FIN435

FINANCIAL MARKET AND BANKING SERVICES

TITLE:
PERFORMANCE EVALUATION AND BANKING PRODUCTS AND SERVICES
CIMB BANK VS PERMODALAN NASIONAL BERHAD (PNB)

GROUP: JBC2422B

PREPARED BY:

NAME ID
NUR HIDAYAH BINTI HUD 2020981021
NUR FATEN HAMIMAH BINTI NORMAN 2020996669
NUR BILAH IZZAH BINTI ZULKIFLY 2020982887
NORSHAHIRA BINTI JASNI 2020976669
NUR SYAFIQAH ADILAH BINTI AHMAD KAMA 2020976821
WAN NUR FAQIHAH BINTI WAN MOHD RIDZAN 2020985381

PREPARED FOR:
MADAM RUZIAH BINTI LATIFF

SUBMISSION DATE:
21ST MAY 2020.

SEMESTER 2
SESSION 2 2019/2020
TABLE OF CONTENT

Table of Content 2

1
1.0 Introduction 3

1.1 Background of CIMB Group 3

1.2 Background of Permodalan Nasional Berhad (PNB) 4

2.0 Ratios 5

2.1 CIMB Bank Internal Comparison 5

2.2 CIMB Bank External Comparison 2018 12

2.3 PNB Internal Comparison 15

2.4 PNB External Comparison 17

3.0 Characteristics, Advantages and Disadvantages of Banking Products and Services 18

3.1 Remittances / Fund Transfer 18

3.2 Trade Finance: Banker’s Acceptance 26

4.0 Conclusion 27

5.0 References 28

6.0 Appendix 29

2
1.0 INTRODUCTION

1.1 BACKGROUND OF CIMB GROUP

Figure 1: Logo of CIMB Group

As the introduction, the name of CIMB is abbreviated for Commerce International Merchant
Bankers. CIMB Group Holding Berhad is one of the Malaysian universal bank headquartered in Kuala
Lumpur. It is the second largest financial services provider in the country, Malaysia and the world leader
in Islamic finance. Moreover, it is also listed on Bursa Malaysia through Bumiputera-Commerce Holding
Berhad (BCHB) since 1987 and has market capitalization of RM51.1 billion as at 31 December 2019.
CIMB Group is the first universal bank in Malaysia that was created as a result of the merger occurred
between Bumiputera-Commerce Bank and Southern Bank. The vision of CIMB is to be the leading
ASEAN company while its mission is to provide universal banking services as a high-performing,
institutionalized and integrated company located in ASEAN and key market beyond, and to champion
the acceleration of ASEAN integration and the region’s links to the rest of the world.

Through the record, the bank has a wide retail branch network with 1080 branches located in 14
ASEAN countries, with the total employment around 35,000 people and over 15 million customers as at
the end of December 2019. People are able to find their presences in many countries like Malaysia,
Brunei, Singapore, Indonesia, Thailand, Hong Kong, South Korea and others. It offers their customers
with consumer banking, commercial banking, investment banking, Islamic banking and asset
management products and services.

The group operates under several entities, such as CIMB Investment Bank, CIMB Bank, CIMB
Islamic, CIMB Niaga, CIMB Thai and CIMB Securities International. With many entities have, the
products and services offered by them included in the areas of Consumer Banking, Treasury and
Markets, and Group Strategy and Strategic Investments. It is also observed that the core markets are
being in Malaysia, Indonesia, Singapore and Thailand. On the other side, CIMB Islamic offered
operates in parallel with these businesses, in line with the group’s dual banking model.

To ensure the geographical reach, the products and services of the group are complemented by
partnerships included the Principal Financial Group, Bank of Tokyo-Mitsubishi UFJ, Standard Bank,
Daewoo Securities and others.

3
 CIMB also has received a few recognitions and awards for its best performances in the financial
industry. For instance, Global Finance World’s Best Islamic Financial Institution Awards 2019, Alpha
SEA Best Financial Institution Award 2019 and FinanceAsia Achievement Awards 2018.

1.2 BACKGROUND OF PERMODALAN NASIONAL BERHAD (PNB)

Figure 2: Logo of PNB

To start with, Permodalan Nasional Berhad (PNB) was established on 17 March 1978 alongside
Yayasan Pelaburan Bumiputera (YPB) as one of the instruments of the Government’s New Economic
Policy (NEP). Over the last four decades, PNB has grown to become one of the largest fund
management companies in Malaysia. The vision of PNB is to be a distinctive world class investment
house while its mission is to enhance the economic wealth of the Bumiputera community and all
Malaysians, for the prosperity of the nation. For now, the headquarter of PNB is in Kuala Lumpur,
Malaysia. The current chairman of PNB is Tan Sri Dr. Zeti Aziz that had hold the position since 2018.
From the record, PNB has employed around 1500 people to work with them. There are many
companies listed under PNB Group such as Amanah Saham Nasional Berhad (ASNB), PNB
Commercial Sdn. Berhad (PNBC), Pelaburan Hartanah Nasional Berhad (PHNB) and others.

Under ASNB, there are two types of unit trust funds, which are fixed price unit trust funds and
variable price unit trust funds. The examples of fixed price unit trust funds are ASB, ASB 3 Didik, ASM 2
Wawasan and others while the variable price unit trusts are ASN, ASN Equity 2, ASN Imbang 1, ASN
Sara 1 and much more.

