for
women was relaunched with the Espre Mastercard
IT AND ELECTRONIC BANKING
while other cards such as, the Excel Mastercard, the
Rotaform Gold Mastercard, the Sime Darby Travel Continuing a strategic emphasis in the area of
Discovery Mastercard and the Sime Darby Travel Electronic Banking, the Bank participated in the
Visa Corporate Card were designed to offer benefits INFOTECH Malaysia exhibition. This premier
to specialized groups of cardholders. IT convention and forum was used to showcase the
Bank’s IT products such as electronic commerce,
Depositors were accorded a special focus in 1998. PC Banking and Enterprise Banking.
A wider range of deposit products, namely the Max
Plus Savings Account, Max Plus Fixed Deposit and
Max Plus Two in One Account were introduced to
provide depositors with better returns and greater
flexibility in their banking transactions.
N AT I O N A L S AV I N G S Closer to home, the Bank was among the 400

AND HOME-OWNERSHIP local and foreign companies that participated in the
I N I T I AT I V E S APEC International Trade Fair 1998. This major
APEC event was held in Kuala Lumpur in
The Personal Banking Division actively participated
conjunction with the meeting of the Heads of
in property launches around the country during the
Governments and key business luminaries in the
recent Home Ownership Campaign, that resulted
Asia Pacific Economies. It provided an unrivalled
in improved sales.
opportunity to raise the level of awareness of our
business in these key markets.
In support of a National effort to encourage savings,
a special booth was set up by the Bank to promote
deposits and Unit Trust products in conjunction with EXCELLENCE
the ‘Art of Saving Competition and Art Bazaar’
The bank’s leadership in the industry and the
organized by Bank Negara and the Association of
continuing effort to “shape up or ship out” has not
Financial Institutions.
gone unrecognized. 1998 saw a number of industry
honours and recognition.
I N T E R N AT I O N A L
Recognizing Southern Bank’s IT leadership in
The second largest bank in the Republic of
Malaysia and in the industry, the Chief Executive
Mozambique, Banco Austral, adopted its present
Director was appointed a member of the
name in 1998 to signal a new beginning as a modern
National Information Technology Council (NITC),
financial institution and market leader in
advising the Government on the development of
Mozambique.
IT in Malaysia.
The official launch of Banco Austral’s new corporate
Southern Bank was honoured as the first direct
identity was witnessed last July in Maputo by His
banking service provider in the nation to be
Excellency the President of the Republic of
accredited with the internationally acclaimed ISO
Mozambique, Joaquim Alberto Chissano together
9002 certificate by the Standards and Industrial
with the Right Honourable Prime Minister of
Research Institute of Malaysia (SIRIM). The ISO
Malaysia, YAB Dato’ Seri Dr. Mahathir Mohamad
9002 certification includes the processing of credit
during his official state visit to Mozambique.
cards, unsecured facilities, property financing and
share margin financing.
The ISO 9002 recognizes our management Maintaining a Group wide effort to reduce cost,
philosophy which emphasizes the provision of a Voluntary Separation Scheme (VSS) was
competitively priced and innovative products and introduced at SFCB with excellent results. Staff and
quality customer service to provide a competitive personnel at SFCB were reduced by 60% through
edge in the financial sector. the VSS. This increased substantially restructuring
charges in the current year, with adverse implication
on profitability. Undoubtedly, however it will also
Y2K COMPLIANCE
result in substantial savings moving forward.
As our business is information and transaction
intensive, IT is relied upon as a business enabler
DIVIDENDS
and used heavily in many critical areas including
service delivery, decision-support, processing and The Board of Southern Bank are pleased to
others. In this regard, Y2K is a major issue that is recommend the payment of a first and final dividend
mission critical. To ensure business continuity as we of 4.5% (1997-10%) for the year ended 31 December
cross the third millennium, the Bank has long 1998 for approval of the shareholders at the Bank’s
focused on Y2K issues. The Group will be fully 37th Annual General Meeting.
Y2K compliant by June of 1999. The Bank is also
working closely with its customers and business This proposed dividend will absorb a net sum of
partners to ensure they are Y2K ready. RM23.3 million (unchanged from the previous year)
which, if approved by shareholders will be paid to
The Bank and Group have completed the renovation, shareholders on the Register of Members at a date
implementation and testing of all critical systems to be later announced.
supporting the core businesses of the Bank Group.
Contingency plans including business resumption
MOVING INTO THE FUTURE
are in place to ensure that the Bank Group’s
operations will remain fail-safe at the critical dates. With a solid foundation, and a past where the
common thread is consistency in earnings and a
prudential credit culture, the Bank and the Group
A M A L G A M AT I O N OF
are in an unr ivalled position to maximize
SFCB’S BUSINESS
opportunities that may arise in the markets. The
The amalgamation of SFCB with the Bank was amalgamation of SFCB and the Bank, besides
completed in the Second Quarter of 1999. strengthening a strong Risk Weighted Capital Ratio
Continuing a strategy of restructur ing and of 18.8% to 20.9%, will also allow customer access
rationalization of the Group, 40% of SFCB’s to a larger network of branches for their banking
branches were closed so as to avoid Branch convenience. Following the amalgamation of SFCB,
network duplication and overlaps. the Bank’s branch network will be increased to 72
branches in major cities and towns nationwide.
A milestone in the history of the Bank, is the upcoming relocation of its offices
to its new Corporate Headquarters in Bukit Damansara, Kuala Lumpur.
This new headquarters will house the main branch as well as the offices of the
Bank and is expected to further reduce real estate and occupancy cost.
With recovery well underway, the economy should show positive growth this
year. Our strong balance sheet and a Capital Adequacy Ratio that is nearly three
times that of the Bank of International Settlements Agreement of 8%, should
provide excellent opportunities for the Bank to advance its franchise in markets
where it has strengths.
The economy has recovered, but NPLs are expected to rise due mainly to
the lead-lag effects. However, NPLs are expected to remain around 10% net
for the Group.
The financial services industry is entering a phase of consolidation.The directors

remain sensitive to market developments and regulatory initiatives for fewer but
larger banks.The Bank’s exceptional balance sheet strength and its stature in the
markets should ensure that the Bank Group emerges from this process in a
position of leadership.
A P P R E C I AT I O N
To the men and women of Southern Bank Berhad, we thank them for
their dedication and their efforts. We also thank our valued customers,
shareholders, the authorities and business associates for their support during
this challenging period.
Tan Sri Osman S Cassim Dato’ Tan Teong Hean

Chairman Chief Executive Director
Kuala Lumpur
12 April 1999
Performance at a Glance
’98 ’98
’97 6,781,038 ’97 5,437,417
’96 5,594,797 ’96 4,508,906
’95 4,379,095 ’95 3,346,691
’94 4,148,357 ’94 2,712,136
’98 ’98
’97 9,203,476 ’97 1,181,463
’96 7,324,446 ’96 680,925
’95 5,617,676 ’95 590,749
’94 4,981,103 ’94 326,768
’98 ’98
’97 122,201 ’97 1,176,759
’96 173,725 ’96 675,960
’95 111,202 ’95 585,523
’94 95,809 ’94 321,281

Lending Directions
CREDIT PLAN
Further to Bank Negara Malaysia’s (“BNM”) guidelines 6000
on the, “Credit Plan” to moderate gross loans growth to

20% by March 1998 and 15% by the end of 1998, most
banks tightened credit and loans growth started to shrink 4000
RM Million
faster than expected. As at end September 1998, the
banking industry’s gross loans growth stood at 4.5% and
fell further to only 2.2% in the following month. Due to 2000
the sharp drop in loans growth, all banks were strongly

advised by BNM in October 1998 to achieve a minimum 2,220 2,811 3,712 4,613
0
gross loans growth of 8% for that year. Despite this, the 1994 1995 1996 1997 1998
banking industry failed to achieve the 8% growth target.
LOAN PORTFOLIO MIX

However, as the Bank is financially strong with one
of the highest Risk Weighted Capital Ratio (“RWCR”) in As illustrated in the pie-chart below, it is the Bank’s practice
the banking industry (18.8% as at year-end 1998), to lend prudently to a diverse range of businesses so as to
there were no problems in meeting the growth target set by avoid over-concentration of loans to a particular sector.
BNM. As a conscientious corporate citizen in heeding the
Government’s call to revive the economy and with the
concurrence of BNM, the Bank’s final loans growth figure
stood at 18.0%. This was in line with our strategy to gain
market share at the bottom end of the economic cycle so as
to be well placed to take advantage of the enormous upside
potential during the economic recovery of the country.
LOAN ASSETS
Following the Bank’s Credit Plan, our gross loan assets

grew to RM5.4 billion as at year-end 1998. Meanwhile,
our approximate market share of good loans was 2% while
our market share of bad loans was approximately 0.5%. 16% Manufacturing 6% Purchase of
Securities
15% Purchase of Residential
Properties 5% Real Estate
11% Purchase of 5% Credit Cards
Non-Residential Properties
3% Electricity, Gas
10% Construction & Water Supply
8% Wholesale & Retail, 2% Other Sectors
Restaurants & Hotels
2% Transport, Storage
8% Finance, Insurance & Communication
& Business Services
1% Agriculture,
8% Personal Uses Hunting, Forestry
& Fishing
SMART GLOVE INDUSTRIES
(M) SDN BHD
Located in Klang, it is a manufacturer and

exporter of disposable gloves.We have been
its banker since 1997.
HOUSING LOANS LOANS TO SMALL AND MEDIUM

ENTERPRISES / INDUSTRIES
The Bank contributed to the Government’s effort to
encourage affordable home ownership for each Malaysian Small and Medium Enterprises / Industries were hit hard
family by meeting the interim Special Housing Loan quota by the economic turmoil in 1998. This was further
set by BNM five months ahead of the period ended compounded by the difficulty in obtaining loans at
31 March 1999. This achievement was attained owing reasonable rates. Since this sector was recognised as crucial
to teamwork, speedy approval and the Bank’s IT driven to the nation’s economic recovery, this prompted the
processes and workflow. Government to allocate a fund of RM1.5 billion to Small
and Medium Industries to enable banks to lend to this
Throughout 1998, staff from our Personal Banking sector at reasonable rates. Bank Negara also allocated
Division participated in various property development lending targets for banks to achieve with respect to Small
launches throughout the country, including the one month and Medium Enterprises.
Home Ownership Campaign launched by our Prime
Minister on 12 December 1998, to provide end-financing Supporting the Government’s efforts, the Bank continued
facilities to purchasers. to lend to this important sector. The Bank was also the
only commercial bank to participate in the 1998 APEC
Trade Fair to enable entrepreneurs to have ‘first hand’
information on available financing.
AUDREY I N T E R N AT I O N A L
(M) SDN BHD
Audrey International, part of the Ng Tiong

Seng Group of Companies, is a well known
manufacturer of ladies lingerie for both the
local and export markets.
CUSTOMER PROFILE
Ng Tiong Seng Group

Southern Bank Berhad has been our principal
banker for over 30 years, a few years after our shoe
trading business was founded back in 1956.The
unfailing support of Southern Bank Berhad through
good and difficult times has contributed significantly
towards the Group’s success which has grown from
its modest beginnings as a shoe trading company
to a diversified group of companies involved in the
manufacturing of shoes and ladies lingerie, property
development and investment, marketing and retailing
with total assets exceeding RM100 million.
We wish the Bank every success and hope the
good relations can be further enhanced.
Ng Tiong Seng
Executive Chairman
THE TEN LARGEST ‘SINGLE

CUSTOMERS’ OF THE BANK
As at year-end 1998, the Bank’s exposure to the ten 200
largest ‘single customers’ (as defined under Section 61,

Banking and Financial Institutions Act 1989 but excluding 180
the Bank’s subsidiaries) amounted to RM1.25 billion.
These ten largest ‘single customers’ have interests in a wide 160
variety of business activities as represented by the following
bar chart :-
140
Public Administration (0.4%) Financial Services (4.0%) 120

RM Million
Transport & Storage (0.5%) Wholesale & Retail Trade (7.6%)
Mining & Quarrying (0.5%) Electricity (9.2%) 100
Consumption Credit (0.6%) Manufacturing (12.0%)
Hotel (0.8%) Construction (19.1%) 80
Purchase of Properties (1.1%) Business Services (19.7%)
Timber & Forestry (1.2%) Purchase of Securities (19.9%) 60
Real Estate (3.5%)
40
20
0
(Each bar represents a “Single Customer”)
TENAGA NASIONAL BERHAD
Tenaga Nasional Berhad, responsible for

transmission and distribution of electricity in
Peninsular Malaysia has been banking with
Southern Bank since 1996.
ASSET QUALITY
Non-Performing Loans (“NPL”) 12

10.5
The tight monetary policy initially adopted by the 10
9.7
Government to combat the economic crisis led to a higher

8 7.3
level of NPLs within the banking industry. However,
Ratio (%)
5.8
through prudent lending and close monitoring of loan 6
7.2
assets quality, the Bank was able to keep its 1998 NPL 5.2
5.8
4 3.2 4.9
level below the industry average. The lower NPL level
was achieved without any sale of NPLs to Danaharta. 2 2.8
0
Banks who had sold their NPLs to Danaharta had been Dec ’97 Mar ’98 Jun ’98 Sept ’98 Dec ’98
able to reduce their NPL ratio which is an indicator of SBB Industry

asset quality. Selling banks would also be able to report a
higher profit or a lower loss position. This is because the
Net NPL Ratio
banks were allowed to amortize any shortfall on sale over
Throughout 1998, the Bank’s net NPL ratio had always
a period of five years. On the contrary, if the NPLs were
been below the industry’s ratio. As at year-end 1998,
not sold to Danaharta, the banks would have had to write
the Bank’s net NPL ratio was 5.8% as compared to the
down the value of the NPL within one year. In addition,
commercial banks’ average ratio of 9.7% (based on
sale of NPLs to Danaharta would result in the reduction
3 months classification).
of total loan base, thus enabling selling banks to report a
higher general provision ratio.
In September 1998, BNM revised the NPL classification 3000 20
standard from 3 months to 6 months. Despite this, the 2500

Bank continues to adopt the more stringent 3 months 16.8
15
2000
classification standard. The Bank’s gross NPL increased
RM Million
Ratio (%)
from RM198 million as at year-end 1997 to RM518 1500 10
million as at year end-1998 with a corresponding increase 9.8
1000 9.5
in net NPL ratio from 2.8% to 5.8%. However, the net 7.4
6.2 5
NPL ratio would have been significantly reduced to 3.9% 500
if the Bank had adopted the 6 months classification 1,609 2,527 582 402 283
0 0
standard instead. OD TL HL TB CARD
Loan Assets Default Ratio
450 8
Gross NPL Position by Product Groups
400 7 The default ratio as at year-end 1998 for Overdrafts
350 5.8
6 (“OD”),Term Loans (“TL”), Housing Loans (“HL”) and
300 4.7
RM Million
5 Trade Bills (“TB”) increased within the range of 2.4%

Ratio (%)
250
3.4 4 to 6.0%. As for Credit Cards (“CARD”), default ratio
200 2.8
2.6 3 increased from 8.3% to 16.8%. This was due mainly
150
2 to the drop in the loans base for CARD.
100
50 1
104 97 103 136 324
0 0
1994 1995 1996 1997 1998
Net NPL Outstanding Net NPL Ratio

Gross NPL Position by Sectors
LOAN PURPOSE CODE LOAN GROSS DEFAULT % DEFAULT %

ASSETS NPL WITHIN AGAINST
SECTOR LOAN
ASSETS
RM Million RM Million % %
Agriculture, Hunting, Forestry & Fishing 80 3 3.8 0.1

Mining & Quarrying 25 0 0.0 0.0
Manufacturing 824 62 7.5 1.1
Electricity, Gas & Water Supply 185 0 0.0 0.0
Construction 552 38 6.9 0.7
Real Estate 293 51 17.4 0.9
Purchase of Landed Property 1,343 117 8.7 2.2
Residential 752 79 10.5 1.5
Non-Residential 591 38 6.4 0.7
Wholesale & Retail, Restaurants & Hotels 459 24 5.2 0.4
Transport, Storage & Communication 105 9 8.6 0.2
Finance, Insurance & Business Services 432 20 4.6 0.4
Purchase of Securities 349 102 29.2 1.9
Purchase of Transport Vehicles 4 0 0.0 0.0
Personal Uses 415 39 9.4 0.7
Credit Cards 283 48 17.0 0.9
Other Sectors 78 5 6.4 0.1
TOTAL 5,427 518 9.5
Developing a team of dedicated

and motivated bank staff.
Quality of NPL Portfolio Loan Loss Provision Ratio

The Bank’s loan loss provision ratio, defined as a percentage
of the total general provision, specific provision and
25.1% Doubtful
38.2% Bad interest-in-suspense against the gross NPL, is 53.4%.
This ratio which is comparable to the commercial

banks’ average ratio of 53.7%, reflects the Bank’s adoption
of the 3 months classification standard and prudent
provisioning policy.
1999 Outlook on NPL

36.7% Sub-standard
The various measures taken by the Government and
Bank Negara Malaysia have eased access to capital and
these have helped build investors’ confidence and put the
Quality of NPL Portfolio economy on the road to recovery. Against this backdrop,
NPLs which are in arrears for 3 months but less than 9 we view 1999 with optimism and we expect the NPL
are classified as “Sub-standard”. NPLs which are in arrears level to moderate.
for 9 months but less than 12 months, and for 12 months
and above are classified as “Doubtful” and “Bad”
respectively.
Out of the total gross NPLs of RM518 million as at

year-end 1998, 36.7% or RM190 million was classified as
“Sub-standard”, 25.1% or RM130 million as “Doubtful”,
and the remaining 38.2% or RM198 million as “Bad”.
Service excellence and product innovation

to cater to the discerning needs of our
customers.
Treasury Management
The International Banking Group (IBG) carries out the fluctuations in exchange rates when assets and liabilities in
treasury function of the Bank under the guidance of the the same currency are not of the same magnitude. Interest
Asset and Liability Management Committee (ALCO). rate risks result primarily from differences in the maturity
It is responsible for managing and mitigating the market or repricing dates of assets and liabilities.
risks that arise from the business activities of the Bank.
Market risk is the exposure to an adverse change in Southern Bank’s risk management is guided by predefined
the value of financial instruments caused by a change in risk management principles, including:
market prices or rates.The major risks to which the Bank
1. Formal definition of risk management guidelines;
is exposed are liquidity risk, price risk, foreign exchange
risk and interest rate risk. 2. Risk oversight by ALCO;
3. Utilisation of risk management systems, including
Liquidity risk is the risk that an institution will be unable daily mark-to-market analysis and portfolio stress
to meet a financial commitment to a customer when testing. A key element in the Bank’s on-going
commitment falls due. To be able to conduct its normal process to effectively measure and manage interest
business activities, an institution needs to have continuous rate risks is the utilisation of simulation models; both
access to sufficient, reasonably priced funding. Price risk Interest Rate Sensitivity and Net Interest Income
is the risk to earnings that arises from volatility in interest simulation.
rates and foreign exchange rates which may have adverse
impact. Foreign exchange risk arises from exposure to
Treasury: Providing professional services

to help customers manage foreign exchange
and interest rate risk.
ASSET LIABILITY MANAGEMENT The Bank’s limits structure extends to desk-level activities
and includes a listing of authorized instruments, maximum
Risk management and oversight are governed by ALCO
tenors, loss appetite and maximum holding depending
which approves a general risk mandate to oversee these
on the type of instruments.The limit structure helps ensure
activities. ALCO is made up of Senior Managers of all
alignment of corporate risk appetite with trading and
business departments, operating within Asset/Liability
investment risk-taking activities.
Management Policy with the following objectives:
1. Primary Objective STRESS TEST

