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AMMB Holdings Berhad: Annual Report 2017

IM Insights
By IM Insights
5 years ago
AMMB Holdings Berhad: Annual Report 2017

Amanah, Hibah, Islam, Islamic banking, Kafalah, Murabahah, Musharakah, Shariah, Shariah advisor, Sukuk, Takaful, Tawarruq, Wakalah, Zakat, Credit Risk, Participation, Provision, Receivables, Reserves, Sales

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  2. Our Passion & Commitment Shine Out The energised, moving rays of light featured on our cover depict AmBank Group's passion and commitment and our accelerating pace of growth with Malaysia. With our 42 years of rich expertise, we at AmBank Group will remain steadfast and resilient in providing relevant financial solutions that will fit seamlessly into the daily lives of our fellow Malaysians. Over the years, we have realigned ourselves and streamlined our operations better. We constantly strive to improve our products, solutions and services, leveraging on the power of digital technology in order to meet the growing needs of our customers and to stay competitive in today’s financial landscape. The moving speed lines and rays that burst outwards illustrate that AmBank Group is an agile and fast-moving organisation. Our progressive services will empower individuals from all walks of life.
  4. ANNUAL REPORT TWENTY SEVENTEEN Annual Report Financial Report Our Report The Annual Report of AMMB Holdings Berhad is our main report of the year . It provides our stakeholders with the information they need to understand our various businesses and operations. We also supplement this report with additional online disclosures during the year, including quarterly financial statements. For the purposes of this report, we generally refer to AMMB Holdings as AmBank Group. Our financial year runs from 1 April until 31 March. In preparing our report, we were guided by the requirements of Malaysian statutory and reporting frameworks, including those of Bursa Malaysia. Corporate Section This is a detailed source of information about AmBank Group and gives an overview of the financial and non-financial milestones and achievements for our financial year. We include information on our businesses and performance and our approach to sustainability, governance and risk. We also lay out our strategy and our future goals. The format of our annual report is designed to be easy to read and to give stakeholders an overview of our operations. Financial Section This presents the full set of audited financial statements for AMMB Holdings Berhad. These statements give our stakeholders a clear and full analysis of our financial affairs at the end of our financial year on 31 March 2017. They are prepared in accordance with Malaysian financial reporting standards with the engagement of external auditors. Online Version ambankgroup.com th 26 Annual General Meeting of AMMB Holdings Berhad Grand Ballroom First Floor, Sime Darby Convention Centre 1A Jalan Bukit Kiara 1 60000 Kuala Lumpur, Malaysia Date: Monday, 31 July 2017 Time: 10.00 a.m.
  5. INSIDE THIS REPORT Annual Report 2017 AMMB Holdings Berhad pg 88 Group Financial Review by Chief Financial Officer Overview of the AmBank Group 4 6 Our Purpose Our Presence and Operations 8 9 Business Highlights Financial Highlights Key Highlights 12 Key Messages Performance Review Letter to Shareholders 88 pg 14 Message From Group Chief Executive Officer 14 Message From Group Chief Executive Officer About Us 27 28 32 34 36 40 42 51 52 54 62 64 65 AmBank Group Corporate Profile Our Milestones Corporate Information Group Corporate Structure Strategic Business Entities 91 92 93 94 95 96 99 100 101 102 103 104 105 106 107 113 Group Financial Review by Group Chief Financial Officer FY18 Quarterly Results Announcements Five-Year Group Financial Summary Five-Year Group Financial Highlights Performance Scorecard Simplified Group Statements of Financial Position Segmental Analysis Group Quarterly Financial Performance Key Interest Bearing Assets and Liabilities Statement of Value Added Distribution of Value Added Capital Management Dividends for FY17 Credit Ratings Balance Sheet Management Investor Relations 111 AmBank Share Price and Volume Financial Calendar Leadership Business Review Board of Directors Profile of Directors Profile of Company Secretary Senior Management Team Profile of Group Senior Management Group Organisation Structure Shariah Committee Profile of Shariah Committee 114 126 128 129 132 134 135 Management Discussion and Analysis Strategic Review 72 74 76 77 78 81 86 87 Economic and Banking Industry Review and Outlook Our Business Model Material Matters Impacting Our Strategy Key Risks and Mitigation Our Strategy FY17 Key Strategic Objectives and Achievements Key Initiatives 82 Customer Experience 83 Human Resources : People, Talent and Culture 85 Integrating Digital Technology Code of Ethics and Business Conduct Ensuring Sustainable Value Creation Wholesale Banking Retail Banking Business Banking Islamic Banking General Insurance Life Insurance Family Takaful Corporate Governance 180 Chairman’s Statement on Corporate Governance 181 Statement of Corporate Governance 202 Compliance with Bursa Securities Listing Requirements 203 Compliance with the Malaysian Code on Corporate Governance 2017 214 Statement on Risk Management and Internal Control 216 Audit and Examination Committee Report 219 Statement on Internal Audit 221 Group Risk Management Report 222 Group Compliance 223 Shariah Committee Report Highlights and Achievements 228 Calendar Of Events 228 Business Activities 233 Social And Sports Activities 234 Notable Achievements 236 Media Highlights Stakeholders Information 240 244 245 252 Analysis of Shareholdings Top 10 Properties of AmBank Group Notice of Twenty-Sixth Annual General Meeting Statement Accompanying Notice Of Annual General Meeting 253 Administrative Details For The 26th Annual General Meeting 255 Group Corporate Directory 263 Group Branch Network • Proxy of Form Sustainability Statement 140 141 142 147 148 162 168 Chairman’s Sustainability Message About the Sustainability Statement Embedding Sustainability Managing Sustainability Responsible Banking Employer of Choice Positive Societal Impact pg 138 Sustainability Statement Our Annual Report is printed on environmentally-friendly ICON White paper. This paper is certified chlorine-free and is completely recyclable and biodegradable. ICON White is made from pulp that is harvested from sustainable forests and is sourced from Japan.
  6. OUR PURPOSE p . 4 p. 5 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  7. OUR PURPOSE We exist to help individuals and businesses in Malaysia grow and win together We focus on relationships and are advisors and long term partners to our customers . We help by being professional, reliable and fast, and giving them the best service. By helping, we earn their trust. Externally we focus on building our customers into winners. Internally we focus on performance, teamwork and collaboration to win in the market. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Our business is centered on leveraging domestic growth opportunities. We will expand in Malaysia with Malaysian business. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 We believe in growth, for our customers, for our people and for our business. We support and empower our customers and our people to achieve their aspirations. Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  8. OUR PRESENCE AND OPERATIONS We are a leading Malaysian bank AmBank Group is a leading Malaysian financial services group with 42 years of experience in supporting Malaysians in their economic development . Total Assets Market Capitalisation RM134.8 billion RM14 billion (at 31 March 2017) (at 31 March 2017) Geographical footprint Across Malaysia, AmBank Group has 175 branches, 766 ATMs and a network of 13 regional offices. Perlis Kedah Kelantan Sabah Terengganu Pulau Pinang Perlis Kedah Pulau Pinang Perak Selangor Kuala Lumpur Putrajaya Negeri Sembilan Melaka Johor Pahang Terengganu Kelantan Sabah Labuan Sarawak Labuan Perak Pahang Selangor Kuala Lumpur Putrajaya Sarawak Negeri Sembilan Melaka Johor Population Density < 100 persons per km2 101-500 persons per km 1,001-1,500 persons per km2 2 > 1,501 persons per km2 501-1,000 persons per km SME branches 175 (140 Cluster Branches) p. 6 p. 7 2 Branches ATM 1 6 14 18 38 23 1 7 6 21 9 4 2 9 1 15 175 3 24 51 45 221 105 3 38 34 81 29 16 16 40 3 57 766 Regional Offices 1 1 1 2 3 1 1 1 1 1 13 AmBank Islamic branches Weekend banking branches ATMs @ 7-Eleven Electronic banking centres Internet & mobile banking AmGeneral AmMetlife AmInvestment Bank AmCard Services MBC 3 75 266 183 AmOnline AmGenie 29 branches 3 counters 15 branches 48 agencies 7 retail broking 6 corporate 25 Annual Report 2017 ambankgroup.com AMMB Holdings Berhad (223035-V)
  9. Our Strategic Priorities ATTAIN MARKET LEADERSHIP IN KEY PRODUCTS FIRING UP NEW GROWTH ENGINES Win in fast growing , underserved segments • Cards and Merchants • Transaction Banking • SME • Markets • Mid Corp • Wealth Management • Mass Affluent • Affluent SETTING UP FOR SUCCESS OPTIMISE CURRENT ENGINES Digital transformation – channels, processes, productivity, analytics Leverage strengths in corporate and investment banking Fully leverage distribution footprint, partnerships and new digital channels Strengthen retail deposit franchise Break down organisational silos and focus on people, talent and culture Risk and compliance culture Contribution to Profits Diverse Range of Financial Services AmBank Group serves over 3 million individual and corporate customers. It provides services in wholesale banking, retail banking, investment banking and related financial services which include Islamic banking, underwriting of general insurance, stock and share broking, futures broking, investment advisory and management services in assets, real estate investment trust and unit trusts. Divisional PAT Contribution (YoY) WHOLESALE BANKING See page 114 59% Wholesale Banking RETAIL BANKING 25% Retail Banking See page 126 14% Insurance BUSINESS BANKING (a new division) See page 128 2% Others ISLAMIC BANKING (Shariah-based financial solutions across the Group) See page 129 GENERAL INSURANCE, LIFE INSURANCE & FAMILY TAKAFUL See page 132 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  10. BUSINESS HIGHLIGHTS for the year ended 31 March 2017 TRACTION ON TOP 4 STRATEGY NEW SME PLATFORM PROJECT APEX The first year of our Top 4 Strategy is complete and we are on target to reach our aspiration to rise to a Top 4 bank in Malaysia by 2020 We have started a new Business Banking division to focus on growth in our targeted area of small and medium-sized enterprise (SME) businesses To improve our customer experience we are driving straight-through processing in retail banking and improved internal processes LEADERSHIP STRENGTH HOLISTIC BRANCH MODEL GROUP-WIDE COLLABORATION AND INDUSTRY PARTNERSHIP To build our capacity and lead our transformation, we have invested in senior management and revived our Group talent council Our new branch model is a onestop centre catering to retail, SME and commercial customers in one location AmBank p. 8 p. 9 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com Leveraging our insurance partners to grow on banca and drive strategic collaboration across industry key players as part of our digital ecosystem footprint
  11. FINANCIAL HIGHLIGHTS Dividend Payout Ratio 40 % RM CET 1 Capital Ratio 11.6% Return on Equity Cost to Income Ratio 8.5 57.4% % Profit After Tax and Minority Interests RM1,324.6 million Profit Before Provision RM1,605.1 million Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  12. KEY MESSAGES 12 14 Letter To Shareholders Message From Group Chief Executive Officer
  14. LETTER TO SHAREHOLDERS Dear Valued Shareholders , When I wrote to you twelve months ago, I said we were determined to make AmBank Group stronger in order to preserve and enhance market confidence. A year down the line, I can report that AmBank Group has made progress. p. 12 p. 13 We have strengthened our leadership bench, we have traction on our Top 4 Strategy and we have made improvements in governance and compliance. Over the year, we also recorded a 1.7% increase in profit to RM1,324.6 million and we bolstered our performance across most areas of the Group. AMMB Holdings Berhad (223035-V) Annual Report 2017 These positive results came despite a volatile and changeable backdrop in the region and beyond. In particular, the Chinese economy was beset by structural changes, whilst the Indian economy was affected by a dip in consumption. Here in Malaysia, economic growth slowed to 4.2% from 5.0% a year earlier and the Malaysian ringgit fell to its lowest level against the US dollar since 1997. ambankgroup.com
  15. Dividend Increase With such challenges around us I am pleased to propose , on behalf of the Board of Directors, an increase in dividend compared to last year. Our proposed final dividend of 12.6 sen per share will bring the total dividend for the 2016-2017 financial year to 17.6 sen per share. This translates into a dividend payout ratio of 40%. It is an increase of four percentage points from the previous financial year and means we can make good on our dividend guidance to shareholders. Improving Performance Over the past year, our management team has reorganised parts of our operations and realigned key performance indicators to allow for better focus in our strategic journey to reach Top 4 in Malaysian banks by 2020. We have made good progress in the first year of this four-year journey and we already have traction in many areas, including an improved focus on customer service and our digital transformation, an increase in deposits and effective cross-selling of our services to our over 3 million customers. Our senior management team has also invested heavily in leaders with proven industry experience and expertise in order to build our capabilities and lead our transformation. We have also gone through a very intense process of improving our governance and compliance structure, and we are striving to have one of the best structures in the industry going forward. We need to ensure the idea of governance and compliance is firmly in the mindset of every member of staff and that AmBank Group is well equipped to adjust to the evolving regulatory landscape for financial institutions. As a priority, Group Compliance has been restructured and measures have been taken to strengthen policies, procedures, training, technology and systems. Throughout the year, we have continued to develop our governance practices. We approved our revised Board Charter on 27 July 2016 and recently completed our annual independent Board Effectiveness Assessment. We have also widened the scope of our Statement on Corporate Governance in the Annual Report, in line with recent regulatory changes. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 In terms of governance, we believe good corporate governance is the key to maintaining the trust that our investors and customers place in us. One of the most important aspects of my role as Chairman is to foster the right dynamics on the board so we have Directors with the right range and balance of skills and expertise. Changes to the Board of Directors This year, we appointed three new Directors to the Board of Directors of AMMB Holdings Berhad: • Graham Kennedy Hodges, non-independent non-executive director • Datuk Shireen Ann Zaharah binti Muhiudeen, independent non-executive director • Seow Yoo Lin, independent non-executive director You can read more about our Sustainability Statement on pages 140 to 175 of this Annual Report. Responsibility to Our Communities Over the past year, we had a few appreciation nights for our customers in various parts of Malaysia. I found it very useful to meet up with some of our long term customers and remember how we have grown together. Back in the early days, our customers were starting out in plantations and timber. Now they have big property and construction companies. We grew with them and they grew with us, and it feels good to be part of it. Acknowledgment At the end of the financial year, Tun Mohammed Hanif bin Omar, who has been a non-independent non-executive director for more than 22 years, retired from the Board. I would like to extend my heartfelt gratitude to Tun Hanif for his guidance and insight over the years. I take this opportunity to thank all of our stakeholders, including our shareholders, our customers, our staff, our communities and our regulators, for your continued support over the year. I would like to make particular mention of our business partners, Australia and New Zealand Banking Group Limited (ANZ), Insurance Australia Group Limited (IAG) and MetLife International Holdings Inc. (MetLife). I would also like to thank Wasim Akhtar Saifi who was an independent and non-executive director and resigned in order to focus on his role as an independent and non-executive director of our subsidiary AmBank Islamic Berhad. I am grateful for the collaboration I have received from my fellow directors, our group chief executive officer and his team in discharging our respective responsibilities. You can read more about our corporate governance on pages 180 to 225 of this Annual Report. Together we can focus on what we do best, helping individuals and businesses in Malaysia grow and win together. Sustainability Statement This year, we have also completed our first Sustainability Statement, identifying our material risks and opportunities in a formal process. This statement includes our corporate social responsibility and all areas of our business, grouped into three themes of responsible banking, employer of choice and positive societal impact. This year’s Sustainability Statement is the outcome of a materiality assessment of our environmental, economic and social risks and opportunities. It includes a new governance process for sustainability that sits with the Board and gives us more clarity and oversight in these areas. In time, we will fully integrate consideration of these areas into core business decisions. TAN SRI AZMAN HASHIM Chairman, Non-Independent Non-Executive Director Kuala Lumpur 30 June 2017 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  16. MESSAGE FROM GROUP CHIEF EXECUTIVE OFFICER DEAR VALUED SHAREHOLDERS , THE 2016-17 FINANCIAL YEAR WAS A CHALLENGING ECONOMIC PERIOD, BOTH IN MALAYSIA AND THE WIDER WORLD. AGAINST THIS BACKDROP, I AM PLEASED TO REPORT GOOD PROGRESS FROM AMBANK GROUP. p. 14 p. 15 AMMB Holdings Berhad (223035-V) Annual Report 2017 We made positive strides forward this year and our profit after tax and minority interests (PATMI) for the year rose 1.7 percent to RM1,324.6 million. Our return on assets (ROA) held steady at 1.1 percent and return on equity (ROE) was marginally lower by 30 basis points at 8.5 percent. Our profit before provision (PBP) rose 5.5% to RM1,605.1 million, reversing a downward trend over recent years. ambankgroup.com