4
2.0 RATIOS

2.1 CIMB BANK INTERNAL COMPARISON

2.1.1 PROFITABILITY RATIO

Ratio 2016 2017 2018 Remark

Return on Asset (ROA)
0.75% 0.90% 1.07% 2018 is better
Net Profit after Tax
¿
Total Assets
Return on Equity (ROE)
8.3% 9.6% 11.4% 2018 is better
Net Profit after Tax
¿
Total Equity
Interest Spread
2.02% 2.06% 1.68% 2017 is better
¿ Interest Income−Interest Expenses
Total Assets

 Return on Asset

Return on Asset 1.07

1.00 0.9
0.90
0.80 0.75
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2016 2017 2018
Return on Asset

Figure 3: Graph of CIMB Return on Asset

The return on asset (ROA) is the benchmark that usually used by bank for measures how
efficiently a bank can manage the asset to produce. The purpose of bank is to generate the revenues
and also profits. This ratio will helps management and the investor see how the bank can convert the
investment in assets into profits. Based on the graph, it show the return on asset for CIMB Bank for the
three years. In year 2016, the ROA is 0.75%, meanwhile in year 2017 is 0.90% and for next year which
is year 2018 increase by 0.17%, so the ROA for that year is 1.07%. It show that from three years ahead
the ROA for CIMB Bank show the good performance in ROA. For this results the CIMB Bank can attract

5
more investor to invest in their bank. The bank has higher interest revenue and has lower interest
expanses that will increase the net interest margin and ROA. CIMB Bank also have sufficient non-
interest income.

 Return on Equity

Return on Equity
12 11.4

10 9.6
8.3
8
6
4
2
0
2016 2017 2018
Return on Equity

Figure 4: Graph of Return on Equity

Return on equity (ROE) is of financial performance in the bank by divide the net income by
shareholder equity. Return on equity measures on how the effectively management to using a company
asset to make profits. It shows how much the profit of the bank earned in comparison to the total
amount of shareholder equity. Based on the graph ROE in CIMB Bank, we can see that three years are
consistently increase. In year 2016, this bank get ratio for ROE is 8.3% meanwhile in 2017 is 9.6% and
for the year steadily increase from 9.6% to 11.4%. CIMB Bank show the good performance in ROE it
shows that this bank is able to generate profit without use or need as much capital and also CIMB Bank
is doing well in mange the shareholders’ capital.

 Interest Spread

Interest Spread
2.5
2.02 2.06
2 1.68
1.5

0.5

0
2016 2017 2018
Interest spread

6
 Figure 5: Graph of Interest Spread
The interest spread ratio is differences between interest margin. Interest spread also known as net
interest spread, the bank spread is a percentage that tells to customer or investor how much the bank
earns and how much the money it gives out. For this ratio, the higher margin is the better that so the
performance of bank is excellent and will be achieve the higher profitability. Interest spread for CIMB
bank is in year 2016 is 2.02%, for year 2017 interest spread is increase by 0.04% but in year 2018 the
interest spread ratio is decrease from 2.06% to 1.68%. It shows that CIMB Bank is having decrease in
profitability on loans.

2.1.2 LIQUIDITY RATIO

Ratio 2016 2017 2018 Remark

Loan to Total
Asset
323719559 324218054 346290529
¿ ¿ ¿
485766887 506499532 533089043 2017 is better
Loan = 66.64% = 64.01% = 64.96%
¿
Total Assets

 Loan to Asset

Loan to Asset Ratio Graph for CIMB

67.00% 66.64%
66.50%
66.00%
65.50%
64.96%
65.00%
64.50% 64.01%
64.00%
63.50%
63.00%
62.50%
Category 1
2018 2017 2016

Figure 6: Loan to Asset Ratio Graph for CIMB

Loan to Asset Ratio (LAR) is a measurement of the total loans outstanding as percentage of the
bank in total asset in a year. LAR is an indicator for the bank’s level of liquidity that reflects the credit
and also shows the ability of the bank to meet the demand for credit with total asset owned. It is
calculated by dividing the loans with total assets of the bank. If the ratio is higher, it will be indicated that
the bank is loaned up and the liquidity is low because it indicates the bank’s existing funds are over

7
used for credit assessment and less short-term liabilities. But, sometimes the higher the ratio the better
credit performance level. This is because the greater the loan component given in the total structure of
its assets. Based on the Figure 1, it shows that the trend analysis of Loan to Asset Ratio (LAR) for
CIMB from year 2016 to year 2017 is decreased by 2.63% where the year 2016 has recorded for
66.64% and 64.01% for the year 2017. In year 2018, the ratio has recorded for 64.96% and the trend
for this two current year has increased by 0.95%. Based on this trend, CIMB Bank has recorded its LAR
above the 50% for three years straight. It shows that this bank has lower liquidity level and lead to
higher liquidity risk. The bank can do restructuring of debt, making small expenses and selling its
unneeded assets in order to improve their liquidity ratio.