To maintain a balance between risk and return.
The focus is on identification, measurement and Stress testing is done to capture the effects of worst-case
management of both risks and returns, ensuring that market movements on a portfolio. It discloses the risk of
risks are maintained at known and acceptable levels. the unlikely but plausible events in abnormal markets.
The risks incorporated in typical stress tests include
2. Specific Objectives those of liquidity, correlation, prepayment speeds and
To manage and maintain in all manner consistent term structures. Stress testing helps understand and
with the overall goals of the Bank: communicate the risk profile of a complicated portfolio.
The Bank’s stress tests are focused around changes in
• Asset Quality and credit risk within acceptable market rates and prices that result from pre-specified
levels; economic scenarios.
• Interest rate risk within acceptable levels;
Presently, the Bank performs the stress test on the Net
• Liquidity sufficient to meet projected loan demand Interest Income (NII), taking into consideration the
and deposit withdrawal; various interest rate scenarios. Results from the stress test
• Capital adequacy at or above the required are thoroughly analysed and appropriate strategies derived
regulatory guidelines; and taken by the Bank to address the various scenarios.
• Earnings and profitability at optimum levels; and
• Growth which is sound, profitable and balanced.
ALCO’s responsibilities also include the measurement,

monitoring, assessment and control of market risk
throughout Southern Bank. These cover setting and
overseeing risk limits, approving unique, non-standard
transactions, evaluating and approving new products,
developing risk measurement and capital allocation
methodologies and portfolio stress tests.
KLANG M U LT I TERMINAL
SDN BHD
Located in Port Klang, Klang Multi Terminal

Sdn Bhd is the operator of Westport, the newest terminal
in Port Klang.We have been its banker since 1995.
INTEREST R AT E SENSITIVITY
Maturity or repricing date

of interest sensitive instruments Interest
Up to Above 3 to Over 12 Rate
RM Million, as at 31 December 1998 3 months 12 months months Sensitive Total
Assets
Cash and short-term funds 67.7 55.7 - 221.7 345.1
Dealing and Investment Securities 384.1 552.0 581.7 82.3 1,600.1
Gross Loans and Advances - - - - -
Loans sold to Cagamas 4,576.2 131.1 764.0 204.2 5,675.5
Others - - - 565.5 565.5
Total Assets 5,028.1 738.8 1,345.7 1,073.7 8,186.3
Liabilities and shareholders’ equity

Customer deposits, borrowing,
rediscounts and liabilities arising
from Loans sold to Cagamas 3,894.3 1,676.3 76.9 769.6 6,417.1
Subordinated bonds issued - - 300.0 - 300.0
Others - - - 1,469.2 1,469.2
Total Liabilities and shareholders’ equity 3,894.3 1,676.3 376.9 2,238.8 8,186.3
Interest rate sensitivity gap 1,133.8 (937.5) 968.8 (1,165.1)
Cumulative interest rate sensitivity gap 1,133.8 196.3 1,165.1 0.0
Notes:
1. Data relates to the Bank only and excludes positions of subsidiaries.
2. Assumptions made:
a. Savings account deposits deemed to be repriced within 3 months;
b. Credit card loans, housing loans under prescribed rate and staff loans deemed to reprice longer than 12 months.
NEW LIQUIDITY FRAMEWORK
As announced by BNM in March 1998, one of the

800 measures to be implemented under the stabilisation
package was the review of the present liquidity framework.
600 Under the old framework, financial institutions were
RM Million
required to hold liquid assets equivalent to a specified

400
percentage of their eligible liabilities.
200
760.6 705.2 0.0

The New Liquidity Framework is to ensure that there
0
Up to 3 mths >3 mths-1 yr >1 yr
is sufficient liquidity to meet the maturing liabilities
obligations with maturing assets and also to sustain
unexpected heavy withdrawals.
BNM conducted a six-month trial run of the New TREASURY MANAGEMENT SYSTEM
Liquidity Framework, which began in July 1998 in parallel
Against a backdrop of a highly competitive environment
to the existing liquidity framework. Effective 1999,
and the fact that market risks (comprising price and
banking institutions that are capable and ready to comply
liquidity risks) are an inherent part of banking activities,
with the stringent requirements can switch over to the
IBG has upgraded its front office operations by acquiring
new framework. All banking institutions will be required
the Treasury Management System.
to comply with the new framework by 1 January 2000.
The system enables on-line deal inputs and counter party
Beginning in 1999, Southern Bank Berhad was amongst
verifications, and to improve the Bank’s risk management
the pioneer financial institutions that have adopted the
culture to manage risks better from the front and back-
New Liquidity Framework.
end treasury operations through interfacing to other
critical treasury related systems.
NAGA DDB SDN BHD
One of the top advertising agencies in Malaysia

with the Enterprise 50 qualification.
CUSTOMER PROFILE
Naga DDB Sdn Bhd

We have enjoyed tremendous support from
Southern Bank since our incorporation in 1985.
We strongly believe this partnership has helped
us become one of the leading advertising agencies in
Malaysia.The same support from Southern Bank
has further helped us in being selected as an
Enterprise 50 company. The Enterprise 50 award
recognises the achievements of Malaysia’s 50 most
enterprising home grown companies. We would like
to share this award with the Bank.
Lionel Koh
General Manager
IT Industry Leadership
NITC R E P R E S E N TAT I O N YEAR 2000 COMPLIANCE BY MID 1999
In September, Chief Executive Director (CED) All financial transactions, in the era of increasingly
Dato’ Tan Teong Hean was appointed as the sole important computerised services rely on accurate dates
banker to the National Information Technology Council and times. A bank’s date-sensitive systems must be able to
(NITC), reflecting Southen Bank’s leading position in differentiate between dates using “00” as year 2000 instead
the IT sector. The NITC acts as a think-tank at the of the year 1900.
highest level to advise the Gover nment on the
development of IT in Malaysia. Southern Bank has long been aware of the risk associated
with the Y2K or Millennium Bug problems. As a result
The NITC is chaired by the Prime Minister of Malaysia the Bank has placed significant emphasis on identifying
YAB Dato’ Seri Dr. Mahathir Mohamad and was and addressing the Year 2000 problems, completing the
bulk of the conversion process in 1998 in order to achieve
established to spearhead Malaysia’s advancement into
Y2K compliance status by June 1999. This will leave the
the Information Technology era in line with the objectives
rest of this year as a buffer for testing and fine tuning all
of the National IT Agenda and the Multi-Media
systems, in order to ensure that all possible details of the
Super Corridor.
Y2K problem have been considered and that all aspects
have been completely verified.
RON SENG PA P E R PRODUCTS
SDN BHD
A manufacturer of corrugated carton boxes and

related products. Our banking relationship was
started together with the establishment of the
business in 1978.
Forerunner in the IT Industry

Under the aegis of Bank Negara, the Bank during 1998 The Board has been regularly briefed and consulted on
completed the renovation, testing and implementation of the Banks Y2K progress in compliance with the Bank
the mainframe systems, as well as all the critical systems Negara guidelines. Training kits have been made available
supporting the core banking business. An audit by Bank to assist Managers in briefing Bank staff and Y2K leaflets
Negara in 1998 placed the Bank in the highest satisfactory have been distributed to customers.
Y2K preparedness category.
Southern Bank can be considered in the top preparedness
The Bank has been conducting final testing with external category in terms of Millennium Compliance in Malaysia.
partners like VISA, MasterCard and MEPS and is Accordingly the Bank’s clients can enjoy absolute
completing “marginal” items such as personal computers confidence that all their financial records will remain
and non IT systems like the telephone exchange systems intact and that the Year 2000 challenge will not disrupt
or fax machines. any business process vital to the Bank’s operations or
customer requirements.
The Bank has initiated measures to ensure that customers,
business partners and service providers areY2K compliant.
Necessary contingency plans have been implemented to
ensure that all Bank operations will run smoothly on
critical dates such as January 1 or February 29, 2000.
ALL THE BANK’S CORE SYSTEMS ARE Y2K COMPLIANT
Credit Cards General Ledger
Teller
Workstations
Payroll
Loans
Mainframe Fixed Assets

Automated
Teller Machines
Interbank
Clearing
Deposits
Enterprise Direct Access

Banking Call Centre
IT DRIVEN PRODUCTIVITY GAINS With technology the Bank was able to develop new
payment products to meet the changing needs of the
The Bank has always positioned itself as one of the key
latest demands of the customers. The Corporate Card
movers in Malaysia in the early adoption of emerging
and Platinum Card were developed and launched in
technologies. In line with this approach, the Bank tested
August 1998 with many high valued features.
the Biometric ATM using finger-scanning to verify the
ATM cardholders.This technology offers greater security
The technology for the Maestro Debit Card was put in
in verifying the cardholders.The Biometric data is stored
place in February 1998 to provide more convenience for
on a chip card during the initial “personalised process”
the cardholders to pay at checkout counters worldwide,
and verification entails checking the present image against
in addition to cash withdrawal via ATM.
the stored image.
Enhancements were made to the Enterprise Banking

The Bank completed the implementation of the
System to include the convenience of printing Letters of
Autoposting System which has the ability to handle
Guarantee and Letters of Credit, and broadcasting news
voluminous crediting and debiting of accounts for
and information via customers’ own computer systems.
customers.
The Bank after pioneering the first implementation of

SPICK, a project initiated by Bank Negara Malaysia to
a Secure Electronic Transmission (SET) system in 1997
process inward clearing of cheques using digital images
upgraded this version to a higher security level in 1998.
instead of paper cheque, was extended throughout the
country. Treasury System was also upgraded in December
The Bank provided assistance to its sister institution,
1998 to improve productivity and efficiency. In order
Banco Austral in Mozambique to computerise banking
to tighten up protection against credit card fraud,
operations. In 1998, the Bank successfully implemented
a sophisticated Account Activity Monitoring System
Savings Account, Current Account, Fixed Deposit Account
was implemented.
and Loans Systems for Banco Austral.
Other major implementations for the year include
Recurring Payment System and Change-Off Accounts
System which greatly improved efficiency in monitoring
credit card accounts.
OSK SECURITIES
BERHAD
OSK Securities has been in the

industry for over 14 years and has
become one of the largest stockbroking
houses in Malaysia.The banking relationship
with this customer dates back to 1985.
Southern Bank as Change Catalyst
The CED, Dato Tan Teong Hean through his participation

as a speaker, panellist and moderator, represented the Bank
in the following fora in Kuala Lumpur covering issues
ranging from Information Technology and Finance to the
National Economic Recovery:
At the NITC InfoTech Malaysia 1998 Conference,

a premier conference on information technology on the
“Impact of E-Commerce on the Financial Sector.”
At the Multimedia Asia (MMA) Conference and

Exhibition 1998 on “Developing Multimedia Content
Industry in MSC: Challenges and Opportunities”. This
International event was the largest and most specialised
multimedia conference and exhibition in Asia in 1998.
At the CEO Forum organised by Business Week in

October 1998, a bankers perspective on “Corporate
Responses to the Financial Crisis : Managing the New
Economic Reality” together with other international
speakers on the Panel that included CEOs from diverse
sectors ranging from airline and hotel industries to trading
and investment.
At an international conference on “Managing the

Asia Financial Crisis” on “Malaysia’s Road to Recovery:
the Key Tasks Ahead”, which included distinguished
speakers such as the Second Finance Minister,YB Datuk
Mustapa Mohamed.
Corporate Restructuring
LEANER AND F L AT T E R It is this re-engineering of people resources that will drive

Flattening the organisations is not a mere buzz by the Group well into the next millennium and we are proud
word in the Bank Group. It has happened and it is of what we have accomplished so far.
still happening.
CLOSURE OF SBB FUTURES
Delayering, launched four years back, way before the
SBB Futures having made losses since start-up two years
July 1997 regional downturn, has already benefited the
ago wound down in 1998. Its closure in August which
Bank Group’s operations. We are now much leaner.
resulted in all employees leaving the Bank Group resulted
in substantial savings in personnel, operational and
Along with the above phenomenon, the multi-tasking
office costs.
culture has grown and spread out beyond the top-most
layers.
KIM SWEE LOONG
DEVELOPMENT SDN BHD
As the developer of Temerluh Industrial Park,

it has been banking with us since 1992. However,
the bank has been supporting its palm oil business
under Kim Swee Loong Sdn Bhd since 1985.
CUSTOMER PROFILE
Kim Swee Loong Development Sdn Bhd

We would like to take this opportunity to
express our appreciation to the Bank whose support
had been invaluable in helping us grow from our
beginnings in palm oil plantations to the developer
of the successful Temerluh Industrial Park.
Lee Kim Seng Kong Foo Leong
Executive Chairman Executive Director
Islamic Banking: Alternative banking services to cater

to the changing needs of the community.
A M A L G A M AT I O N OF BANK SFCB offered all its employees a Voluntary Separation

AND FINANCE C O M PA N Y: Scheme (“VSS”) to address the excess in human resources
A 72 BRANCH NETWORK
at branch and Corporate HQ arising from the branch
The amalgamation of the business of Southern Finance network rationalisation and duplication of functions at
Company Berhad (“SFCB”) and the Bank was completed HQ.With its in-built elements of fairness and competitive
April 12, 1999. The customers of SFCB now have access to characteristics, the scheme was favourably received
an enlarged branch network of 72 as well as the Bank’s resulting in a 60% reduction in staff force after the
expanding non-branch delivery channels.A merger of eleven implementation of the VSS Scheme. Thus, from a total
finance branches with the Bank’s branches arising from close staff number of 295,118 will be joining the Bank upon
proximity was necessary to allow for a more efficient amalgamation as the number of staff have been reduced
management of human resources and other infrastructure by 177. The staff who will be joining the Bank will
leaving sixteen finance branches to be converted to be retrained and this process of skill enhancement will
bank units. also serve the best interest of the staff as they acquire
multi-skills.
There will be a tangible benefit to the Bank from the
amalgamation scheme in terms of the expansion of assets As not to inconvenience the customers of SFCB as
and liabilities which is expected to register an increase of the Bank winds down the hire purchase (HP) portfolio,
RM1.0 billion from the exercise. Cost-savings are also to a Hire Purchase Centre is being set up as a one-stop centre
be reaped in other areas amounting to no less than RM3.2 to interface with branches on all HP matters. The Bank,
million in the first post-amalgamation year and RM6.4 nevertheless, will continue to serve all markets in which
million in the second year. SFCB has built up a distinct franchise.
COMPUTER FORMS
(MALAYSIA) BERHAD
CFM is involved in the printing and

distribution of computer forms, stock forms
and specialised forms and has been banking
with us since 1996.
C O R P O R AT E R E L O C AT I O N TO Purchase of additional space for these offices will be

G E N E R AT E S AV I N G S considered when funding cost and pricing of office space
return to a more reasonable level. In the meantime the
The Bank will be relocating from its downtown Bank will be benefiting from considerable savings by no
location on Jalan Sultan Ismail to its new corporate longer paying premium rental rates for its corporate office
headquarters at Plaza Damansara, Damansara Heights in while retaining the bank branch in Wisma Genting for
1999. In view of the rapid price escalations for prime the convenience of customers.
office space within the Golden Triangle during the
property boom of the mid 1990s the Bank made a decision
to reduce its long-term overhead costs by building its BETTER C O S T- T O - I N C O M E R AT I O
own office space in the suburb of Damansara Heights,
strategically located between Kuala Lumpur City Centre Reaping the benefits on our bankwide cost cutting
and Petaling Jaya/Shah Alam and easily accessible to measures, the Bank’s cost-to-income ratio improved to
Putra Jaya and Cyberjaya. 43% from 48% previously.
Its close proximity and accessibility to the major highways At the Group, cost-to-income ratio increased to 59% from
such as the Lebuhraya Damansara-Puchong and the 51% a year ago. The increase was due to the first year
Middle Ring Road, has brought about the speedy success consolidation of the Mozambican subsidiary’s overhead
of Damansara Heights as an up and coming major expenses which amounted to RM74.2 million
commercial hub away from the city centre. There are (the Mozambican subsidiary’s results were equity
presently about 20 large commercial buildings in accounted for in 1997). Excluding these expenses,
Damansara Heights as more offices relocate to the suburbs the adjusted cost-to-income ratio of the Malaysian
in view of the lower rentals and easier accessibility away operation will be marginally higher at 52%.
from the traffic congestion in the city centre.
Moreover, included in the Bank and the Group’s overhead
The new building with net lettable space of 170,000 sq. cost are non-recurring expenses such as personnel costs
ft., comprises seven levels of office and retail space for employees who left with no replacement totalling
and four levels of carparks. It will accommodate 70% of nearly RM8.0 million.
HQ and will satisfy the need for prime space requirement
of the Banks front liners. It will include a new state of Adjusted for all the above, the Bank and the Group’s
the art bank branch with smart offices and biometric cost-to-income ratio would be even lower at 42% and
security systems. The remaining 30% of the office space 51% respectively.
for support and back offices will stay at premises with
relatively lower priced rentals to be more cost effective.
Model of the Bank’s new headquarters.

Channel Strategies
DIRECT ACCESS: BILL P AY M E N T As the concept was developed ‘in-house’, the cost for the
SERVICE entire campaign was kept to a minimum.
Easy Auto Pay (EAP) marked the introduction of Direct
In a special Bonus Promotion (BP) tied in with this
Access’ bill payment service. EAP is available to all Direct
campaign, bonus points were given to customers who
Access’ valued customers where they can now
signed up for this facility during promotion period.
conveniently pay their bills to a variety of participating
Executed as a direct mail effort, the EAP-BP mail-out
Direct Access billers. This is in line with the Bank’s
was sent to the entire customer base. Additionally, this
commitment of extending convenience to its base and
promotion was supported by the internal telephone
adding more value to the way they bank.
message-on-hold service. Customers were encouraged to
sign-up during this promotion period as they would be
In a successful three month campaign initiated by the
eligible for free bonus points which will be credited into
Bank, four organisations were designated as participating
their Direct Access credit card account.
Direct Access billers. They are Telekom Malaysia Berhad
(TMB), Petaling Jaya Municipal Council (MPPJ),
Shah Alam Municipal Council (MPSA) and Klang
Municipal Council (MPK).
LION ELECTRONICS
ENTERPRISE (M) SDN BHD
A subsidiary of Paracorp Bhd which is listed

on the Main Board of KLSE, it manufactures
transformers and coils for the electronic and
telecommunication industry. Lion has been
banking with us since 1994.
Telephone Banking: An alternative to conventional banking.

The EAP list is still growing as the bank continually builds recognised alternative delivery channels. It is becoming
relationships with other organisations. The number of widely accepted among an increasing number of corporate
participating billers or organisations have since increased member managers who use it on a daily basis to gain
and Direct Access is now poised to embark on its next up-to-date real-time information on their accounts.
EAP campaign. The uptake by corporates has been very good, and the
1998 target has been exceeded. Transaction throughput,
which was zero in January 1998, exceeded RM1.5 billion
ENTERPRISE BANKING: A DIVISION
by the end of 1998.
S P E C I A L LY FOR BUSINESS
Information Technology (IT) plays a growing integral and Customer service is a major consideration of the service
important role in making business operations across provided and EBD has been pleased with many favorable
boundaries and between other businesses seamless. comments from our clients in 1998. As part of the
Enterprise Banking Division (EBD) has been at the continuous improvement of customer service, we have
forefront of enhancing the perception that Southern Bank had two major upgrades of the software. These have
is an IT driven bank. EBD is now one of the Bank’s improved the system and have enhanced the services
provided to the customers.
KUOK BROTHERS SDN BHD
The company is an investment holding company

involved in commodities, industrial products,
property, trading and hotels. Our banking
relationship started in 1998.
Enterprise Banking: Convenience at the touch of a button.

At the APEC Conference, the Bank’s electronic banking SOUTHERN BANK’S WEBSITE:
was on display with the Enterprise Banking System one IMPACT ON A WIDER PUBLIC
of the featured systems.
Southern Bank’s corporate website (http://www.
sbbgroup.com.my) launched in 1995, posts information
EBD, as part of the Bank, participated in the ITX ’98
on the Bank’s banking products and services, corporate
(IT Exhibition).
information and current news.
At the AGM, the Bank’s IT products were also showcased.