  17. Strategic Course is Set Customers and Digital at the Core of Our Business I am particularly pleased to report that we have now completed the first year of our strategic journey to rise to a Top 4 bank in Malaysia by 2020 and we have achieved good momentum towards realising AmBank Group ’s ambitions. Last year’s waves of disruption in global and local markets served to sharpen our focus on the task ahead. Customers are of course at the very core of our business. We thrive when we can integrate our financial services into the lives of our customers and our digital journey is at the forefront of that integration. Over the year, we have made sound progress in building up the foundations that will support our growth agenda, focusing on improving margins and strengthening our balance sheet for optimal returns to our shareholders. A major part of any strategic plan is getting people to reorganise themselves, believe in the outcome we are working towards and do what is supposed to be done. That part was challenging in the beginning. But now we are seeing the results of our efforts and there is a feeling that change is a good thing, that we have set our ship on its new course. Passion and Commitment to AmBank Group I have spent as much time as possible this year out in the field, visiting AmBank branches, offices and clients, and interacting with as many staff and customers as I can. I feel the passion and commitment to AmBank Group, to our 42 years of expertise in supporting Malaysians in their economic development and improved well-being. I am humbled by the longevity of our AmBank Group customers, some of whom have been with us for all of our four decades, and have grown businesses from cradle to IPO. I am also delighted to see our customer base growing. Already our AmBank Signature Priority Banking customer base has increased six-fold from December 2016 to March 2017, and there is more to come. We recently commissioned a pulse check on our brand health and the indicators in the wider market are encouraging. We have a positive upturn from consumers indicating an interest in banking with AmBank in the near future. Over the past year we have focused on building the foundation pillars for our digital journey into the future, with infrastructure and application programming interface (API) readiness. We have optimised existing channels and customer touch point experiences to increase our customer base and cross-sell relevant services. We are now accelerating the next phase of our digital capabilities with our Group-wide digital roadmap that focuses on integrating our services into the daily lives of our customers in an innovative and practical manner. We will continue to strengthen our digital positioning through partnerships and collaboration across various industries. Review of 2016-2017 From a global perspective, market conditions have been harsh this past year, with economic growth rates at their lowest level since the 2008 Global Financial crisis. The changing consumer landscape and the convergence of responses to digital disruptors affected many industries and generally increased competition in the market place. Political surprises such as the United Kingdom’s vote to withdraw from the European Union, and the result of the US presidential election heightened volatility. The oil and gas industry experienced a sharp decline with pricing in 2016 falling 70 percent lower than in 2014 as the markets faced an oversupply of oil. Closer to home, the Malaysian ringgit fell to its lowest level against the US dollar since the Asian financial crisis of 1997-98. The US presidential election prompted a flow of funds into the United States and out of markets like Malaysia, causing volatility in Malaysian Government Securities yields. The impact of the oil price decline hit export revenues and also led to a drop in government revenue. There were further challenges on the property front with excesses of supply in office space and shopping complexes. Overall, Malaysia’s 2016 gross domestic product (GDP) growth came in at 4.2 percent, the lowest since 2008. More Technology, More Regulation in the Financial Industry In the financial sector, two issues took on high levels of significance this past year. Firstly, we have seen increasing competition from Fintech (financial technology) companies operating in our traditional space. Whilst Fintech has the potential for more disruption, at the same time there are huge potential benefits from the new technologies and innovation coming into the marketplace. We envisage that partnerships with key Fintech players will integrate into our digital roadmap and form an ecosystem for our AmBank Group customers across their day to day needs. In addition, big data analytics will help to capture new sources of business and drive internal efficiencies. Secondly, there is a widening emphasis on compliance from government regulators. Worldwide, the financial industry is coming under closer scrutiny. At AmBank Group, we are investing strongly in our compliance culture and infrastructure as part of our strategic priority of ‘setting up for success.’ We are integrating our compliance function as a strategic element of the business, working in partnership to operate within the framework prescribed by our regulators. As a priority, our Compliance Department has been restructured, with the right subject matter expertise and skill sets to ensure independence. Further, measures have been taken to strengthen the key enablers of compliance, which includes policies, procedures, training, technology and systems. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  18. MESSAGE FROM GROUP CHIEF EXECUTIVE OFFICER Laser Focus on Top 4 Strategy We started our strategic journey towards Top 4 in April 2016 after an intense seven-week period of analysis and consultation as to our future direction , involving our board, senior management and working groups of our business and support teams. One year into our transformation journey, we already have traction in many areas, including digital transformation, increased deposits and cross-selling of services to over 3 million customers. We have also made appropriate and measured changes in emphasis to our management structure, business divisions and support services. We are pleased with the initial progress and we are confident that the Group is well positioned to achieve our growth targets and progressively deliver optimal returns for our shareholders. With our Top 4 Strategy, we aim to be among the top four banks in Malaysia by 2020 by focusing on 33 initiatives related to the following quadrants: • Be among the top four in our four growth segments – mass affluent, affluent, SME and mid corporates; • Be among the top four in our four key products – cards and merchants, transaction banking, markets and wealth management; • Sustain top four position in each of our current engines – corporate loans, debt and capital markets and asset management; and • Be among the top 4 employers in Malaysia. To be Top 4 in each of our 4 growth segments (Mass Affluent, Affluent, To be Top 4 in each of our 4 focus products (Cards and Merchants, SME, Mid Corps) Transaction Banking, Markets, Wealth Management) To Sustain Top 4 in each of our To be Top 4 current engines (Corporate Loans, Best Employer in Malaysia Debt Capital Markets, Asset Management) p. 16 p. 17 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  19. Our deposits from customers increased 8 .5% in the last quarter of FY17 supported by corporate and retail fixed deposits. On a YoY basis, deposits rose 4.1%. Current accounts and savings accounts (CASA) recorded an annual growth of 6.1% reflecting traction in cash management, payroll acquisition and retail SME. Profit Before Provision Profit After Tax and Minority Interests AmBank Group made progress against the backdrop of a challenging operating environment for the financial year ended 31 March 2017 (FY17). Our total income was up by 1.9% year on year (YoY) to RM3,765.6 million. We controlled our expenses, bringing them down by 0.6% YoY to RM2,160.5 million and profit (after tax and minority interests) for the year rose 1.7% YoY to RM1,324.6 million. Net interest income (NII) was weaker in FY17 caused by margin compression in the second half of 2016 from the roll off of higher yield legacy retail loans. Our ongoing initiatives to improve our cost of funds alleviated that compression as our net interest margin (NIM) improved in the second half of FY17. Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 FY17 FY16 36% YOY : +1.7% 1,324.6 Financial Performance Overview Dividend YOY : +5.5% 1,605.1 With our Top 4 Strategy at the front of mind, we have started a new Business Banking division which comprises Enterprise Banking and Commercial Banking in order to focus on growth in our targeted area of small and medium-sized enterprise (SME) businesses. We have joined Group Operations, Group Information Systems and Digital Banking into one division. We have streamlined several functions in Group Risk and Retail Banking to provide more focus and rigour, and we have set up a Group Transformation Office to monitor our progress. We registered the impact of our Top 4 strategy with a 3.5% growth in loans to RM91.0 billion. At the forefront of this growth were Mortgages which grew stronger at 20.5% YoY. SME and Mid Corporate loans, our target growth segments, also recorded encouraging growth at 17.4% and 2.1% respectively. Cards receivables base was up 7.6% with heightened acquisition of new cards and higher cards spending underpinned by enhanced value propositions. 40% Reorganisation Our expense growth was contained despite investments for growth and compliance as the Group took on a concerted effort in executing various cost savings initiatives. As a result, our cost-to-income ratio (CTI) improved by 1.4 percentage points to 57.4%. 40% We have also revived our group talent council and departmental talent council to identify talent and provide opportunities for our people to excel and grow through coaching, grooming and mentoring. Our gross impaired loans (GIL) ratio improved to 1.86% from 1.94% driven by continued improvement in retail asset quality. Recoveries were stronger though net allowance write-back was marginally lower due to higher provisions on impaired wholesale loans. 1,302.2 To build our capability and lead our transformation, we have invested this year in a new senior management team. We now have new leaders in wholesale banking, retail banking, business banking, information, operations & digital, risk and transformation. This complements the senior management changes we made the previous year in human resources, compliance and Islamic banking. Non-interest income (NoII) ended the year stronger with an annual growth of 11.9% underpinned by trading gains from debt capital market syndication and fixed income activities as well as gain on disposal of foreclosed property. We saw encouraging momentum in sustainable fee income especially in wealth management and bancassurance. 1,521.5 Strengthening Our Leadership FY17 FY16 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 FY17 Guidance FY17 FY16 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  20. MESSAGE FROM GROUP CHIEF EXECUTIVE OFFICER Business Performance Wholesale Banking did well in FY17 , recording a total income expansion of 12.9% YoY. That growth was underpinned by capital market activities and stronger trading gains. We can expect more growth next year as we increase penetration on our full suite of services. Divisional Income Contribution (YoY) 44% Wholesale Banking 36% Retail Banking 15% Insurance 5% Others Retail Banking was impacted by margin compression and saw income fall 7.9% YoY. The Retail loan base grew 5.4% supported by robust growth in mortgage loans and cards. Next year, we expect to see stronger results as the benefits of this year’s divisional restructuring become apparent. In Retail Banking, we have refined key performance indicators, given more clarity to the ownership of our channels, segments and products and redesigned our incentive schemes for branch managers and relationship managers. Our Islamic Banking business continues to form an integral part of the Wholesale and Retail Banking divisions, with profit after taxation and zakat increasing by 6.4%, supported by higher trading and investment income and net allowance written back. Going forward, we want to position AmBank Islamic as a value-based financial intermediary offering differentiated shariah-compliant financial solutions. We will be setting up a financial research and development team to drive innovation and create new products for our customers. Divisional PAT Contribution (YoY) 59% Wholesale Banking 25% Retail Banking 14% Insurance 2% Others Our General Insurance business recorded a higher net earned premium of RM368.9 million. We are the no. 1 motor insurer in Malaysia. In preparation for the liberalisation of premium pricing for motor and fire insurance products slated for July 2017, we have developed a risk pricing model infrastructure and increased penetration to non-motor products. As for our life assurance and Takaful businesses, we will continue to focus on customer-centricity and aspire to be the preferred life insurer in Malaysia. With our partner MetLife Inc., we will continue to drive our life insurance business by leveraging on our bank customer base moving forward. p. 18 p. 19 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  21. Malaysia ’s Outlook 2017-2018 So far in 2017, we have seen a pickup in Malaysia’s economic growth. GDP for the year is expected to come in around 4.3% – 4.8% (2016: 4.2%) because of continued expansion in domestic activities and stronger exports on account of an improving global economy. Consumer spending looks set to rise after recent pro-growth measures from the government and signs of consistent wage growth. Support for domestic investment activity will likely come from capital expenditure in the manufacturing sector and ongoing large-scale infrastructure projects. We project that inflation will rise to around 3.0% – 4.0% in 2017 (2016: 2.1%) reflecting the impact of our weaker ringgit and higher commodity prices, especially on retail fuel prices. In the banking system, we expect a modest growth in retail loans and an improvement in business loans which will push loans growth to between 5.0% and 6.0% in 2017. We think growth support is likely to come from mortgage loans for affordable homes and infrastructure loans. We have created a new division called Business Banking to enhance our focus on the SME segment. We are very excited with the prospects of this new division. Business Banking comprises two lines of business: • Enterprise Banking will drive programme lending and flow business such as foreign exchange and trade FY18 Targets • Commercial Banking will focus on liabilities and discretionary lending, along with ancillary solutions. In the coming year, AmBank Group will maintain its laser-sharp focus on its Top 4 Strategy. We will be accelerating penetration into our targeted segments and expanding in areas where we are already strong. We will focus on growth of quality assets, our deposit mix, maximising fees and optimising & improving our risk-adjusted returns. Our focus in FY18 is to further unleash the bank’s potential, expand our share of our customer’s wallet and increase our customer base through our digital proposition. We will also strengthen our SME and corporate portfolios. For our people, we will be investing further to nurture our internal talent and attract external talent where necessary. In the digital arena, our transformation initiatives will focus on unrivalled customer experience and internal efficiencies, creating a digitally enabled workforce and embedding innovation into our way of working. In compliance, we will continue to implement programmes to invest in our compliance culture and infrastructure. How we will do it: ‘Run the bank better’ and ‘Change the bank’ R C RUN THE BANK BETTER Unlock value across our footprint, capabilities, customer base and talent pool Drive efficiency and build momentum Create new sources of competitive advantage through harnessing digital & analytics to take us to the next level CHANGE THE BANK Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  22. MESSAGE FROM GROUP CHIEF EXECUTIVE OFFICER Sustainability Banks exist to support and sustain economic development and AmBank Group has a clear responsibility to play a positive role in the communities in which we operate . This year we have made some changes to the way we assess our wider risks and opportunities in our communities with our first Sustainability Statement. At the centre of our inaugural Sustainability Statement is an assessment that identifies the material sustainability matters which are of significance to both our stakeholders and to AmBank this year. Going forward, we will conduct this materiality assessment on an annual basis. It is an important tool in identifying and evaluating concerns raised by our stakeholders in formulating our strategic plans to pursue sustainable business growth. The sustainability framework will also support AmBank in developing a longer term, more equitable and sustainable outlook. We have built this formal assessment and sustainability process so that we can clearly identify and reshape our environmental, economic & social risks and opportunities. In this process, we have regrouped our most pressing areas of risk and opportunity into three key areas - responsible banking, employer of choice and positive societal impact. Over time, we will integrate these areas into our core business decisions and our reporting to shareholders and stakeholders. Awards p. 20 AMMB Holdings Berhad (223035-V) p. 21 In the Asset Triple A Asia Infrastructure Awards, we won Malaysia’s best project finance bank and best transport deal. For the latest phase of the DUKE Highway in Kuala Lumpur, we won the Alpha Southeast Asia Best Wakalah Deal of the Year. We also won the Asia Asset Management Award for Best Pension Fund Manager for the fourth year. At the Asset Triple A Islamic Finance Awards we were awarded best Islamic asset management house, Malaysia; best local currency sukuk and best loan syndication. The RAM League Awards recognise accomplishment and leadership in the Malaysian bond and sukuk market. This year, we won five RAM Awards of Distinction, we were placed in the top 3 for bonds in Malaysia by Bloomberg and we won bond-related awards from MorningStar Malaysia and The Edge/ Thomson Reuters Lipper. Annual Report 2017 ambankgroup.com
  23. For the fifth year , we won the Best FX Bank for Corporates & Financial Institutions from Alpha Southeast Asia. We won three e-payment excellence awards from MyClear, including outstanding contribution to JomPAY. We won another three awards from Visa, including highest payment volume growth in Visa Signature cards. In recognition of our best practices in human resources, we were a winner of the HR Asia Best Company to Work For in Malaysia Award 2016. New Group Chief Financial Officer Our new Group Chief Financial Officer with effect from 1 June 2017 is Jamie Ling. He is a Chartered Accountant and joins us with more than 20 years of commercial, financial and international banking experience across Asia and Europe. Thanks and Acknowledgments I express my gratitude to our Board of Directors for their support and trust through the challenging past 12 months. Their guidance and advice to the Group management team during the implementation phase of our Top 4 Strategy has been invaluable. To our valued customers and shareholders, regulators and communities, thank you for your continued trust, loyalty and support. We cherish the fact that our people are our most valuable asset. I would like to thank AmBankers for working hard and positively contributing to the Top 4 Strategy this year. Thank you for your contributions and for focusing on what we do best, helping individuals and businesses in Malaysia grow and win together. I would like to make particular mention of Mandy Simpson, who was AmBank Group Chief Financial Officer for five years from 2012 and returned to Australia and New Zealand Banking Group Limited (ANZ) at the end of May 2017. She played a significant role in crafting the Top 4 Strategy and driving transformation efforts. With her exemplary leadership, she has built a strong team within Group Finance. SULAIMAN MOHD TAHIR Group Chief Executive Officer Kuala Lumpur 30 June 2017 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  24. Driving Economic Growth We have banking solutions to support your growth . From your first bank account to your company’s first loan, to your corporate IPO, we are here with you. We continue to provide seamless banking experience and solutions to our customers while they grow with us.