2.1.3 CAPITAL ADEQUACY RATIO

Ratio 2016 2017 2018 Remark

Risk Weighted Capital
Ratio
16.2% 16.8% 18.4% 2018 is better
Capital Base
¿
Total Risk Weighted Loan Assets
Core Capital Ratio
13.1% 13.3% 13.7% 2018 is better
Debt
¿
Capital

 Capital adequacy ratio/ Risk weighted capital ratio

Capital Adequacy Ratio (CAR)

19
18.5 18.4

18
17.5
17 16.8
16.5 16.2
16
15.5
15
2016 2017 2018

Figure 7: Graph of Capital Adequacy Ratio for CIMB

The capital adequacy ratio (CAR) is a measurement of a bank’s available capital expressed as
a percentage of a bank’s risk-weighted credit exposures. The capital adequacy ratio, also known as

8
capital-to-risk weighted asset ratio (CRAR) where it used to protect depositors and promote the stability
and efficiency of financial systems around the world. Based on figure above, CIMB Bank has increase
their CAR for three years. For 2016, the CAR is 16.2% and for 2017 the CAR is 16.8% it shows that the
ratio increase by 0.6% and for 2018, the CAR is 18.4%. Means that, the CAR continuous increase by
1.6% for that year. It shows that CIMB Bank has greater level of unexpected losses can absorb before
becoming insolvent.

 Core capital ratio

Core Capital Ratio

13.8
13.7
13.7
13.6
13.5
13.4
13.3
13.3
13.2
13.1
13.1
13
12.9
12.8
2016 2017 2018

Figure 8: Graph of Core Capital Ratio for CIMB

The core capital ratio is a measurement of a company’s financial leverage. This ratio also known
as Tier 1 ratio and it calculated by taking the company’s interest-bearing debt, both short-term and long-
term liabilities and dividing by the total capital. Based on figure above, the core capital ratio of CIMB
Bank has increase for 3 years. For 2016 the ratio is 13.1% and the ratio for year 2017 is 13.3%, it
shows that the ratio increase by 0.2% and for year 2018, the ratio is 13.7%. It means that, the ratio is
continuous increase by 0.4%. It means that, the CIMB Bank has higher company capital fund
dependent towards debt.

2.1.4 ASSET QUALITY RATIO

Ratio 2016 2017 2018 Remark

NPL Ratio 2408883 2230907 1432661
¿ ¿ ¿
323719559 324218054 346290529 2018 is better
Outstanding Loan
¿
Total Loan = 7.4413% = 6.8809% =4.1372%
Loan to 95.60% 90.80% 91.20% 2017 is better
Deposit Ratio

9
 Total Loan
¿
Total Deposit

 Non-Performing Loan (NPL)

Non-Performing Loan Ratio (NPL)

8.00% 7.44%
6.88%
7.00%
6.00%
Percentage

5.00% 4.14%
4.00%
3.00%
2.00%
1.00%
0.00%
Category 1
Year

2018 2017 2016

Figure 9: Non-Performing Loan Ratio (NPL) Graph for CIMB

Non-Performing Loan Ratio (NPL) is one of the method uses by the bank to compare the quality
of the portfolio and shows the effectiveness of bank in receiving repayment on its loans. This ratio can
be calculated by dividing the outstanding loan with the total loan where it refers to the amount of non-
performing loan in bank’s loan portfolio to the total amount of outstanding loan. If the ratio is higher, its
means that the company has poor performance in manage its debt and lower in net income. The
important of this ratio is when the investors need to view and choose which lenders has high NPL ratio
to invest their money. Based on the Figure 2, CIMB Bank has recorded its decreasing percentage of
NPL ratio from year 2016 until 2018. For year 2016, the NPL ratio is at high percentage of 7.44%. The
NPL ratio for year 2017 is dropping out to 6.88% and the NPL ratio of year 2018 also decreased to
4.14%. It shows that CIMB Bank has lower performance of its assets quality because of its
inappropriate credit risk management or irresponsible borrowing that lead to the lower level of net
income. The bank need to have evaluate the bank securities supporting the loans and adding more
value by redesign on their operating model in order to improve this ratio.

10
  Loan-To-Deposit Ratio (LDR)

Loan to Deposit Ratio (LDR)

96.00% 95.60%
95.00%
94.00%
Percentage

93.00%
92.00% 91.20% 90.80%
91.00%
90.00%
89.00%
88.00%
Category 1
Year

2018 2017 2016

Figure 10: Loan-To-Deposit Ratio (LDR) Graph for CIMB

Loan-To- Deposit Ratio (LDR) is usually expressed in percentage and used for assessing bank’s
liquidity by comparing a bank’s total loans to its total deposits for same period. This ratio shows the
ability of the bank to cover loan losses and withdrawals by its customers. It also important in helping to
show how the bank retaining and attracting their customers. Based on the Figure 3, the ratio has been
referred in the CIMB Bank’s financial statement where it shows that the LDR in CIMB Bank for year
2016 is at higher rate which is 95.60%, in year 2017, the LDR is also dropped at 90.80% for year 2018,
the rate has increased by 0.4% which is 91.20%. This trend analysis shows that the bank has recorded
the higher rate of LDR because the LDR rate for the three years are above 90%. It indicates that the
bank is in poor performance because it may not have enough liquidity to cover its unforeseen fund
needed. The bank need to reduce in lending their deposit because it will overextend their operation
especially in economic downturn.