The website was redesigned in 1998 with a friendlier look.
Pages were reconfigured for easier reading. Interactive
EBD has continued to forge ahead in IT area, with an
forms and search engines were added to assist users to
upgrading of its IT services. The EBD system is Y2K
find information more quickly.
compliant. It uses the latest technology available. Also,
nodes have been set up across the country where users
The web site is popular with an average of 6500 user/
can access EBD through a local call.
visitors every month generating more than 1.6 millions
hits in 1998. Malaysians make up 43% of the traffic with
The customers of EBD range from SMIs to large
57% of the visitors originating from foreign countries.
corporations. Industries range from manufacturing,
hi-tech companies, construction, financial services,
In 1998, Southern Bank began disseminating its 1997
medical, hotels, services, trading and shipping. EBD expects
Annual Report via the web site and CD-ROM. This has
to continue to forge inroads into these and other industries
proven to be popular with our IT-savvy shareholders.
in 1999, as well as providing a complete banking solution
The Annual Report was downloaded on an average of
for our customers.
190 times per month during 1998. In this way the Bank
was able to save publishing costs as well as demonstrating
ecological sensitivity.
The website is maintained and operated within the Bank

by IT staff who also host the website for Southern Unit
Trust Sdn. Bhd. (http://www.sbbut.com.my).
SCB DEVELOPMENT BERHAD
A subsidiary of Boustead Holdings Bhd,

both companies are listed on the Main Board of KLSE.
SCB’s principal businesses are to cultivate and process oil
palm and natural rubber as well as investment holding.
SCB started its banking relationship with us in 1998.
Strategic Alliances: MIMOS and SCANS
In order to stay competitive in the future Southern Bank In December 1998, Southern Bank and MIMOS
is striking strategic alliance with partners that will add extended their strategic alliance further by launching
value to stakeholders – customers, shareholders and staff. the JET Debit Card. The JET Debit cardholders will
Strategic partners with diverse core competencies can assist earn free Internet hours based on their Southern Bank
Southern Bank compete in a market where the traditional savings or current account balances, in addition to other
role of banking is blurring.The cross-selling opportunities debit card benefits.
and value-added services are among the benefits that can
be derived from these strategic alliances. Another example of an alliance is the Banks relationship
with the Securities Clearing Automated Network Services
A good example of a Southern Bank alliance partner is or SCANS as it is better known. SCANS is a subsidiary
MIMOS Berhad. MIMOS Berhad started Malaysia’s first of the KLSE and is the clearing house for member
Internet Service Provider, JARING. Backed by its companies of the KLSE i.e. Securities Companies.
technically superior network and personnel, JARING is Southern Bank is one of the select approved clearing banks
the choice of many Malaysians and corporations for its for SCANS.
innovative and excellent services. The management teams
of Southern Bank and MIMOS share the same vision of This strategic alliance has benefited all parties. SCANS
providing excellent products and services to an increasingly now gets payments from the Securities Companies on
technology-literate population in Malaysia. a real-time basis by means of the Banks Enterprise
Banking System. As the system identifies who has paid,
The strategic alliance between Southern Bank and together with the date, time and message, SCANS can
MIMOS has brought immediate benefit to both not only control its cash position, but can also better
organisations. JARING subscribers can now pay through manage its relationship with the Securities Companies.
automatic payment arrangements using credit cards.
MIMOS is using Southern Banks Enterprise Banking The Securities Companies use the branch network
service that allows transactions and fund management of where their customers can walk in and make payment.
its accounts electronically. Through the Enterprise banking System, they can
immediately identify which customer has paid them.
This SBB/SCANS alliance has thus increased efficiency,
reduced costs and has made another contribution
towards the paperless office.
The Jet Debit Card: Malaysia’s first debit card for the banking,
shopping and net surfing convenience of our customers.
THE NEW STRAITS TIMES
PRESS (M) BHD
The New Straits Times was first

published in 1845. Over the last 154
years, the company became a major
publisher and began banking with
Southern Bank in 1998.
MELAKA TONG BEE
GROUP OF C O M PA N I E S
(“MTB GROUP”)
MTB Group is one of the oldest and largest

family owned businesses in Melaka.With its core
business of oil palm and rubber, the Group has
diversified into property development,
manufacturing, hotels and real estate.
CUSTOMER PROFILE
Melaka Tong Bee Group

Our banking relationship with Southern Bank
Berhad was established in 1970 and Southern
Bank has been one of our principal bankers since
then.We are grateful to Southern Bank for its
continued support and are confident that we will
be business partners for many more years to come.
Datuk Yeo Kian Yam Yang Chien Chu

Chairman Managing Director
Subsidiary Companies of the Bank
On the operating front, SBB Securities managed

to increase its market share from 2.1% in 1998 to 2.7%.
The higher market share is reflective of the overall increase
in SBB Securities’ client base.
In line with the difficult trading environment,

SBB Securities has taken several measures to ensure
continued cost competitiveness.These include monitoring
operating cost and expenditure, credit and client trading
limits and staff levels. Appropriate risk management
measures have also been implemented in line with controls
undertaken by the authorities to enhance transparency
and efficiency in the market.
SOUTHERN NOMINEES
( T E M PATA N ) SDN BHD
Trading activities at SBB Securities.
SOUTHERN NOMINEES
(ASING) SDN BHD
SBB SECURITIES SDN BHD

Southern Nominees (Tempatan) and Southern Nominees
SBB Securities, which is the Bank’s stockbroking arm is (Asing) were set up to provide nominee services for both
based in Ipoh and has been a member company of the Malaysian and foreigners. The companies are authorised
Kuala Lumpur Stock Exchange for more than 15 years. direct members of Malaysian Central Depository Sdn Bhd
SBB Securities provides a wide range of stockbroking and ensure speedy and confidential handling of nominee
services and this includes in-house research as well as services in scripless form.
domestic and foreign custodian and nominees services
through its subsidiaries.
SBB ASSET MANAGEMENT
SDN BHD (“SBBAM”)
During the year, SBB Securities successfully participated
in various readiness tests and mock runs carried out by SBBAM, a wholly owned subsidiary of the Bank
the Malaysian Exchange of Securities Dealing and undertakes investment management services under its
Automated Quotation (“MESDAQ”). SBB Securities has Fund Manager’s Licence issued in accordance with
also been admitted as a member of MESDAQ and is ready Securities Industry Act 1983. The Company began
to participate as an inaugural member of the exchange operations in 1992 and is currently a fully integrated fund
when it commences trading. management company with functions ranging from
formulating investment strategy to administrative record
During the year, further investments were made to keeping and custody of scrips.
enhance the use of information technology in trading.
The capabilities of the in-house real-time market The fund managers are long experienced in handling a
information dissemination system were refined and wide cross section of long-term institutional funds such
expanded to facilitate on-line broking and other areas of as pension funds, insurance funds, foundations, statutory
client service. funds and corporate funds. In addition, SBBAM also
manages the unit trust funds launched by the Bank.
In the last six years, SBBAM has consistently achieved S.B. PROPERTIES SDN BHD
above-average performance by adopting a long-term (“S.B. PROPERTIES”)
approach to investment and avoiding excessive short-term
S.B. Properties is the wholly owned subsidiary of the Bank
speculation. The company adopts a combination of
responsible for management of the Bank group’s properties
‘top-down’ and ‘bottom-up’ approaches by examining
in Malaysia.
both macro-economic factors and micro aspects of
the investment in question to minimise exposure to
For the year ended 31 December 1998 profit before
undue risks.
tax was RM4,414,720.56 an increase of 97.4% over the
previous year’s profit before tax of RM2,236,771.97.
1998 was a tough year for fund managers. It was the second
This substantial increase was achieved mainly by the
year where the stock market was severely affected by
extension of its project management services to Banco
the crisis. For SBBAM, it was a hectic year with many
Austral as well as through its subsidiary Elite Constant
changes taking place such as new Government policies,
Development Sdn Bhd which undertook construction
trading amidst unsettling market conditions and coping
contracts for Banco Austral, the Bank’s subsidiary company
with a severe economic recession in the country.
in Mozambique.
To successfully adapt to the changing circumstances,
SBBAM undertook tactical changes to its investment
During 1998 the Company made major headway
policies throughout the year in order to emerge from this
with the development and construction of the Bank’s
current crisis stronger than ever.
headquarters in Plaza Damansara, Bukit Damansara,
Kuala Lumpur.
SB VENTURE C A P I TA L C O R P O R AT I O N
SDN BHD (“SBVCC”)
SBB UNIT TRUST
SBVCC is another wholly owned subsidiary of the Bank MANAGEMENT BERHAD
and is principally involved in providing venture capital
SBB Unit Trust Management Berhad or better known
to companies with good growth potential. Investments as Southern Unit Trust (“SUT”) is wholly owned by
are usually made in growing and emerging companies the Bank and was incorporated in 1995.
with proprietary products, production processes or services
operating in niche markets which may not need to SUT is the manager for the SBB Premium Capital Fund
be profitable currently but must have turnaround potential. and the SBB Retirement Balanced Fund and was the
first unit trust company in Malaysia to be accredited with
The participation of risk capital could be in any of the the ISO 9002 certification. In 1998, SUT also launched
following categories :- a new programme designed for children’s future education
• Development Financing - investment in new business called the SBB Total Education Plan. The SBB Total
Education Plan will allow for realistic monthly savings,
and development of new products.
insurance protection and inflation protected investment.
• Intermediate Financing - investment in existing
business to support growth through internal expansion SUT is responsible for the day-to-day management
or acquisitions. and administration of the various Funds in accordance
with the provisions of the Trust Deed. The main duties
• Secondary Purchases - acquisition of issued shares
of SUT include maintaining a register of unitholders,
from existing shareholders of established businesses.
arranging the sale and repurchase of units, valuing the
investments, keeping proper records of the Funds and
reporting to Unitholders.
BANCO AUSTRAL –
SOUTHERN BANK IN MOZAMBIQUE
Southern Bank Berhad, in September 1997, through its

51% owned subsidiary, Investimentos Associados Limitada,
a holding company incorporated in the Republic of
Mozambique, acquired 60% of Banco Austral, S.A.R.L.
(formerly Banco Popular de Desenvolvimento S.A.R.L).
In February 1998, Banco Austral, S.A.R.L. assumed its

present name, reflecting the transformation of the Bank
into a modern financial institution and a leader in the
financial services industry contributing positively to the
development of the economy.
Banco Austral, one of six licensed banks in Mozambique,

has moved to the forefront of the industry during 1998.
The Bank has led the way by being the first commercial The newly renovated banking hall at Banco Austral.
bank in Mozambique to substantially lower its interest
rates and to introduce a Prime Rate, in an initiative to
reduce interest rates in Mozambique in order to achieve
sustainable economic growth in the country.
Banco Austral is among the leading banks in Mozambique.

With its extensive branch network of 131 branches
strategically located throughout the country, it has one of
the widest reaches of any bank in terms of distribution
and provides a full range of financial products and services.
In line with the core strategies of Southern Bank Berhad

to utilise cutting edge banking technology, Banco Austral
has embarked on an intensive program of retail
transformation and to computerise its delivery channels
to provide on-line efficient and effective delivery.
Given the buoyant growth of the economy in

Mozambique, Banco Austral is well positioned to
become the market leader and to set the highest
standard of banking in Mozambique.
The official launch of the new image of Banco Austral

S.A.R.L. took place in July in Maputo, Mozambique.
The event was presided over by the Prime Minister
of Malaysia, YAB Dato’ Seri Dr Mahathir Mohamad
and the President of the Republic of Mozambique, Official Launch of the new logo for Banco Austral.
His Excellency Mr Joaquim Alberto Chissano.
Corporate Events
• Easy Auto Pay (EAP) marked the introduction of

Direct Access’s bill payment service for its customers to
pay their bills to participating billers such as Telekom
Malaysia and Petaling Jaya Municipal Council.
• Chairman,Tan Sri Osman S Cassim officially launched

Total Education Plan, Southern Unit Trust’s
education trust account that offers a fine-tuned balance
of investment and protection for a child’s long-term
education plan and his/her future.
• Southern Bank was a co-sponsor of the Harvard

Project for Asian and International Relations
held at the Putra World Trade Centre. Over 200
students from the world’s top universities such as
Harvard, Oxford, Yale and Malaysian universities
Banco Austral, our first overseas subsidiary. joined leading politicians, corporate leaders and
renowned scholars to exchange perspectives on
critical issues in the international arena.
FEBRUARY
• Banco Popular de Desenvolvimento S.A.R.L., JUNE

Southern Bank’s subsidiary in Mozambique was
• In conjunction with its 36th Annual General
transformed into Banco Austral, S.A.R.L.
Meeting, Southern Bank held a special exhibition
of its industry-leading IT products and services to
MARCH shareholders and the public at Hotel Istana in
Kuala Lumpur.
• Southern Bank installed the first batch of 25 units
of new generation Autobank ATMs.
• Southern Unit Trust issued its Master Prospectus
for the SBB Premium Capital Fund and
APRIL Retirement Balanced Fund, designed as a friendly,
interactive facility explaining to investors the current
• Southern Bank displayed its forte in applying
schemes, strategies and management skills of the two
state-of-the-art information technology for the
Funds in one package.
benefit and convenience of customers at the annual
Infotech Malaysia held at Putra World Trade Centre
• The Retail Banking Group launched the new range
in Kuala Lumpur. It showcased the high-tech
of Max Plus Savings, Max Plus Fixed Deposit
advantage of the Bank’s successful Direct Access and
and Max Plus Two-In-One, a combination of
Enterprise Banking services for individuals and
savings and deposit accounts.
corporates.
• The Bank’s Butterworth branch commenced branch
MAY broking operations.
• Direct Access became the first direct banking service • Sales of the KL’98 Commonwealth Games
provider in the country to be accredited with the Commemorative RM50 Polymer Notes took off
internationally acclaimed ISO 9002 certificate at the Bank’s branches and by the end of the sales
from the Standards and Industrial Research Institute campaign in November 1999, a total of 21,315 pieces
of Malaysia. were sold.
• The Bank contributed RM 35,000 as an official • Chief Executive Director, Dato’ Tan Teong Hean
co-sponsor of the Petronas Jet Sports Racing represented the Bank in signing the MOU to mark
Programme. the Islamic Banking Division’s success in offering
Bridging Financing under the Special Scheme
for Low and Medium Cost Houses, funded by
Bank Negara Malaysia, totalling RM30.0 million to
Bukit Cerakah Development Sdn. Bhd. for its
project in Puncak Alam, Selangor.
• SBB Card Centre teamed up with Rotary Foundation

of Malaysia to launch the Rotafom Gold
MasterCard, an affinity programme especially for
Rotary Club members, in which the first year
annual fee, part of subsequent years’ annual fee and
a percentage cardholders’ spending are contributed
to the Rotary Club.
At the launching of E.Excel MasterCard.
J U LY
• SBB Card Centre launched its Espré MasterCard

specially designed for women, with its affinity partner,
Extra Excel (M) Sdn. Bhd., the E. Excel MasterCard.
• At a ceremony held in conjunction with the Malaysian

Pr ime Minister’s state visit to Mozambique,
Banco Austral S.A.R.L. officially launched its
new logo and corporate identity in Maputo.
The launch of the Rotafom Gold MasterCard.

AUGUST
• Direct Access introduced the country’s first platinum

credit card, the Direct Access Platinum SEPTEMBER
Mastercard. Platinum card membership comes with • The Bank made a contribution of RM50,000 to the
an unprecedented range of services world wide and Bangsar Carnival in support of the Commonwealth
will be offered to a select group of existing and Games in Kuala Lumpur.
potential customers.
• The Bank launched its new Autokad with debit
card features.
NOVEMBER • SBB Card Centre, in association with Sime Darby

Travel, launched card programmes for travellers:
• Kuala Lumpur played host to the third Asia Pacific
the Sime Darby Travel Discovery MasterCard
Economic Co-operation or APEC forum. At the
for individuals and the Sime Darby Travel Visa
APEC International Trade Fair ’98 held in
Corporate Card for corporations. Card members
conjunction with the forum at MINES, Southern Bank,
also get to enjoy loyalty programmes of Sime Darby.
the sole banking institution to participate, manifested
its top-of-the-league Corporate Banking Services,
SBB Direct PC Banking, SBB Enterprise
Banking, SBB E-Commerce and Retail Banking.
Launching of the Sime Darby Discovery MasterCard

and Travel Visa Corporate Card.
The Southern Bank Exhibit at the
APEC International Trade Fair.
DECEMBER
• Southern Bank launched its JET Debit Card for

Jaring subscribers who are SBB Max Plus SJM
accounts holders.
• The Bank’s first biometric Autobank ATM facility

debuts as a pilot project at Kuala Lumpur Main Branch
at Wisma Genting.
• The Bank’s Retail Banking Group participated in

the “Art of Saving” Competition and Art Bazaar
organised by Bank Negara Malaysia and Associations
of Financial Institutions and took the opportunity
to promote the Bank’s deposit and unit trust products
at the three-day event held at Bank Negara Malaysia.
YB Dato’ Seri Rafidah Aziz, Minister of International Trade,

trying out the SBB Enterprise Banking System.
Financial Network
Southern Bank Berhad Branches
W I L AYA H Jinjang Skudai Seremban

PERSEKUTUAN 6055, Jalan Jambu Gajus 48, Jalan Hang Tuah 4 111 & 113, Jalan Yam Tuan
Kuala Lumpur Main Jinjang Selatan Taman Skudai Baru, 70000 Seremban
Ground Floor, Wisma Genting 52000 Kuala Lumpur 81300 Skudai Tel: (06) 7610588
28, Jalan Sultan Ismail Tel: (03) 6278222 Tel: (07) 5589688 Fax: (06) 7610590
50250 Kuala Lumpur Fax: (03) 6270179 Fax: (07) 5583803 Telex: MA 63977 SOBANK
Tel: (03) 2637000
Kampung Pandan Tampoi
Fax: (03) 2016320 PAHANG
63 & 65, Jalan Kampung Pandan 24 & 26, Jalan Padi 1
Telex: MA 31023 SOBANK Bentong
Kampung Pandan Bandar Baru UDA, Tampoi
87, Jalan Loke Yew, 28700 Bentong
Bangsar 55100 Kuala Lumpur 81200 Johor Bahru
Tel: (09) 2225866/2966
19, Lorong Ara Kiri 1 Tel: (03) 9840355 Tel: (07) 2379655
Fax: (09) 2226113
Taman Lucky, Bangsar Fax: (03) 9828043 Fax: (07) 2379653
59100 Kuala Lumpur Kuantan
Kepong
Tel: (03) 2542344/2777 KELANTAN 34-40, Jalan Telok Sisek
47, Jalan 3/34A
Fax: (03) 2531913 Kota Bahru 25050 Kuantan
Kepong Entrepreneurs’ Park
3764-5, Jalan Temenggong Tel: (09) 5554488
Bukit Tunku 52100 Kuala Lumpur
15000 Kota Bahru Fax: (09) 5551927
J2 & K1 Taman Tunku Tel: (03) 6221242/2245
Tel: (09) 7483942 Telex: MA 50171 SOBANK
Bt. Tunku, 50480 Kuala Lumpur Fax: (03) 6214122
Fax: (09) 7483623
Tel: (03) 6514188 Ringlet
Taman Connaught Telex: MA 53252 SOBANK
Fax: (03) 6513328 31, Main Road 39200 Ringlet
197 & 199, Jalan Sarjana
Tel: (05) 4956866/6877
Jalan Hang Lekiu Taman Connaught, Cheras KEDAH
Fax: (05) 4957096
49, Jalan Hang Lekiu 56000 Kuala Lumpur Alor Setar
50100 Kuala Lumpur Tel: (03) 9316466 1564, Jalan Kota, 05000 Alor Setar
PERAK
Tel: (03) 2300222 Fax: (03) 9326392 Tel: (04) 7319522
Fax: (03) 2011748 Bagan Serai
Fax: (04) 7318058
Taman Sri Rampai 266, Main Rd, 34300 Bagan Serai
Telex: MA 42271 SOBANK
Jalan Imbi 21 & 23, Jalan 46A/26 Tel: (05) 7212711/2712
43, Jalan Barat, Off Jalan Imbi Taman Sri Rampai, Setapak Kulim Fax: (05) 7213911
55100 Kuala Lumpur 53300 Kuala Lumpur 32, Jalan Raya, 09000 Kulim
Tel: (03) 2446496 Tel: (03) 4121013 Kampar
Tel: (04) 4905237/5545
Fax: (03) 2451329 Fax: (03) 4124959 99 & 101, Jalan Gopeng
Fax: (04) 4900805
31900 Kampar
Jalan Kuchai Lama Taman Tun Dr Ismail Tel: (05) 4651155
MELAKA
5, Jalan 2/116B 1, Jalan 2/71,Taman Tun Dr Ismail Fax: (05) 4651854
Kuchai Entrepreneurs’ Park 60000 Kuala Lumpur Air Keroh
Off Jalan Kuchai Lama Tel: (03) 7183688 36 & 37, Lorong Setia 1
58200 Kuala Lumpur Fax: (03) 7190878 Air Keroh Heights, 75450 Melaka Langkap
Tel: (03) 7808442/7817935 Tel: (06) 2322188 3104 C & D, Jalan Kampar
Fax: (03) 7804286 Fax: (06) 2322190 36700 Langkap
JOHOR
Tel: (05) 6591249
Bukit Gambir Melaka
Jalan Pudu Fax: (05) 6592313
167, Jalan Besar 110, Jalan Bendahara, 75100 Melaka
317-319, Jalan Pudu Telex: MA 44291 SOBANK
84800 Bukit Gambir, Muar Tel: (06) 2828655
55100 Kuala Lumpur
Tel: (06) 9762488 Fax: (06) 2848986 Menglembu
Tel: (03) 2222552/4222
Fax: (06) 9762606 Telex: MA 62884 SOBANK 31 & 33, Jalan Lee Ming Hin
Fax: (03) 2217688
31450 Menglembu
Johor Bahru
Jalan Raja Laut NEGERI SEMBILAN Tel: (05) 2813655
2-8, Jalan Abiad
338, Jalan Raja Laut Bahau Fax: (05) 2826416
Taman Tebrau Jaya
50350 Kuala Lumpur 27, Jalan Raja Muda Serting
80400 Johor Bahru Persiaran Greenhill
Tel: (03) 4425888 72100 Bahau
Tel: (07) 3327577 54, Persiaran Greenhill
Fax: (03) 4434909 Tel: (06) 4543960/3950
Fax: (07) 3317750 Greentown, 30450 Ipoh
Jalan Sentul Telex: MA 60274 SOBANK Fax: (06) 4545780
Tel: (05) 2415745/5736
704 & 706, Jalan Sentul Lukut Fax: (05) 2537893
Johor Jaya
51000 Kuala Lumpur Lot 3110, Jalan Besar
2 & 4, Jalan Dedap 20 Tasik
Tel: (03) 4412418 Lukut, 71010 Port Dickson
Taman Johor Jaya 613 & 615, Jalan Tasik
Fax: (03) 4433787 Tel: (06) 6511944
81100 Johor Bahru Taman Sri Tasik
Jalan Sultan Tel: (07) 3548666 Fax: (06) 6511858
31400 Ipoh
59, Jalan Sultan Fax: (07) 3548669 Nilai Tel: (05) 5465622
50000 Kuala Lumpur 5724, Ground Floor Fax: (05) 5460632
Senai
Tel: (03) 2322653/2654 Jalan TS2/1D,
18, Jalan Belimbing, 81400 Senai
Fax: (03) 2325758 Taman Semarak, 71800 Nilai
Tel: (07) 5992188
Fax: (07) 5994855 Tel: (06) 7995934/5935
Fax: (06) 7995933
2 SOUTHERN␣ BANK␣ BERHAD␣ (5303-W) 47
1
7 2
1
7
3
PENINSULAR 16 EAST
MALAYSIA
19 MALAYSIA
4 1
2
Number of Branches
Ipoh SABAH Jalan Gasing Seri Kembangan