  26. ABOUT US 27 28 32 34 36 AmBank Group Corporate Profile Our Milestones Corporate Information Group Corporate Structure Strategic Business Entities
  28. p . 26 p. 27 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  29. AMBANK GROUP CORPORATE PROFILE AmBank Group is a leading The Group was listed on the Main Market of Bursa Malaysia in 1988 . It is the sixth largest banking group by assets in Malaysia, with a market capitalisation of around RM14 billion and assets of RM134.8 billion as at 31 March 2017. Malaysian financial services group with 42 years of rich AmBank Group offers a wide range of both conventional and Islamic financial solutions and services, including wholesale banking, retail banking, investment banking, underwriting of general insurance, life assurance and takaful, stock and share broking, futures broking, investment advisory and management services in assets, real estate investment trust and unit trusts. expertise in supporting Malaysians in their economic development. It has over three million customers and employs The Group’s Purpose is to help individuals and businesses in Malaysia grow and win together. 11,000 people. Employs Over 3 million Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 customers Market capitalisation of 11,000 people. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 RM14 billion Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  30. OUR MILESTONES 1976 1988 2005 Set up as a joint venture between Malaysian and Arab interests Arab-Malaysian Merchant Bank Berhad is the first merchant bank to be listed on Bursa Malaysia Merger of AmBank & AmFinance p. 28 p. 29 1982 2001 Tan Sri Azman Hashim acquires 100% of the Group Acquired MBf Finance AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  31. 2007 2014 Strategic partnership with ANZ Strategic partnership with MetLife 2006 2012 Strategic partnership with IAG Acquired Kurnia Insurance & MBf Cards Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  32. OUR MILESTONES 1975 1986 1993 • • AMMB acquired a stockbroking firm, Kris Securities Sdn Bhd, later renamed as AmSecurities Sdn Bhd • AMMB launched Tabung Ittikal Arab-Malaysian, the first Islamic Unit Trust Fund • • AMMB relocated its corporate headquarters to Jalan Raja Chulan, Kuala Lumpur AMMB acted as Manager and Arranger for the RM240.0 million Syndicated Credit Facility for the construction of Menara Kuala Lumpur • Antah Holdings Berhad and Tokai Bank Limited, Japan acquired 20.0% shareholding each in AMMB • AMMB launched Arab-Malaysian Unit Trusts Berhad to manage unit trust funds Arab-Malaysian Development Bank Berhad was incorporated on 5 August 1975 as a joint venture between Malaysian Industrial Development Finance Berhad with a 55.0% shareholding, Arab Investments for Asia (Kuwait) with a 33.0% shareholding, and the National Commercial Bank (Saudi Arabia) holding 12.0% 1977 • The Group acquired a 70.0% shareholding in Malaysian Industrial Finance Company Limited, which was later renamed Arab-Malaysian Finance Berhad (AMFB) • AMFB became the first private sector institution in Malaysia to issue public bonds – RM20.0 million 8.5% Guaranteed Bonds 1987, listed on the Kuala Lumpur Stock Exchange. The Bonds marked a new chapter in the history of private sector fund raising in the capital markets • 1982 • Tan Sri Azman Hashim acquired 100.0% shareholding in the Group • The Group acquired the remaining 30.0% shareholding of AMFB, making it a wholly-owned finance company subsidiary 1983 • The Group was renamed Arab-Malaysian Merchant Bank Berhad (AMMB) • AMMB established a credit and leasing company, Arab-Malaysian Credit Berhad • • AMMB launched Malaysian Ventures Berhad to undertake private equity investments AMMB arranged the first leveraged lease facility in the country for Sistem Televisyen Malaysia Berhad (TV3) AMMB acquired Arab-Malaysian Insurance Berhad, a general insurance company formerly known as Teguh Insurance Company Sdn Bhd AMMB acquired Perima Assurance Berhad, a life insurance company p. 30 p. 31 AMMB sponsored the establishment of The Malaysia Fund Inc, a close-ended investment fund listed on the New York Stock Exchange, to invest in equities of Malaysian companies listed on the KLSE. The Malaysia Fund raised USD87.0 million • AMMB International (L) Ltd commenced offshore banking operations in Labuan, the first merchant bank to offer offshore banking services • AMMB Futures Sdn Bhd commenced futures broking business AMMB became the first merchant bank to be listed on the Kuala Lumpur Stock Exchange • AMMB was appointed as Adviser to the Government to formulate the National Privatisation Masterplan • AMMB launched the first equity unit trust fund, Arab-Malaysian First Fund 1996 • AMMB Holdings Berhad’s annual report won the Overall Award for the Most Outstanding Annual Report for six consecutive years from 1991 to 1996 in the NACRA awards • Macquarie Bank Limited, Australia acquired 30.0% shareholding in each of AMMB Futures Sdn Bhd, AMMB Asset Management Sdn Bhd and ArabMalaysian Unit Trusts Berhad 1997 1989 Arab-Malaysian Property Trust became the first property trust to be listed on the KLSE • • AMMB was appointed as Adviser and Managing Underwriter for the flotation of Telekom Malaysia Berhad • AMFB acquired First Malaysia Finance Berhad • • AMMB acquired a 49.0% equity stake in the holding company of Fraser Securities, Singapore • AMMB, in collaboration with Nikko Securities Co. Ltd. in Japan, sponsored the establishment of Malaysia Fund (Labuan), the first offshore unit trust fund in the Federal Territory of Labuan • Pursuant to a corporate restructuring scheme, AMMB Holdings Berhad became the holding company of the Arab-Malaysian Banking Group and assumed the listing status of AMMB • Arab-Malaysian Finance Berhad, the Group’s finance company, was listed on the KLSE Annual Report 2017 AMFB acquired the assets and liabilities of Abrar Finance Berhad, in line with the Government’s plan to consolidate the industry 2001 • 1991 AMMB Holdings Berhad (223035-V) AMMB Securities (HK) Limited commenced stock broking operations in Hong Kong 1998 1990 1985 • 1995 • • AMMB ventured into commercial banking with the acquisition of the Malaysian operations of Security Pacific Asian Bank Limited from Bank of America (Asia) Limited. It started commercial banking operations as Arab-Malaysian Bank Berhad AMMB’s two insurance companies merged to form Arab-Malaysian Eagle Assurance Berhad, holding composite insurance licences 1988 1984 • • 1987 • 1980 1994 AMFB acquired MBf Finance Berhad 2002 • Merger of Arab-Malaysian Finance Berhad and MBf Finance Berhad, following the vesting of the assets and liabilities of AMFB into MBf Finance. The latter changed its name to AmFinance Berhad. AMFB was converted into AMFB Holdings Berhad • ‘Arab-Malaysian Banking Group’ rebranded to ‘AmBank Group’ with new Group corporate colours of red, representing prosperity and good fortune and yellow representing commitment and unity ambankgroup.com
  33. 2003 2009 • • Bangunan AmFinance, now known as Menara AmBank on Jalan Yap Kwan Seng, Kuala Lumpur, was officially opened by the then Prime Minister, Tun Dr Mahathir Mohamad • 2005 AmIslamic Funds Management Sdn Bhd obtained a licence for Islamic funds management of offshore and domestic Islamic financial instruments for institutional and retail investors AmCapital (B) Sdn Bhd opened, bringing expertise in funds management, Islamic finance and investment advisory to Brunei Darussalam • Completed privatisation of AMFB Holdings Berhad • • AmInvestment Group Berhad, the Group’s investment banking operations, listed on Bursa Malaysia ANZ increased its shareholding in AmBank Group to 23.91% by converting its exchangeable bonds into new ordinary shares • • AmBank and AmFinance merged to create AmBank (M) Berhad, the sixth largest domestic bank in the country AmBank-MyKasih Community Programme was launched 2010 • 2006 • Am Private Equity, a private equity fund, was launched • Insurance Australia Group Limited, Australia acquired 30.0% shareholding in AmAssurance Berhad • • Am ARA REIT Managers Sdn Bhd was incorporated with AIGB holding 70.0% equity and ARA Asset Management (Malaysia) Limited 30.0% to manage the AmFIRST REIT listing on Bursa Malaysia AmIslamic Bank commenced operations, with the vesting of the Islamic assets and liabilities of AmBank (M) Berhad into a separate subsidiary company • • • AmBank Group completed the integration of AmSecurities Sdn Bhd into AmInvestment Bank, which began operating as a fully-fledged investment bank offering both merchant banking and stockbroking services AmBank Group marks the entry of Australia and New Zealand Banking Group Limited (ANZ) as its strategic partner and major investor Completed privatisation of AIGB, which became a wholly owned subsidiary of AMMB • Established AmG Insurance Berhad to facilitate the separation of the composite insurance business of AmAssurance Berhad into general insurance and life insurance businesses The Group continued to be recognised as an industry leader with awards including: Best Domestic Bond House in Malaysia from The Asset Triple A Country Awards 2010, Best Bond Group at The Edge-Lipper Malaysia Fund Awards, Five awards at the RAM League Awards 2011 for excellence in the bond markets, Best Chief Financial Officer for Investor Relations – Large Cap Award at the MIRA Inaugural Malaysia Investor Relations Awards, Best Asia Award at the Corporate Governance Asia Recognition Awards 2011 AmBank Group completed the acquisition of MBf Cards (M’sia) Sdn Bhd 2013 • Maiden issuance of Exchange Traded Bonds and Sukuk ‘ETBS’ on Bursa Malaysia by DanaInfra Nasional Berhad, creating new asset class on the Exchange, with AmInvestment Bank as one of the Lead Arrangers • AmBank Group clinched the prestigious Bank of the Year in Malaysia 2013 award (The Banker Magazine) in recognition of the Group’s strong management, sound business model and prudent risk management • AmBanCS, the Group’s new core banking system went live 2014 • AMMB Holdings Berhad’s wholly-owned subsidiary, AMAB Holdings Sdn Bhd, and MetLife Inc.’s subsidiary, MetLife International Holdings Inc., entered into a share sale agreement which involved the sale of equity interest of AmLife Insurance Bhd and AmFamily Takaful Berhad. The signing was witnessed by Datuk Seri Najib Tun Razak, Prime Minister of Malaysia and Barak Obama, President of the United States of America • AmBank Group unveiled the brand new logos of AmMetLife and AmMetLife Takaful, reflecting the new strategic partnership between AmBank Group and MetLife Inc 2015 The ‘AmIslamic Bank’ brand was rebranded to ‘AmBank Islamic’. The legal entity name was also changed from AmIslamic Bank Berhad to AmBank Islamic Berhad AmBank Group and ANZ signed a Business Principles Agreement to collaborate in areas of banking businesses including Islamic banking, transaction banking and wealth management across 27 countries, including Australia, China, Indonesia, Singapore and Vietnam • AmFIRST REIT announced the Proposed Acquisition of a three-storey MYDIN Hypermall in Pulau Pinang on 15 April 2015 for a total cash consideration of RM250 million • AmSignature Priority Banking was launched, delivering personalised banking to the affluent segment in Malaysia • AmMetlife Insurance and AmMetlife Takaful moved their head office to Menara 1Sentrum • AmFamily Takaful Berhad commenced Family Takaful business AmBank Group launched its Top Four strategy to be one of Malaysia’s leading banking groups by 2020 2012 • • Friends Provident PLC acquired a 30% stake in AmLife Insurance Berhad • • AmBank and ANZ entered into a technical services agreement to establish AmBank Group’s foreign exchange, interest rate and commodities derivatives business • The Group’s new corporate social responsibility platform AmKasih was launched • AMMB Holdings Berhad changed its stock short name to AMBANK • • • 2008 • AmIslamic Bank successfully issued RM550.0 million Senior Sukuk under its newly established 30-year RM3.0 billion Senior Sukuk Musyarakah Programme AmBank Group completed acquisition of Kurnia Insurans (Malaysia) Berhad, emerging as Malaysia’s No. 1 motor insurer 2011 2007 • AmBank (M) Berhad successfully issued RM1.42 billion senior notes under its newly established 30-year RM7.0 billion Senior Notes Issuance Programme, being the first financial institution to issue senior notes in Malaysia • 2016 IAG increased its stakeholding in AmG Insurance Berhad to 49.0% from 30.0% Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  34. CORPORATE INFORMATION BOARD OF DIRECTORS AUDIT AND EXAMINATION COMMITTEE OF DIRECTORS 1 . Tan Sri Azman Hashim Non-Independent Non-Executive Chairman 1. 2. Graham Kennedy Hodges Non-Independent Non-Executive Director 2. 3. Suzette Margaret Corr Non-Independent Non-Executive Director 3. 4. Soo Kim Wai Non-Independent Non-Executive Director 5. Dato' Rohana binti Tan Sri Mahmood Senior Independent Non-Executive Director GROUP NOMINATION AND REMUNERATION COMMITTEE 6. Dato’ Seri Ahmad Johan bin Mohammad Raslan Non-Independent Non-Executive Director 1. 7. Voon Seng Chuan Independent Non-Executive Director 8. Datuk Shireen Ann Zaharah binti Muhiudeen Independent Non-Executive Director 9. Seow Yoo Lin Independent Non-Executive Director 2. 3. 4. 5. Seow Yoo Lin (Chairman) Independent Non-Executive Director Soo Kim Wai Non-Independent Non-Executive Director Voon Seng Chuan Independent Non-Executive Director Dato’ Rohana binti Tan Sri Mahmood (Chairman) Senior Independent Non-Executive Director Suzette Margaret Corr Non-Independent Non-Executive Director Soo Kim Wai Non-Independent Non-Executive Director Voon Seng Chuan Independent Non-Executive Director Datuk Shireen Ann Zaharah binti Muhiudeen Independent Non-Executive Director GROUP COMPANY SECRETARY RISK MANAGEMENT COMMITTEE OF DIRECTORS Koid Phaik Gunn MAICSA 7007433 Chartered Secretary 1. 2. 3. p. 32 p. 33 AMMB Holdings Berhad (223035-V) Datuk Shireen Ann Zaharah binti Muhiudeen (Chairman) Independent Non-Executive Director Graham Kennedy Hodges Non-Independent Non-Executive Director Voon Seng Chuan Independent Non-Executive Director Annual Report 2017 ambankgroup.com
  35. GOVERNANCE COMMITTEE GROUP INFORMATION TECHNOLOGY COMMITTEE 1 . 1. 2. 3. 4. Dato’ Rohana binti Tan Sri Mahmood (Chairman) Senior Independent Non-Executive Director Graham Kennedy Hodges Non-Independent Non-Executive Director Soo Kim Wai Non-Independent Non-Executive Director Dato’ Seri Ahmad Johan bin Mohammad Raslan Non-Independent Non-Executive Director REGISTERED OFFICE REGISTRAR 2. 3. 22nd Floor, Bangunan AmBank Group No. 55, Jalan Raja Chulan 50200 Kuala Lumpur, Malaysia Tel : +603-2036 2633 Fax : +603-2032 1914 STOCK EXCHANGE LISTING Symphony Share Registrars Sdn Bhd Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46, 47301 Petaling Jaya Selangor Darul Ehsan, Malaysia Tel : +603-7849 0777 Fax : +603-7841 8151/8152 Email : ssr.helpdesk@symphony.com.my AUDITORS Messrs Ernst & Young Chartered Accountants PRINCIPAL BANKER AmBank (M) Berhad Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Voon Seng Chuan (Chairman) Independent Non-Executive Director Dato’ Seri Ahmad Johan bin Mohammad Raslan Non-Independent Non-Executive Director Seow Yoo Lin Independent Non-Executive Director Listed on the Main Market of Bursa Malaysia Securities Berhad Listing Date : 13 February 1992 Stock Name : AMBANK Stock Code : 1015 ambankgroup.com WEBSITE INVESTOR RELATIONS ir@ambankgroup.com MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  36. GROUP CORPORATE STRUCTURE as at 31 March 2017 AMMB Holdings Berhad AmIslamic AmBank MBFC AMFB * AmInvestment AIGB AMAB 100% 100% 100% 100% 100% 100% 100% AMIL BLSB AMF AARH AmGH 100% 33.33% 100% 70% 51% MISSB AMNT AARM AmGI 100% 100% 100% 100% 20% MNT 100% AMNA AmCap (B) 100% 100% AmMetL 50% -1 share AAMNT AIM* 20% 100% 100% AmMetT MTB AAMNA MVMI* 20% 100% 100% +1 share APHSB AMSNT AmPE* 100% 100% 80% 50% AmCSB AMSNA AMSH 100% 100% 100% TOPSB AFM ASHK* 100% 100% 100% BDSB AIFM AMS* 100% 100% 100% MPSB AmFIPL 81.51% 100% AmPremier AmGlobal* 100% 100% AmMortgage AMR* 100% 100% ACL* 100% ATSL* 100% KOMUDA* 100% *In members’ voluntary winding-up p. 34 p. 35 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  37. Legend Company Principal Activities AMMB – AMMB Holdings Berhad Investment holding AMFB – AMFB Holdings Berhad Investment holding (In members’ voluntary winding-up) AmIslamic – AmBank Islamic Berhad Islamic banking AmBank – AmBank (M) Berhad Commercial banking AMIL – AmLabuan Holdings (L) Ltd Investment holding AmCSB – AmCard Services Berhad Credit card-related services and asset financing agency AmPremier – AmPremier Capital Berhad Issue of subordinated securities AmMortgage – AmMortgage One Berhad Securitisation of mortgage loans MTB – MBf Trustees Berhad Trustee services MNT – MBf Nominees (Tempatan) Sdn Bhd Nominee services MISSB – MBf Information Services Sdn Bhd Property investment APHSB – AmProperty Holdings Sdn Bhd Property investment BDSB – Bougainvillaea Development Sdn Bhd Property investment MPSB – Malco Properties Sdn Bhd Dormant TOPSB – Teras Oak Pembangunan Sendirian Berhad Dormant ATSL – AmTrade Services Limited Dormant (In members’ voluntary winding-up) ACL – AMBB Capital (L) Ltd. Dormant (In members’ voluntary winding-up) KOMUDA – Komuda Credit & Leasing Sdn Bhd Dormant (In members’ voluntary winding-up) AmInvestment – AmInvestment Bank Berhad Investment banking AMF – AmFutures Sdn Bhd Dormant AFM – AmFunds Management Berhad Funds management including management of unit trusts and Private Retirement Schemes AIFM – AmIslamic Funds Management Sdn Bhd Islamic fund management services and distribution of wholesale funds AMNT – AMMB Nominees (Tempatan) Sdn Bhd Nominee services AMNA – AMMB Nominees (Asing) Sdn Bhd Nominee services AAMNT – AM Nominees (Tempatan) Sdn Bhd Nominee services AAMNA – AM Nominees (Asing) Sdn Bhd Nominee services AMSNT – AMSEC Nominees (Tempatan) Sdn Bhd Nominee services AMSNA – AMSEC Nominees (Asing) Sdn Bhd Nominee services AmFIPL – AmFraser International Pte Ltd Investment holding AmGlobal – AmGlobal Investments Pte Ltd Dormant (In members’ voluntary winding-up) AMR – AmResearch Sdn Bhd Dormant (In members’ voluntary winding-up) AIGB – AmInvestment Group Berhad Investment holding AmCap (B) – AmCapital (B) Sdn Bhd Dormant AARH – Am ARA REIT Holdings Sdn Bhd Investment holding AARM – Am ARA REIT Managers Sdn Bhd Management of real estate investment trusts AMSH – AmSecurities Holding Sdn Bhd Investment holding ASHK – AmSecurities (HK) Limited Dormant (In members’ voluntary winding-up) AIM – AmInvestment Management Sdn Bhd Dormant (In members’ voluntary winding-up) AmPE – AmPrivate Equity Sdn Bhd Investment holding (In members’ voluntary winding-up) AMS – AMSEC Holdings Sdn Bhd Dormant (In members’ voluntary winding-up) MVMI – Malaysian Ventures Management Incorporated Sdn Bhd Dormant (In members’ voluntary winding-up) AMAB – AMAB Holdings Sdn Bhd Investment holding AmGH – AmGeneral Holdings Berhad Investment holding AmGI – AmGeneral Insurance Berhad General insurance AmMetL – AmMetLife Insurance Berhad Life assurance AmMetT – AmMetLife Takaful Berhad Family takaful MBFC – MBF Cards (M’sia) Sdn Bhd Dormant BLSB – Bonuskad Loyalty Sdn Bhd Managing customer loyalty schemes Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  38. STRATEGIC BUSINESS ENTITIES AMMB Holdings Berhad AMMB Holdings Berhad is the holding company of AmBank Group and has been listed on the Main Market of Bursa Malaysia since 1988 . It is the sixth largest banking group by assets in Malaysia, with a market capitalisation of around RM14 billion and assets of RM134.8 billion at 31 March 2017. AmBank Group is one of Malaysia’s premier financial solutions groups with 42 years of experience in supporting Malaysians in their economic development. AmBank Group offers a wide range of both conventional and Islamic financial solutions and services, including wholesale banking, retail banking, investment banking, underwriting of general insurance, life assurance and takaful, stock and share broking, futures broking, investment advisory and management services in assets, real estate investment trust and unit trusts. p. 36 p. 37 AmBank (M) Berhad The Group’s purpose is to help individuals and businesses in Malaysia grow and win together. The Australia and New Zealand Banking Group (ANZ) is the most substantial shareholder in the AmBank Group (holding 23.8%) and provides support in Board and senior management representations, risk and financial governance, products offering and new business developments. In the general insurance business, the Group has partnered with Insurance Australia Group Ltd (IAG). In the life assurance and family takaful businesses, the Group has a partnership with MetLife International Holdings Inc (MetLife). The Group benefits in terms of expertise transfer from IAG and MetLife. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com AmBank (M) Berhad (AmBank) is part of the AmBank Group and offers a comprehensive suite of financial products and services focused on retail banking and preferred segments in small business, SME, mid corp and corporate customers. Supported by a strong network of 175 branches, 183 electronic banking centres, 766 ATMS, a 24-hour contact centre and a digital banking system, access to AmBank’s financial solutions and services is simple and convenient.