11
2.2 CIMB BANK EXTERNAL COMPARISON 2018

Ratio CIMB BANK RHB BANK Remark

Return on Asset CIMB Bank is
1.07% 0.95%
(ROA) better.
Profitability Return on Equity CIMB Bank is
11.4% 9.8%
Ratio (ROE) better.
CIMB Bank is
Interest Spread 1.68% 1.50%
better.
Liquidity RHB Bank is
Loan to Total Asset 64.96% 68.11%
Ratio better.
Risk Weighted RHB Bank is
Capital 18.4% 19.2%
Capital Ratio better.
Adequacy
RHB Bank is
Ratio Core Capital Ratio 13.7% 16.9%
better.
RHB Bank is
Asset NPL Ratio 4.14% 1.93%
better.
Quality
Loan to Deposit RHB Bank is
Ratio 90.80% 86.00%
Ratio better.

PROFITABILITY RATIO

a) Return on Asset
The return on asset usually used by bank for measures how efficiently a bank can manage the
asset to produce. The purpose of bank is to generate the revenues and also profits. Based on
graph ROA in year 2018 between CIMB Bank and RHB Bank it show that CIMB Bank have
higher ROA compare to RHB Bank which is percentage ROA for CIMB Bank is 1.07%
meanwhile for RHB Bank is 0.95%. Difference percentage between both bank is 0.12%. It
means that CIMB Bank effectively management to using a company asset to make profits
compare to RHB Bank.
b) Return on equity
The return on equity is to measures on how the effectively management to using a company
asset to make profits. Every bank must have the higher ROE to manage their profit. It is affected
by the same income statements items that effect ROA and the degree of financial leverage.
Based on graph ROE between CIMB Bank and RHB Bank for year 2018, the ROE for the for
CIMB Bank is 11.4% and RHB Bank is 9.8% which the ROE for RHB Bank is lower compare to

12
 CIMB Bank. For the ROE the best bank is CIMB Bank because since ROE is higher than RHB
Bank, this bank able manage the shareholder equity.
c) Interest spread
Based on graph interest spread between CIMB Bank and RHB Bank is show the difference
percentage for both bank is 0.18% and CIMB has higher interest spread in year 2018 compare
RHB Bank. CIMB Bank get 1.68% for interest spread meanwhile RHB Bank is 1.50%. CIMB
Bank have higher the margin and have better performance of the bank and also achieve a
higher profitability compare RHB Bank.

LIQUIDITY RATIO

d) Loan-To-Asset Ratio
Loan-To-Asset Ratio (LAR) is a measurement of the total loans outstanding as percentage of
the bank in total asset in a year. LAR is an indicator for the bank’s level of liquidity that reflects
the credit and shows the ability of the bank to meet the demand for credit with total asset
owned. It is calculated by dividing the loans with total assets of the bank. From the data, ir
shows that CIMB Bank with 64.96% is lower LAR compared RHB Bank which the LAR is
68.11%. it shows that CIMB Bank has higher liquidity level and lower liquidity risk but able to
generate higher cash flow to finance its loan.

CAPITAL ADEQUACY RATIO

e) Capital adequacy ratio/ Risk weighted capital ratio

The capital adequacy ratio (CAR) is a measurement of a bank’s available capital expressed as
percentage of a bank’s risk weighted credit exposures. This ratio is used to protect depositors
and promote the stability and efficiency of financial systems around the world. Based on the
figure above, shows that the CIMB Bank has lower CAR which is 18.4% compare to 19.21% by
RHB Bank. It means that, the CAR of CIMB Bank decrease by 0.81% compare to RHB Bank.
Thus, CIMB Bank may have lowest level of unexpected losses that it can absorb before
becoming insolvent.
f) Core capital ratio
The core capital ratio is a measurement of a company’s financial leverage. This ratio known as
tier 1 ratio and it calculated by taking the company’s interest-bearing debt, both short-term and
long-term liabilities and it dividing by total capital. Based on figure above, shows that the CIMB
Bank has lower core capital ratio which is 13.7% compare to 16.91% by RHB Bank. It means

13
 that, the core capital ratio of CIMB Bank decrease by 3.21% compare to RHB Bank. Thus, the
CIMB Bank has lowest company capital fund dependent towards debt than RHB Bank.

ASSET QUALITY RATIO

g) Non-Performing Loan Ratio

Non-Performing Loan Ratio (NPL) is one of the method uses by the bank to compare the quality
of the portfolio and shows the effectiveness of bank in receiving repayment on its loans. The
important of this type of ratio is the investors need to view and choose which lenders has high
NPL ratio to invest their money. Based on the Figure 5, the NPL ratio for CIMB Bank is higher
than RHB Bank which is 4.14% higher than RHB Bank which is the NPL is 1.93%. It shows that
CIMB Bank has poor performance of asset quality and it has lower net income. This is because
CIMB Bank may have problems in manage its loan properly.
h) Loan-To-Deposit Ratio (LDR)
Loan-To- Deposit Ratio (LDR) is used for assessing bank’s liquidity by comparing a bank’s total
loans to its total deposits for same period. This ratio can help to show the ability of the bank to
cover loan losses and withdrawals by its customers. Based on the Figure 6, the LDR for CIMB is
recorded the rate of 90.80% which is higher than RHB Bank that have the rate of 86%. It shows
that CIMB Bank is poor in liquidity which means this bank may have not enough liquidity to
cover its unforeseen funds needed. But in other aspect, this bank has better profit on its higher
number of loan given to customers.