45, Jalan Tun Sambanthan Kota Kinabalu 111 & 113, Jalan Gasing 26368, Jalan College
30000 Ipoh Lot No. 62 & 63 46000 Petaling Jaya 43300 Seri Kembangan
Tel: (05) 2412166 Inanam Commercial Centre Tel: (03) 7578918 Tel: (03) 9485052/5085
Fax: (05) 2535962 88450 Kota Kinabalu Fax: (03) 7586422 Fax: (03) 9424236
Telex: MA 44361 SOBANK Tel: (088) 439731
Jalan Klang Lama Shah Alam
Fax: (088) 439709
14 & 16, Jalan MJ/7 1, Jalan Wau A 11/A, Seksyen 11
PULAU PINANG Telex: MA 81394 SOBANK
Medan Maju Jaya, Batu 7 40100 Shah Alam
Bayan Lepas
Sandakan Jalan Klang Lama Tel: (03) 5500633
1223-4, Jalan Raya
Blok B, Lot No. 2, 46000 Petaling Jaya Fax: (03) 5506701
11900 Bayan Lepas
Bandar Ramai-Ramai, Jalan Leila Tel: (03) 7936929
Tel: (04) 6436001 Subang Jaya
90000 Sandakan Fax: (03) 7936927
Fax: (04) 6448426 40 & 42, Jalan SS15/4D
Tel: (089) 218366
Telex: MA 40611 SOBANK Kelana Jaya Subang Jaya, 47500 Petaling Jaya
Fax: (089) 210175
12, Jalan SS6/3, Kelana Jaya Tel: (03) 7340919
Butterworth Telex: MA 82855 SOBANK
47301 Petaling Jaya Fax: (03) 7352555
4992-3, Jalan New Ferry
Tel: (03) 7031448
12100 Butterworth SARAWAK Sungai Buloh
Fax: (03) 7037153
Tel: (04) 3332875 Kuching 386, Jalan 1A/3
Fax: (04) 3221408 No. 10, Lot 543, Bangunan Cheema Pelabuhan Klang Bandar Baru Sungai Buloh
Jalan Tun Ahmad Zaidi Adruce 55-59, Jalan Cungah 47000 Sungai Buloh
Jalan Dato Keramat
93400 Kuching 42000 Pelabuhan Klang Tel: (03) 6561386
29-B Jalan Dato Keramat
Tel: (082) 429661 Tel: (03) 3681515 Fax: (03) 6561589
10150 Pulau Pinang
Fax: (082) 429678 Fax: (03) 3684021
Tel: (04) 2273880/2263768 Sungai Chua (Kajang)
Telex: MA 70363 SOBANK Telex: MA 39685 SOBANK
Fax: (04) 2266620 3, Taman Cahaya
Puchong Sungai Chua, 43000 Kajang
Nibong Tebal SELANGOR
No. 12 & 13, Jalan Kenari 1 Tel: (03) 8335711
2904, High Street Ampang
Bandar Puchong Jaya Fax: (03) 8369031
14300 Nibong Tebal 16 & 17, Jalan Besar
471000 Puchong
Tel: (04) 5933235/3236 68000 Ampang Taman Intan (Klang)
Tel: (03) 4325008
Fax: (04) 5934800 Tel: (03) 4910533 49 & 51, Jalan Batai Laut
Fax: (03) 4325009
Fax: (03) 4934399 Taman Intan, 41300 Klang
Pulau Pinang
Rawang Tel: (03) 3421272
21, Lebuh Pantai Bandar Sunway
49, Jalan Maxwell, 48000 Rawang Fax: (03) 3424832
10300 Pulau Pinang 23, Jalan PJS 11/28B
Tel: (03) 6912771/2775
Tel: (04) 2624351 Bandar Sunway
Fax: (03) 6912844 TERENGGANU
Fax: (04) 2618100 46150 Petaling Jaya
Kuala Terengganu
Telex: MA 40188 SOBANK Tel: (03) 7377607 Seksyen 14
104A-B, Jalan Sultan Ismail
Fax: (03) 7377613 24, Jalan 14/14, Seksyen 14
Seberang Jaya 20200 Kuala Terengganu
46100 Petaling Jaya
D20-638, Gerbang Tuna Cheras Tel: (09) 6223188
Tel: (03) 7560902
Seberang Jaya, 13700 Perai 1 & 3, Jalan PCR I Fax: (09) 6229058
Fax: (03) 7573872
Tel: (04) 3906401 Kawasan Perniagaan Cheras Raya Telex: MA 51367 SOBANK
Fax: (04) 3901157 Off Jalan Balakong, Batu 11 Seksyen 17
Cheras, 43200 Cheras 933, Jalan 17/38, Seksyen 17 W I L AYA H
Tanjung Bungah
Tel: (03) 9068382 46400 Petaling Jaya PERSEKUTUAN
1, Jalan Concord 13
Fax: (03) 9068395 Tel: (03) 7553343 LABUAN
11200 Tanjung Bungah
Fax: (03) 7568567 Labuan
Tel: (04) 8990144 Dengkil
Lot 15, Jalan Melati
Fax: (04) 8991812 195, Jalan Besar Selayang
Off Jalan Tun Mustapha
43800 Dengkil 14, Jalan Sri Selayang
87007 Wilayah Persekutuan Labuan
Tel: (03) 8186899 Taman Sri Selayang
Tel: (087) 414532
Fax: (03) 8187670 68100 Batu Caves
Fax: (087) 415525
Tel: (03) 6897655
Fax: (03) 6862102
Financial Network
Subsidiary Companies of the Bank
SOUTHERN BANK BERHAD ELITE CONSTANT

Corporate Headquarters DEVELOPMENT SDN BHD
20th Floor, Wisma Genting 1, Jalan Ampang
28, Jalan Sultan Ismail 50450 Kuala Lumpur
50250 Kuala Lumpur Tel: (03) 2389000
Tel: (03) 2637000 Fax: (03) 2329702
Fax: (03) 2320651
Web: http://www.sbbgroup.com.my SOUTHERN NOMINEES (TEMPATAN) SDN BHD
SOUTHERN NOMINEES (ASING) SDN BHD
SBB SECURITIES SDN BHD 20 th Floor,
51-53, Persiaran Greenhill Wisma Genting
30450 Ipoh, Perak 28, Jalan Sultan Ismail
Tel: (05) 2530888 50250 Kuala Lumpur
Fax: (05) 2537666 Tel: (03) 2637000
Telex: MA44150 SBBSEC Fax: (03) 2320651
SBB ASSET MANAGEMENT SDN BHD SBB UNIT TRUST MANAGEMENT BHD
17th Floor (Old Wing), 10 th Floor, Wisma Perdana
Wisma Genting Jalan Dungun
28, Jalan Sultan Ismail Damansara Heights
50250 Kuala Lumpur 50490 Kuala Lumpur
Tel: (03) 2628823 Tel: (03) 2542288
Fax: (03) 2016881 Fax: (03) 2540605/0684
S.B.VENTURE CAPITAL SBB CAPITAL MARKETS SDN BHD

CORPORATION SDN BHD 16th Floor, Wisma Genting
4th Floor (New Wing), 28, Jalan Sultan Ismail
Wisma Genting 50250 Kuala Lumpur
28, Jalan Sultan Ismail Tel: (03) 2093737
50250 Kuala Lumpur Fax: (03) 2642190
Tel: (03) 2641148
Fax: (03) 2647800 BANCO AUSTRAL S.A.R.L.
1184 Av. 25 de Selimbro Maputo
S.B. PROPERTIES SDN BHD Republic of Mozambique
1, Jalan Ampang Tel: 2581-428125/7
50450 Kuala Lumpur Fax: 2581-424122
Tel: (03) 2389000
Fax: (03) 2329702
Financial Statements
Directors’ Report 50-55
Balance Sheets 56
Profit and Loss Accounts 57
Consolidated Cash Flow Statement 58-59
Notes to the Accounts 60-100
Statement by Directors 101
Statutory Declaration 101
Report of the Auditors to the Members

of Southern Bank Berhad 102
98
Directors’ Report
The directors have pleasure in submitting their report and the audited accounts of the Bank and of the Group for
the financial year ended 31 December 1998.
PRINCIPAL ACTIVITIES
The Bank is principally engaged in all aspects of the banking business and the provision of related services, which
also include Islamic banking services.
The principal activities of the Bank’s subsidiary companies are stated in Note 10 to the accounts.
Other than as indicated in Note 10 to the accounts, there have been no significant changes in the nature of the activities
of the Bank and of the Group during the financial year.
R E S U LT S
The Bank The Group

RM’000 RM’000
Profit before taxation and zakat 111,229 78,489

Taxation (38,429) (42,627)
Zakat (14) (14)
Profit after taxation and zakat 72,786 35,848

Minority interests – 1,338
Net profit after minority interests 72,786 37,186

Transfer to statutory reserve (36,394) (36,394)
Retained profit brought forward 89,895 112,665
Profit available for distribution 126,287 113,457

Proposed dividend of 4.5% less tax (23,312) (23,312)
Retained profit carried forward 102,975 90,145
DIVIDENDS
Since the end of the previous financial year, the Bank paid a final dividend of 10% less tax in respect of the previous
financial year and dealt with in the previous directors’ report amounting to RM23,024,182 on the issued and fully
paid-up ordinary shares of the Bank that ranked for dividend for that year.
The directors now recommend a first and final dividend of 4.5% less tax in respect of the current financial year totalling
RM23,311,984 on the issued and fully paid-up ordinary shares of the Bank.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves and provisions during the financial year other than those disclosed
in the accounts.
Directors’ Report (Cont’d.)
ISSUE OF SHARES AND DEBENTURES
The Bank has not issued any new shares or debentures during the financial year.
SHARE OPTION
During the financial year, the Bank has not issued any options to any parties to take up unissued shares of the Bank.
No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares
of the Bank. As at the end of the financial year, there were no unissued shares of the Bank under options.
BAD AND DOUBTFUL DEBTS AND FINANCING
Before the accounts of the Bank and of the Group were made out, the directors took reasonable steps to ascertain
that action had been taken in relation to the writing off of bad debts and financing and the making of provision
for doubtful debts and financing, and had satisfied themselves that all known bad debts and financing had been written
off and that adequate provisions had been made for bad and doubtful debts and financing.
At the date of this report, the directors are not aware of any circumstances which would render the amount written
off for bad debts and financing, or the amount of the provision for bad and doubtful debts and financing, in the accounts
of the Bank and of the Group inadequate to any substantial extent.
CURRENT ASSETS
Before the accounts of the Bank and of the Group were made out, the directors took reasonable steps to ascertain
that any current assets, other than debts and financing, which were unlikely to realise their value as shown in the
accounting records of the Bank and of the Group in the ordinary course of business have been written down to an
amount which they might be expected to realise.
At the date of this report, the directors are not aware of any circumstances which would render the values attributed
to the current assets in the accounts of the Bank and of the Group misleading.
VA L U AT I O N METHODS
At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence
to the existing methods of valuation of assets or liabilities in the accounts of the Bank and of the Group misleading
or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:

(a) any charge on the assets of the Bank and of the Group which has arisen since the end of the financial year
which secures the liabilities of any other person; or
(b) any contingent liability in respect of the Bank and of the Group which has arisen since the end of the financial
year other than those arising in the ordinary course of banking business.
No contingent or other liability of the Bank and of the Group has become enforceable or is likely to become enforceable
within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or
may substantially affect the ability of the Bank and of the Group to meet their obligations as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report
or the accounts, that would render any amount stated in the accounts of the Bank and of the Group misleading.
ITEMS OF AN UNUSUAL N AT U R E
The results of operations of the Bank and of the Group for the financial year were not, in the opinion of the directors,
substantially affected by any item, transaction or event of a material and unusual nature.
Other than the uncertainties resulting from the economic slowdown, there has not arisen in the interval between
the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature
likely to affect substantially the results of operations of the Bank and of the Group for the financial year in which
this report is made.
DIRECTORS AND THEIR INTERESTS IN SHARES
The names of the directors of the Bank in office since the date of the last report and at the date of this report are:
YBhg Tan Sri Osman S Cassim (Chairman)
YBhg Dato’ Tan Teong Hean (Chief Executive Director)
YBhg Dato’ Dr. Yahya bin Ismail
YBhg Dato’ Dr. Mohammad Abdus Salim bin Cassim
Sim Kee Boon
Lim Pak Tow
Dr. Maisarah bte Abdullah
Dr. Maisarah bte Abdullah retires by rotation under Article 116 of the Bank’s Articles of Association and, being eligible,
offers herself for re-election.
YBhg Dato’ Dr. Yahya bin Ismail and Mr Lim Pak Tow retire pursuant to Section 129 of the Companies Act, 1965
and resolutions will be proposed for their re-appointment as directors under the provision of Section 129 (6) of the
said Act to hold office until the next Annual General Meeting of the Bank.
According to the Register of Directors’ Shareholdings maintained by the Bank in accordance with Section 134 of
the Companies Act, 1965, the directors’ beneficial interests in the shares and warrants of the Bank and its related
corporations are as follows:
Number of ordinary shares of RM1 each
As at As at
1.1.1998 Additions Disposals 31.12.1998
YBhg Tan Sri Osman S Cassim – direct 14,391,000 – – 14,391,000

(Chairman) – indirect – – – –
YBhg Dato’ Tan Teong Hean – direct 2,664,685 – – 2,664,685

(Chief Executive Director) – indirect 272,036,231 917,000 37,280,000 235,673,231
YBhg Dato’ Dr. Yahya bin Ismail – direct 8,248,762 – – 8,248,762

– indirect 1,119,310 – – 1,119,310
YBhg Dato’ Dr. Mohammad

Abdus Salim bin Cassim – direct 33,742,062 – – 33,742,062
– indirect 225,111,076 – 37,280,000 187,831,076
Lim Pak Tow – direct 55,579 – – 55,579

– indirect 96,761 10,000 – 106,761
By virtue of their shareholdings in the Bank, the above directors are deemed to have beneficial interest in the shares
of its subsidiary companies.
Number of warrants
As at As at
1.1.1998 Additions Disposals 31.12.1998
YBhg Tan Sri Osman S Cassim – direct 2,782,260 – – 2,782,260

(Chairman) – indirect – – – –
YBhg Dato’ Tan Teong Hean – direct 515,169 – – 515,169

(Chief Executive Director) – indirect 53,591,065 – – 53,591,065
YBhg Dato’ Dr. Yahya bin Ismail – direct 2,149,933 – 502,077 1,647,856
– indirect 324,595 – – 324,595
YBhg Dato’ Dr. Mohammad

Abdus Salim bin Cassim – direct 6,954,997 – – 6,954,997
– indirect 42,870,494 – – 42,870,494
Lim Pak Tow – direct 10,744 – – 10,744

– indirect 44,524 7,000 – 51,524
Each warrant entitles the holder to subscribe for one new ordinary share of RM1 each in the Bank at any time during
the exercise period. The exercise period is from 18 June 1997 to 17 June 2001.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the directors of the Bank has received or become entitled to
receive any benefit (other than the benefit included in the aggregate amount of emoluments received or due and
receivable by directors shown in the accounts, or the fixed salary of a full-time employee of the Bank) by reason of
a contract made by the Bank or a related corporation with the director or with a firm of which the director is a
member, or with a company in which the director has a substantial financial interest.
Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangements
to which the Bank was a party whereby directors might acquire benefits by means of the acquisition of shares in,
or debenture of, the Bank or any other body corporate.
SIGNIFICANT EVENTS
During the financial year,

(i) the Bank transferred its 30.6% equity interest in its then associated company, Banco Austral S.A.R.L. (formerly
known as Banco Popular de Desenvolvimento), a bank incorporated in the Republic of Mozambique, to Investil
– Investimentos Associados Limitada (IIAL), a private company incorporated in the Republic of Mozambique,
in return for 51% interest in the capital of IIAL.
In addition to the shares transferred from the Bank, Invester S.A.R.L. also transferred its shareholding in Banco
Austral S.A.R.L. of 29.4% to IIAL. Consequently, IIAL has a total of 60% equity interest in Banco Austral S.A.R.L..
Banco Austral S.A.R.L. became an indirect subsidiary company of the Bank and its accounts are consolidated
with the accounts of the Bank for the current financial year.
(ii) The Bank obtained the approvals from Bank Negara Malaysia and other relevant authorities for the proposed
amalgamation of the finance business of the Bank’s wholly-owned subsidiary company, Southern Finance Company
Berhad (SFCB), with that of the Bank. The Bank also obtained a court vesting order for the takeover by the
Bank of all assets and liabilities of SFCB pursuant to the amalgamation.
The amalgamation is expected to be completed by 11 April 1999.
AUDITORS
The auditors, Messrs. Kassim Chan & Co., have indicated their willingness to continue in office.
BUSINESS S T R AT E G Y AND OUTLOOK
During the year, a further contraction in the domestic economy led to an easing of interest rates to address deflationary
pressures.
The Group responded by focussing on the better cost management which led to lower expenses.
In a continuing drive to raise productivity, with the amalgamation of its business, 11 branches of the finance subsidiary
were closed-down. Staff level was also reduced substantially through a voluntary separation scheme.
Leveraging on the strength of the Bank’s balance sheet and management, on a selective basis, the Bank expanded its
business in the markets where it has a niche. The Group’s loan growth, at 15.8% reflects its belief that its balance
sheet growth should not be at the expense of asset quality.
Looking ahead, we will continue to focus on the cost discipline, better operation efficiency and improved risk management.
Our solid business franchise, a superior risk weighted capital ratio of 19.85%, and the depth of management, positions
the Group strategically to take advantage of opportunities amidst crises and to gain significantly as the economy recovers.
YEAR 2000 COMPLIANCE
The Bank has completed the renovation and implementation of the critical systems supporting the core banking business
including Branch Teller System, Deposit System, Loans System, General Ledger System, ATM System, Funds Transfer
System and Credit Card System.
The Bank is in the midst of renovating the marginal or less critical systems. The Bank is also conducting testing with
external parties like VISA, MasterCard and MEPS. We expect all the systems to be fully Y2K compliant by June 1999.
The Bank has initiated actions to ensure that customers, business partners and service providers are Y2K compliant.
The necessary contingency plans have also been developed to ensure that operations will run smoothly on the critical
dates.
To date, progress of our compliance efforts remains on schedule and the Bank is confident that the Y2K issue will
not disrupt business processes which are vital to its operations.
Signed on behalf of the Board in accordance

with a resolution of the directors,
YBhg TAN SRI OSMAN S CASSIM

Chairman
YBhg DATO’ TAN TEONG HEAN

Kuala Lumpur
31 March 1999
Balance Sheets
as at 31 December 1998
The Bank The Group