  39. AmInvestment Bank Berhad AmInvestment Bank Berhad (AmInvestment Bank), part of the AmBank Group, is a leading Malaysian investment bank with over 30 years of experience. It provides a full range of wholesale banking related products and services that include Corporate Finance, Equity Markets, Debt Markets, Islamic Capital Markets, and Markets & Private Banking. AmInvestment Bank has an award-winning track record in the debt, equity and Islamic capital markets. AmMetLife Insurance Berhad AmFunds Management Berhad (AmInvest) is the funds management business of AmBank Group and manages both conventional and Shariahcompliant funds. It is one of the leading fund management houses in Malaysia and has an award-winning track record spanning more than three decades. As at 31 March 2017, AmInvest has approximately RM37.2 billion assets under management. AmMetLife Insurance Berhad (AmMetLife) is a strategic partnership between AMMB Holdings Berhad (AmBank Group) and MetLife International Holdings, Inc. (MetLife). AmMetLife offers a comprehensive range of life assurance and wealth protection solutions distributed through a combination of AmBank and AmMetLife branch offices nationwide, in addition to the strength of its authorised life insurance agents nationwide. AmInvest manages unit trust and wholesale funds, institutional mandates, exchange-traded funds and Private Retirement Scheme funds, encompassing both conventional and Shariahcompliant funds. AmBank Islamic Berhad AmGeneral Insurance Berhad AmMetLife Takaful Berhad AmBank Islamic Berhad (AmBank Islamic) is the Islamic banking arm of the AmBank Group. Since its beginnings as AmBank Group’s Islamic banking division in 1993 and subsequently incorporated as an Islamic bank in 2006, AmBank Islamic has built a reputation in serving the banking needs of individuals, businesses and institutions. AmGeneral Insurance Berhad (AmGeneral Insurance) is one of the largest motor and general insurance companies in Malaysia with over four million policy holders. It is backed by a strong partnership between AmBank Group and IAG Trading under its two trusted brands, AmAssurance and Kurnia. AmMetLife Takaful Berhad (AmMetLife Takaful) is a strategic partnership between AmBank Group and MetLife. The strategic partnership combines the international expertise and financial strength of MetLife with the local strength and reach of AmBank Group. AmBank Islamic’s comprehensive range of Shariah-compliant retail and wholesale banking products and services (including treasury and trade solutions), and their delivery channels; continuously evolve in line with market changes. This dynamic approach supports the agenda to help individuals, businesses and institutions in Malaysia grow and win together. AmGeneral Insurance generates business from a comprehensive range of general insurance solutions distributed through a network of 32 insurance branches servicing 7,000 agents and dealers, as well as through AmBank branches and customer touch points nationwide. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 AmMetLife Takaful offers a comprehensive range of takaful solutions distributed by its authorised takaful agents and AmBank branches nationwide. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  40. LEADERSHIP 40 42 51 52 54 62 64 65 Board of Directors Profile of Directors Profile of Company Secretary Senior Management Team Profile of Group Senior Management Group Organisation Structure Shariah Committee Profile of Shariah Committee
  42. BOARD OF DIRECTORS Standing from left SUZETTE MARGARET CORR GRAHAM KENNEDY HODGES SOO KIM WAI Non-Independent Non-Executive Director Non-Independent Non-Executive Director Non-Independent Non-Executive Director DATUK SHIREEN ANN ZAHARAH BINTI MUHIUDEEN TAN SRI AZMAN HASHIM VOON SENG CHUAN Non-Independent Non-Executive Chairman Independent Non-Executive Director DATO ’ ROHANA BINTI TAN SRI MAHMOOD Independent Non-Executive Director Independent Non-Executive Director DATO’ SERI AHMAD JOHAN BIN MOHAMMAD RASLAN SEOW YOO LIN Senior Independent Non-Executive Director Non-Independent Non-Executive Director p. 40 p. 41 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  43. Ethnicity 4 3 Nationality Malay Malaysian Age Group 7 50-60 Chinese Others 2 Gender 2 Others 6 Overview Key Highlights Key Messages About Us Leadership p . 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 3 Length of Service 5 61-70 3 71-80 1 7 11.0% 8 – 14 Years 1 1 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 78.0% 1 – 7 Years 11.0% 15 Years & Above Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  44. PROFILE OF DIRECTORS Relevant Expertise Tan Sri Azman Hashim has been in the banking industry since 1960 when he joined Bank Negara Malaysia . He practised as a Chartered Accountant in Azman Wong Salleh and Co. from 1964 to 1971. He was on the board of Malayan Banking Berhad from 1966 to 1980 and was its Executive Director from 1971 until 1980. He was the Executive Chairman of Kwong Yik Bank Berhad, a subsidiary of Malayan Banking Berhad, from 1980 until 1982 when he acquired AmInvestment Bank Berhad. Tan Sri Azman is Chairman of the Asian Institute of Finance Berhad, Asian Institute of Chartered Bankers, Asian Banking School Sdn Bhd, Malaysian Investment Banking Association, the Malaysia Productivity Corporation, Malaysia South-South Corporation Berhad and Chairman Emeritus of Pacific Basin Economic Council (PBEC). He is the President of Malaysia South-South Association, Malaysia-Japan Economic Association, Malaysian Prison FRIENDS Club and a Member of the APEC Business Advisory Council and East Asia Business Council. He is also the Leader of the ASEAN Japanese Business Meeting (Malaysia Committee, Keizai Doyukai). He is the Pro-Chancellor of Open University of Malaysia and a member of the Governing Body of Asian Productivity Organisation. TAN SRI AZMAN HASHIM Chairman, Non-Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Malaysian Male | 78 15 August 1991 26 Years Declaration Qualifications Fellow Chartered Banker (FCB) Chartered Accountant (FCPA) Fellow, Institute of Chartered Accountants Fellow, Institute of Chartered Secretaries and Administrators Directorships Chairman, Non-Independent Non-Executive Director of the following AmBank Group subsidiaries: • AmBank (M) Berhad • AmInvestment Bank Berhad • AmGeneral Insurance Berhad • AmMetLife Insurance Berhad • AmGeneral Holdings Berhad • AmInvestment Group Berhad Executive Chairman, Amcorp Group Berhad p. 42 p. 43 Tan Sri Azman is also involved in several charitable organisations as Chairman and Trustee of AmGroup Foundation and Perdana Leadership Foundation and Trustee for Yayasan Azman Hashim, Malaysian Liver Foundation, Yayasan Tuanku Najihah and Yayasan Canselor Open University Malaysia. Tan Sri Azman is also the Founder and Council Member of Azman Hashim Family (L) Foundation and Azman Hashim Charitable (L) Foundation. He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company except as follows: being a director and substantial shareholder of Amcorp Group Berhad, which in turn is a substantial shareholder of AMMB Holdings Berhad (AMMB), and being a director of Clear Goal Sdn Bhd, his family company which is deemed a substantial shareholder of AMMB by virtue of its interest in Amcorp. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  45. Relevant Expertise Graham Kennedy Hodges is the Deputy Chief Executive Officer of Australia and New Zealand Banking Group (ANZ). Prior to that, he was Chief Executive Officer and a director of ANZ National Bank Limited responsible for the running of ANZ Group’s New Zealand business. Mr Hodges has held the position of Group Managing Director, Corporate and various other roles in Corporate and Business Banking. He joined ANZ in 1991 and was appointed Chief Economist in 1992, a post he held for three (3) years. Before ANZ, Mr Hodges spent several years with the International Monetary Fund in Washington DC and nine (9) years in Commonwealth Treasury in Canberra. GRAHAM KENNEDY HODGES Non-Independent Non-Executive Director Declaration Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Australian Male | 62 30 June 2016 1 Year He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company except as follows: He is a board representative of Australia and New Zealand Banking Group Limited, which is deemed a substantial shareholder of AMMB by virtue of its interest in ANZ Funds Pty Ltd, a substantial shareholder of AMMB. Membership of Board Committees Member of the Company’s Risk Management Committee of Directors Member of the Company’s Governance Committee He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Bachelor of Economics (Hons), Monash University, Australia. Directorships None Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  46. PROFILE OF DIRECTORS Relevant Expertise Suzette Margaret Corr is the General Manager Human Resources Institutional for Australia and New Zealand Banking Group (ANZ). She is an experienced human resources executive with demonstrated strengths in strategy and execution developed across a range of sectors, including Consulting and Financial Services. Declaration She does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company except as follows: She is a board representative of Australia and New Zealand Banking Group Limited, which is deemed a substantial shareholder of AMMB by virtue of its interest in ANZ Funds Pty Ltd, a substantial shareholder of AMMB. SUZETTE MARGARET CORR Non-Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Australian Female | 56 23 January 2015 2 Years Membership of Board Committees Member of the Company’s Group Nomination and Remuneration Committee Qualifications Bachelor of Commerce, University of Western Australia, Australia Master of Business Administration, University of Queensland, Australia Directorships None Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee p. 44 p. 45 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  47. Relevant Expertise Soo Kim Wai is currently the Group Managing Director of Amcorp Group Berhad . He joined Amcorp Group Berhad in 1989 as Senior Manager, Finance, and has since held various positions before he was promoted to his current appointment. Prior to that, he was with Plantation Agencies Sdn Bhd from 1985 to 1989, and in the accounting profession for five (5) years with Deloitte KassimChan from 1980 to 1985. Mr Soo sits on the board of some private limited companies and foreign companies. He is also a board member of the British Malaysian Chamber of Commerce and serves as Chairman of Am ARA REIT Managers Sdn Bhd, the Manager of AmFirst Real Estate Investment Trust. SOO KIM WAI Non-Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Declaration He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company except as follows: He is the Group Managing Director of Amcorp Group Berhad, which is a substantial shareholder of AMMB. Malaysian Male | 56 4 October 2002 14 years He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Membership of Board Committees Member of the Company’s Group Nomination and Remuneration Committee Member of the Company’s Audit and Examination Committee Member of the Company’s Governance Committee Qualifications Member, Malaysian Institute of Accountants Member, Malaysian Institute of Certified Public Accountants Fellow, Certified Practising Accountants, Australia Fellow, Association of Chartered Certified Accountants United Kingdom Directorships Director, RCE Capital Berhad Director, Amcorp Properties Berhad Director, Amcorp Group Berhad Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  48. PROFILE OF DIRECTORS Relevant Expertise Dato ’ Rohana binti Tan Sri Mahmood is Chairman/Partner/Director and Founder of RM Capital Partners, a Malaysian private equity fund. She was chairman and co-founder of Ethos Capital, a Malaysian private equity fund 2007-2012. Dato’ Rohana is a member of Global Council of the Asia Society, New York and a member of APEC Business Advisory Council of Malaysia. She is also the Chairman/Director and Founder of RMCP One Sdn Bhd. She sits on the board of various private companies including amongst others, Sime Darby Industrial Holdings Sdn Bhd, KDU University College Sdn Bhd, YIM Technology Resources Sdn Bhd and RM Capital Partners & Associates Sdn Bhd. DATO’ ROHANA BINTI TAN SRI MAHMOOD Senior Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Dato’ Rohana is the Chairman, Advisory Council and founding member of the Kuala Lumpur Business Club, an invitation-only networking and business development organisation limited to 100 members of Malaysia’s leading corporate and business leaders. She is a Distinguished Fellow and board member of the Institute of Strategic and International Studies (ISIS) Malaysia. Prior to ISIS, Dato’ Rohana was attached to the Ministry of Foreign Affairs Malaysia. Malaysian Female | 63 8 July 2011 5 Years Membership of Board Committees Chairman of the Company’s Group Nomination and Remuneration Committee Chairman of the Company’s Governance Committee Declaration She does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. Qualifications Bachelor of Arts (Honours) in Politics, Essex University United Kingdom Master’s degree in International Relations, Sussex University United Kingdom Directorships Director, AmInvestment Bank Berhad, a subsidiary of the Company Director, Sime Darby Berhad Director, Sime Darby Property Berhad Director, Paramount Corporation Berhad She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee p. 46 p. 47 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  49. Relevant Expertise Dato ’ Seri Ahmad Johan bin Mohammad Raslan is a former Executive Chairman of PricewaterhouseCoopers Malaysia (PwC). He spent ten (10) years of his career in London, United Kingdom, and 20 years in Malaysia, working in the fields of assurance and advisory. He retired from PwC in 2012. When his contract as Senior Adviser to the AmBank Group Chairman ended, Dato’ Seri Johan was redesignated as a Non-Independent Non-Executive Director of the Company, effective 1 December 2016. DATO’ SERI AHMAD JOHAN BIN MOHAMMAD RASLAN Non-Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Malaysian Male | 57 9 December 2014 2 Years In addition to his assurance and advisory work, Dato’ Seri Johan has frequently been consulted in matters concerning corporate governance. Dato’ Seri Johan’s past work for the Government of Malaysia has included memberships of the boards of Perbadanan Putrajaya (Putrajaya Corporation), The Retirement Fund Incorporated (KWAP), and the Chairmanship of the Financial Reporting Foundation. He is currently a member of the Financial Services Professional Board. Declaration Membership of Board Committees Member of the Company’s Group Information Technology Committee Member of the Company’s Governance Committee He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Bachelor of Science (Honours) in Economics & Accountancy, University of Hull, United Kingdom Fellow, Institute of Chartered Accountants in England & Wales Member, Malaysian Institute of Certified Public Accountants Member, Malaysian Institute of Accountants Directorships Director, Eco World International Berhad (Listed on the Main Market of Bursa Malaysia Securities Berhad on 3 April 2017) Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  50. PROFILE OF DIRECTORS Relevant Expertise Voon Seng Chuan sits on the board of Silverlake International Ltd and Silverlake International (HK) Limited. He has been part of the Information Technology (IT) industry for about three (3) decades. In April 2008, he joined the IBM Quarter Century Club reflecting his 25 years of service in IBM. He retired from IBM in March 2010. In his 27 years of service with IBM, he held a number of roles delivering all aspects of IT products and services for clients in all industry segments in Malaysia and the Asia Pacific region. His last role in IBM prior to his retirement was Director for Mid-Market Segment in Asia Pacific. VOON SENG CHUAN Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Malaysian Male | 58 18 June 2015 2 Years Membership of Board Committees Chairman of the Company’s Group Information Technology Committee Member of the Company’s Audit and Examination Committee Member of the Company’s Risk Management Committee of Directors Member of the Company’s Group Nomination and Remuneration Committee From 2000 to 2006, Mr Voon was the Managing Director for IBM Malaysia and Brunei. Mr Voon responded to the Malaysian Government’s call to transform the nation into an international shared services and outsourcing hub by leading IBM’s investment in seven (7) regional centres/operations in Malaysia. In doing so, IBM is well positioned to transfer best practices and high-skilled expertise to the country. In 2013, Mr Voon was recognised with the ‘Outsourcing Leader of the Year’ award by Outsourcing Malaysia. He was also a Council Member of PIKOM (National ICT Association of Malaysia) from 1994/1995 and 1999/2000. Declaration He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Bachelor of Science (Honours) in Mathematics, University of Malaya Directorships Director, AmBank (M) Berhad, a subsidiary of the Company Director, Mesiniaga Berhad Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee p. 48 p. 49 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  51. Relevant Expertise Datuk Shireen Ann Zaharah binti Muhiudeen is the founder of Corston-Smith Asset Management . She set up Corston-Smith after 12 years with the global insurance company, AIG. In all, she has more than 29 years of focused fund management expertise. In recognition of her work in the industry, she was named one of the 25 most influential women in the Asia-Pacific region for asset management by Asian Investor, a regional publication, in June 2011 and in March 2014, she was honoured by Forbes Asia as one of the 50 Asia’s Power Businesswomen 2014. DATUK SHIREEN ANN ZAHARAH BINTI MUHIUDEEN Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Malaysian Female | 54 30 June 2016 1 Year Datuk Shireen was a member of IFC’s working group for the establishment of the Philippine Stock Exchange’s Maharlika Board, a distinct trading board for companies with world-class corporate governance practices. She is currently a member of the International Advisory Panel for Labuan International Business and Financial Centre. She was an Independent Director and chaired the Governance Committee of a public listed company from 2011 to 2015. She was a director of a foreign bank from December 2013 to February 2016. Declaration Membership of Board Committees Chairman of the Company’s Risk Management Committee of Directors Member of the Company’s Group Nomination and Remuneration Committee She does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Bachelor of Science in Business Administration, University of Southern California, United States Master of Business Administration, Loyola Marymount University, United States Directorships None Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  52. PROFILE OF DIRECTORS Relevant Expertise Seow Yoo Lin joined KPMG Malaysia in 1977 and qualified as a Certified Public Accountant in 1980 . In 1983, he was seconded to KPMG United States to gain overseas experience, specialising in banking assignments. He returned in 1985 and was admitted as Partner in 1990. He has been the audit partner on a wide range of companies including public listed companies and multinationals in banking and finance, manufacturing, trading and services. In addition, he held various leadership roles including those of Human Resources Partner, Partner in charge of Financial Services and a member of the KPMG Asia Pacific Board. He was a member of Executive Committee of the Malaysian Institute of Certified Public Accountants from 2009 to 2011 and a Council member of the Malaysian Institute of Accountants from 2007 to 2011. He was the Managing Partner of KPMG Malaysia from 2007 to 2010. He retired from the firm in 2011. SEOW YOO LIN Independent Non-Executive Director Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : Malaysian Male | 61 30 June 2016 1 Year Declaration He does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. Membership of Board Committees Chairman of the Company’s Audit and Examination Committee Member of the Company’s Group Information Technology Committee He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended in 31 March 2017. Qualifications Certified Public Accountant Master of Business Administration, International Management Centre, Buckingham, United Kingdom Member, Malaysian Institute of Accountants Member, Malaysian Institute of Certified Public Accountants Member, Malaysian Institute of Management Directorships Director, Southern Steel Berhad Director, Hume Industries Berhad Director, Dolomite Corporation Berhad Committee Membership Audit and Examination Committee Risk Management Committee of Directors Group Nomination And Remuneration Committee Group Information Technology Committee Governance Committee p. 50 p. 51 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  53. PROFILE OF COMPANY SECRETARY Relevant Expertise Koid Phaik Gunn is the named Company Secretary of AMMB Holdings Berhad . She has more than 30 years of experience in corporate secretarial practice. Ms Koid joined AmBank Group in 1993 as Company Secretary to AmSecurities Sdn Bhd, then the stockbroking arm of AmBank Group. In 2004, she moved to the Group Legal and Company Secretarial Department as Deputy Group Company Secretary. She has been the Group Company Secretary of AmBank Group since 2009. Prior to joining AmBank Group, Ms Koid was in company secretarial practice for nine (9) years. KOID PHAIK GUNN Group Company Secretary Nationality Gender | Age Date of Appointment Length of Tenure as Director : : : : The AmBank Group Company Secretarial Department provides company secretarial services across the AmBank Group, which includes banking and insurance entities, fund management, unit trusts and real estate investment trusts. Malaysian Female | 51 2009 8 Years Declaration She does not have any conflict of interest or any family relationship with any other Director and/ or major shareholders of the Company. Qualifications Fellow, Institute of Chartered Secretaries and Administrators (ICSA) Bachelor of Law, University of London, United Kingdom She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Directorships None Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  54. Standing from left , first row UJI SHERINA ABDULLAH KOID PHAIK GUNN Group Company Secretary Group Chief Human Resource Officer p. 52 p. 53 Standing from left, second row EQHWAN MOKHZANEE MUHAMMAD DATO’ SULAIMAN MOHD TAHIR JADE LEE GAIK SUAN CHRISTOPHER YAP HUEY WEN Group Chief Executive Officer Managing Director Retail Banking Managing Director Business Banking Chief Executive Officer AmBank Islamic Bhd AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com Third row JEROEN THIJS Group Chief Risk Officer DEREK LLEWELLYN ROBERTS Chief Executive Officer AmGeneral Insurance Berhad