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2.3 PNB INTERNAL COMPARISON

2.3.1 PROFITABILITY RATIO

Ratio 2016 2017 2018 Remark

Return on
6.0% 6.7% 6.0% 2017 is better
Asset (ROA)
Return on
N/A N/A N/A -
Equity (ROE)
Interest Spread N/A N/A N/A -

Return on Asset
6.80% 6.70%
6.60%
RETURN ON ASSET

6.40%
6.20%
6.00% 6.00%
6.00%
5.80%
5.60%
2016 2017 2018
Year

Return on Asset

Return on asset shows how capable the management of bank has been applied in converting
the institution’s assets into the net earnings. This is because it calculates on how much a bank
manages its assets in order to generate revenue and profits. It is shown as a percentage, and the
higher the number, the more efficient the company’s management is at managing its balance sheet to
generate profits. For PNB itself, it has an upward trend from 6.00% in 2016 to 6.70% in 2017 and then
shows a downward trend back from 6.70% in 2017 to 6.00% in 2018. A slight difference in the past
three years shows that PNB is able to gain more profit in 2017 compared to in 2016 and 2018. The
return on assets has been gotten from the net income divided by the monthly average total assets. The
stabile return on asset of PNB shows that it is managed in good performance by its management. As
the result, PNB can attract more investors to invest with them. The financial institution has higher
interest revenue and lower interest expenses that will able to increase the net interest margin and
return on assets. It also has sufficient non-interest income.

2.3.2 LIQUIDITY RATIO

15
 Ratio 2016 2017 2018 Remark
Loan to Total
N/A N/A N/A -
Asset

2.3.3 CAPITAL ADEQUACY RATIO

Ratio 2016 2017 2018 Remark

Capital
N/A N/A N/A -
Adequacy
Core Capital N/A N/A N/A -

2.3.4 ASSET QUALITY RATIO

Ratio 2016 2017 2018 Remark

NPL Ratio N/A N/A N/A -
Loan to Deposit
N/A N/A N/A -
Ratio

16
2.4 PNB EXTERNAL COMPARISON

Ratio PNB BPMB Remark

Return on Asset PNB is better
6.0% 0.68%
Profitability (ROA) than BPMB.
Return on Equity
Ratio N/A 2.22% -
(ROE)
Interest Spread N/A 2% -
Liquidity
Loan to Total Asset N/A 73.93% -
Ratio
Capital Capital Adequacy N/A 37.01% -
Adequacy
Core Capital N/A 30.78% -
Ratio
Asset NPL Ratio N/A 12% -
Quality Loan to Deposit
N/A 3.19 times -
Ratio Ratio

Return on asset shows how capable the management of bank has been applied in converting
the institution’s assets into the net earnings. This is because it calculates on how much a bank
manages its assets in order to generate revenue and profits. It is shown as a percentage, and the
higher the number, the more efficient the company’s management is at managing its balance sheet to
generate profits. The graph above shows the return on assets for both PNB and BPMB in 2018. Based
on the graph, PNB has recorded higher return on assets with 6.00% compared to BPMB that has
0.68% return on assets. It indicates that PNB has more effective management to use the institution
asset to make profits as compared to BPMB. Also, it is able to control costs in its operation, ensure
assets are productive and provide more return.

17
3.0 CHARACTERISTICS, ADVANTAGES AND DISADVANTAGES OF BANKING PRODUCTS AND
SERVICES

3.1 REMITTANCES / FUND TRANSFER

a) Cashier’s Order
All cashier’s order is pre-printed with the crossing ‘not negotiable’. Other than that, the cashier’s
order to be issued for use only within the clearing area of the issuing bank and if cleared outside the
clearing area then the normal outstation cheque commission is payable. Besides, in CIMB the
cashier’s order cannot be returned except for technical reasons and should be accepted as good by
the payee as it has been paid for by the customer at time of issue. Cashier’s order also can be used
by customers who do not have a current account but wish to make payments by cheques or in
situation when a personal cheque is unacceptable, and it must be issued in Ringgit Malaysia only.
The cashier’s order will be cut off at 3.00 p.m. on BizzChannel @CIMB.

Fees and charges cashier’s order in CIMB:

Product/item
Issuance of Banker’s Cheques/MIDF/MIH
Banker’s Cheque
Replacement of Banker’s
Cheque/MIDF/MIH Banker’s Cheque
Reports Lost
Replacement/Revalidation or Stale
Banker’s Cheque (with original instrument)
Cancellation & Refund of Banker’s
Cheque/MIDF/MIH Banker’s Cheque
Reported Lost
Cancellation & Refund of Banker’s Cheque
(with original instrument)
Cancellation & Re-Issuance of Banker’s
Cheque
Cancellation & Refund Of MIDF/MIH
Charges
RM 5 and stamp duty of RM 0.15
Cheque processing fee of RM 0.50
Service charge of RM 20 (inclusive of stamp duty of
letter of indemnity and charges for new cheque
issued)
Cheque processing fee of RM 0.50
Service charge of RM 20 flat rate (inclusive of
charges of new banker’s cheque issued)
cheque processing fee of RM 0.50
Service charge of RM 20 (inclusive of stamp duty of
letter of indemnity and charges for new cheque
issued)
Service charge of RM 2 per cheque
Cancellation charge of RM 2 per cheque
Reissuance charges of RM 5 and stamp duty of RM
0.15
Cheque processing fee of rm 0.50
No charge (payment via cash/ credit account)