1998 1997 1998 1997
Note RM’000 RM’000 RM’000 RM’000
ASSETS
Cash and short-term funds 3 222,415 534,022 222,806 622,696
Securities purchased under
resale agreements – – 5,692 651
Deposits and placements with
financial institutions 4 78,897 123,816 98,366 179,052
Dealing securities 5 156,478 292,941 160,220 313,082
Investment securities 6 1,497,037 1,260,385 1,653,395 1,421,292
Loans, advances and financing 7 5,150,571 4,472,723 6,067,600 5,437,417
Other assets 8 227,264 172,757 356,687 236,738
Statutory deposits with
Bank Negara Malaysia 9 185,829 725,170 215,149 841,250
Investment in subsidiary companies 10 250,307 229,520 – –
Investment in associated company 11 – 14,001 – 17,019
Fixed assets 12 70,849 73,545 274,170 129,575
Goodwill on consolidation – – 21,043 4,704
TOTAL ASSETS 7,839,647 7,898,880 9,075,128 9,203,476
LIABILITIES AND SHAREHOLDERS’ FUNDS

Deposits from customers 13 4,876,188 4,604,636 5,727,669 5,245,104
Deposits and placements of banks
and other financial institutions 14 631,228 1,111,746 702,952 1,535,934
Obligation on securities sold under
repurchase agreements 306,050 181,730 386,190 266,548
Bills and acceptances payable 346,099 327,921 353,258 327,621
Other liabilities 15 218,981 262,243 362,055 318,809
5.5% Redeemable unsecured
subordinated bonds 16 300,000 300,000 300,000 300,000
TOTAL LIABILITIES 6,678,546 6,788,276 7,832,124 7,994,016
MINORITY INTERESTS – – 45,450 27,997
Share capital 17 719,506 719,506 719,506 719,506

Reserves 18 441,595 391,098 478,048 461,957
SHAREHOLDERS’ FUNDS 1,161,101 1,110,604 1,197,554 1,181,463
TOTAL LIABILITIES AND

SHAREHOLDERS’ FUNDS 7,839,647 7,898,880 9,075,128 9,203,476
COMMITMENTS AND
CONTINGENCIES 29 4,932,239 6,177,521 5,255,664 6,372,591
The accompanying notes form an integral part of the Accounts.

Profit and Loss Accounts

for the year ended 31 December 1998
The Bank The Group

1998 1997 1998 1997
Note RM’000 RM’000 RM’000 RM’000
Interest income 19 746,322 633,547 894,913 769,532

Interest expense 20 (456,008) (379,165) (537,911) (455,362)
Net interest income 290,314 254,382 357,002 314,170

SPI income 35 2,012 315 2,012 315
292,326 254,697 359,014 314,485

Loan and financing loss and
provision 21 (99,390) (55,217) (120,812) (73,725)
192,936 199,480 238,202 240,760

Non-interest income 22 74,208 80,273 128,064 87,445
Provision for commitments
and contingencies (54) – (54) –
Net income 267,090 279,753 366,212 328,205

Overhead expense 23 (155,861) (159,707) (287,723) (206,979)
111,229 120,046 78,489 121,226

Share in results of associated
company – – – 975
Profit before taxation and zakat 111,229 120,046 78,489 122,201

Taxation 26 (38,429) (39,452) (42,627) (41,230)
Zakat (14) – (14) –
Profit after taxation and zakat 72,786 80,594 35,848 80,971

Minority interests – – 1,338 2,459
Net profit after minority interests 72,786 80,594 37,186 83,430

Transfer to statutory reserves 18 (36,394) (40,297) (36,394) (47,557)
Retained profit brought forward 89,895 72,620 112,665 99,814
Profit available for distribution 126,287 112,917 113,457 135,687

Proposed dividend of 4.5%
(1997: 10%) less tax (23,312) (23,022) (23,312) (23,022)
Retained profit carried forward 18 102,975 89,895 90,145 112,665
Earnings per share (sen) 28

– Basic 5.2 17.4
The accompanying notes form an integral part of the Accounts.

Consolidated Cash Flow Statement

1998 1997
RM’000 RM’000
CASH FLOW FROM OPERATING ACTIVITIES

Profit before taxation and minority interests 78,489 122,201
Adjustments for investing and financing items and items
not involving the movement of cash and cash equivalents:
Depreciation of fixed assets 24,538 16,552
Net gain/loss on disposal of fixed assets 124 (837)
Fixed assets written off 490 285
Interest income from investment securities (103,141) (56,608)
Loan and financing loss and provision 136,989 88,438
Amortisation of premium/(accretion of discount) – net (2,988) 1,155
Amortisation of goodwill 975 261
Share of profit retained in associated company – (975)
Net (gain)/loss from sale of investment securities (1,998) 7,375
(Write back)/Provision for diminution in value of investment securities (3,838) 14,445
Dividend income (2,287) (1,861)
Provision for diminution in value of dealing securities 292 12,083
Operating profit before working capital changes 127,645 202,514

Decrease in deposits and placements with financial institutions 203,322 460,317
(Increase)/decrease in dealing securities 118,693 (94,073)
Increase in loans, advances and financing (584,145) (1,018,670)
Increase in other assets (19,548) (38,574)
(Increase)/decrease in statutory deposits with Bank Negara Malaysia 626,101 (267,338)
Increase in deposits from customers 59,706 462,832
Increase/(decrease) in deposits and placements of banks and
other financial institutions (838,355) 723,409
Increase in obligations on securities sold under repurchase agreements 119,642 172,617
Increase in bills and acceptance payable 12,408 2,235
Increase/(decrease) in other liabilities (49,466) 18,384
Cash generated from/(used in) operations (223,997) 623,653

Income taxes paid (45,749) (58,195)
Net cash generated from/(used in) operating activities (269,746) 565,458
CASH FLOW FROM INVESTING ACTIVITIES

Purchase of investment securities (2,262,315) (1,227,657)
Purchase of fixed assets (61,486) (46,878)
Proceeds from disposal of fixed assets 271 1,608
Dividend received 1,665 1,361
Proceeds from sale of investment securities 2,081,383 586,891
Purchase of shares in associated company – (14,001)
Interest received from investment securities 102,115 50,088
Acquisition of subsidiary company net of cash and cash equivalents acquired 34,136 –
Net cash used in investing activities (104,231) (648,588)

Consolidated Cash Flow Statement (Cont’d.)

1998 1997
RM’000 RM’000
CASH FLOW FROM FINANCING ACTIVITIES

Share issue expenses – (2,543)
Proceeds from shares issued to minority shareholders of a subsidiary company – 15,000
Net proceeds from issue of shares – 443,786
Dividend paid to shareholders (23,024) (17,906)
Dividend paid to minority shareholders of a subsidiary company – (3,067)
Net cash generated from/(used in) financing activities (23,024) 435,270
Net increase/(decrease) in cash and cash equivalents (397,001) 352,140

Cash and cash equivalents at 1 January 622,696 270,556
Currency translation difference (2,889) –
Cash and cash equivalents at 31 December 222,806 622,696
ANALYSIS OF CASH AND CASH EQUIVALENTS

Cash and short-term funds (Note 3) 222,806 622,696
1998
RM’000
ANALYSIS OF NET ASSETS OF SUBSIDIARY
COMPANY ACQUIRED DURING THE FINANCIAL YEAR
Cash and short-term funds 34,136
Deposits and placement with financial institutions 139,480
Investment securities 11,448
Loans, advances and financing 199,947
Other assets 99,307
Fixed assets 118,565
Deposits from customers (461,949)
Deposits and placement of banks and other financial institutions (5,870)
Bills and acceptances payable (14,452)
Other liabilities (104,585)
Net assets acquired 16,027

Goodwill on consolidation 17,315
Minority interests (16,323)
Purchase consideration 17,019

Satisfied by reclassification from investment in associated company (17,019)
Satisfied by cash –
Cash and cash equivalents acquired 34,136
Net cash from acquisition of subsidiary company 34,136
The accompanying Notes form an integral part of the Accounts.

Notes to the Accounts

31 December 1998
1. BASIS OF P R E PA R AT I O N
The financial statements of the Bank and of the Group have been prepared in compliance with the Companies
Act, 1965, modified to comply with the Principles of Syariah, the applicable approved accounting standards of
Malaysian Accounting Standards Board and BNM/GP8: Guidelines on the Specimen Financial Statements for
the Banking Industry.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Accounting Convention

The accounts of the Bank and of the Group have been prepared under the historical cost convention.
(b) Basis of Consolidation

The consolidated accounts of the Group comprise the audited accounts of the Bank and all its subsidiary
companies listed under Note 10, made up to 31 December.
All significant intercompany transactions and balances have been eliminated on consolidation.
(c) Income Recognition

Interest on loans and advances and commitment fees are recognised on an accrual basis. Interest from hire-
purchase, block discounting and leasing transactions is recognised on the ‘sum-of-the-digits’ method.
Where a customer account is classified as non-performing, recognition of interest income is suspended

until it is realised on a cash basis. Customers’ accounts of the Bank and its finance subsidiary company
are classified as non-performing where repayments are in arrears for 3 months or more for all loans and
advances and overdrafts and 1 month after maturity date for trade bills, bankers’ acceptances and trust receipt.
This policy of classifying non-performing accounts is more stringent than the requirement of Bank Negara
Malaysia guidelines, BNM/GP3 (Revised 1998) “Guidelines on Classification of Non-performing Loans
and Provision for Bad and Doubtful Debts and Financing”, which require that accounts be classified as
non-performing where repayments are in arrears for 6 months or more for all loans and advances and
overdrafts.
Customers’ accounts of the foreign bank subsidiary company, Banco Austral S.A.R.L. (formerly known
as Banco Popular de Desenvolvimento), are classified as non-performing where repayments are in arrears
for 1 month or more for all loans and advances in accordance with the rules of the Bank of Mozambique.
Interest income on non-performing loans and advances is recognised on a cash basis except for loans to
the Government of Mozambique and loans secured on real estate which is accrued.
In previous financial year, trade bills, bankers’ acceptances and trust receipt were classified as non-performing
14 days after their maturity dates.
Loan arrangement fees, commissions, guarantee fees and dividends from investment securities are recognised
on a cash basis.
Income from Islamic banking (SPI) is recognised on a cash basis in accordance with the Syariah principles.
Notes to the Accounts (Cont’d.)

31 December 1998
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
(d) Provision for Bad and Doubtful Debts and Financing

Specific provisions are made for doubtful debts and financing which have been individually reviewed and
specifically identified as bad or doubtful.
A general provision based on a percentage of the loan and financing portfolio is also made to cover possible
losses which are not specifically identified.
An uncollectible loan and financing or portion of a loan and financing classified as bad is written off after
taking into consideration the realisable value of collateral, if any, when in the judgement of the management,
there is no prospect of recovery.
(e) Repurchase Agreements

Securities purchased under resale agreements are securities which the Group has purchased with a commitment
to resell at future dates. The commitment to resell the securities is reflected as an asset on the balance sheet.
Conversely, obligation on securities sold under repurchase agreements are securities which the Group has
sold from its portfolio, with a commitment to repurchase at future dates. Such financing transactions and
the obligation to repurchase the securities are reflected as a liability on the balance sheet.
(f) Dealing Securities

Dealing securities are marketable securities that are acquired and held with the intention of resale in the
short-term and are stated at the lower of cost and market value.
Transfers, if any, between dealing and investment securities are made at the lower of cost and market value.
(g) Investment Securities

Investment securities are securities that are acquired and held for yield or capital growth or to meet minimum
liquid assets requirement pursuant to Section 38 of the Banking and Financial Institutions Act, 1989, and
are usually held to maturity.
Malaysian Government securities, Malaysian Government investment issues, Cagamas and Danamodal bonds,
other Government securities and Bank Guaranteed Private Debt Securities held for investment are stated
at cost adjusted for amortisation of premium or accretion of discount to maturity date. Other Private Debt
Securities are valued at the lower of cost and market value. Long-term investments in quoted shares are
stated at cost less provision for diminution in value. Provision is made for any permanent diminution in
value of such investments as determined on an individual basis.
Transfers, if any, between investment and dealing securities are made at the lower of carrying value and
market value.
(h) Investment in Subsidiary Companies

A subsidiary company is a company in which the Bank controls the composition of its board of directors
or more than half of its voting power, or holds more than half of its issued ordinary share capital.
Investment in subsidiary companies is stated at cost in the accounts of the Bank and a provision for diminution
in value is made when the directors consider that there is a permanent diminution in the value of such
investment.

31 December 1998
(i) Investment in Associated Company

An associated company is a company in which the Group has a long term equity interest of between
20% to 50% and where the Group is in a position to exercise significant influence in its management.
Investment in associated company is stated at cost less provision for diminution in value of investment
of a permanent nature, if any, in the Bank’s financial statements. In the consolidated financial statements,
the results of associated company is accounted for under the equity method based on management accounts
whereby the Group’s share of post acquisition profits less losses of associated company is included in the
consolidated profit and loss account and the Group’s interest in the associated company is stated at cost
plus adjustments to reflect changes in the Group’s share of the net assets of the associated company in
the consolidated balance sheet.
(j) Depreciation
Freehold land is not depreciated. Leasehold land is depreciated on a straight-line basis over the period
of the lease. Other fixed assets are depreciated on a straight-line basis over their estimated useful lives. The
principal annual rates are:-
Buildings 2.5%
Office equipment, furniture, fittings and renovations 10.0% – 20.0%
Computer equipment and software 10.0% – 50.0%
Motor vehicles 20.0%
(k) Assets Under Lease

Assets under lease which in substance transfer the risks and benefits of ownership of the assets are capitalised
under fixed assets. The assets and the corresponding lease obligations are recorded at the lower of present
value of the minimum lease payments or the fair value of the leased assets at the beginning of the lease
term. Such leased assets are subject to depreciation consistent with that for depreciable assets which are
owned.
Leases which do not meet such criteria are classified as operating leases and the related rentals are charged
to profit and loss account as incurred.
(l) Bills and Acceptances Payable

Bills and acceptances payable represent the Bank’s own bills and acceptances rediscounted and outstanding
in the market.
(m) Forward Exchange Contracts

Unmatured forward exchange contracts are stated at their original contracted forward rates applicable to
the respective dates of maturity and unrealised losses and gains are taken up in the profit and loss account
for the year on a time-apportionment basis over the individual life of the contracts.
(n) Interest Rate Swaps and Futures Contracts

The Bank uses interest rate swaps and futures contracts in its trading account activities and in an overall
interest rate risk management.

31 December 1998
Interest income or interest expense associated with interest rate swaps that qualify as hedges is recognised
over the life of the swap agreement as a component of interest income or interest expense. Gains and
losses on interest rate futures contracts that qualify as hedges are generally deferred and amortised over
the life of the hedged assets or liabilities as adjustments to interest income or interest expense.
Gains and losses on interest rate swaps and futures contracts that do not qualify as hedges are recognised
in the current year using the mark-to-market method, and are included in the net result from dealing
securities.
(o) Currency Translations

Individual foreign currency assets and liabilities are stated in the balance sheet at spot rate of exchange
which closely approximate those ruling at the balance sheet date. Transactions in foreign currencies are
translated at rates prevailing on transaction dates. Exchange gains and losses are recognised in the profit
and loss account in the year they arise.
For the purpose of consolidation, the financial statements of associated/subsidiary company expressed in
foreign currency are translated into Ringgit Malaysia at the rates of exchange ruling at the balance sheet
date. Gains or losses arising on translation into Ringgit Malaysia are taken up in the exchange fluctuation
reserve. Translation losses in excess of amount in the exchange fluctuation reserve, if any, is taken up in
the profit and loss account.
(p) Deferred Taxation

Provision for deferred taxation using the ‘liability’ method is made in respect of all material timing differences
between profit as reported for accounting and taxation purposes to the extent where it is probable that
a liability for taxation will crystallise in the foreseeable future.
Timing differences which give rise to net deferred tax benefits are generally not recognised except for
the tax effects which arise from the difference in the recognition of amortisation of premiums, unrealised
loss on securities and interest income suspended for tax and accounting purposes.
(q) Goodwill
Goodwill arising on consolidation represents the excess of the purchase price over the fair value of the
net assets of the subsidiary company at the date of acquisition and is amortised over twenty-five years
in compliance with the recommendation of Malaysian Accounting Standard No. 6,“Accounting For Goodwill”.
(r) Deferred Asset

Deferred asset of a subsidiary company is reduced annually by an amount computed in accordance with
the guidelines of the rescue scheme sponsored by Bank Negara Malaysia (see Note 8), and is based on
net loans recoveries and income arising from utilisation of long-term deposits placed by Bank Negara
Malaysia as provided for under the said scheme. This amount was fully amortised to the profit and loss
account during the financial year.
(s) Cash and Cash Equivalents

Cash equivalents are short-term, highly liquid investments which are readily convertible to cash with
insignificant risk of changes in value.