  55. SENIOR MANAGEMENT TEAM Standing from left , first row DATUK ISWARAAN SUPPIAH Group Chief Operations Officer Standing from left, second row RAJA TEH MAIMUNAH RAJA ABDUL AZIZ Chief Executive Officer AmInvestment Bank Managing Director Wholesale Banking FARADINA MOHAMMAD GHOUSE Group Chief Compliance Officer Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MANDY JEAN SIMPSON RAMZI ALBERT TOUBASSY Group Chief Financial Officer (Retired with effect 1 June 2017) Chief Executive Officer AmMetLife Insurance Berhad THEIN KIM MON JAMIE LING Chief Internal Auditor Group Chief Financial Officer (Appointed with effect 1 June 2017) MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  56. PROFILE OF GROUP SENIOR MANAGEMENT Position Group Chief Executive Officer AmBank Group Chief Executive Officer AmBank (M) Berhad Qualifications Working Experience Accounting Graduate from Royal Melbourne Institute of Technology, Australia Dato’ Sulaiman has a wealth of experience backed by 30 years of managing and spearheading growth in consumer banking as well as in commercial and corporate banking in Malaysia. Nationality Malaysian Dato’ Sulaiman bin Mohd Tahir is the Group Chief Executive Officer of AmBank Group and Chief Executive Officer of AmBank (M) Berhad (“AmBank”) (a whollyowned subsidiary of AMMB), the commercial banking arm of AmBank Group, a position he has held since November 2015. Gender | Age Male | 54 Date of Appointment 23 November 2015 DATO’ SULAIMAN BIN MOHD TAHIR Responsibilities As Group Chief Executive Officer of AmBank Group, he oversees the management of all businesses in the group to deliver sustainable long-term value for shareholders, customers, employees and other stakeholders of AmBank Group. These businesses include Retail and Commercial Banking, Investment Banking, Islamic Banking, Corporate Banking, Transaction Banking, Global Markets, Life & General Insurance/ Takaful Operations and Asset Management, staffed by a workforce of more than 11,000. Dato’ Sulaiman is currently leading the group in its journey to be amongst the top 4 banks in Malaysia by year 2020. Dato’ Sulaiman is also a Member of the Company’s Nomination and Remuneration of Committee of Directors and Investment Committee of Directors. He first served with the accounting firm now known as Pricewaterhouse before repositioning his career in banking in 1987 by joining the Bank of Commerce. Prior to joining AmBank Group, he has held many prominent positions at a leading ASEAN bank before his appointment as Chief Executive Officer/Executive Director of the Bank, where he led the development, management and performance of the bank’s consumer banking business. Directorships in Public Companies and Listed Issuers AmMetLife Insurance Berhad AmMetLife Takaful Berhad AmGeneral Insurance Berhad AmGeneral Holdings Berhad AMAB Holdings Sdn Bhd Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. He does not have any interest in the securities of AMMB Holdings Berhad or its subsidiaries, save for unexercised options granted under the company’s Executives’ Share Scheme. p. 54 p. 55 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  57. Position Group Chief Financial Officer AmBank Group (Appointed with effect 1 June 2017) Nationality Malaysian Gender | Age Male | 48 Qualifications BA (Hons) in Economics and Accounting University of Newcastle Upon Tyne, United Kingdom Member, Institute of Chartered Accountants in England and Wales. Member, Association of Chartered Certified Accountants Directorships in Public Companies and Listed Issuers Responsibilities Jamie Ling is responsible for all aspects of finance in AmBank Group and takes a lead role in setting the Group’s financial strategy and overall business strategy. Date of Appointment 1 June 2017 Working Experience Jamie has over 20 years of commercial, financial and international banking experience across Asia and Europe, where he has held various roles in finance, treasury, risk management and sales. JAMIE LING and North East Asia at Standard Chartered Bank, overseeing finance functions for four major banking legal entities operating in Hong Kong, Taiwan, China, South Korea and Japan. He also served as a Board member and Finance Director of Standard Chartered (Hong Kong) Limited, where Hong Kong is the largest market of the group. None Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. He qualified as a chartered accountant in London, and moved into finance with HSBC, London. Thereafter, Jamie joined Standard Chartered Bank where he held various leadership roles in Malaysia, the United Kingdom, and North East Asia. Most recently, he was the Regional Chief Financial Officer for Greater China Position Group Chief Financial Officer AmBank Group (Retired with effect 1 June 2017) Nationality New Zealand (CHK) Qualifications Bachelor of Commerce University of Canterbury, New Zealand Chartered Accountant Institute of Chartered Accountants, New Zealand Directorships in Public Companies and Listed Issuers Responsibilities None Mandy Jean Simpson is responsible for all aspects of finance in AmBank Group and takes a lead role in setting the Group’s financial strategy and overall business strategy. She is a secondee from the Australia and New Zealand Banking Group (ANZ). Gender | Age Female | 46 Date of Appointment 16 May 2012 Working Experience Mandy has over 24 years of experience in the financial sector spanning New Zealand, the United Kingdom, Australia and Malaysia. She has held several senior finance and lead business roles, most recently with ANZ, where she was variously General Manager of Deposits, Head of Savings and Investments, Head of Strategy and Finance, Banking Products and Divisional Marketing, Managing Director of ANZ Bank (Samoa) Ltd. and Chief Financial Officer of Corporate and Small to Medium Enterprises. She joined AmBank Group in 2011 as Chief General Manager of Distribution and Transformation for Retail Banking. MANDY JEAN SIMPSON Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Mandy was named Asia’s Best CFO (Investor Relations) at the 5th Asian Excellence Recognition Awards 2015 and CFO of the Year, Financial Institutions, Malaysia at The Asset CFO/Treasurer of the Year Awards 2014. Declaration She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  58. PROFILE OF GROUP SENIOR MANAGEMENT Position Chief Executive Officer AmInvestment Bank Berhad Managing Director Wholesale Banking AmBank Group Nationality Malaysian Gender | Age Female | 48 Qualifications Bachelor of Laws LL.B (Hons) University of East London, United Kingdom Honorary Doctorate of Law University of East London, United Kingdom Advisor on Islamic Banking & Finance to the World Islamic Economic Forum Foundation Member of Malaysian Institute of Accountants Board Member of Islamic Banking and Finance Institute Malaysia Member, Social Impact Committee, Agensi Inovasi Malaysia Working Experience Date of Appointment 7 February 2017 RAJA TEH MAIMUNAH RAJA ABDUL AZIZ Position Managing Director Retail Banking AmBank (M) Berhad Nationality Malaysian Gender | Age Female | 60 Date of Appointment 1 December 2016 JADE LEE GAIK SUAN p. 56 p. 57 Raja Teh Maimunah Raja Abdul Aziz has 23 years of experience in banking and finance, across all product groups of investment banking and Islamic banking including equity and debt origination, mergers and acquisition, private placements, proprietary investments, initial public offerings and secondary offerings, asset backed securitisation, debt and restructuring. are Global Head, Islamic Markets of Bursa Malaysia, Chief Corporate Officer & Head, International Business, Corporate & Investment Banking of Kuwait Finance House (Malaysia), Senior Director of Bank Alkhair, Bahrain/Kuala Lumpur, Associate Director at CIMB Investment Bank and Senior Vice President, Investment Banking of RHB Investment Bank. Raja Teh Maimunah has received various awards and accolades including the ‘Most Influential Brand Leader’ from World Brand Congress in 2016 and ‘Most Enterprising Islamic Bank Women CEO of the Year 2016’ by Global Brands Magazine. Directorships in Public Companies and Listed Issuers None Declaration She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. Prior to joining AmBank Group, Raja Teh Maimunah was the Managing Director/CEO of Hong Leong Islamic Bank. She started her career with KPMG Peat Marwick Consultants and then moved in to banking and finance. Among the senior positions she has held She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Directorships in Public Companies and Listed Issuers Bachelor of Science (Hons) University Malaya Certified Six Sigma Champion None Declaration Working Experience Jade Lee Gaik Suan has more than 30 years of financial sector experience across wealth management, priority banking & segments, retail product management, shared services, contact centre, credit cards and sales management. Prior to joining AmBank Group, she was Head, Regional Wealth Management & Segments at CIMB Bank, where she was instrumental in driving the digitisation of wealth management services and holistic financial planning. Jade started her career in American Express Malaysia. She went on to lead teams and businesses in Standard Chartered Bank and RHB Bank. At Prudential Services Asia, she set up a new shared services centre. She has considerable experience in growing businesses through product innovation and distribution expansion. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017.
  59. Position Chief Executive Officer AmBank Islamic Berhad Qualifications Bachelor of Economics (Hons), University of Cambridge, United Kingdom Master of Economics (Hons), University of Cambridge, United Kingdom Fellow, Institute of Chartered Accountants in England and Wales Chartered Accountant, Malaysian Institute of Accountants Chartered Banker, Asian Institute of Chartered Bankers Nationality Malaysian Gender | Age Male | 41 Date of Appointment 1 April 2015 Working Experience Eqhwan Mokhzanee Muhammad has almost 20 years of corporate and financial services experience. He started his career with PricewaterhouseCoopers in London and then joined the corporate advisory practice of PricewaterhouseCoopers in Kuala Lumpur. Prior to joining AmBank Islamic, Eqhwan worked with local and foreign banks where he gained experience in inter alia business development, debt capital markets, corporate finance, treasury, corporate banking, financial advisory, real estate investment and international business. He has developed awardwinning and innovative Islamic financial structures, and authored research papers on Islamic finance. EQHWAN MOKHZANEE MUHAMMAD Position Managing Director Business Banking AmBank Group Other than in banking, his experience includes corporate management, mergers and acquisitions, strategy development and operational start-ups both within and outside Malaysia. Directorships in Public Companies and Listed Issuers None Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Directorships in Public Companies and Listed Issuers Bachelor of Science Business Administration St. Cloud State University, United States None Declaration Working Experience Nationality Malaysian Christopher Huey Wen Yap has 20 years of experience in financial services, with specific focus on the commercial and small & medium-size enterprise (SME) segments. He oversees a new business grouping, comprising Enterprise Banking and Commercial Banking. Gender | Age Male | 44 Date of Appointment 2 February 2017 He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Christopher started his career in trade services at Citibank Malaysia. Prior to joining AmBank Group, he was Head of SME Banking for Alliance Bank, where he grew SME business to 25 percent of the bank’s revenue. He and his team won the award for ‘Best SME Bank in Asia Pacific 2015’ from The Asian Banker. CHRISTOPHER YAP HUEY WEN Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  60. PROFILE OF GROUP SENIOR MANAGEMENT Position Chief Executive Officer AmGeneral Insurance Berhad Nationality Australian Gender | Age Male | 45 Qualifications Directorships in Public Companies and Listed Bachelor of Business Science, University of Cape Town, South Africa Qualified Chartered Accountant Member, South African Institute of Chartered Accountants None Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. Working Experience Derek Llewellyn Roberts is responsible for the overall business growth, strategic direction and performance of the general insurance business of AmBank Group. He has over 16 years of professional experience in the insurance industry and financial sector in South Africa, United States, United Kingdom, Australia and Malaysia. Date of Appointment 17 September 2014 He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Before joining AmGeneral Insurance, Derek led a large transformational change programme within the claims operation of Insurance Australia Group’s (IAG) Direct Insurance Division in Australia. Prior to that, Derek was Chief Financial Officer for a joint venture within IAG and Head of Short Tail Claims for Direct Insurance. DEREK LLEWELLYN ROBERTS Derek is currently a Director of Insurance Services Malaysia Berhad, and a Member of the Management Committee and Chairman of the Motor Sub Committee for General Insurance Association of Malaysia (PIAM). Position Chief Executive Officer AmMetLife Insurance Berhad Nationality CHK Gender | Age Male | 49 Date of Appointment 19 September 2014 RAMZI ALBERT TOUBASSY p. 58 p. 59 Qualifications Directorships in Public Companies and Listed Bachelor of Arts in Political Science Georgia State University, United States Master of Arts in International Relations Georgia State University, United States None Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. Working Experience Ramzi Albert Toubassy is responsible for executing a transformation strategy to achieve profitable growth and accelerate shareholder return and ensure the operational effectiveness of the AmMetLife business in Malaysia. He has accumulated over 21 years of experience in the insurance industry. Ramzi started his career with American International Group (AIG) in 1996. He joined MetLife since 2012, and previously served as its Head of Face-to-Face Distribution for the Europe, Middle East and Africa region. Prior to joining MetLife, he was with AIA, where over a period of eight years, he held several key management roles including Deputy Chief Agency Officer in Hong Kong, Senior Assistant General Manager in Malaysia, Deputy General Manager & Director of Distribution in Korea, and Chief Distribution Officer in Vietnam. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017.
  61. Position Group Chief Operations Officer AmBank Group Nationality Malaysian Qualifications Directorships in Public Companies and Listed Issuers Member of Malaysian Institute of Certified Public Accountants Member of Malaysian Institute of Accountants Member of Financial Planning Association of Malaysia None Working Experience Gender | Age Male | 53 Datuk Iswaraan Suppiah oversees a new division of Group Operations, Group Information Systems and Digital Banking for AmBank Group. He has 30 years of experience in banking, audit, operations and information services. Date of Appointment 2 February 2017 Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Datuk Iswaraan started his career in audit with the accountancy firm Arthur Anderson. He joined the Bank of Commerce in 1991 and moved to CIMB Securities in 1994 where he held various senior positions in operations, equity risk, strategic risk and compliance and finally held the position as Executive Director of Operations before moving to the parent company CIMB Merchant Bank in 2000. Prior to joining AmBank Group, Datuk Iswaraan was Group Chief Information and Operations Officer for CIMB Group. He led digital transformation, information technology and operations functions across all business and geographical markets and his key focus area was to digitise the bank by applying technology innovation. DATUK ISWARAAN SUPPIAH Position Group Chief Compliance Officer AmBank Group Qualifications Directorships in Public companies and Listed Issuers Bachelor of Management (Hons) University Science Malaysia None Nationality Malaysian Working Experience Gender | Age Female | 47 Faradina binti Mohammad Ghouse has 23 years of experience in the financial services industry, having served in Malaysian, regional and global positions in anti-money laundering operations, audit, securities & funds services and trade operations. Declaration Date of Appointment 15 March 2016 She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Faradina started her career in the stockbroking industry as a dealer representative. She joined Citibank Berhad in 1994 as a management associate and became Head of Operations for Securities & Funds Services and Trade Operations. Faradina also served as Audit Manager with Citigroup’s Asia Pacific Audit and Risk Review division in Singapore. Prior to joining AmBank Group, she was the Global Head of Transactions Monitoring, Standards and Training for Citigroup’s Anti-Money Laundering (AML) Operations. In this role, she set the operational procedures and standards for AML transactions review across all AML operations hubs for Citigroup. FARADINA BINTI MOHAMMAD GHOUSE Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  62. PROFILE OF GROUP SENIOR MANAGEMENT Position Group Chief Risk Officer AmBank Group Nationality Dutch Position Group Chief Human Resource Officer AmBank Group p . 60 p. 61 He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Qualifications Directorships in Public Companies and Listed Issuers Associate in Occupational Studies Degree in Business Management, Central City Business Institute Syracuse, NY, USA None Working Experience Uji Sherina binti Abdullah has over 30 years of experience in Malaysian and multinational companies, including 22 years in the field of human resources, developing and leading human capital initiatives to complement corporate strategies. Her expertise covers organisational development & talent management, leadership & succession planning, culture & team development and performance & rewards management. UJI SHERINA BINTI ABDULLAH Declaration Jeroen started his career with Rabobank International in Singapore as a credit analyst and went on to hold senior positions wtih ABN AMRO Bank in financial services in Japan, Singapore, Netherlands and the United Kingdom. Prior to joining AmBank Group, he was Country Chief Risk Officer for OCBC Bank Malaysia. He served as Chief Risk Officer for Bank Islam Malaysia from 2009-2014. Jeroen has substantial hands-on experience with the Malaysia’s Conventional and Islamic Banking models and risk management. JEROEN PETRUS MARGARETHA MARIA THIJS Date of Appointment 1 June 2015 None Jeroen Petrus Margaretha Maria Thijs has over 26 years of experience working mostly in Asia and Europe across risk management, corporate banking, structured finance and treasury. He has worked in Malaysia since 2009 and has wide exposure to the Malaysian business environment, financial service industry and risk landscape. Date of Appointment 1 January 2017 Gender | Age Female | 56 Directorships in Public companies and Listed Issuers Bachelor of Businness & Finance Master of Business & Finance Rotterdam Erasmus University, Netherlands Working Experience Gender | Age Male | 50 Nationality Malaysian Qualifications Uji Sherina started her career in the telecommunications sector, before she found her vocation in human resource management. Prior to joining AmBank Group, Uji Sherina was Country Human Resource Director of HSBC Berhad. She was Country Human Resource Director of Citibank Berhad from 2004 to 2009. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com Declaration She does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. She has not been convicted for any offences within the past five (5) years nor has she been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017.