18
Banker’s Cheque

Advantages Disadvantages
Cashier’s order can be used for making payment Cashier’s order or banker’s cheque is quite
for goods and services within the partners in local expensive rather than normal cheques.
areas because of their convenient in settling
account with local partners.
 For example, pay for training schools,
subscription of books and publications,
embassies for issue of visas, to make gifts
in cash and others.
Cashier’s order is very convenient for making When using cashier’s order, the money will
payments when there is no need to make an urgent be taken out straight away from the account
money transfer. without any cancellation.
Cashier’s order is very fits if there is no enough The maturity of cashier’s order is up to six
information about payee. monthly only and become invalid.
It is because, the firm only submitted the address
and name requested to pay but in which
international payment order is not possible.

b) Demand draft

Demand draft is one of remittance that CIMB Bank offered to their customer. Demand draft
is payment order in writing issued by an issuing bank to a payee bank for reason to paid on demand
the sum that have stated in the draft. In other words, this is to say that the bank addressed is
required to pay on demand draft to the person or beneficiary specified on the draft which is transfer
money from one place to another place.

The features of demand draft are the maturity date for demand draft is six months. Besides
that, demand draft can transfer funds within and outside country. Demand draft also is payable on
demand. Include two parties only in demand draft which is drawee and payee. The bank will issue
the demand draft if customer want to make this services. The customer will send the draft to the
payee who presents at the drawee bank for payment. It also an unconditional order for payment, no
need to use a stamp and the draft can be negotiated by delivery or endorsement.

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 This remittance also has two type which is local demand draft and foreign demand draft.
Local demand draft is drawn in Malaysian Ringgit(RM) and payable only in Malaysia. The demand
draft will have indicated by the applicant that where he wants to be payable. For example, Puan
Mariam are based in Negeri Sembilan, meanwhile her son is studying in UiTM Kedah. Puan Mariam
need to give a money for her son with amount RM4000 and Puan Mariam may use the demand
draft to give money to her son. Her son should be able to receive the payment from the drawee
bank upon the presentation of demand draft. Under local demand draft have two type which is
outward demand draft and also inward demand draft. Outward demand draft is demand draft that
will draw by drawing bank meanwhile inward demand draft for demand draft that issued by other
bank and received by a drawee bank. In this types of demand draft, CIMB Bank did not provide to
their customer. Usually people are rarely to use demand draft in same country because they can
use another remittance that easier compare to demand draft.

Another type of demand draft is foreign demand draft. Foreign demand draft is when the
person want remittance for another party in different country. If local demand draft use RM, the
foreign demand draft will be in foreign currency. Same goes to local demand draft, the foreign
demand draft also can be divided into two which is outward foreign and inward foreign demand
draft. In outward foreign demand draft is must or have necessary to mention the amount, selling
rate and also currency involved and for inward foreign demand draft is issued by other bank and
received by drawee bank. In CIMB Bank offer the for foreign demand draft to the customer. It is an
efficient way for send money to overseas. The fee charges by CIMB Bank for foreign demand draft
starting from RM0 to RM20. For example, expressed in Foreign Currency up to RM5,000 the fees
are RM5.

Advantages
It is safe to transfer money from one country to
another country. The cheques are payable for
particular beneficiary drawn in correspondent
bank and can be in any major currency for any
amount.
Disadvantages
The process of demand draft is not easy.
It will take a time to approve because a form
has got to be filled and submitted to the branch,
which then takes a particular amount of time to
process the request by customer.

The issuing bank will guarantee payment for
their customer. Demand draft is secured
remittances because demand draft is payable
to only the specified payee.
There are not have chances of a default in
The fees of demand draft are costly.
It is because the services are quite difficult and
the process in not ease.

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demand draft because the amount has already
been paid. In other words, customer can be
confident of the payment because demand draft
eliminates the elements of doubt.
Demand draft is more secured because it is
made only on request, so if the demand draft is
lost, the customer can use the counter-file to
cancel the demand draft.

c) Telegraphic Transfer
Telegraphic Transfer (TT) which know n as telex transfer is one of the electronics
method for those who wants to transfer their funds or money overseas with wire transactions.
Telegraphic Transfer has bringing a lot of changes in banking system which interact the
customers of the bank to others in overseas as nowadays, people tend to have fast tread
lifestyle because their times is very important and they look for everything that brought them
under the online services. This type of transfer is safe for sending money whether people use
bank or provider. The TT will operate by a cable message service and works when the sender
instructs their bank to transfer funds abroad to someone else or the beneficiary. Telegraphic
Transfer will do the money transfer between different banks in the world until its reach as its
destination with its own processing fees charged. This connection between banks also known
as SWIFT which present the money passes with pre-existing commercial connection called as
“commercial banking relationship” Usually, the telegraphic transfer will take two to four business
days to operate the transferring of funds depending on the currency exchange requirement and
the origin of the transfer.
The process usually involved five party to operate this process which the sender,
sender’s bank, intermediary bank, recipient’s bank and the recipient. The process of a customer
wants to make money transfer can be summarized with this situation, they need to go to any
local’s bank branch or go through the website to apply it and ask for the international funds
transfer which is Telegraphic Transfer. Next, they need to fill up some information in the form
provided by the bank branch or from the website such as the customer or originator’s, the
recipient or the beneficiary’s details and the transfer details. Lastly they have to pay the money
transfer amount and the applicable processing fees. Commonly, there are four types of fees
charges by the bank to make this money transfer which is the sender’s bank fees and this fees
usually ranges of RM10 to RM30 depends on the banks. The second fee is the corresponding