31 December 1998
3. CASH AND S H O RT- T E R M FUNDS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Cash and balances with banks and

other financial institutions 81,985 128,572 110,152 135,084
Money at call and deposit placements
maturing within one month 140,430 405,450 112,654 487,612
222,415 534,022 222,806 622,696
4. DEPOSITS AND PLACEMENTS WITH FINANCIAL INSTITUTIONS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Licensed banks – 66,521 69,786 67,732

Licensed finance companies 51,558 32,595 500 86,620
Other financial institutions 27,339 24,700 28,080 24,700
78,897 123,816 98,366 179,052
5. DEALING SECURITIES
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Money market instruments:

Malaysian Government securities 62,081 24,058 62,081 24,058
Cagamas bonds and notes – 9,863 – 9,863
Bankers’ acceptances and
Islamic accepted bills 94,397 259,020 95,954 274,592
156,478 292,941 158,035 308,513

Quoted securities in Malaysia:
Quoted shares and unit trusts – – 2,185 4,569
156,478 292,941 160,220 313,082
Market value of quoted securities:

Cagamas bonds and notes – 9,863 – 9,863
Quoted shares and unit trusts in Malaysia – – 3,185 5,569
63,197 33,921 66,382 39,490


31 December 1998
6. INVESTMENT SECURITIES
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000

Cagamas bonds and notes 205,324 257,783 215,325 278,807
Negotiable instruments of deposits 795,132 733,973 807,132 773,973
KLIA’s Islamic Primary Notes 30,528 30,528 30,513 30,513
Private debt securities 10,437 10,464 10,437 10,464
Danamodal bonds 96,587 – 108,806 –
1,411,070 1,186,812 1,506,637 1,313,248

Quoted shares:
In Malaysia 25,774 21,092 72,400 67,398
Outside Malaysia 52,706 50,432 52,706 50,432
Unquoted shares:
In Malaysia 3,885 3,885 12,302 12,302
Outside Malaysia – – 25,962 –
1,493,435 1,262,221 1,670,007 1,443,380

Amortisation of premium less
accretion of discount 3,602 (1,836) 3,602 (1,836)
Provision for diminution in value of

investment securities:
Quoted shares – – (12,294) (14,445)
Unquoted shares – – (7,920) (5,807)
1,497,037 1,260,385 1,653,395 1,421,292
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
(i) Market value of quoted securities:

Cagamas bonds and notes 208,492 256,292 218,492 277,292
KLIA’s Islamic Primary Notes 25,603 32,100 25,603 32,100
Private debt securities 10,838 10,260 10,838 10,260
Shares quoted in Malaysia 20,297 21,339 50,046 51,356
Shares quoted outside Malaysia 77,350 74,033 77,350 74,033
Danamodal bonds 100,874 – 113,129 –
725,696 542,232 839,405 656,478


31 December 1998
6. INVESTMENT SECURITIES (CONT’D.)
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
(ii) The maturity structure of money

market instruments held for
investments are as follows:
Maturing within one year 934,097 886,419 966,302 951,066
One year to three years 198,258 156,481 242,006 180,057
Three years to five years 118,388 23,831 135,376 52,363
Over five years 160,327 120,081 162,953 129,762
1,411,070 1,186,812 1,506,637 1,313,248
7. LOANS, ADVANCES AND FINANCING
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Overdrafts 1,609,496 1,431,428 1,650,634 1,427,165

Term loans 3,108,992 2,421,237 3,734,341 2,455,942
– Fixed rate 939,524 240,664 1,053,955 287,515
– Floating rate 2,169,468 2,180,573 2,680,386 2,168,427
Lease receivables – – 11,846 16,925
Hire-purchase – – 364,354 558,367
Credit/charge cards receivables 283,046 311,862 297,595 331,226
Bills receivable 58,557 82,039 58,557 82,039
Trust receipts 18,022 19,524 18,022 19,524
Claims on customers under
acceptance credits 325,394 306,456 325,394 306,456
Staff loans 40,044 35,871 64,179 39,555
Other loans 744 6,755 52,671 490,071
5,444,295 4,615,172 6,577,593 5,727,270

Unearned interest and income (17,117) (7,383) (66,959) (104,994)
Gross loans, advances and financing 5,427,178 4,607,789 6,510,634 5,622,276

Provision for bad and doubtful debts
and financing
– Specific (123,045) (40,591) (208,606) (59,829)
– General (82,749) (73,026) (99,239) (87,945)
Interest-in-suspense/income-in-suspense (70,813) (21,449) (135,189) (37,085)
Net loans, advances and financing 5,150,571 4,472,723 6,067,600 5,437,417


31 December 1998
7. LOANS, A D VA N C E S AND FINANCING (CONT’D.)
Included under provision for bad and doubtful debts and financing, and interest-in-suspense of the Group in
1997 is an amount of RM0.12 million and RM0.31 million respectively which relates to loans and advances
of Eu Finance Berhad taken over in 1990 by the finance subsidiary company under a rescue scheme sponsored
by Bank Negara Malaysia.
Specific provision for doubtful debts and financing is made by the Bank and its finance subsidiary company
for non-performing accounts in compliance with Bank Negara Malaysia’s guidelines, BNM/GP3 (Revised 1998),
“Guidelines on Classifications of Non-performing Loans and Provision for Bad and Doubtful Debts and Financing”,
generally as follows:
(a) at 20% of the estimated uncollateralised portion of the accounts which are in arrears for 6 months but
less than 9 months;
(b) at 50% of the estimated uncollateralised portion of the accounts which are in arrears for 9 months but
less than 12 months; and
(c) at 100% of the estimated uncollateralised portion of the accounts which are in arrears for 12 months and
above
In previous financial year, the specific provision was made for non-performing accounts at 50% of the estimated
uncollateralised portion of the accounts in arrears for 6 months but less than 12 months, and at 100% of the
estimated uncollateralised portion of the accounts in arrears for 12 months and above.
Specific provision for doubtful debts is made by the foreign bank subsidiary company, Banco Austral S.A.R.L.
(formerly known as Banco Popular de Desenvolvimento) in accordance with the rules of Bank of Mozambique
calculated on a percentage basis depending on the period the accounts are past due.
(i) The maturity structure of loans, advances and financing are as follows:
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Within one year 3,455,822 2,802,838 3,850,716 3,051,577

Three years to five years 229,909 297,792 453,031 631,189
Over five years 1,513,692 1,307,165 1,695,503 1,475,534
5,427,178 4,607,789 6,510,634 5,622,276


31 December 1998
7. LOANS, ADVANCES AND FINANCING (CONT’D.)
(ii) Loans, advances and financing analysed by their economic purposes are as follows:
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Agriculture 80,420 55,879 181,866 67,771

Mining and quarrying 24,842 21,704 30,740 28,282
Manufacturing 823,905 615,905 916,800 674,182
Electricity, gas and water 184,961 61,821 185,358 62,254
Construction 552,225 499,975 626,956 573,888
Real estate 293,267 290,016 434,860 423,501
Purchase of landed properties 1,342,799 1,169,731 1,474,462 1,284,932
(of which: i. Residential 752,063 629,692 851,939 718,400
ii. Non-residential) 590,736 540,039 622,523 566,532
General commerce 458,957 445,865 516,387 469,744
Transport, storage and communication 105,137 78,662 120,084 89,857
Finance, insurance and business services 431,428 172,412 385,980 159,176
Purchase of securities 349,231 331,213 458,561 490,071
Purchase of transport vehicles 3,646 3,893 223,273 296,569
Consumption credit 698,385 764,756 803,820 879,609
Others 77,975 95,957 151,487 122,440
5,427,178 4,607,789 6,510,634 5,622,276
(iii) Movements in non-performing loans and financing including interest receivables (NPL) are as follows:
The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Balance as at 1 January 197,737 151,288 356,524 249,057

Non-performing during the year
(gross) 772,252 249,891 1,019,663 358,156
Recoveries (89,496) (121,921) (155,285) (156,528)
NPL reclassified as performing (333,113) (45,446) (333,113) (46,156)
Amount written-off (29,538) (36,533) (119,024) (48,463)
NPL of subsidiary company
acquired during the year – – 135,099 –
Currency translation difference – – (11,432) –
Adjustment – 458 – 458
Balance as at 31 December 517,842 197,737 892,432 356,524
% of NPL to total loans 5.8 2.8 8.4 4.4


31 December 1998
7. LOANS, A D VA N C E S AND FINANCING (CONT’D.)
(iv) Movements in provision for bad and doubtful debts and financing and interest-in-suspense accounts are
as follows:
The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
General provision (GP)

Provisions made during the year 9,723 30,418 9,005 35,845
Amount written-back during
the year – – (2,639) –
GP of subsidiary company
Currency translation difference – – (455) –
% of total loans less SP and IIS 1.5 1.5 1.5 1.5
Specific provision (SP)

Amount written-back in respect
of recoveries (36,094) (8,068) (174,401) (12,137)
SP of subsidiary company
Interest-in-suspense (IIS)
Amount written-back in respect of
recoveries (35,354) (13,570) (51,920) (25,023)
IIS of subsidiary company


31 December 1998
8. OTHER ASSETS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Other debtors, deposits and prepayments 226,987 172,479 356,049 225,998

Deferred asset – net – – – 9,288
Foreclosed properties – net of provision
for diminution in value 277 278 638 1,452
227,264 172,757 356,687 236,738
The Deferred Asset net of recoveries of RM75.4 million (1997: RM66.1 million) represents the net consideration
incurred by the finance subsidiary company relating to the takeover in 1990 of business operations, assets and
liabilities of Eu Finance Berhad (a finance company) pursuant to a Rescue Scheme of Arrangement sponsored
by Bank Negara Malaysia.This amount has been fully amortised to the profit and loss account during the financial
year.
9. S TAT U T O RY DEPOSITS WITH BANK NEGARA M A L AY S I A
The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance with Section
37(1) (c) of the Central Bank of Malaysia Ordinance 1958 (Revised – 1994), the amounts of which are determined
at set percentages of total eligible liabilities.
10. INVESTMENT IN SUBSIDIARY COMPANIES
The Bank
1998 1997
RM’000 RM’000
Unquoted shares at cost 253,076 229,520

Less: Provision for diminution in value (2,769) –
250,307 229,520
During the financial year, SBB Futures Sdn. Bhd. (SBBF), a subsidiary company of the Bank, ceased operations
effective 1 September 1998. A provision for diminution in value of investment in SBBF has been made in the
accounts of the Bank.

31 December 1998
10. INVESTMENT IN SUBSIDIARY C O M PA N I E S (CONT’D.)
The subsidiary companies of the Bank, all of which are incorporated in Malaysia except as stated otherwise,
are as follows:
Effective Percentage
of Equity
1998 1997
Direct Subsidiary Companies Principal Activities % %
Southern Finance Company Berhad Accepting deposits and advancing loans 100 100
Southern Nominees (Tempatan) Sdn. Bhd. Providing nominee services (local) 100 100
Southern Nominees (Asing) Sdn. Bhd. Providing nominee services (foreign) 100 100
– Dormant
S.B. Properties Sdn. Bhd. Property ownership and management 100 100
S.B. Venture Capital Corporation Providing risk capital 100 100
Sdn. Bhd.
SBB Asset Management Sdn. Bhd. Investment and asset management 100 100
SBB Capital Markets Sdn. Bhd. Investment holding 100 100
SBB Unit Trust Management Berhad Sale and management of unit trusts 100 100
SBB Futures Sdn. Bhd. Trading in futures and options 100 100
– Dormant
Investil – Investimentos Associados Investment holding 51 –
Limitada* (incorporated in the
Republic of Mozambique)
Indirect Subsidiary Companies

SBB Securities Sdn. Bhd. Stockbroking 70 70
RC Nominees (Tempatan) Sdn. Bhd. Providing nominee services (local) 70 70
RC Nominees (Asing) Sdn. Bhd. Providing nominee services (foreign) 70 70
– Dormant
SBBAM Nominees (Tempatan) Sdn. Bhd. Providing nominee services (local) 100 100
SBBAM Nominees (Asing) Sdn. Bhd. Providing nominee services (foreign) 100 100
Elite Constant Development Sdn. Bhd. Building construction 100 100
Banco Austral S.A.R.L. (formerly Banking business 30.6 –
known as Banco Popular de
Desenvolvimento)* (incorporated in
the Republic of Mozambique)
* The accounts of these subsidiary companies were audited by auditors other than the auditors of the Bank.

31 December 1998
10. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D.)
The auditors’ report on the accounts of Banco Austral S.A.R.L., a company incorporated in the Republic of
Mozambique, was qualified as follows:
(a) the auditors were unable to determine the fairness of, or adjustments, if any, that is necessary for the following:
(i) a deposit of RM22.5 million (Mts73,025 million) which could not be reconciled to the amount
of RM27.4 million (Mts89,000 million) reported by the central bank of Mozambique; and
(ii) an inter-branch account balance of RM13.1 million (Mts42,644 million), of which about RM8.3
million was cleared in January 1999; and
(b) an overstatement of profit resulting from the deferment of provision for doubtful loans amounting to
approximately RM25.3 million (Mts81,973 million) which is to be charged to the profit and loss accounts
of Banco Austral S.A.R.L. over four years.
The said deferred provision however has been adjusted for in the consolidated accounts of the Group.
During the financial year, the Bank transferred its 30.6% equity interest in its then associated company, Banco
Austral S.A.R.L. (formerly known as Banco Popular de Desenvolvimento), a bank incorporated in the Republic
of Mozambique to Investil – Investimentos Associados Limitada (IIAL), a private company incorporated in the
Republic of Mozambique, in return for 51% interest in the capital of IIAL.
In addition to the shares transferred from the Bank, Invester S.A.R.L. also transferred its shareholding in Banco
Austral S.A.R.L. of 29.4% to IIAL. Consequently, IIAL has a total of 60% equity interest in Banco Austral S.A.R.L..
Banco Austral S.A.R.L. became an indirect subsidiary company of the Bank and its accounts are consolidated
with the accounts of the Bank for the current financial year.
11. INVESTMENT IN A S S O C I AT E D COMPANY
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Share of net assets at date of acquisition – 7,450 – 7,450

Premium on acquisition – 6,551 – 6,551
Cost of investment – 14,001 – 14,001

Gain on foreign exchange – – – 2,482
Share of post acquisition profit before tax – – – 975
Share of taxation – – – (439)
– 14,001 – 17,019

31 December 1998
11. INVESTMENT IN A S S O C I AT E D C O M PA N Y (CONT’D.)
The associated company of the Bank in 1997 is Banco Austral S.A.R.L. (formerly known as Banco Popular
de Desenvolvimento), a bank incorporated in the Republic of Mozambique, in which the Bank has a 30.6%
equity interest.
During the financial year, the Bank acquired a 51% interest in Investil – Investimentos Associados Limitada (IIAL),
a private company incorporated in the Republic of Mozambique, following the transfer of its equity interest
in Banco Austral S.A.R.L. as explained in Note 10. Also during the financial year, Banco Austral S.A.R.L. became
a 60% owned subsidiary company of IIAL and therefore an indirect subsidiary company of the Bank.
12. FIXED ASSETS
Balance As Balance As At
At 1 January Additions Disposals Write-off 31 December
RM’000 RM’000 RM’000 RM’000 RM’000
The Bank
1998
Cost
Freehold land and buildings 1,515 – – – 1,515
Office equipment,
furniture, fittings and
renovations 34,719 1,236 (8) (577) 35,370
Computer equipment
and software 86,358 11,988 (409) (2,002) 95,935
Motor vehicles 8,668 20 (150) (2) 8,536
131,260 13,244 (567) (2,581) 141,356
Accumulated Depreciation
Freehold land and buildings 395 20 – – 415
Office equipment, furniture,
fittings and renovations 17,695 2,931 (3) (533) 20,090
Computer equipment
and software 37,212 11,097 (301) (1,971) 46,037
Motor vehicles 2,413 1,698 (145) (1) 3,965
57,715 15,746 (449) (2,505) 70,507


31 December 1998
12. FIXED ASSETS (CONT’D.)
At 1 January Additions Disposals Write-off 31 December
RM’000 RM’000 RM’000 RM’000 RM’000
The Bank
1997
Cost
Freehold land and buildings 1,515 – – – 1,515
Office equipment,
furniture, fittings and
renovations 31,363 4,654 (32) (1,266) 34,719
Computer equipment
and software 66,703 19,826 (19) (152) 86,358
Motor vehicles 5,418 4,821 (1,571) – 8,668
104,999 29,301 (1,622) (1,418) 131,260
Freehold land and buildings 375 20 – – 395
fittings and renovations 16,241 2,647 (22) (1,171) 17,695
Computer equipment
and software 28,618 8,751 (12) (145) 37,212
Motor vehicles 2,443 1,190 (1,220) – 2,413
47,677 12,608 (1,254) (1,316) 57,715
1998 1997
RM’000 RM’000
Net Book Value

Freehold land and buildings 1,100 1,120
Office equipment, furniture, fittings and renovations 15,280 17,024
Computer equipment and software 49,898 49,146
Motor vehicles 4,571 6,255
70,849 73,545

31 December 1998
Balance Currency Balance

As At Translation As At 31
1 January Additions Disposals Write-off Acquisition Difference December
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
The Group
1998
Cost
Freehold land and
buildings 32,950 35,528 – (281) 101,603 (8,598) 161,202
Leasehold land and
buildings
– less than 50 years 2,152 – – – – – 2,152
– 50 years or more 7,827 1 – – – – 7,828
Office equipment,
furniture, fittings
and renovations 49,929 7,837 (15) (1,073) 16,759 (1,418) 72,019
Computer equipment
and software 97,292 16,825 (714) (2,092) 5,658 (479) 116,490
Motor vehicles 13,968 1,295 (273) (2) 12,180 (1,031) 26,137
204,118 61,486 (1,002) (3,448) 136,200 (11,526) 385,828
Freehold land and
buildings 1,258 1,779 – – 7,688 (650) 10,075
Leasehold land and
buildings
– less than 50 years 735 56 – – – – 791
– 50 years or more 923 143 – – – – 1,066
Office equipment,
furniture, fittings
and renovations 24,360 5,455 (7) (915) 5,131 (433) 33,591
Computer equipment
and software 43,325 13,746 (449) (2,042) 1,528 (130) 55,978
Motor vehicles 3,942 3,359 (153) (1) 3,288 (278) 10,157
74,543 24,538 (609) (2,958) 17,635 (1,491) 111,658


31 December 1998
Balance Currency Balance

As At Translation As At 31
1 January Additions Disposals Write-off Acquisition Difference December
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
The Group
1997
Cost
Freehold land and
buildings 21,695 11,255 – – – – 32,950
Leasehold land and
buildings
– less than 50 years 2,152 – – – – – 2,152
– 50 years or more 7,818 9 – – – – 7,827
Office equipment,
furniture, fittings
and renovations 44,876 6,777 (57) (1,667) – – 49,929
Computer equipment
and software 76,292 21,282 (19) (263) – – 97,292
Motor vehicles 8,751 7,555 (2,289) (49) – – 13,968
161,584 46,878 (2,365) (1,979) – – 204,118
Freehold land and
buildings 1,167 91 – – – – 1,258
Leasehold land and
buildings
– less than 50 years 679 56 – – – – 735
– 50 years or more 779 144 – – – – 923
Office equipment,
furniture, fittings
and renovations 21,510 4,318 (31) (1,437) – – 24,360
Computer equipment
and software 33,508 10,042 (12) (213) – – 43,325
Motor vehicles 3,636 1,901 (1,551) (44) – – 3,942
61,279 16,552 (1,594) (1,694) – – 74,543
1998 1997
RM’000 RM’000
Net Book Value
Freehold land and buildings 151,127 31,692
Leasehold land and buildings
– less than 50 years 1,361 1,417
– 50 years or more 6,762 6,904
Office equipment, furniture, fittings and renovations 38,428 25,569
Computer equipment and software 60,512 53,967
Motor vehicles 15,980 10,026
274,170 129,575

31 December 1998
13. DEPOSITS FROM CUSTOMERS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Demand deposits 734,386 702,172 1,085,595 701,360

Savings deposits 327,103 365,969 355,894 396,155
Fixed deposits 2,423,524 2,715,281 2,810,635 3,190,523
Negotiable instruments of deposits 1,389,800 819,800 1,461,100 955,450
Others 1,375 1,414 14,445 1,616
4,876,188 4,604,636 5,727,669 5,245,104
(i) The maturity structure of fixed deposits and negotiable instruments of deposits are as follows:
Due within six months 3,431,165 3,092,857 3,778,982 3,488,575
Six months to one year 346,064 372,008 432,941 572,449
Three years to five years 110 781 3,421 1,584
3,813,324 3,535,081 4,271,735 4,145,973
(ii) The deposits are sourced from the following customers:

Business enterprises 1,585,311 1,107,162 1,825,855 1,238,765
Individuals 2,398,066 2,474,227 2,958,336 2,869,216
Others 892,811 1,023,247 943,478 1,137,123
4,876,188 4,604,636 5,727,669 5,245,104
14. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Licensed banks 230,918 778,099 276,046 982,099

Licensed finance companies 33,350 31,481 68,350 76,757
Other financial institutions 366,960 302,166 358,556 477,078
631,228 1,111,746 702,952 1,535,934


31 December 1998
15. OTHER LIABILITIES
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Proposed dividend 23,312 23,022 23,312 23,022

Taxation payable 40,273 35,100 46,605 49,332
Zakat payable 14 – 14 –
Deferred taxation (Note 27) 13,404 13,969 10,568 12,544
Obligations under finance lease – – 525 579
Provision for commitment and
contingencies* 54 – 54 –
Other liabilities 141,924 190,152 280,977 233,332
218,981 262,243 362,055 318,809
* Movements in provision for commitment and contingencies are as follows:

The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Balance as at 1 January – – – –
Provision made during the year 272 – 272 –
Amount written-back in respect of
recoveries (218) – (218) –
Balance as at 31 December 54 – 54 –
16. 5.5% REDEEMABLE UNSECURED S U B O R D I N AT E D BONDS 1996 – 2001
Pursuant to a trust deed dated 13 June 1996, the Bank issued RM300 million nominal value 5.5% redeemable
unsecured subordinated bonds 1996 – 2001 with 53,292,750 detachable warrants at 100% of the nominal value
of the bonds to a primary subscriber on a bought deal basis. The detachable warrants were offered for sale by
the primary subscriber to the shareholders of the Bank at an offer price of RM0.767 per warrant on the basis
of one warrant for every four ordinary shares held in the Bank.
The salient features of the bonds are as follows:

(a) The bonds bear interest at a fixed coupon rate of 5.5% per annum based on the nominal amount of the
bonds. The interest is payable annually in arrears.
(b) The bonds constitute direct, unsecured and unconditional obligations of the Bank and between the bondholders
rank pari passu without any preference or priority amongst themselves and with all other present and
future obligations of the Bank.
(c) Unless previously redeemed, cancelled or purchased by the Bank, the bonds will be redeemed at 100%
of their nominal value together with the interest accrued on the maturity date of 17 June 2001.
(d) The bonds will not be listed on the Kuala Lumpur Stock Exchange (KLSE) or any other Stock Exchange.
(e) The bonds are not convertible into any form of securities in the Bank.