  63. Position Group Chief Internal Auditor AmBank Group Nationality Malaysian Gender | Age Male | 62 Qualifications Directorships in Public Companies and Listed Chartered Banker Asian Institute of Chartered Bankers Chartered Accountant Institute of Chartered Accountants England and Wales Chartered Accountant Institute of Chartered Accountants Australia Chartered Member Institute of Internal Auditors Malaysia None Working Experience Date of Appointment 1 July 2010 Thein Kim Mon is responsible for providing independent audit and value-added assurance and consulting services to assist AmBank Group in realising its strategic objectives. He has over 41 years of experience in audit and risk management. Declaration He does not have any conflict of interest or any family relationship with any other Director and/or major shareholders of the Company. He has not been convicted for any offences within the past five (5) years nor has he been imposed of any public sanction or penalty by any relevant regulatory bodies during the financial year ended 31 March 2017. Prior to joining AmBank Group, Kim Mon spent 21 years with the Australia and New Zealand Banking Group (ANZ) where he held several key roles such as Chief Auditor in New Zealand and Regional Head of Audit, UK/Europe & Americas in London. Kim Mon began his career with Coopers & Lybrand (now PricewaterhouseCoopers) in London. THEIN KIM MON Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  64. GROUP ORGANISATION STRUCTURE Dato ’ Sulaiman Mohd Tahir Group Chief Executive Officer LINE OF BUSINESSES SUBSIDIARY Raja Teh Maimunah Raja Abdul Aziz Chief Executive Officer AmInvestment Bank Managing Director Wholesale Banking Derek Llewellyn Roberts D Chief Executive Officer AmGeeneral Insurance Berhad Jade Lee Gaik Suan Managing Director Retail Banking Christopher Yap Huey Wen C Managing Director Business Banking Eqhw wan Mokhzanee Muhammad Chief Executive Officer AmBank Islamic Bhd p. 62 p. 63 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  65. PARTNERSHIP GROUP SHARED SERVICES Ramzi Albert Toubassy Chief Executive Officer AmMetLife Insurance Berhad Datuk Iswaraan Suppiah Group Chief Operations Officer G Faradina Mohammad Ghouse Grou up Chief Compliance Officer Vacant Chief Executive Officer AmMetLife Takaful Jamie Ling Group p Chief Financial Officer (Appointed with effect 1 June 2017) Thein Kim Mon Group Chief Internal Auditor Mandy Jean Simpson Grou up Chief Financial Officer (Retired with effect 1 June 2017) Koid Phaik Gunn Gro oup Company Secretary Jeroen Thijs Group Chief Risk Officer Uji Sherina Abdullah Grr up Chief Gro C Human Resource Officer Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  66. SHARIAH COMMITTEE Standing from left ASSOCIATE PROFESSOR DATIN DR . NOOR NAEMAH ABDUL RAHMAN PROFESSOR DR. AMIR HUSIN MOHD NOR ASSISTANT PROFESSOR DR. TAJUL ARIS AHMAD BUSTAMI – Chairman ASSOCIATE PROFESSOR DR. ADNAN YUSOFF DR. ASMAK AB RAHMAN p. 64 p. 65 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  67. PROFILE OF SHARIAH COMMITTEE ASSISTANT PROFESSOR DR . TAJUL ARIS AHMAD BUSTAMI Nationality : Gender | Age : Date of Appointment : Length of Service : Malaysian Male | 47 1 July 2011 5 Years Qualifications Position Relevant Experience Bachelor of Law (Hons) LL.B International Islamic University Malaysia Bachelor of Law Shariah (Hons) LL.B_S International Islamic University Malaysia Master of Laws LL.M University of London, United Kingdom Diploma in Shariah Law and Practice International Islamic University Malaysia Doctor of Philosophy (Ph.D) in Law International Islamic University Malaysia Member of Association of Shariah Advisors in Islamic Finance Malaysia (ASAS) Chairman Shariah Committee of AmBank Islamic Berhad A wholly owned subsidiary of AMMB Holdings Berhad since 1 April 2016 Dr. Tajul Aris Ahmad Bustami is a lecturer and Assistant Professor, Department of Islamic Law, Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia. His areas of specialisation are Islamic Banking Law and Takaful, Muslim Law of Succession & Waqf and Administration of Estates. He has written 12 books, contributed 7 chapters to other books, published 2 articles and presented 15 papers. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Chairman Shariah Oversight Committee A sub-committee of the Shariah Committee of AmBank Islamic Berhad Dr. Tajul Aris has no family relationship with any director and/or major shareholder of AMMB Holdings Berhad. He has no conflict of interest with AMMB Holdings Berhad and neither has he been charged with any offences. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  68. PROFILE OF SHARIAH COMMITTEE Qualifications Position Relevant Experience Bachelor of Shariah (Hons) University of Malaya Master of Laws LL.M University of London, Untied Kingdom Doctor of Philosophy (PhD) in Islamic Studies, University of Edinburgh Member Shariah Committee of AmBank Islamic Berhad A wholly owned subsidiary of AMMB Holdings Berhad Past Chairman of the Committee from 1 April 2005 – 31 March 2016 Professor Dr. Amir Husin Mohd Nor is a lecturer and Professor, Faculty of Syariah and Law, Islamic Science University of Malaysia (USIM). His areas of specialisation are Islamic Jurisprudence (Usul al-Fiqh) and Law. PROFESSOR DR. AMIR HUSIN MOHD NOR Nationality : Gender | Age : Date of Appointment : Length of Service : Member Shariah Oversight Committee A sub-committee of the Shariah Committee of AmBank Islamic Berhad Malaysian Male | 51 1 April 2005 12 Years Member Association of Shariah Advisors in Islamic Finance Malaysia (ASAS) He has served as Shariah Advisor for AmMetLife Takaful Berhad since 2014. Previously, he acted as Shariah Advisor for AmFamily Takaful Berhad (20112014). He is a Committee Member of Tabung Amanah Zakat UNITEN. Professor Dr. Amir Husin has written 14 books & chapters in books, completed 13 research papers and written 32 papers and contributions to journals. Professor Dr. Amir Husin has no family relationship with any director and/or major shareholder of AMMB Holdings Berhad. He has no conflict of interest with AMMB Holdings Berhad and neither has he been charged with any offences. Qualifications Bachelor of Shariah (Hons) University of Malaya Master of Shariah University of Jordan Doctor of Philosophy (Ph.D) in Shariah University of Malaya ASSOCIATE PROFESSOR DATIN DR. NOOR NAEMAH ABDUL RAHMAN Nationality : Gender | Age : Date of Appointment : Length of Service : Malaysian Female | 54 1 April 2005 12 Years Position Member Shariah Committee of AmBank Islamic Berhad A wholly owned subsidiary of AMMB Holdings Berhad Member Shariah Oversight Committee A sub-committee of the Shariah Committee of AmBank Islamic Berhad p. 66 p. 67 AMMB Holdings Berhad (223035-V) Member Association of Shariah Advisors in Islamic Finance Malaysia (ASAS) Relevant Experience Associate Professor Datin Dr. Noor Naemah Abdul Rahman is a lecturer, Associate Professor and coordinator for Applied Science in the Islamic Studies Program, Academy of Islamic Studies, University of Malaya. Her areas of specialisation are Islamic jurisprudence (Usul al-Fiqh) and Fatwa. Datin Dr. Noor Naemah holds a post as Ahli Jawatankuasa Perundingan Hukum Syarak Wilayah Persekutuan (Session 2010-2013, 2011-2014, and 2014-2017). She also serves as Shariah Annual Report 2017 ambankgroup.com Advisor for AmMetLife Takaful Berhad since 2014. Previously, she acted as Shariah Advisor for AmFamily Takaful Berhad (2011-2014). She has written 14 books, contributed 11 chapters to other books, and completed 31 research projects, 48 presentations and 41 articles. Datin Dr. Noor Naemah has no family relationship with any director and/or major shareholder of AMMB Holdings Berhad. She has no conflict of interest with AMMB Holdings Berhad and neither has she been charged with any offences.
  69. Qualifications Bachelor of Shariah (Hons) University Al-Azhar, Cairo, Egypt Master of Comparative Laws International Islamic University Malaysia Doctor of Philosophy in Islamic Muamalat University of Malaya ASSOCIATE PROFESSOR DR. ADNAN YUSOFF Position Nationality : Gender | Age : Date of Appointment : Length of Service : Member Shariah Committee of AmBank Islamic Berhad A wholly owned subsidiary of AMMB Holdings Berhad Malaysian Male | 52 1 April 2005 12 Years Member Association of Shariah Advisors in Islamic Finance Malaysia (ASAS) Relevant Experience Associate Professor Dr. Adnan Yusoff, is a Director of Tabung Amanah Zakat Universiti Tenaga Nasional (UNITEN), and lecturer and Associate Professor at UNITEN. His areas of specialisation are Islamic Commercial Law (Fiqh Muamalat), Islamic Jurisprudence (Usul al-Fiqh), Islamic Family Law (Fiqh Munakahat) and Islamic Criminal Law (Fiqh Jinayat). Dr. Adnan also serves as Shariah Advisor for AmMetLife Takaful Berhad since 2014. He is a registered Shariah Advisor with the Securities Commission Malaysia. Previously, he acted as Shariah Advisor for AmFamily Takaful Berhad (20112014). He has written and presented about 30 articles and papers. Dr. Adnan has no family relationship with any director and/or major shareholder of AMMB Holdings Berhad. He has no conflict of interest with AMMB Holdings Berhad and neither has he been charged with any offences. Member Shariah Oversight Committee A sub-committee of the Shariah Committee of AmBank Islamic Berhad Member Association of Shariah Advisors in Islamic Finance Malaysia (ASAS) Qualifications Bachelor of Shariah University of Malaya Master of Shariah University of Malaya Doctor of Philosophy (Ph.D) in Islamic Economics University of Malaya DR. ASMAK AB RAHMAN Nationality : Gender | Age : Date of Appointment : Length of Service : Relevant Experience Position Malaysian Female | 43 1 July 2011 5 Years Member Shariah Committee of AmBank Islamic Berhad A wholly owned subsidiary of AMMB Holdings Berhad Member Shariah Oversight Committee A sub-committee of the Shariah Committee of AmBank Islamic Berhad Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Dr. Asmak Ab Rahman is a Head of Department and a Senior Lecturer at the Department of Shariah and Economics, Academy of Islamic Studies, University of Malaya. Her areas of specialisation are Comparative Economic Development, Takaful, Islamic Banking, Islamic Economics and Economics of Waqf. Shariah Advisor for Bank Islam Malaysia (2005-2009), AIA AFG Takaful (20112013) and BIMB Investment Management (2010-2013). She has written 5 books, contributed 14 chapters to other books and completed 38 research projects, presented 30 papers and made 54 journal submissions. Dr. Asmak has no family relationship with any director and/or major shareholder of AMMB Holdings Berhad. She has no conflict of interest with AMMB Holdings Berhad and neither has she been charged with any offences. Dr. Asmak also serves as Shariah Advisor to SME Bank (2010-2017), Tabung Haji (2016-2017) and Hong Leong MSIG Takaful (2014-2017). She is a registered Shariah Adviser with the Securities Commission. Previously she acted as a MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  71. Accelerating business aspirations Small and medium-sized enterprises (SMEs) are the life blood of Malaysia and build the future of our nation. We are targeting SME growth so we can help you grow and manage your business.
  72. MANAGEMENT DISCUSSION AND ANALYSIS Strategic Review 72 Economic and Banking Industry Review and Outlook 74 Our Business Model 76 Material Matters Impacting Our Strategy 77 Key Risks and Mitigation 78 Our Strategy 81 FY17 Key Strategic Objectives and Achievements Key Initiatives 82 Customer Experience 83 Human Resources : People, Talent and Culture 85 Integrating Digital Technology 86 Code of Ethics and Business Conduct 87 Ensuring Sustainable Value Creation Performance Review 88 Group Financial Review by Chief Financial Officer 91 FY18 Quarterly Results Announcements 92 Five-Year Group Financial Summary 93 Five-Year Group Financial Highlights 94 Performance Scorecard 95 Simplified Group Statements of Financial Position 96 Segmental Analysis 99 Group Quarterly Financial Performance 100 Key Interest Bearing Assets and Liabilities 101 Statement of Value Added 102 Distribution of Value Added 103 Capital Management 104 Dividends for FY17 105 Credit Ratings 106 Balance Sheet Management 107 Investor Relations 111 AmBank Share Price and Volume 113 Financial Calendar Business Review 114 Wholesale Banking 126 Retail Banking 128 Business Banking 129 Islamic Banking 132 General Insurance 134 Life Insurance 135 Family Takaful
  74. ECONOMIC AND BANKING INDUSTRY REVIEW AND OUTLOOK Global Review Global Financial Markets 2016 was a year that witnessed fundamental shifts in political and social dynamics . Uncertainties on US monetary policy, volatility in global commodity prices and concerns over global growth created a dynamic and challenging environment. This was compounded by unexpected developments such as the UK’s EU referendum (Brexit) and the outcome of the US presidential election. Still, the global output registered a stable growth in 2016. Volatility in the global financial markets remained high in 2016, reflecting increased risk factors. The UK’s EU referendum (Brexit) in June resulted to a shortterm spike in volatility as well as sharp repricing of global financial assets. Secondly, the outcome of the US presidential election led to another round of strong volatility from November onwards owing to growing expectations of progrowth and inflationary economic policies which saw global portfolio investments flowing towards the US equity market. The stronger demand for US dollar assets led to the appreciation of the US dollar. Global portfolio rebalancing impact was most significant in the emerging markets which led to the sharp depreciation of many emerging market currencies. The advanced economies registered favourable growth. This was supported by lower inventories and some pickup in manufacturing output. However, the output in a number of advanced economies, notably in the euro area remained below potential. Growth in Asia moderated despite an improving trend in the second half of 2016, supported by the bottoming out of oil prices, higher external demand from the United States and the European Union, fiscal stimulus and a slight easing of financial conditions in some economies. In particular, the Chinese economy was beset by structural changes, whilst the Indian economy was affected by a dip in consumption induced by cash shortages and payment disruptions associated with the Indian government’s currency note withdrawal and exchange initiative. Growth in ASEAN-5 (Malaysia, Indonesia, Thailand, Philippines, Singapore) was healthy, buoyed by domestic activities and exports. Activity was weaker than expected in some Latin American countries currently in recession, such as Argentina and Brazil, as well as in Turkey, which faced a sharp contraction in tourism revenues. Russia’s growth was slightly better than expected, in part reflecting firmer oil prices. Malaysian Review The Malaysian economy maintained commendable growth despite challenging times, driven by domestic demand. Household spending was sustained by continued wage and employment growth, with an additional lift from targeted measures for low- and middle-income households. Investment activities continued to be anchored by the ongoing implementation of infrastructure projects and capital spending as well as pre-emptive policies introduced to support for a more sustainable growth. The domestic economy benefited from prudent fiscal policies implemented over the year and both the economy and financial sector remained resilient to past and ongoing reforms and improvements. Hence, the economy grew a credible 4.2% in 2016. Malaysian Financial Markets For Malaysia, these uncertainties led to reversal flow of portfolio. Still the domestic financial markets were orderly and supportive of domestic financial intermediation despite bouts of volatility. The yields on Malaysian Government Securities (MGS) were primarily driven by external factors with the 3-year, 5-year and 10-year MGS yields increased by 24, 23 and 4 basis points, respectively. The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) declined by 3.0% (2015: -3.9%) to close at 1641.73 points, amid higher market uncertainties and tepid investor sentiments. Financial stability on the domestic front was maintained despite heightened financial market volatility as Malaysia was able to buffer owing to its depth of the domestic financial markets and strong domestic institutional investors. Overall domestic funding conditions were stable, with improvements in the distribution of liquidity across banks. Financial institutions remained well-capitalised and profitable. While the ringgit was affected by the same external shocks that impacted regional currencies, the volatility of the ringgit exchange rate was exacerbated by speculative activities in the offshore non-deliverable forward (NDF) market. This was especially evident in November following the US presidential election result. Speculation in the NDF market resulted in a significant disconnect between the offshore and onshore pricing of the ringgit exchange rate. Hence, the Financial Markets Committee (FMC), in collaboration with Bank Negara Malaysia, introduced several measures. For the whole year, the ringgit depreciated by 4.3% to end the year at RM4.486 against the US dollar. The local currency also fell against the euro (-0.7%), the Australian dollar (-3.4%) and the Japanese yen (-7.3%) but strengthened against the British pound (15.4%). Against regional currencies, the ringgit was broadly weaker. During the year, domestic interest rates fell with interbank rates, retail lending rates and fixed deposit rates trending lower. Bank Negara Malaysia reduced the Statutory Reserve Requirement (SRR) in February 2016 by 50 basis points to 3.50% and thereafter lowered the Overnight Policy Rate (OPR) by 25 basis points to 3.00% in July 2016. p. 72 p. 73 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  75. Global Outlook Global growth is expected to improve modestly to around 3 .3% in 2017, from 3.1% in 2016. This pick-up in global growth is underpinned by ongoing and projected fiscal initiatives, notably in China and the United States, with easier stance in the euro area and initiatives in other economies. In addition, positive signs of improving accelerating activities and rising consumer and business confidence in advanced economies and a number of emerging market economies have emerged. Furthermore, the weak global trade in 2016 is envisaged to improve particularly in Asia in 2017, partly due to firmer commodity and oil prices. Meanwhile, headline inflation is rising in most countries as the result of higher energy prices. Still underlying inflation in advanced economies is anticipate to remain subdued and will pick up only slowly as the expansion gains traction, including more robust wage growth across the income distribution. Inflation is easing in a number of emerging market economies as the effect of past exchange rate depreciations fades and the effect of monetary policy actions works through, but commodity importers are exposed to rising commodity prices. While envisaging trade growth in 2017, it is likely to remain below pre-crisis growth rates, in part reflecting a slowdown or reversal of the expansion of global value chains. Underpinned by weak global trade and investment as well as widening productivity gaps, the gap in real incomes and income inequality will have some knock on effect on global growth. It impacts many households, particularly at the bottom of the distribution, and has in turn held back aggregate consumption growth. Besides, rising interest rates and oil prices will somewhat offset the upside on global growth although higher commodity prices will benefit some emerging market economies. Malaysian Outlook The outlook of the Malaysian economy in 2017 will depend on global economic performance and continued support from domestic demand. With a moderate global growth projected for 2017 added to firmer commodity prices, there will be a boost to the domestic economy with positive spillovers through trade, investment and income channels. Domestic activity will be spurred with investment activity from capital expenditure in the export-oriented industries, particularly in the manufacturing sector, continued roll-out of large-scale infrastructure projects, sustained private consumption from healthy wage growth and recent pro-growth Government measures. Although the Government continues with its fiscal consolidation program by reprioritising public spending and lowering expenditure on noncritical items, the public sector is still projected to contribute positively to growth through continued public investment in selected sectors. Hence, the economy is poised to grow a credible 4.3-4.8% in 2017. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 During the year, inflation is projected to be on the uptrend driven by cost – push pressure from the pass-through impact of the increase in global oil prices on domestic retail fuel prices and cheaper currency. This cost-driven inflation, however, is not expected to cause significant spillovers into the broader price trends, given the stable domestic demand conditions. Monetary policy will ensure stable growth continues amidst price stability in a challenging environment. Furthermore, the fiscal policy in 2017 will further strengthen the Government’s fiscal position while supporting growth and promoting economic inclusiveness. Meanwhile, the risk of a potential disconnect between financial markets and fundamentals on the global front remains. It can result in market volatility, financial vulnerabilities and policy uncertainties. Vulnerabilities remain in some advanced economies from strong price increases. Risks to emerging market economies are high, including higher corporate debt, rising non-performing loans and vulnerability to external shocks. Such risks could derail the projected moderate global recovery including Malaysia’s growth. Financial Sector Outlook Thus, Malaysia’s financial conditions are expected to remain challenging, especially for some businesses and households in 2017. Some deterioration in loan performance is likely, but is not expected to be broad-based given the generally strong asset quality of banks, stable labour market conditions and continued economic growth. The ongoing low interest rate environment will also increase challenges for life insurers. Stress tests conducted are expected to ensure resilience to severe macroeconomic and financial strains. A key challenge to the banking landscape is to manage risk in the current volatile and uncertain environment. There is an essential need to continuously improve early warning systems and supervision to ensure they are more robust, and at the same time use macro prudential instruments appropriately and promote effective approaches to manage and resolve non-performing loans. Also important is maintaining governance and transparency. Hence, the cost of rising regulation and compliance will remain. Following the 2008 Global Financial Crisis, regulation and compliance gained strong attention. Financial institutions are increasingly investing to meet the growing complex regulatory environment and this threatens to raise the cost of compliance overwhelmingly. Furthermore, financial institutions are under increasing pressure to find technological solutions and develop a winning digital strategy that maintains agility and awareness. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  76. OUR BUSINESS MODEL HOW WE CREATE VALUE FOR OUR SHAREHOLDERS , CUSTOMERS, PEOPLE, AND FOR MALAYSIA Increasing Value Where We Are Thriving We continue to partner with our corporate customers in crafting their competitive edge in the local market. We support their financial needs, ranging from corporate loans to debt capital markets and asset management. Our Key Assets as Input • Providing superior customer experience at every customer touch point • High-performing talented employees focused on our Top 4 Strategy