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 bank fees which is for the process of the customer bank transfer the money along the SWIFT
connection until it reaches to the recipient. The third is, exchange rate margin which the bank
will depend this on the payment method and the currency and they use for add margin to the
exchange rate to protect their own fees. Lastly, the recipient’s bank fees that is needed for the
beneficiary received the money.
CIMB Bank provide this type of money transfer for their customers that called as Foreign
Telegraphic Transfer (TT) which can be applied through their website CIMB Clicks or via CIMB
Branches. It still need the customer to fulfil the information required to instruct this bank make
the money transfer such as the beneficiary’s name, address, contact number, passport number
and the name of the beneficiary’s bank. Besides that, for the actual time taken for the
beneficiary to receive their money will depend on the beneficiary bank or the respective agent.
Foreign TT transaction will be process on the same day if the instruction submitted before 4
p.m. and if the instruction of money transfer has been made after 4 p.m. or made in Saturday,
Sunday or Federal Territory Public Holiday, the transaction will be made on the next working
days. CIMB have state their own minimum and maximum transaction funds limit. According to
the website of CIMB Bank, the minimum amount of the money transfer for Foreign TT is
equivalent to RM250 and the maximum amount is RM10,000 for daily transactions which can be
apply via Clicks while there is no maximum limit for the transfer applied in any Branches. For
those who apply this Foreign TT through bank branches, CIMB will charge the fees for this
transaction where the fees charged will be determined and imposed by the third party’s bank to
process the transaction. The sender will have an option to pay for the third party’s bank fee
charges upfront (USD and EUR currency) or they can just deduct the charges from the amount
money transferred. Meanwhile, for the transaction through Clicks, customers only can do
deduction of the charges from the amount money transferred.

Advantages Disadvantages
It is the simplest and the quickest method to It is sometimes being out of control and definitely
help people transfer their money in overseas would make the process of transfer money
compared to other services. unsuccessfully.
People need to visit bank branches or any
institution that provide the service nearly to
them and start to apply the transaction
process by fill up the information and wait for
the process and normally will take two to four
working days.

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It is also one of the safest and secure service It will be very expensive method and costly to
to transfer money along many countries. cover many fees charges compared to bank draft
It is protected by the multi-layered security of and other direct transfer.
credentials as it will be transferred directly to  For example, CIMB Bank charges fee for
the recipient account along the SWIFT sender’s bank fees, corresponding’s bank
connection of banks. fees, exchange rate margin and
recipient’s bank fees.
TT is very nominal system even in overseas TT also has higher chances of being scam
which has been used and accepted by almost especially when applied through the application
every country in this world. or website.
It can have some difficulties in access the money
in bank or any service provider which includes
the process of currency exchange because it
only approve money in min currencies.

d) Online Transfers (IBG/RENTAS/SWIFT)

Figure CIMB Clicks Logo

CIMB Clicks Internet Banking is an Internet Banking Service provided by CIMB Bank
Berhad that enable the customers to electronically access and use their “Accounts” and other
banking facilities, products and services as made available by CIMB Bank, CIMB Islamic Bank
or any of its subsidiaries, affiliates and business partners. "Account" means one or more of your
savings, current, fixed deposit, General Investment Account, Mudharabah account, Foreign
Currency Account, loan/Financing, credit card, investment or any other account(s) as may be
accessed through CIMB Clicks as may be determined by CIMB Bank and CIMB Islamic Bank
from time to time. In order to enroll for CIMB Clicks, you need to register online at
www.cimbclicks.com.my by clicking on the Online Registration tab and follows the step provided
there.

Advantages Disadvantages
 Interbank GIRO (IBG)  Encryption Weakness
Customers can enjoy the convenience of Recently, most of the CIMB Clicks user were
transferring funds to any participating bank facing some problems regarding suspicious
accounts via IBG. The IBG service allows you to transactions in their online banking history.

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transfer funds up to RM50,000 per day from your
CIMB Clicks account to selected accounts.
 Instant Transfer (IBFT)
For those who are in urgency to transfer money in
short time, they can make instant money transfer
through CIMB Clicks which are simple, fast and
secure. Upon keying in the beneficiary account
number, the name of the account holder will be
displayed so you know your money is going to the
right person. Funds will be sent immediately to the
recipient's account upon confirmation. Therefore,
there will be no worries of transferring money to
the wrong person.
 Online Application Form
Customers can easily apply for CIMB Lazada
Prepaid Mastercard, ASB loan, Business
Premises Financing, and Property Financing
services through CIMB Clicks without need to go
to the bank which consume more time.
 Bill Payment and Top Up
Bills such as utilities, post-paid phone bill,
education fees, AEON - Easy Payment, Personal
Finance and etc. can be paid through CIMB
Clicks. Also, one could also top-up their phone
credit easily following the simple steps provided
by the apps.
No online system is completely foolproof and
accounts can be hacked, resulting in identity
theft via stolen login credentials.
 Not Multitasking Friendly
If you are familiar with online transaction,
every time you want to complete the
transaction, you will need to insert the TAC.
In this case, when the user switched to my
Message app and look for the TAC, they will
be signed off from the CIMB app and will
need to redo everything. It can become more
annoying when you get a warning for not sign
out properly.
 Server Breakdown
If the bank's server is down, due to the loss
of net connectivity or a slow connection, then
it might be hard to know if your transaction
went through.