31 December 1998
16. 5 . 5 % R E D E E M A B L E U N S E C U R E D S U B O R D I N AT E D B O N D S 1 9 9 6 – 2 0 0 1 ( C O N T ’ D . )
The bonds qualify as Tier-2 capital for the purpose of determining the Capital Adequacy Ratio of the Bank
and is subordinated to all other general creditors.
The salient features of the warrants are as follows:

(a) Each warrant carries the right to subscribe for one new ordinary share of RM1 each in the Bank at the
subscription price of RM5.70, payable in cash at anytime within the subscription period commencing
from the first anniversary date of issue of the warrants and expiring on 17 June 2001, being a period of
4 years from the date of issue of the rights to allotment of the warrants.
(b) After the expiry of the subscription period, any subscription rights represented by the warrants which
have not been exercised and delivered to the Registrar will lapse and every such warrant will cease thereafter
to be valid for any purposes.
(c) The warrants are listed and quoted on the Kuala Lumpur Stock Exchange with effect from 2 September
1996.
Consequential to the Bank’s bonus issue in December 1996 of 106,585,500 new ordinary shares of RM1 each,
the number of warrants in issue were adjusted from 53,292,750 to 79,939,125 warrants and the subscription
price for the Bank’s ordinary shares of RM1 each was adjusted from RM5.70 to RM3.80 per share, in accordance
with condition 3A(ii) of the Second Schedule of the Deed Poll. Also, consequential to the Bank’s bonus issue
in November 1997 of 159,890,153 new ordinary shares of RM1 each and the rights issue in December 1997
of 239,835,230 new ordinary shares of RM1 each, the number of warrants in issue were further adjusted from
79,939,125 to 139,423,286 warrants, after taking into account warrants already exercised, and the subscription
price was adjusted from RM3.80 to RM2.18 per share, in accordance with condition 3A(ii) and (iv) of the
Second Schedule of the Deed Poll.
The movements in the number of warrants during the financial year are as follows:
The Bank
1998 1997
Balance of units as at 1 January 139,423,286 79,939,125

Additions during the year – 59,507,967
Exercised during the year – (23,806)
Balance of units as at 31 December 139,423,286 139,423,286


31 December 1998
17. SHARE CAPITAL
The Bank
1998 1997
RM’000 RM’000
Authorised:
Balance as at 1 January 2,000,000 500,000
Created during the year – 1,500,000
Balance as at 31 December 2,000,000 2,000,000
Issued and fully paid:

Balance as at 1 January 719,506 319,757
Bonus issue 1:2 – 159,890
Rights issue 1:2 at RM1.85 per share – 239,835
Shares issued by virtue of exercise of warrants – 24
Balance as at 31 December 719,506 719,506
During the financial year, no warrants were exercised to subscribe for new ordinary shares of RM1.00 each
of the Bank.
18. RESERVES
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Share Premium 201,419 200,396 201,419 200,396

Statutory Reserve 137,201 100,807 169,294 132,896
Capital Reserve – – 16,000 16,000
Exchange Fluctuation Reserve – – 104 –
Other Reserve – – 1,086 –
Retained Profit 102,975 89,895 90,145 112,665
441,595 391,098 478,048 461,957
Share Premium
Capitalisation for bonus issue – (39,539) – (39,539)
Arising from rights issue – 203,927 – 203,927
Share issue expenses – (3,656) – (3,656)
Provision for share issue expenses
no longer required 1,023 – 1,023 –


31 December 1998
18. RESERVES (CONT’D.)
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Statutory Reserve
Capitalisation for bonus issue – (120,351) – (120,351)
Acquisition – – 4 –
Transfer from profit and loss account 36,394 40,297 36,394 47,557
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Capital Reserve
Balance as at 1 January – – 16,000 16,000
Balance as at 31 December – – 16,000 16,000
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Exchange Fluctuation Reserve

Translation of foreign susbidiary company – – 104 –
Balance as at 31 December – – 104 –
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Other Reserve
Movement during the year – – 1,086 –
Balance as at 31 December – – 1,086 –


31 December 1998
19. INTEREST INCOME
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Loans and advances 672,261 529,395 840,156 647,871

Money at call and deposit placements
with financial institutions 20,211 47,453 15,548 56,354
Dealing securities 17,736 20,838 18,976 23,448
Investment securities 83,145 47,535 103,141 56,608
Others 5,772 1,265 9,532 4,549
799,125 646,486 987,353 788,830

Accretion of discount/(amortisation
of premium) – net 3,579 (393) 2,988 (1,155)
Net interest suspended (56,382) (12,546) (95,428) (18,143)
746,322 633,547 894,913 769,532
20. INTEREST EXPENSE
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Deposits and placements of banks

and other financial institutions 47,242 69,816 56,600 78,204
Deposits from other customers 336,941 259,666 389,146 302,888
Others 71,825 49,683 92,165 74,270
456,008 379,165 537,911 455,362
21. LOAN AND FINANCING LOSS AND PROVISION
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Provision for bad and doubtful debts

and financing:
– specific provision (net) 104,673 37,171 130,623 52,593
– general provision (net) 9,723 30,418 6,366 35,845
Bad debts
– written-off 492 869 492 869
– recovered (15,498) (13,241) (16,669) (15,582)
99,390 55,217 120,812 73,725


31 December 1998
22. NON-INTEREST INCOME
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Fee income:
Commissions 6,349 7,294 35,273 36,079
Service charges and fees 9,636 15,548 19,905 24,691
Guarantee fee 3,042 3,359 4,934 3,359
Other fee income 29,432 36,667 29,228 36,085
48,459 62,868 89,340 100,214
Investment income:
Net profit/(loss) from dealing
securities 1,604 (2,705) 1,423 (15,306)
Gain/(loss) on sale of investment securities 1,339 (8,442) 1,998 (7,375)
Gross dividends from:

Malaysia:
Investment securities 444 272 685 355
Dealing securities – 387 540 693
Subsidiary companies 4,968 11,446 – –
Outside Malaysia:
Investment securities 1,062 813 1,062 813
9,417 1,771 5,708 (20,820)
Provision for diminution in value

of investment securities – – – (14,445)
Write-back of provision for diminution
in value of investment securities – – 3,838 –
9,417 1,771 9,546 (35,265)
Other income:
Foreign exchange gain 8,572 7,285 19,911 7,286
Rental income 257 295 765 718
Gain on disposal of fixed assets 46 750 56 904
Net profit/(loss) on sale of unit trusts – – (304) 5,836
Gain on disposal of foreclosed properties 11 143 241 356
Other operating income 7,446 7,161 8,509 7,396
16,332 15,634 29,178 22,496

74,208 80,273 128,064 87,445

31 December 1998
23. OVERHEAD EXPENSE
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Personnel costs 66,024 75,392 136,403 95,537

Establishment costs 49,588 46,951 66,755 55,665
Marketing expenses 7,608 10,807 12,059 20,506
Administration and general expenses 32,641 26,557 72,506 35,271
155,861 159,707 287,723 206,979
The above expenditure includes the following:

The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Directors’ emoluments (Note 25)

– Bank 1,071 1,075 1,071 1,075
– Subsidiary companies – – 1,293 1,703
Rental of premises 14,200 13,896 16,037 15,996
Hire of equipment 251 276 317 465
Lease rental 6,701 8,637 6,705 8,641
Auditors’ remuneration
– Statutory audit 195 195 488 290
– Over provision in prior years – (15) – (12)
– Special audit – – 2 –
Provision for diminution in value of
investment in subsidiary company 2,769 – – –
Depreciation of fixed assets (Note 12) 15,746 12,608 24,538 16,552
Amortisation of goodwill – – 975 261
Loss on disposal of fixed assets 79 32 180 67
Fixed assets written-off 76 102 490 285

31 December 1998
24. SIGNIFICANT R E L AT E D COMPANY TRANSACTIONS AND BALANCES
Subsidiary Companies
1998 1997
RM’000 RM’000
Income
Interest on fixed deposit 6,669 3,055
Interest on advances 12,698 4,248
Dividend income 4,968 11,446
Management fees 2,390 1,300
Others 897 1,047
27,622 21,096
Expenditure
Interest on fixed deposit 1,082 1,566
Interest on advances 5,866 2,999
Management fees 753 465
Rental of premises and equipment 13,483 12,790
Others 1,510 1,857
22,694 19,677
Amount due from

Deposits and placements 142,394 32,595
Loans and advances 68,262 9,603
Negotiable instruments of deposits 70,000 35,000
Others 33,387 29,309
314,043 106,507
Amount due to
Deposits and borrowings 67,273 54,500
Others 3,427 510
70,700 55,010

31 December 1998
25. DIRECTORS’ EMOLUMENTS
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
The aggregate emoluments of the

directors are:
Fees 280 280 591 585
Other emoluments:
Executive directors
– Bank 767 767 767 767
– Subsidiary companies – – 16 –
Non-executive directors 24 28 990 1,426
1,071 1,075 2,364 2,778
The estimated cash value of benefits-in-kind received but not included in the above amounted to RM67,200
(1997: RM68,007).
26. TA X AT I O N
The charge for taxation, which is based on the profit for the year, comprises:
The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Malaysian income tax @ 28% 38,620 35,100 40,701 43,081

Overseas taxation – – 3,983 –
Transfer (from)/to deferred taxation
(Note 27) (565) 6,782 (1,976) 4,265
Under/(Over) provision in respect
of prior years 374 (2,430) (81) (6,555)
Share in taxation of associated company – – – 439
38,429 39,452 42,627 41,230
The tax charge for the Bank and the Group reflects an effective tax rate which is higher than the statutory income
tax rate as certain charges and provisions are not considered deductible for tax purposes.

31 December 1998
27. DEFERRED TA X AT I O N
The Bank The Group

1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000

Transfer (to)/from profit and loss
account (Note 26) (565) 6,782 (1,976) 4,265
The deferred taxation is in respect of

the following:
Timing differences between
depreciation and corresponding
capital allowances on fixed assets 14,209 12,883 15,328 13,609
Other short-term timing differences (805) 1,086 (4,744) 1,367
Deferred assets – – – (2,432)
13,404 13,969 10,584 12,544
Net deferred tax benefit not recognised

in the account:
Timing differences on interest-in-suspense – – (4,348) –
Timing differences between depreciation
and corresponding capital allowances
on fixed assets – – 555 –
Other short-term timing differences – – 169 –
– – (3,624) –
28. EARNINGS PER SHARE (EPS)
The basic earnings per share have been calculated based on the Group’s profit after taxation and minority interests
of RM37.2 million (1997: RM83.4 million) and on the number of 719,505,689 (1997: on the weighted average
of 480,308,496) ordinary shares of RM1 each in issue during the financial year.
The fully diluted earnings per share are not shown for 1998 as there is an anti-dilution on the earnings per
share, after taking into account the assumed conversion of the outstanding warrants during the financial year.
The fully diluted earnings per share are not shown for 1997 as the dilution on the earnings per share after taking
into account of the assumed conversion of the outstanding warrants during the financial year is immaterial.

31 December 1998
29. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Bank and its finance subsidiary company make various commitments and
incur certain contingent liabilities with legal recourse to their customers. No material losses are anticipated
as a result of these transactions.
Risk-weighted exposure as at 31 December is as follows:

1998 1997
Credit Credit
Principal Equivalent Principal Equivalent
Amount Amount Amount Amount
RM’000 RM’000 RM’000 RM’000
The Bank
Direct credit substitutes 109,474 109,474 93,937 93,937
Certain transaction-related
contingent items 111,424 55,712 167,389 83,695
Short-term self-liquidating trade-
related contingencies 24,613 4,923 65,994 13,199
Housing loans sold directly and
indirectly to Cagamas Berhad 352,211 352,211 324,858 324,858
Irrevocable commitments to extend credit:
– maturity exceeding one year 478,469 239,235 675,040 337,520
– maturity not exceeding one year 3,468,052 – 3,762,530 –
Foreign exchange related contracts
– less than one year 288,709 35,615 1,057,201 119,537
Interest rate related contracts
– one year to less than five years 50,000 1,000 – –
Miscellaneous commitments and
contingencies 49,287 9,857 30,572 6,114
4,932,239 808,027 6,177,521 978,860


31 December 1998
29. COMMITMENTS AND CONTINGENCIES (CONT’D.)
1998 1997
Credit Credit
RM’000 RM’000 RM’000 RM’000
The Group
Direct credit substitutes 110,961 110,961 95,599 95,599
Certain transaction-related
contingent items 116,424 58,212 167,389 83,695
Short-term self-liquidating trade-
related contingencies 42,325 8,465 65,994 13,199
Housing loans sold directly and
indirectly to Cagamas Berhad 394,720 394,720 339,498 339,498
Irrevocable commitments toextend credit:
– maturity exceeding one year 529,445 264,661 849,242 424,621
– maturity not exceeding one year 3,528,443 – 3,767,096 –
Foreign exchange related contracts
– less than one year 288,709 35,615 1,057,201 119,537
Interest rate related contracts
– one year to less than five years 50,000 1,000 – –
Miscellaneous commitments and
contingencies 194,637 38,927 30,572 6,114
5,255,664 912,561 6,372,591 1,082,263
Housing loans sold to Cagamas Berhad are administered by the Bank and its finance subsidiary company. The Bank
and its finance subsidiary company are committed to buy back any loans which are regarded as delinquent.
Foreign exchange and interest rate related contracts are subject to market risk and credit risk:
Market Risk
Market risk is the potential change in value caused by movement in market rates or prices. The contractual
amounts stated above provide only a measure of involvement in these types of transactions and do not represent
the amounts subject to market risk. Exposure to market risk may be reduced through off-setting on and off-
balance sheet positions. As at the end of 1998, the amount of contracts which were not hedged and, hence,
exposed to market risk was RM0.7 million (1997: RM23.7 million).
Credit Risk
Credit risk arises from the possibility that a counterparty may be unable to meet the terms of a contract in
which the Bank has a gain position. As at the end of 1998, the amounts of credit risk, measured in term of
the cost to replace the profitable contracts, was RM37.4 million (1997: RM86.4 million).This amount will increase
or decrease over the life of the contracts, mainly as a function of maturity dates and market rates or prices.
The stockbroking subsidiary company, SBB Securities Sdn. Bhd., is contingently liable for an unsecured guarantee
of RM5 million (1997: RM5 million) given to a local bank in respect of standby credit facilities extended to
SCANS.

31 December 1998
30. LEASE COMMITMENTS
Non-cancellable long-term operating lease commitments of the Bank and of the Group in respect of rental
of premises and equipment are as follows:
The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Expiry of operating lease:

Within one year 529 6,621 10,608 21,230
Between one and two years 265 446 1,924 11,994
After two years 101 337 557 2,526
31. CAPITAL COMMITMENTS
Capital expenditure approved by the directors but not provided for in the accounts are as follows:
The Bank The Group
1998 1997 1998 1997
RM’000 RM’000 RM’000 RM’000
Capital expenditure:
Contracted for 1,053 3,909 40,293 40,379
Authorised but not contracted for 199 500 3,718 500
32. CAPITAL ADEQUACY
The capital adequacy ratios of the Bank are as follows:

The Bank
1998 1997
RM’000 RM’000
Tier-1 capital
Paid-up share capital 719,506 719,506
Share premium 201,419 200,396
Other reserves 240,176 190,806
Total Tier-1 capital 1,161,101 1,110,708
Tier-2 capital
Subordinated bonds 120,000 180,000
General provision for bad and doubtful debts and financing 82,749 73,026
Total Tier-2 capital 202,749 253,026


31 December 1998
32. C A P I TA L ADEQUACY (CONT’D.)
The Bank
1998 1997
RM’000 RM’000
Total capital 1,363,850 1,363,734
Less: Investment in subsidiary companies (250,307) (229,520)

Holding of other banking institutions’ capital (51,456) (63,184)
Total (301,763) (292,704)
Capital base 1,062,087 1,071,030
Capital Ratios:
Core capital ratio 18.83% 20.34%
Risk-weighted capital ratio 18.83% 20.34%
Breakdown of risk-weighted assets in the various categories of risk-weights:

0% 993,656 1,293,980
10% 210,668 372,104
20% 1,380,408 1,610,201
50% 1,113,250 1,095,170
100% 4,786,619 4,356,466
33. SEGMENT A N A LY S I S
The analysis by activity of the Group’s operations for the year ended 31 December are as follows:
Operating Profit Before Assets
Revenue Taxation Employed
By Activity RM’000 RM’000 RM’000
1998
Banking 908,517 122,626 8,413,062
Finance 119,521 (12,924) 802,713
Share broking and fund management 22,700 (20,049) 120,171
Others 24,531 (1,790) 60,564
1,075,269 87,863 9,396,510

Consolidation adjustments (58,184) (9,374) (321,382)
1,017,085 78,489 9,075,128


31 December 1998
33. SEGMENT A N A LY S I S (CONT’D.)
Operating Profit Before Assets

Revenue Taxation Employed
By Activity RM’000 RM’000 RM’000
1997
Banking 714,135 121,021 7,899,416
Finance 136,574 15,019 1,450,724
Share broking and fund management 38,728 (2,204) 221,564
Others 31,345 10,565 58,295
920,782 144,401 9,629,999

Consolidation adjustments (52,955) (22,200) (426,523)
867,827 122,201 9,203,476
By Geographical Location
1998
Malaysia 931,110 67,806 8,482,516
Overseas 85,975 10,683 592,612
1,017,085 78,489 9,075,128
1997
Malaysia 867,827 121,226 9,186,457
Overseas – 975 17,019
867,827 122,201 9,203,476
34. C O M PA R AT I V E S
Certain accounts in 1997 have been reclassified to conform with their presentation in 1998, which is in compliance
with Bank Negara Malaysia’s guidelines on the presentation of financial statements.

