BANK OF CHINA (MALAYSIA) BERHAD

1 Company No. 511251-VBANK OF CHINA (MALAYSIA) BERHAD (Company No. 511251-V)(Incorporated in Malaysia)Directors Report and Audited Financial Statements 31 DECEMBER 2017 Company No. 511251-VBANK OF CHINA (MALAYSIA) BERHAD (Incorporated in Malaysia)REPORTS AND FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 CONTENTSPAGEDIRECTORS REPORT1 - 30 STATEMENT BY DIRECTORS31 STATUTORY DECLARATION31 INDEPENDENT AUDITORS REPORT32 - 35 STATEMENTS OF FINANCIAL POSITION36 STATEMENTS OF COMPREHENSIVE INCOME37 STATEMENTS OF CHANGES IN EQUITY38 STATEMENTS OF CASH FLOWS39 - 41 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES42 - 58 NOTES TO THE FINANCIAL STATEMENTS59 - 121 Company No.

2 511251-VBANK OF CHINA (MALAYSIA) BERHAD (Incorporated in Malaysia)DIRECTORS' REPORTPRINCIPAL ACTIVITIESO ther information relating to the subsidiary is disclosed in Note 11 to the financial '000RM'000 Profit before taxation157,555 149,955 Taxation(39,985) (35,193) Net profit for the financial year117,570 114,762 DIVIDENDSCHANGES IN DEBT AND EQUITY SECURITIESRESERVES AND PROVISIONSBAD AND DOUBTFUL DEBTSThe Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Bank for the financial year ended 31 December 2017.

3 The principal activities of the Bank are commercial banking and related financial services. The principal activity of the subsidiary is that of providing Chinese visa application services. There were no significant changes in these activities during the financial year. No dividend has been paid or declared by the Bank since the end of the previous financial year. The Directors do not recommend the payment of any dividend in respect of the current financial year. There were no issuance and repayment of debt, share buy-backs, share cancellations, shares held as treasury shares and resale of treasury shares during the financial year, other than the issuance of subordinated loan of USD310 million (RM1,254,725,000) as disclosed in Note 17 to the financial statements.

4 Before the financial statements of the Group and of the Bank were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that there were no bad debts and adequate allowance had been made for doubtful debts. At the date of this report, the Directors are not aware of any circumstances which would render it necessary to write off any bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Bank inadequate to any substantial extent.

5 All material transfers to or from reserves and provisions during the financial year are shown in the financial statements. 1 Company No. 511251-VBANK OF CHINA (MALAYSIA) BERHAD (Incorporated in Malaysia)DIRECTORS' REPORT (CONTINUED)CURRENT ASSETSVALUATION METHODSCONTINGENT AND OTHER LIABILITIESAt the date of this report, there does not exist:(a)(b)CHANGE OF CIRCUMSTANCESITEMS OF AN UNUSUAL NATURE statements of the Group and of the Bank inadequate to any substantial extent. Before the financial statements of the Group and of the Bank were made out, the Directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and of the Bank had been written down to an amount which they might be expected to realise.

6 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 financial statements of the Group and of the Bank misleading. At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Bank misleading or inappropriate. No contingent or other liability of the Group and of the Bank has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group or of the Bank to meet their obligations when they fall due.

7 Any charge on the assets of the Group and of the Bank which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Group and of the Bank that has arisen since the end of the financial year other than in the ordinary course of banking business. At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Bank, which would render any amount stated in the financial statements misleading.

8 The results of the operations of the Group and of the Bank 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. 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, in the opinion of the Directors, to affect substantially the results of the operations of the Group and of the Bank for the current financial year in which this report is made.

9 2 Company No. 511251-VBANK OF CHINA (MALAYSIA) BERHAD (Incorporated in Malaysia)DIRECTORS' REPORT (CONTINUED)SIGNIFICANT EVENT DURING THE FINANCIAL YEARDIRECTORSThe BankGuan XuefeiWang Hongwei (ceased on 27 March 2018)Chai Woon ChewEugene Khoo Kong HooiDato Low Kian Chuan (appointed on 10 August 2017)Datuk Ter Leong Yap (resigned on 10 August 2017)The subsidiaryQiu HengchangChew Lee LinDIRECTORS' INTERESTS IN SHARESDIRECTORS' BENEFITSHOLDING COMPANIEST here were no material events subsequent to the reporting date that requires disclosure or adjustments to the financial statements.

10 The Directors of the Bank and the subsidiary in office since the beginning of the current financial year to the date of this report are: According to the Register of Directors' Shareholdings, none of the Directors in office at the end of the financial year held any interest in shares of the Bank and its related corporations. During and at the end of the financial year, no arrangements subsisted to which the Bank or its subsidiary is a party, being arrangements with the object or objects of enabling Directors of the Bank to acquire benefits by means of the acquisition of shares in, or debentures of the Bank or any other body corporate.