 Easy Access and Interactive Features

The apps has simple and fast navigation with new
look. Also, all recent transactions will be displayed
for easy access, Saved details of billers and
money transfer recipients will be automatically
displayed and pre-filled, and instant access to any
transaction page.

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25
3.2 TRADE FINANCES: BANKER’S ACCEPTANCE

Banker’s acceptance(BA) is under trade finance was introduced in Malaysia as a new financial
instrument in 1979 under guideline set by the Bank Negara Malaysia. The introduction of BA to
encourage and promote domestic and foreign trading by providing attractive financing facilities. BA
also is a promised future payment or time draft which is accepted and guaranteed by a bank and
drawn on a deposit at the bank. It is used for both imports and exports of goods and services. The
acceptance of BA is an undertaking by the accepting bank to honor payment on maturity date and it
specifies the amount of money, the date and the person to which the payment is due. The minimum
amount of BA is RM 30 000, with multiple of RM 1000. It is drawn for a tenor of 30 days or more but
not more than 200 days from the day of acceptance. For CIMB Bank, it has stated general charged
for trade finance depend on types of products and services. The charge of postage by this bank is
RM 5 flat within Malaysia but for other countries the bank charges by RM 10 flat. The charge of
courier by this bank is RM 20 flat within Malaysia but for other countries the bank charges RM 20
flat plus actual.

Advantages
It is more cost effective because the bank
offer lower cost and interest rate offered to
the seller and buyer.
The procedure of banker acceptance is
easy to understand and bank can provide
further explanation to seller and buyer if
both of them are agree to use this method
to import or export their goods.
Documentation needed by bank is very
minimal such as original invoice and other
related commercial and financial document
to the bank as the reference for bank to
simplify the process of banker acceptance.
Disadvantages
The possible to be fraud is very high risk.
 For example, if the seller does not take the
insurance to export goods to importer
country and then the buyer for a sudden
cancel the payment for goods thus, the
seller will not get their money back and he
also have to bear all the cost of shipments.
The bank very strict analyze the document provided
by seller and buyer to analyze the ability of exporter
and importer to pay the payment in the future.
Buyer or seller may face foreign exchange risk.
They are exposed to fluctuations in foreign
exchange market which may result in paying more
or receiving less in terms of the local currency.

4.0 CONCLUSION

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 As the conclusion, the financial performances of any financial institutions can be analyzed by
calculating the ratios such as capital adequacy ratio, liquidity ratio, asset quality ratio and profitability
ratio. The capital adequacy ratio measures the amount of capital a bank retains compared to its risk.
Therefore, national regulators and customers or investors must track the capital adequacy ratio of
banks to determine how effectively the bank can sustain a reasonable amount of loss. When the
customers studied well the capital adequacy ratio before making any decision, they are able to choose
the best financial institutions that suit well with their nature and prevent from any further loses in the
future. Other than that, calculating the liquidity ratios for the financial institutions can determine a
debtor’s ability to pay off the current debt obligations without raising external capital. Also, the condition
of any financial institutions can be observed through asset quality ratio as it will evaluate asset to
measure the credit risk associated with it. Profitability ratios enable people inside and outside of the firm
to evaluate the ability of a company to generate profit relative to the revenue, during a specific period of
time.

Both financial institutions studied, CIMB Bank and Permodalan Nasional Berhad (PNB) have
good performances in the financial industry yet many improvements need to be done to compete well
and being relevant with other banks in the industry. When CIMB Bank is being compared with RHB
Bank, we can conclude that there are many initiatives and strategies need to be done by the
management of CIMB Group in controlling the debts, minimizing the risks occurred and increasing the
level of assets to support the firm. The different side happened in PNB. Many information cannot be
identified by the ratios stated as PNB did not offer any types of loans to their investors or customers. It
is because, most of the ratios calculated were being formulated with the total amount of loans and
equity that did not be stated in the annual report.

Other than that, we can see that CIMB Bank offers many types of banking products and
services especially in the remittances or fund transfers and trade finance of banker’s acceptance.
Products like cashier’s order, demand draft, telegraphic transfers and online transfers give many
benefits to their customers for their daily needs despite of some precautions still need to be done to
avoid problems arise in the future.

To sum up, both parties need to shoot up the performances of their financial institutions to make
sure they are able to achieve their goals as stated in their vision and mission. Last but not least, the
specialties provided through their products and services need to be maintained and improved to attract
and gain more customers to enhance their profits.

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5.0 REFERENCES

CIMB Group website. (2019). Retrieved from http://cimb.com.my/

Permodalan Nasional Berhad website. (2019). Retrieved from http://pnb.com.my/

Bank Negara Malaysia website. (2019). Retrieved from http://bnm.gov.my

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6.0 APPENDIX

Annual Report of CIMB Bank 2018

Annual Report of Permodalan Nasional Berhad 2018

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