31 December 1998
35. ISLAMIC BANKING SCHEME (SPI)
The state of affairs as at 31 December 1998 and the results for the year ended on that date under SPI of the
Bank which are incorporated in the accounts of the Bank and of the Group are as follows:
BALANCE SHEET AS AT 31 DECEMBER 1998

The Bank and The Group
1998 1997
Note RM’000 RM’000
ASSETS
Cash and short-term funds i 8,702 21,415
Dealing securities ii 94,397 1,416
Loans, advances and financing iii 11,064 1,552
Fixed assets iv 103 100
Other assets v 383 1,013
Deposits with Bank Negara Malaysia 2,441 772
TOTAL ASSETS 117,090 26,268
LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers vi 50,504 18,059
Deposits and placements of banks and other financial institutions vii 37,534 3,104
Other liabilities viii 691 109
TOTAL LIABILITIES 88,729 21,272
ISLAMIC BANKING FUND ix 28,361 4,996
TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 117,090 26,268
COMMITMENTS AND CONTINGENCIES xiii 25,002 845


31 December 1998
35. ISLAMIC BANKING SCHEME (SPI) (CONT’D.)
PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 1998
1998 1997
Note RM’000 RM’000
Income x 2,012 315

Loans and financing loss and provision xi (144) (24)
Net income 1,868 291

Overhead expense xii (1,300) (612)
Profit/(Loss) before taxation and zakat 568 (321)

Taxation (200) –
Zakat (14) –
Profit/(Loss) after taxation and zakat 354 (321)

Accumulated loss brought forward (550) (229)
Accumulated loss carried forward (196) (550)
NOTES TO THE ISLAMIC BANKING SCHEME FINANCIAL STATEMENTS

i. Cash and Short-Term Funds
1998 1997
RM’000 RM’000
Cash and balances with banks and other financial institutions 3,701 1,336
Money at call and deposit placements maturing within one month 5,001 20,079
8,702 21,415
ii. Dealing Securities

1998 1997
RM’000 RM’000

Islamic accepted bills 94,397 1,416

31 December 1998
iii. Loans, Advances and Financing

1998 1997
RM’000 RM’000
Term financing 24,417 3,788

Staff loans 7 –
Unearned income (13,192) (2,212)
Gross loans, advances and financing 11,232 1,576

General provision for bad and doubtful debts and financing (168) (24)
Net loans, advances and financing 11,064 1,552
Loans, advances and financing analysed by concepts are as follows:

1998 1997
RM’000 RM’000
Al-Bai’ Bithaman Ajil 11,232 1,576
The maturity structure of loans, advances and financing are as follows:

1998 1997
RM’000 RM’000
Maturing within one year 15 –

Over five years 11,217 1,576
11,232 1,576
Loans, advances and financing analysed by their economic purposes are as follows:
1998 1997
RM’000 RM’000
Construction 8 –
Housing 11,217 1,576
Consumption credits 7 –
11,232 1,576

31 December 1998
Movements in the provision for bad and doubtful debts and financing are as follows:
1998 1997
RM’000 RM’000
General Provision
Balance as at 1 January 24 –
Provisions made during the year 144 24
Balance as at 31 December 168 24
iv. Fixed Assets

At 1 January Additions Adjustment* 31 December
The Bank and The Group RM’000 RM’000 RM’000 RM’000
Cost
1998
fittings and renovations 98 – (3) 95
Computer equipment and software 17 19 – 36
115 19 (3) 131
fittings and renovations 12 10 – 22
Computer equipment and software 3 3 – 6
15 13 – 28
* Prior year’s adjustment
Cost
1997
fittings and renovations 112 9 (23) 98
Computer equipment and software 14 7 (4) 17
126 16 (27) 115


31 December 1998
At 1 January Additions Adjustment* 31 December
fittings and renovations 3 10 (1) 12
Computer equipment and software 1 2 - 3
4 12 (1) 15
Net Book Value

1998 1997
RM’000 RM’000

fittings and renovations 73 86
Computer equipment and software 30 14
103 100
v. Other Assets
1998 1997
RM’000 RM’000
Other debtors, deposits and prepayments 383 1,013
vi. Deposits From Customers

1998 1997
RM’000 RM’000
Demand deposits 27,033 12,219

Saving deposits 6,902 3,742
General investment deposits 16,569 2,098
Total deposits 50,504 18,059


31 December 1998
Maturity structure of investment deposits are as follows:

1998 1997
RM’000 RM’000
Due within six months 15,606 2,098

Six months to one year 963 –
16,569 2,098
The deposits are sourced from the following customers:

1998 1997
RM’000 RM’000
Business enterprises 13,810 6,476

Individuals 20,617 9,895
Others 16,077 1,688
50,504 18,059
vii. Deposits and Placements of Banks and Other Financial Institutions

1998 1997
RM’000 RM’000
Licensed banks 29,031 3,000

Other financial institutions 8,503 104
37,534 3,104
viii. Other Liabilities

1998 1997
RM’000 RM’000
Taxation 200 –
Zakat 14 –
Other liabilities 477 109
691 109

31 December 1998
ix. Islamic Banking Fund (IBF)

1998 1997
RM’000 RM’000
Funds allocated from Head Office 28,557 5,546

Accumulated losses (196) (550)
28,361 4,996
x. Income
1998 1997
RM’000 RM’000
Income derived from investment of depositors’ funds 2,862 427

Income attributable to depositors
– other customers (1,013) (194)
– banks and financial institutions (70) –
Income attributable to Bank 231 80
Other SPI income 2 2
2,012 315
Details of the income derived from investment of depositors’ funds and funds allocated from Head Office
are as follows:
1998 1997
Depositors’ Depositors’
Funds IBF Funds IBF
RM’000 RM’000 RM’000 RM’000
Income from financing 660 53 14 3
Investment income:
Net profit from dealing securities 2,200 178 413 74
2,200 178 413 74
Fee income:
Service charges and fees 2 – – –
2 – – –
Other income:
Other non-operating income – – – 3
– – – 3
2,862 231 427 80

31 December 1998
xi. Loans and Financing Loss and Provisions

1998 1997
RM’000 RM’000
General provision for bad and doubtful debts and financing 144 24
xii. Overhead Expense

1998 1997
RM’000 RM’000
Personnel costs 508 193

Establishment costs 143 127
Marketing expenses 74 251
Administration and general expenses 575 41
1,300 612
xiii. Commitments and Contingencies

In the normal course of business, the Bank makes various and incurs 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:

1998 1997
Credit Credit
Irrevocable commitments to
extend credits:
– maturity exceeding one year 25,002 12,501 845 423
36. CREDIT R AT I N G
On 20 July 1998, the rating of the Bank and its RM300 million 5.5% Redeemable Unsecured Subordinated
Bonds (1996/2001) were reaffirmed by Rating Agency Malaysia Berhad as follows:
July 1998 July 1997
Long-term rating A1 A1
Short-term rating P1 P1
Rating for RM300 million 5.5% Redeemable
Unsecured Subordinated Bonds 1996/2001 A2 A2
Statement by Directors
The directors of SOUTHERN BANK BERHAD state that, in their opinion, the accounts set out on pages 56 to
100 are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting
standards in Malaysia so as to give a true and fair view of the state of affairs of the Bank and of the Group at 31
December 1998 and of the results of the Bank and of the Group and the cash flows of the Group for the year ended
on that date.
Signed in accordance with a resolution of the directors,
YBhg TAN SRI OSMAN S CASSIM

Chairman
YBhg DATO’ TAN TEONG HEAN

Kuala Lumpur
31 March 1999
Statutory Declaration
I, NG GEK SIU, being the officer primarily responsible for the financial management of SOUTHERN BANK BERHAD,
do solemnly and sincerely declare that the accounts set out on pages 56 to 100 are, in my opinion, correct and
I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the
Statutory Declarations Act, 1960.
Subscribed and solemnly declared )

by the abovenamed NG GEK SIU, )
at KUALA LUMPUR )
this 31st day of March 1999. )
Before me,
Commissioner for Oaths

Kuala Lumpur
Report of the Auditors to the Members of

Southern Bank Berhad
We have audited the accompanying balance sheets as of 31 December 1998, the related profit and loss accounts and
consolidated cash flow statement, together with the notes thereto, for the year then ended. These accounts are the
responsibility of the Bank’s directors. Our responsibility is to express an opinion on these accounts based on our audit.
We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that
we plan and perform the audit to obtain reasonable assurance about whether the accounts are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An
audit also includes assessing the accounting principles used and significant estimates made by the directors, as well
as evaluating the overall accounts presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the abovementioned accounts are properly drawn up in accordance with the provisions of the Companies Act,
1965 and the applicable approved accounting standards in Malaysia so as to give a true and fair view of:
(i) the state of affairs of the Bank and of the Group as of 31 December 1998 and of the results of the Bank
and of the Group and the cash flows of the Group for the year ended on that date; and
(ii) the matters required by Section 169 of the Act to be dealt with in the accounts and consolidated accounts;
and
(b) the accounting and other records and the registers required by the Act to be kept by the Bank and by the subsidiary
companies of which we have acted as auditors have been properly kept in accordance with the provisions of
the Act.
We have considered the accounts and the auditors’ reports of the subsidiary companies of which we have not acted
as auditors as indicated in Note 10 to the accounts, being accounts that have been included in the consolidated accounts.
We are satisfied that the accounts of the subsidiary companies that have been consolidated with the accounts of the
Bank are in form and content appropriate and proper for the purposes of the preparation of the consolidated accounts,
and we have received satisfactory information and explanations as required by us for these purposes.
The auditors’ reports on the accounts of the subsidiary companies were not subject to any qualification except as
indicated in Note 10 to the accounts and did not include any comment made under sub-section 3 of Section 174
of the Act.
KASSIM CHAN & CO

AF0080
Public Accountants
TAN BUN POO

1304/5/00(J/PH)
Partner
Kuala Lumpur
31 March 1999
List of Bank Group’s Properties

As at 31 April 1999
Location Description Existing Land Area Tenure No. of Expiry Age of Net Book
Use (Sq. Meters) Years Date Building Value
(Years) (RM)
Kedah
No. 1564, 4 1/2 Storey Branch & 393 Leasehold 60 25/11/2023 16 1,036,911.55
Jalan Kota, 0500 Alor Setar Building Tenanted
Melaka
No. 110, Jalan Bendahara, 2 Storey Branch 1335 Freehold – – 71 1,444,197.80
75100 Melaka Building
Negeri Sembilan
No. 111 & 113, Jalan Yam 5 Storey Branch & 357 Freehold – – 1 2,297,008.27
Tuan, 70000 Seremban Building Tenanted
Perak
No. 33, Jalan Lee Ming Hin, 2 1/2 Storey Branch 180 Freehold – – 12 175,988.19
31450 Menglembu Building
Lot Nos. 2673 & 2674 2 Storey Branch 298 Leasehold 99 18/8/2085 9 394,174.71
Main Road, 36700 Langkap Building
No. 99 & 101, Jalan Gopeng, 2 Storey Branch 446 Freehold – – 74 366,065.11
31900 Kampar Building
No. 613 & 615, Jalan Tasik, 2 Storey Branch 286 Leasehold 88 11/3/2079 13 191,004.41
31400 Ipoh Building
Pulau Pinang
No. 33 & 33B, Lebuh Pantai 2 Storey Tenanted 3418 Freehold – – 61 2,750,454.00
& No. 9 Pengkalan Weld, Building
10300 Penang
No. 21, Lebuh Pantai, 5 1/2 Storey Branch & 929 Freehold – – 34 1,099,963.11
10300 Penang Building Tenanted
Lot 636-640, Block D 20, 2 Storey Branch & 393 Leasehold 99 28/8/2082 12 451,988.65
Gerbang Tuna, Seberang Jaya, Building Tenanted
13700 Perai
Selangor
No. 14, Jalan Sri Selayang, 4 Storey Branch 334 Freehold – – 13 1,554,065.44
Taman Sri Selayang, Building
68100 Batu Caves
No. 40 & 42, 4 Storey Branch 327 Freehold – – 13 1,289,497.16
Jalan SS15/4D, Subang Jaya, Building & Tenanted
47500 Petaling Jaya
No. 12, Jalan SS6/3 Kelana Jaya, 4 Storey Branch 186 Leasehold 99 – 13 479,457.55
47301 Petaling Jaya Building & Tenanted
Wilayah Persekutuan
No. 13, Jalan Barat, Off Jalan 2 Storey Tenanted 163 Leasehold 99 30/3/2025 71 325,239.18
Imbi, 55100 Kuala Lumpur Building
No. 43, Jalan Barat, Off Jalan 4 1/2 Storey Branch & 374 Leasehold 99 30/1/2073 21 3,672,828.15
Imbi, 55100 Kuala Lumpur Building Tenanted
Lot 50574, Geran 12753, Land – 4166 Freehold – – Building 10,575,721.95
Bukit Damansara, Under
Mukim Kuala Lumpur Construction
Tanjung Bungah
Block 21 & 22 2 Units – 209 Freehold – – Building 1,451,075.26
Prima Tanjung, 4 Storey Under
Town of Tanjung Tokong, Shop-Cum- Construction
Pulau Pinang Office
Analysis of Shareholdings
As at 30 April 1999
DISTRIBUTION OF SHAREHOLDINGS
No. of % of Total % of Issued

Size of Shareholdings Shareholders Shareholders No. of Shares Share Capital
1 - 499 609 4.79 109,619 0.02

500 - 5,000 8,238 64.79 20,206,475 2.81
5,001 - 10,000 1,794 14.11 13,677,127 1.90
10,001 – 100,000 1,852 14.56 47,763,798 6.64
100,001 - 1,000,000 175 1.38 48,672,269 6.76
1,000,001 and above 47 0.37 589,076,401 81.87
Total 12,715 100.00 719,505,689 100.00
TWENTY LARGEST SHAREHOLDERS AS PER REGISTER OF MEMBERS
Shareholding
No. of Shares % of Total
1. Aseam Malaysia Nominees (Tempatan) Sdn Bhd 82,807,083 11.51
2. Keppel TatLee Bank Limited 71,948,252 10.00
3. Multi-Purpose Bank Nominees (Tempatan) Sdn Bhd 50,727,966 7.05
4. Mazal Sdn Bhd 43,736,230 6.08
5. Amalan Istimewa Sdn Bhd 36,891,249 5.13
6. Citicorp Nominees (Asing) Sdn Bhd 35,977,601 5.00
7. KLCS Asset Management Sdn Bhd 35,280,000 4.90
8. Malaysia Focus Investment Fund Limited 33,776,420 4.69
9. Malaysia Nominees (Tempatan) Sendirian Berhad 24,952,584 3.47
10. Southern Nominees (Tempatan) Sdn Bhd 20,394,022 2.84
11. Mayfair Finance Corp. 20,000,000 2.78
12. The Central Depository (PTE) Limited 13,106,483 1.82
13. Asia Life (M) Berhad 10,339,020 1.44
14. Public Nominees (Tempatan) Sdn Bhd 10,000,000 1.39
15. Malaysia Nominees (Tempatan) Sendirian Berhad 8,344,612 1.16
16. The Asia Insurance Company Limited 7,209,312 1.00
17. Capital Properties Berhad 6,867,000 0.95
18. Employees Provident Fund Board 6,211,500 0.86
19. Glenmarie Estates Sdn Berhad 6,181,000 0.86
20. Kenanga Nominees (Tempatan) Sdn Bhd 5,466,656 0.76
Total 530,216,990 73.69
SUBSTANTIAL SHAREHOLDERS
AS PER REGISTER OF SUBSTANTIAL SHAREHOLDERS
Beneficially Interested Deemed Interested % of Total

Killinghall (Malaysia) Bhd 192,430,655 - 26.74
Ramuda Sdn Bhd 103,431 193,143,645 26.86
Dato’ Tan Teong Hean 2,664,685 241,089,231 33.88
Dato’ Dr Mohammad Abdus Salim S Cassim 33,742,062 193,247,076 31.55
Keppel Bank of Singapore Limited 71,948,252 - 10.00
KI Investment (HK) Limited 35,977,601 - 5.00
Amalan Istimewa Sdn Bhd 47,842,155 - 6.65
Mazal Sdn Bhd 43,736,230 - 6.08
Altima, Inc. 35,280,000 - 4.90
Malaysian Focus Investment Fund Limited 33,776,420 - 4.69
Mayfair Finance Corp 20,000,000 - 2.78
Tan Sri Osman S Cassim 14,391,000 - 2.00
SOUTHERN␣ BANK␣ BERHAD␣ (5303-W) (Incorporated in␣ Malaysia)
No. of Shares Held Form of Proxy

37th Annual General Meeting
I/We NRIC No.

( FULL NAME IN BLOCK LETTERS)
of
(ADDRESS)
being a member of SOUTHERN BANK BERHAD hereby appoint the Chairman of the Meeting* or
(FULL NAME)
of
(ADDRESS)
or failing him,
(FULL NAME)
of
(ADDRESS)
as my/our proxy, to vote for me/us on my/our behalf at the 37th Annual General Meeting of the Bank, to be held on
16 June 1999, and at any adjournment thereof.
Resolutions Description of Resolutions For Against

1 Adoption of Reports and Accounts
2 Directors Remuneration
3 Re-election of Dr Maisarah bte Abdullah in
accordance with the Bank’s Articles of Association
4 Re-appointment of Directors in compliance with
Section 129(6) of the Companies Act, 1965
(a) Mr Lim Pak Tow
(b) YBhg Dato’ Dr Yahya bin Ismail
5 Declaration of Dividend
6 Appointment of Auditors
Please indicate with an “X” in the spaces how you wish your votes to be cast. If you do not indicate how you wish
your proxy to vote on any Resolution, the proxy will vote as he thinks fit, or, at his discretion, abstain from voting.
Dated this day of , 1999.
Witness Signature or Common Seal of Member
* Delete the words “Chairman of the Meeting” if you wish to appoint some other person(s) to be your proxy.
Notes: A member of the Bank entitled to attend and vote at the above Meeting is entitled to appoint a proxy to vote on his behalf. A proxy need
not be a member of the Bank but shall be either an advocate, an approved company auditor or a person approved by the Registrar of Companies.The instrument
appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation,
under its Common Seal. An instrument appointing a proxy executed in Malaysia need not be witnessed. The signature to an instrument appointing
a proxy executed outside Malaysia shall be attested by a solicitor, notary public, consul or magistrate.
Where a member appoints two proxies, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented
by each proxy.
In the case of joint holdings, the signatures of all joint holders are required.
The instrument appointing a proxy must be deposited at the Registered Office of the Bank, 20 th Floor, Wisma Genting, 28 Jalan Sultan Ismail,
50250 Kuala Lumpur not less than 48 hours before the time set for the Meeting and at any adjournment thereof.
Fold here
Stamp
Southern Bank Berhad

20th Floor, Wisma Genting
28, Jalan Sultan Ismail
50250 Kuala Lumpur
Fold here

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“At Southern Bank Berhad,

we are committed to customer

service excellence in all markets

we seek to serve, creating and

maximising value for all

Notice of Annual General Meeting 2-3 Southern Bank as Change Catalyst 31

Board of Directors 4 Corporate Restructuring 32-34

Corporate Information 4 Channel Strategies 35-37

Corporate Structure 5 Strategic Alliances:

Performance at a Glance 17 Financial Statements 49-102

Lending Directions 18-23 List of Bank Group’s Properties 103

Treasury Management 24-27 Analysis of Shareholdings 104-105

IT Industry Leadership 28-30 Form of Proxy

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Thirty-Seventh Annual General

2. “That the Directors’ remuneration of Ringgit One Million Seventy Thousand

NOTICE OF CLOSURE OF BOOKS

By Order Of The Board

Tan Ghee Kay

BOARD OF DIRECTORS Chairman

Chief Executive Director

YBhg Dato’ Dr Salim Cassim

Lim Pak Tow

100% Southern Finance Company Berhad

100% SBB Asset Management Sdn Bhd

100% SBBAM Nominees (Tempatan) Sdn Bhd

100% S.B. Venture Capital Corporation Sdn Bhd

100% Southern Nominees (Asing) Sdn Bhd

100% Southern Nominees (Tempatan) Sdn Bhd

100% SBB Futures Sdn Bhd

100% S.B. Properties Sdn Bhd

100% SBB Capital Markets Sdn Bhd

51% Investil - Investimentos Associados Limitada

60% Banco Austral S.A.R.L.

Five Year Group Financial Highlights

1994 1995 1996 1997 1998

Management of the Bank

Chief Executive Director Loans

Group Financial Control Division Direct Banking

Management of Subsidiary Companies

SBB Securities Sdn Bhd S.B. Properties Sdn Bhd

Chief Executive Officer General Manager

Chief Executive Officer

Southern Nominees (Asing) Sdn Bhd

Banco Austral S.A.R.L.

The Audit Committee comprises the following directors:

The duties of the Audit Committee are:

2. To nominate a person or persons as auditors;

3. (a) To review the Company’s financial condition, internal controls, as well

1998 was a difficult year, a time that brought wrenching change

The government to counter negative economic growth introduced

TAN SRI OSMAN S CASSIM D AT O ’ TAN TEONG HEAN

THE BANK Danaharta, the Special Purpose Vehicle established

N AT I O N A L S AV I N G S Closer to home, the Bank was among the 400

The financial services industry is entering a phase of consolidation.The directors

Tan Sri Osman S Cassim Dato’ Tan Teong Hean

’97 6,781,038 ’97 5,437,417

’96 5,594,797 ’96 4,508,906

’95 4,379,095 ’95 3,346,691

’94 4,148,357 ’94 2,712,136

’97 9,203,476 ’97 1,181,463

’96 7,324,446 ’96 680,925

’95 5,617,676 ’95 590,749

’94 4,981,103 ’94 326,768