FY2023 M25+ Progress: Enhancing Digital Banking

Overall Business and Financial Impact from the Adoption of MFRS 17 Business Perspective . • Not expected to have a notable impact on pricing and product strategies No significant impact expected to the business, financial strength, claims paying ability, or dividend paying capacity of Etiqa. Accordingly, no significant changes to the business strategies anticipated at this juncture Capital Requirements • No significant impact to capital requirements for Etiqa anticipated Financial Statements Maybank is in compliance with MFRS 17 requirements for 1QFY2023 reporting. As Etiqa has opted to use the various approaches to transition allowed under MFRS 17, the financial impact might vary depending on type of business: General Businesses • • The financial impact from the adoption of MFRS 17 are mainly from the following key components:- Insurance revenue recognition The measurement model will affect the revenue recognition and contract liabilities computation ➤ Deferment of expenses Amortisation of the identified acquisition of directly attributable expenses over the policy coverage period i.e. sales related expenses, commission etc. ➤Insurance finance income/(expenses) The change of the time value of money mainly from Life and Family businesses, interest accretion on Future Cash flow i.e. the change in discounting factor used over the period Impact to Maybank's income statement and balance sheet arising from MFRS 17 adoption can be found in Note A40 (i & ii) of the Maybank 1Q FY2023 Financial Statements Life/Family Credit Businesses Life/Family Investment Linked Businesses The discounting of insurance contract/takaful certificate liabilities will be applied. Acquisition expenses such as agency and sales commission and claims are now amortised over the coverage period Revenue is now recognised when service is rendered over the coverage period as opposed to the previous practice of upfront recognition at inception. For example, policies/certificates such as Mortgage Reducing Term Assurance or Mortgage Reducing Term Takaful can only see revenue recognition over the duration of the credit policy/certification's coverage period, which averages about 30 years Insurance liability recognition under MFRS 17 now includes expected future income, which is the surplus transfer from the participants' fund. The inclusion was not allowed under MFRS 4. 16

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