 • Responsible leadership
 • High levels of goodwill
 • Longevity in the marketplace
 Growing Underserved Segments We help underserved market segments, such as small and mid-sized enterprises and mid-sized corporations, to grow faster. We are also building strength in our mass affluent and affluent retail customers. • Strong strategic relationships and business partnerships
 • A coordinated governance, compliance and risk management framework across the Group We Are Focused On Malaysia As a Malaysian bank, we add value to our offerings to local businesses and global conglomerates by leveraging our insights and deep understanding of the local environment and the Malaysian way of doing business. p. 74 p. 75 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  77. Collaboration To Deliver Innovation And Convenience To Our Customers We leverage and harness digital capabilities through collaborative partnerships with key industry players . This enables us to weave our financial services seamlessly into the daily lives of our customers. What We Do • Our business model is to facilitate our customers in the ever-evolving landscape and meet customer needs through delivering technologyenabled banking convenience and best-in-class services • We provide products and services that cater for conventional and Islamic banking in retail banking, business banking, wholesale banking and insurance • Continually Building Market Confidence Our increased focus on compliance and governance boosts market confidence, as seen with our financials and brand reported positively by the media. These products and services are offered through our multiple customer touch points • We believe in listening intently and partnering with our customers to grow and prosper by delivering what they need Positive Societal Impact We contribute back to our society through our corporate social responsibility outreach and our focus on sustainability. Our internal training programmes groom talent for our nation. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 Sustainability Statement Corporate Governance p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  78. MATERIAL MATTERS IMPACTING OUR STRATEGY Material Matter How We Respond Increasing Competition • Competition in financial services in Malaysia is increasing, and new financial technology companies are entering the field Launch of our four year journey to become a Top 4 Malaysian bank by 2020 • Focus on our four strategic targets for growth and consolidation • Everything we do ties back to our purpose to help individuals and businesses in Malaysia grow and win together Understanding Our Customers • Customers are at the core of our business. We thrive when we integrate our financial services into the lives of our customers, by understanding their needs, circumstances and desired outcomes Set up a central Customer Care unit to manage all retail customer issues • Project APEX to improve the customer experience with improved processes • Group-wide digital roadmap to integrate and innovate services Evolving Regulatory Requirements • In order to protect the financial services industry, government regulators have a widening emphasis on compliance and an increasingly rigorous regulatory framework Integration of our compliance function as a strategic element of the business • Compliance Department has been restructured to ensure independence • Measures taken to strengthen compliance policies, procedures, training, technology and systems Building Leadership and Talent • We need motivated leaders and talent to build capacity, lead our transformation strategy and champion our values Ensure we have the right people and skills to drive our strategy • Revive our Group Talent Council • Emphasise our code of conduct, customer care, risk management and compliance • Identify mission critical positions and succession planning Innovation and Digital Transformation • New digital mobile platform, Mobile First The changing digital landscape has a large impact on our customers’ needs and is transforming the financial services industry • Focus on infrastructure and application programming interface (API) readiness • Partnerships with key financial technology players • Use of big data analytics to capture new sources of business and drive internal efficiencies Managing Our Sustainability • The future sustainability of the Group depends on our management and anticipation of current and future environmental, economic and social risks and opportunities. Identify and group our sustainability matters into three themes of responsible banking, employer of choice and positive societal impact • Integrate environmental, economic and social factors into our business decisions • Fulfil our social responsibilities towards local communities p. 76 p. 77 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com More Information See GCEO’s Message p14 See Our Strategy p78 See GCEO’s Message p14 See Customer Experience p82 See Integrating Digital Technology p85 See GCEO’s Message p14 See Group Compliance p222 See Sustainability Statement p140 See GCEO’s Message p14 See Human Resources: People, Talent and Culture p83 See Corporate Governance p180 See GCEO’s Message p14 See Integrating Digital Technology p85 See Sustainability Statement p140 See GCEO’s Message p14 See Sustainability Statement p140
  79. KEY RISKS AND MITIGATION The success of AmBank Group ’s strategy is supported by sound management of its risks. Risk Appetite AmBank Group’s risk appetite is set by the Board and integrated within the Group’s strategic objectives. The risk appetite framework supports the principles of strong capitalisation, sound balance sheet and healthy earnings, protecting the Group’s franchise and underpinning the continuous enhancement of an enterprise-wide risk culture. Material Risks AmBank Group’s activities involve the analysis, evaluation, acceptance and management of risks or combinations of risks. The material risks facing the Group and the approach to management of those risks are described below: Type of Risk Credit Risk How We Respond • • • Market Risk • • Liquidity and Funding Risk • • Operational Risk • • • Cyber Security Risk • • • Compliance Risk • • • The risk of financial loss resulting from a counterparty failing to fulfil its obligations, or from a decrease in credit quality of a counterparty resulting in a loss in value. The Group has a robust credit management framework to manage credit risk. The framework is top down, being defined by credit principles and policies. The effectiveness of the credit risk management framework is assessed though various compliance and monitoring procedures. The risk which stems from AmBank’s trading and balance sheet activities being the risk to the Group’s earnings arising from changes in interest rates, foreign exchange rates, credit spreads, volatility, correlations and from fluctuations in bond, commodity or equity prices. The Group has a comprehensive market risk management policy, to support its trading and balance sheet activities, incorporating an independent risk measurement approach to quantify the magnitude of market risk within the trading and balance sheet portfolios. The risk that AmBank Group is unable to meet its payment obligations as they fall due, including repaying depositors or maturing wholesale debt, or that the Group has insufficient capacity to fund increases in assets. The Group’s liquidity risk appetite is defined by the ability to meet a range of regulatory and internal liquidity metrics mandated by the Board. The risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. This definition includes legal risk and the risk of reputation loss, or damage arising from inadequate or failed internal processes, people and systems but excludes strategic risk. The objective of operational risk management is to ensure that risks are identified, assessed, measured, monitored and reported in a structured environment with appropriate governance oversight. The Group strives to ensure that residual risk exposures are being kept as low as reasonably practical based on sound risk/reward analyses. The risk that may cause AmBank Group’s data to be compromised, lost or stolen as a result of internal process failure or external cyberattacks. This risk would threaten AmBank Group’s reputation and may cause potential non-compliance with regulatory guidelines. The Group has an Information Technology Management Framework and is in the midst of enhancing it further to ensure that cyber security risk is robustly managed and controlled. The probability and impact of an event that results in a failure to act in accordance with laws, regulations, industry standards and internal policies that apply to AmBank Group’s businesses. The Group has a compliance framework that is aligned to key industry regulatory standards and benchmarks. The framework utilises the concept of a ‘risk-based’ approach to compliance management, enabling the compliance function to support divisions and businesses in taking a standardised approach in managing compliance matters. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  80. OUR STRATEGY Top 4 Aspiration In April 2016 , after an intensive period of consultation and strategising, we unveiled our Top 4 Aspiration to become one of the top 4 banks in Malaysia by 2020. We charted out 33 clusters of initiatives and the Group Strategic Transformation Office was set up to track overall progress, working closely with Retail Banking, Business Banking, Wholesale Banking, Islamic Banking as well as Group shared services and Group CEO’s office. An immediate strategic focus is to unlock latent values across the organisation for our existing customer base. Looking forward, we have adopted multiple strategies in order to target growth areas and under penetrated areas in the local market, and build our organisational capabilities with the right market and product mix. We will continue to expand our current key strengths and build up targeted business lines. To be Top 4 in each of our 4 growth segments (Mass Affluent, Affluent, To be Top 4 in each of our 4 focus products (Cards and Merchants, SME, Mid Corps) Transaction Banking, Markets, Wealth Management) To Sustain Top 4 in each of our To be Top 4 current engines (Corporate Loans, Best Employer in Malaysia Debt Capital Markets, Asset Management) Our Strategic Priorities ATTAIN MARKET LEADERSHIP IN KEY PRODUCTS FIRING UP NEW GROWTH ENGINES Win in fast growing, underserved segments • Cards and Merchants • Transaction Banking • SME • Markets • Mid Corp • Wealth Management • Mass Affluent • Affluent SETTING UP FOR SUCCESS Digital transformation – channels, processes, productivity, analytics Leverage strengths in corporate and investment banking Fully leverage distribution footprint, partnerships and new digital channels Strengthen retail deposit franchise Break down organisational silos and focus on people, talent and culture Risk and compliance culture p. 78 p. 79 AMMB Holdings Berhad (223035-V) OPTIMISE CURRENT ENGINES Annual Report 2017 ambankgroup.com
  81. Executing The Plan In our longer four-year journey towards our Top 4 Aspiration , the Group aims to: • Gain market leadership in key products that continue to show potential. We are vigorously building up transaction banking and markets; • Set up an integrated platform for credit cards and the merchant 360 ecosystem; • Be the market leader with our advisory-led wealth management proposition; • Better serve fast growing retail market segments. We intend to build prestige into our offerings and services for both the affluent and mass affluent markets with the latter as our sharper focus; • Provide value-added services to Small and Medium-sized Enterprises (SMEs) and mid-sized corporations (Mid Corps) which are underserved, despite their key role in building Malaysia’s economic future; • Optimise our current engines of strength in corporate and investment; • Strengthen our retail deposit franchise; and • Utilise digital technology to bring ease of banking to the daily lives of our customers. How we will do it: ‘Run the bank better’ and ‘Change the bank’ R C RUN THE BANK BETTER Unlock value across our footprint, capabilities, customer base and talent pool Drive efficiency and build momentum Create new sources of competitive advantage through harnessing digital & analytics to take us to the next level CHANGE THE BANK Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  82. OUR STRATEGY We will implement our strategic growth plan under two streams of work , to improve existing systems and make changes where necessary, under our ‘Run the bank better/Change the bank for the better’ approach. Running the bank better entails value creation across the business, prioritising on quick wins, monetising collaboration opportunities, improving funding cost, attracting top talent to build up capabilities and increasing efficiency by streamlining operations and improving distribution productivity. Change the bank entails our increasing effort to elevate our product and service offerings in the market, delivering innovative solutions that matter to our customers given the changing financial landscape. Our key focus is on driving performance as we look to improve revenue and productivity by running the bank better and changing the bank through new growth strategies. We will continually identify new growth opportunities to serve the market better whilst balancing strategies to ensure improvements are sustainable. p. 80 p. 81 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  83. FY17 KEY STRATEGIC OBJECTIVES AND ACHIEVEMENTS ONE YEAR INTO OUR STRATEGIC JOURNEY TOWARDS TOP 4 , WE HAVE GAINED TRACTION IN MANY AREAS. WE HAVE REALIGNED AMBANK GROUP’S KEY PERFORMANCE INDICATORS TO ALLOW FOR BETTER FOCUS. WE HAVE MADE APPROPRIATE AND MEASURED CHANGES TO OUR MANAGEMENT STRUCTURE, BUSINESS DIVISIONS AND SUPPORT SERVICES. We have an improved focus on customer service and digital transformation, an increase in deposits and effective cross-selling of our services to our over 3 million customers. Our senior management team has invested in leaders with proven industry experience and expertise in order to build our capabilities and lead our transformation. We have embarked on a journey of transformation in compliance to ensure AmBank Group is well equipped to adjust to the evolving regulatory landscape for financial institutions. • Set up new Business Banking division to focus on Enterprise Banking and Commercial Banking • Established Group Strategic Transformation Office • Embarked on Project APEX to improve retail process and customer experience • Centralised all retail customer queries and complaints in Customer Care initiative • New Mobile First platform ready for roll out in second half of 2017 • Updated data centre capabilities with AmBank Group’s Private Cloud • Set up Retail, Wholesale, Credit, Wealth and Management Academies • Re-launched our AmGraduate programme KEY MILESTONES IN FY17 • Entered into a RM475 million Portfolio Guarantee Scheme with Credit Guarantee Corporation for SME financing • Launched Johor Affordable Homes Financing Scheme • Refreshed holistic retail branch model and priority banking centres • Signed up PTPTN as a JomPAY biller, and partnered with Advelsoft on JomPAY Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • New PR1MA home end-financing scheme • Appointed as agent for Amanah Saham Nasional Berhad (ASNB) funds. • Launched AmBank Bonus Link co-branded Visa Card • Completed Big Data proof of concept and plans for a digital innovation lab to leverage digital and analytics capabilities MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  84. CUSTOMER EXPERIENCE The trust and confidence of our customers is the key to AmBank Group ’s long term sustainability. Over the years, our strategy at AmBank Group has been centered on building convenience for our customers and engaging customers with banking solutions to improve their experience. As the way our customers interact with us is changing, we are increasingly embracing digital banking, and the integration of our digital services into the daily lives of our customers. We have identified customer satisfaction and turnaround time as one of three non-financial metrics to measure our progress in our Top 4 Strategy. Customer Care Touch Point We introduced a new Customer Care initiative in January 2017 to improve our customer experience and centralise all customer queries and complaints in Retail Banking. This initiative means we now have one touch point for customers, with measured time periods to resolve and close off issues. Enhancing Customer Experience Project APEX Largely in response to our customers’ feedback, we initiated Project APEX in September 2016 to drive improvements across four key areas and eleven processes in retail banking. In our five initial pilot branches, we reduced the overall account opening experience from an average of 45 minutes to less than 10 minutes. We are now rolling this out across all of our branches. We have also accelerated self-service migration, the rationalisation of branch reports, call deflection and cheque decentralisation processing. We have refreshed our branch model so that new branches are designed with a holistic customer journey in mind. Our latest branch in Plaza Shell, Kota Kinabalu was launched in November 2016 and was the first to adopt this design. It is a one stop centre which caters to retail customers (including AmBank Signature Priority Banking customers), SME and commercial customers. We will see more of such branch models in the future. Improving Internal Focus We have refined key performance indicators in our Retail Banking framework, and given more clarity to the ownership of our channels, segments and products. We have also redesigned our incentive schemes for branch managers and relationship managers. Customer Surveys In order to manage and monitor customer trust and confidence towards AmBank Group, we conduct customer feedback surveys to measure, manage and improve customer relationships. In seeking to understand our customers’ behaviours and attitudes better, we are able to customise our products and services to meet the needs and expectations of our customers, thereby adding value to our customers. We recently commissioned a pulse check on our brand health and the indicators in the wider market are encouraging. We have a positive upturn from consumers indicating an interest in banking with AmBank in the near future. p. 82 p. 83 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  85. HUMAN RESOURCES : PEOPLE, TALENT AND CULTURE Overview Towards Being Employer of Choice Leadership and Talent AmBank Group’s transformation journey entails rising to a top 4 employer in Malaysia by 2020. We have begun our journey to equip and empower our people to achieve their aspirations with the following agenda. In parallel, Human Resources (HR) solutions and processes have been developed and deployed to support the transformation. HR Awards Our efforts to build our leadership bench strength and capability continued, with the inclusion of best in class learning approaches from reputable learning partners, business schools and management institutes with regional and global presence and track record. The HR agenda was wide ranging, encompassing: • Aligning organisation structures and reporting lines for greater clarity and accountability • Developing C-Suite KPIs that drive results and promote collaboration to better serve our customers • Embarking on a group-wide culture programme to empower and encourage the necessary conditions for individual and team ownership of high performance • Enlarging and advancing talent pools to better serve customers • Upgrading workforce capability via the set-up of the Retail, Wholesale, Credit, Wealth and Management Academies • • Developing requisite onboarding programmes at Board, C-Suite and employee level for better employee experience and effective assimilation into AmBank Group. Stepping up the recruitment of top talents into roles across the Group as well as hiring for future leader bench strength via the AmGraduate Programme. AmBank Group was awarded HR Asia Best Company to Work For in Malaysia 2016. We are encouraged by this outcome, based on HR Asia’s independent survey gathering employee inputs and their levels of energy and engagement. Increased presence and visibility in social media has generated desirable outcomes for our employer brand, particularly in providing easier access to careers and gathering employment insights. In particular, our LinkedIn followers increased four-fold, from 4,000 to 17,000 within FY17. AmBank Group also received the Employer Branding Award 2016 by the World HR Congress. Enterprise Leadership Development • Emerging Leaders programme is a leadership development programme. 70 employees across the group have completed this 18-month programme. • Since its inception, the Management Development Programme has seen 27 high potential middle managers complete the programme. Another cohort of 20 participants will complete by August 2017. Careers We participated in 14 external career fairs in the financial year, ranging from campus fairs and notable public events to significant overseas recruitment drives. Our brand tagline ‘Fly High With AmBank’ earned us much attention and interest. In November 2016, our inaugural internal career fair, Career Bazaar, brought together career opportunities from all across the AmBank Group under one roof. Over 200 employees visited the career booths manned by employees from business units and group functions, who marketed their respective career paths. A total of 829 job applications were lodged, providing a ready pool of resources to select and deploy within the group. This reflected the employee value proposition of growing across AmBank Group. Management Development Academy We designed our Management Development Academy to develop and build a sustainable bench strength of effective people managers across all levels in the group. A total of 140 employees from Executives to Executive Vice President commenced these programmes which run for a period of 12 to 18 months. • Advance Leaders Programme • Future Leaders Programme • New Managers Programme • Emerging Managers Programme Senior Management Offsite AmBank Group held its Senior Management Meeting in February 2017 in Putrajaya. The team reviewed the AmBank Group strategy, the Group’s financial results and our transformation thus far. Outdoor team learning activities cultivated and cemented new relationships, a practical demonstration of our corporate value of collaboration across the Group. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  86. HUMAN RESOURCES : PEOPLE, TALENT AND CULTURE Reinforcing Culture Code of Ethics In our journey to making AmBank Group a place we can be proud to work, Group HR upgraded the Code of Ethics. It was launched on 19 May 2016. The launch was officiated by Tan Sri Azman Hashim, Chairman of AmBank Group, Dato’ Sulaiman Mohd Tahir, Group Chief Executive Officer of AmBank Group, members of the Senior Management and Department Heads across the Group. At the launch, Dato’ Sulaiman spoke in detail on the six principles of the Code of Ethics. As this code signifies the standards we uphold in guiding us to make decisions in our daily conduct of business, a complete programme consisting of e-learning and team town halls led by heads of departments was carried out to ensure a full cascade to employees. Please see page 86 for details on AmBank Group’s Code of Ethics. Aligning Rewards with Performance AmBank Group continued to emphasise the recognition of employees’ contributions in 2016. An independent yearly review of the Group’s Total Reward Philosophy against the Financial Services industry was also carried out to ensure our competitiveness and alignment with industry practices. Reward practices were reviewed to ensure greater adherence to differentiated variable pay approach based on performance as well as increasing the adoption of variable pay and performance linked incentives. Our Workforce Looking Ahead For details on the makeup of our workforce, please see our Sustainability Statement on page 162. Looking ahead our focus in FY18 will be: p. 85 Driving a culture of compliance, with a groupwide project to review, develop and deploy plans to strengthen the practice of compliance. • Increasing the pipeline of future leaders by recruiting talents into the AmGraduate programme. • Initiatives in career management, talent development and in building succession throughout the group. • Initiatives to enhance high performance culture. • Implementing the results of a recent employee benefit review across AmBank Group to drive employer of choice attractiveness and supports the various workforce needs and priorities. • Employee engagement activities to encourage mindfulness, engagement and wellness. Learning And Development For details on our learning and development, please see our Sustainability Statement on page 165. Employee Experience For details on our employee experience, please see our Sustainability Statement on page 164. Related to this, efforts were placed on developing and aligning key performance indicators to drive performance with a view to increase collaboration between business units and to increase selling between retail banking and wholesale banking. p. 84 • AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  87. INTEGRATING DIGITAL TECHNOLOGY AT AMBANK GROUP , WE ARE ALWAYS LOOKING AT INNOVATIVE WAYS OF GROWING OUR BUSINESS IN A SUSTAINABLE MANNER. THIS REQUIRES AN AGILE APPROACH TO DELIVERING INFORMATION TECHNOLOGY AND OPERATIONS SERVICES TO SUPPORT THE NEEDS OF AMBANK GROUP’S BUSINESS, SUCH AS ENHANCING THE BANK’S DIGITAL BANKING CAPABILITIES AND IMPROVING OPERATIONS PROCESS EFFICIENCY TO BETTER ENGAGE WITH CUSTOMERS. To enable AmBank Group to realise its Top 4 Strategy to become one of the top four Malaysian banks by 2020, we are focusing our resources on mobile and digital as the ‘quantum leap’ for improving our performance. Technology is an opportunity to get there faster and we are fully leveraging the Group’s investment in technology and its cooperation with partners to transform digital banking capabilities, particularly on mobile banking and digital analytics. We are exploring avenues to launch compelling digital value propositions to market more quickly by riding on existing technology assets and embracing iterative/agile delivery. Mobile First We have invested substantially in a highly flexible and agile digital mobile banking platform, Mobile First, which is a simple, fast and secure intuitive banking experience. Mobile First is designed to appeal to all customers across all segments. It is differentiated from existing online banking experiences and breaks through clutter by providing an ergonomic and easy to navigate user experience with well organised and personalised personal finance insights. The initial launch in the second half of 2017 enables AmBank Group delight customers with better ergonomics in transaction flow. The platform will continue to add new and improved features that are relevant to customer behaviour frequently. Banking as a Service We are committed to creating greater convenience and lifestyle integration for our customers by securely extending the ability to originate financial transactions that are digitally based on consent from the customer to trusted partners and Fintechs (financial technology companies). To this end, we have instituted a strategic bank-as-a-service programme. With emerging technologies like Open Authorisation and Application Programme Interface (API) gateways, a whole new world of possibilities has opened up for re-imagining customer experience. One of the first initiatives we launched to extend banking into the customer ecosystem is an API that allows our car distributor partners to originate car financing right at the point of sale. AmCloud AmBank Group’s Private Cloud Capability has empowered us to modernise our infrastructure from a hotchpotch of costly, complex and difficult to maintain legacy systems. Our new software-defined data centre is highly efficient, agile and responsive to business needs. By the end of FY17, 60% of AmBank Group’s current infrastructure needs were on this platform. Through automation and centralised management of AmBank Group’s virtual infrastructure, we are now able to operate with fewer support staff as a result of automated provisioning and deployment capability. Our information technology (IT) administrators can troubleshoot Issues faster, spend less time in our data centres and focus more on critical issues. Driving AmBank Group further with Analytics Advanced analytics allow banks to drive their customer journey further, increasing loyalty, revenue and profitability. We embarked on a Big Data analytics proof of concept to gain new insights from our customer data. We looked at card spending patterns and gained new insights into where, when and why our customers are spending their money. These insights allowed our business teams to champion new marketing strategies. To push AmBank Group into the next age of digital, we will look into data that is bigger and faster (real time analytics) to allow us to cross sell and upsell our products and services to our customers. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  88. CODE OF ETHICS AND BUSINESS CONDUCT COMPLIANT RESPONSIBLE ETHICAL We comply with the law both in letter and in spirit , this code and AmBank Group policies and procedures We identify and manage conflicts of interest responsibly We uphold the highest level of integrity and act with honesty and professionalism ACCURATE TRUSTWORTHY EQUITABLE We ensure completeness and accuracy of underlying records, financial and otherwise We ensure confidentiality of information and transactions We ensure fair and equitable treatment to all p. 86 p. 87 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  89. ENSURING SUSTAINABLE VALUE CREATION Our Sustainable Future By identifying the existing processes and actions in our material sustainability matters and improving in these areas , AmBank Group can focus on what we do best, helping individuals and businesses in Malaysia grow and win together. AmBank Group takes environmental, economic and social factors into account in offering sustainable products and services, and we integrate these factors into our business decisions. We aspire to be an employer of choice and we focus on developing our employees and supporting their well-being so that we continue to attract, retain and reward appropriately. We uphold our commitment to creating a positive societal impact by conducting our business activities with reduced environmental impact and by fulfilling our social responsibilities towards local communities. MATERIAL SUSTAINABILITY MATTERS • Customer Satisfaction • Ethics, Governance and Compliance • Data Security, IT Infrastructure and Digital Transformation RESPONSIBLE BANKING EMPLOYER OF CHOICE • Responsible Sourcing and Procurement We are committed to being a responsible financial services group We recognise the need to maintain an engaging and inclusive workplace that lets people achieve their aspirations • Financial Inclusion and Responsible Lending • Responsible Marketing & Product and Service Management • Employer of Choice • Environmentally and Socially Responsible Investment • Community Investment and Development • Energy, Water and Waste Management POSITIVE SOCIETAL IMPACT We contribute to a more sustainable future by considering carefully our investment decisions, the environmental impacts of our activities and how we interact with our wider communities Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  90. GROUP FINANCIAL REVIEW BY GROUP CHIEF FINANCIAL OFFICER JAMIE LING Group Chief Financial Officer We delivered a higher net profit of RM1 ,324.6 million in 2017, an increase of 1.7% from the year before, amidst challenging market conditions. The initiatives undertaken in our Top 4 four-year strategy, aimed at reshaping the Group, have gained traction. Loans and deposits recorded encouraging growth. The Group strengthened its balance sheet with a lower impaired loans ratio, a high liquidity coverage ratio and strong capital adequacy ratios. Key Highlights in FY17 • Net profit up 1.7% YoY underpinned by stronger non-interest income, improved asset quality and recoveries, with expenses being managed prudently • Asset quality improved with a lowered impaired loans ratio of 1.86%. Compliance with regulatory guidelines on minimum levels of provisioning for loan loss resulted in the transfer of RM222.3 million to regulatory reserves • Achieved profit before provisioning of RM1,605.1 million, growth of 5.5% YoY • • Recorded lower cost to income ratio YoY at 57.4% Group deposits from customers grew 4.1%, contributed by increase in term deposits • Group gross loans expanded by 3.5%, supported by growth in mortgage loans and trade financing • Capital adequacy remained resilient and strong with a Total Capital Ratio of 16.304% • Total dividend payout ratio was 40%, an increase over the FY16 ratio of 36% p. 88 p. 89 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  91. FY17 PERFORMANCE REVIEW The Group recorded a commendable performance in FY17 despite challenging times . Over the year, a few major and largely unexpected economic and political events impacted many economies worldwide. These events included falling commodity prices, the UK’s EU referendum (Brexit) and the outcome of the US presidential election. In Malaysia, the impact was partly mitigated by monetary policies implemented by Bank Negara Malaysia (BNM) and a growth in domestic demand spurred by investment activities for ongoing infrastructure projects. Against this background, the Group remained resilient and achieved a 5.5% growth in profit before provisioning of RM1,605.1 million, driven by higher noninterest income and on the back of an improved cost to income ratio of 57.4%. Loans grew 3.5% over last year, as proactive measures undertaken to manage asset quality resulted in higher recoveries and an improved impaired loans ratio. Our return on equity (ROE) stood at 8.5%. The total dividend payout ratio was 40% in FY17, an increase of four percentage points from the previous year. Table 1 All ratios expressed in % Key Financial & Operating Indicators FY17 FY16 Return on Equity Net interest margin Non-interest income to Income ratio Cost to income ratio 8.5 1.98 39.1 57.4 8.8 2.02 35.6 58.8 Asset Quality Gross impaired loans ratio Loan loss coverage* Credit costs 1.86 79.7 (0.2) 1.94 81.2 (0.2) Capital adequacy (aggregated)** Common Equity Tier 1 ratio Total capital ratio 11.563 16.304 11.259 16.121 FY17 RM’million FY16 RM’million YoY % 1,564.6 1,637.8 (4.5) 805.2 975.5 805.8 870.4 (0.1) 12.1 383.6 379.3 1.1 36.6 2.5 >100 3,765.5 (2,160.4) 3,695.8 (2,174.3) 1.9 (0.6) Operating profit Write back for net impairment losses and provisions 1,605.1 1,521.5 5.5 196.1 209.5 (6.4) Profit before taxation and zakat 1,801.2 1,731.0 4.1 Profit for the financial year 1,408.8 1,399.5 0.7 Profit attributable to equity holders (PATMI) 1,324.6 1,302.2 1.7 44.1 43.3 1.7 * including regulatory reserve ** after deducting proposed dividend NET PROFIT COST TO INCOME RATIO Table 2 RM1,324.6 million 57.4% FY16: RM1,302.2 million FY16: 58.8% TOTAL CAPITAL RATIO RETURN ON EQUITY 16.304% 8.5% FY16: 16.121% FY16: 8.8% GROSS LOANS  GROWTH DEPOSITS  GROWTH 3.5% 4.1% FY16: (0.08%) FY16: (1.9%) Statements of Profit or Loss Net interest income Net income from Islamic banking Other operating income Net income from insurance business Share in results of associates and joint ventures Net operating income Other Operating expenses WE DELIVERED A HIGHER NET PROFIT OF RM1,324.6 MILLION IN 2017, AN INCREASE OF 1.7% FROM THE YEAR BEFORE, AMIDST CHALLENGING MARKET CONDITIONS EPS - Basic (sen) Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  92. GROUP FINANCIAL REVIEW BY CHIEF FINANCIAL OFFICER Net profit of RM1 ,324.6 million underpinned by stronger non-interest income, improved asset quality and recoveries with expenses being managed prudently • • • Net operating income improved 1.9% to RM3,765.6 million, driven by higher non-interest income, marginal growth in income from insurance businesses and substantially improved results from the equity accounted investments. Non-interest income increased, contributed by corporate and commercial banking from gain on disposal of foreclosed property, wealth management and global markets. From our insurance subsidiary, the net earned premium was higher at RM383.6 million and we have strong market positioning as the number one motor insurer with 16.5% market share. Operating expenses incurred for projects and investments spend were contained; we achieved a cost to income ratio of 57.4%. As part of a cost management initiative in FY17, the Group established an operating expenditure task force to drive operational efficiencies further. Net allowance writebacks contributed to the improvement in Retail gross impaired loans, underpinned by strong recoveries and improvement in Retail asset quality resulting from a focus on preferred segments. Wholesale banking was impacted by impairments; these loans are well collateralised to cushion any further adverse impact from credit quality deterioration. p. 90 p. 91 AMMB Holdings Berhad (223035-V) • For the Group’s major income earning asset, gross loans grew by 3.5% supported by retail mortgage loans, cards and lending to SMEs and from wholesale SMEs and mid corporates (Mid Corp). Our Top 4 Strategy is already targeting SME and Mid Corp as two of our growth segments. • Customer deposits grew 4.1% with CASA (current account and savings account) growth of 6.1% over last year. CASA growth was underpinned by Retail SME and payroll services/solutions, whilst the deposits base grew mainly from Wholesale fixed deposits. CASA composition was higher at 21.1% as compared to 20.7% at 31 March 2016. • The Group’s banking subsidiaries’ liquidity coverage ratios are well above the minimum requirement set by BNM. The net loans, advances and financing to customer deposits ratio improve marginally to 95.5% from 95.7% as at 31 March 2016. • The Group’s capital ratios remain adequate with Common Equity Tier 1 (CET 1) capital ratio of 11.563% and Total Capital ratio of 16.304%. The Group has been progressively optimising its capital structure for Basel III financial holding company capital adequacy ratios reporting effective 1 January 2019. Annual Report 2017 ambankgroup.com
  93. FY18 QUARTERLY RESULTS ANNOUNCEMENTS The tentative dates for our FY18 results announcements are as follows : 28 28 August 2017 Q1FY18 Results Announcement 26 H1FY18 Results Announcement 29 February 2018 9MFY18 Results Announcement Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 November 2017 May 2018 FY18 Results Announcement MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  94. FIVE-YEAR GROUP FINANCIAL SUMMARY Profit Before Tax and Zakat Profit Attributable to Shareholders (RM Million) (RM Million) 2017 1,801.2 2017 1,324.6 2016 1,731.0 2016 1,302.2 2015 2,604.3 2015 1,918.6 2014 2,448.2 2014 1,782.4 2013 2,139.0 2013 1,620.7 Total Assets Loans, Advances and Financing (Net) (RM Million) (RM Million) 2017 134,767.6 2017 89,865.1 2016 133,764.0 2016 86,513.3 2015 133,803.8 2015 86,173.8 2014 132,739.5 2014 87,170.6 2013 127,572.3 2013 82,586.3 Total Liabilities Paid-up Share Capital (RM Million) (RM Million) 2017 117,614.7 2017^ 5,551.6 2016 117,644.6 2016 3,014.2 2015 118,296.4 2015 3,014.2 2014 118,645.1 2014 3,014.2 2013 114,630.9 2013 3,014.2 ^ Shareholders’ Equity Paid-up share capital for 31 March 2017 is including share premium account (RM Million) 2017 16,027.1 2016 15,168.5 2015 14,455.1 2014 13,142.9 2013 12,067.7 p. 92 p. 93 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  95. FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS FINANCIAL YEAR ENDED 31 MARCH 1 . 2. 2017 2016 2015 2014@ 2013 REVENUE (RM MILLION) i. Operating revenue 8,285.8 8,416.0 9,142.5 9,606.0 8,705.9 ii. Profit before allowances for impairment on loans, advances and financing and tax 1,627.7 1,566.9 2,573.8 2,516.0 2,312.3 iii. Impairment writeback/(allowances) on loans, advances and financing 173.5 164.1 30.5 (67.8) (173.3) iv. Profit before tax and zakat 1,801.2 1,731.0 2,604.3 2,448.2 2,139.0 v. Profit attributable to shareholders 1,324.6 1,302.2 1,918.6 1,782.4 1,620.7 134,767.6 133,764.0 133,803.8 132,739.5 127,572.3 89,865.1 86,513.3 86,173.8 87,170.6 82,586.3 117,614.7 117,644.6 118,296.4 118,645.1 114,630.9 94,071.5 90,358.6 92,130.0 89,698.9 84,830.0 104,811.6 102,097.6 102,814.7 98,267.6 93,057.7 BALANCE SHEET (RM MILLION) Assets i. Total assets ii. Loans, advances and financing (net) Liabilities and Shareholders’ Equity i Total liabilities ii Customer deposits 1 iii Adjusted customer deposits iv Paid-up share capital* v Shareholders’ equity Commitments and Contingencies 3. 4. 5. 1 * ^ @ 5,551.6 3,014.2 3,014.2 3,014.2 3,014.2 16,027.1 15,168.5 14,455.1 13,142.9 12,067.7 134,563.3 125,037.1 116,765.1 103,478.9 102,467.5 PER SHARE (SEN) i. Basic net earnings 44.1 43.3 63.8 59.3 54.0 ii. Fully diluted net earnings 44.0 43.3 63.8 59.3 54.0 iii. Net assets 531.7 503.2 479.6 436.0 400.4 iv. Single tier/gross dividend 17.6 15.5 27.3 24.1 22.0 FINANCIAL RATIOS (%) i. Post-tax return on average shareholders’ equity^ 8.5 8.8 13.8 14.1 13.9 ii. Post-tax return on average total assets 1.0 1.1 1.6 1.5 1.4 iii. Net loans, advances and financing to customer deposits 95.5 95.7 93.5 97.2 97.4 iv. Adjusted net loans, advances and financing to customer deposits 85.7 84.7 83.8 88.7 88.7 v. Cost to income 57.4 58.8 45.7 45.8 47.9 SHARE PRICE (RM) i. High 4.99 6.50 7.34 8.08 6.80 ii. Low 3.90 4.27 6.16 6.44 6.13 iii. As at 31 March 4.65 4.60 6.36 7.18 6.55 Inclusive of recourse obligation on loans, advances and financing sold to Cagamas and term funding with original maturity of 3 years and above Paid-up share capital for 31 March 2017 is including share premium account. Adjusted for non-controlling interests After adjusting for adoption of amendments to MFRS 132-Offsetting Financial Assets and Financial Liabilities that have been applied retrospectively for one financial year. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  96. PERFORMANCE SCORECARD Financial Indicators Return on Equity (ROE) PATMI FY17 Guidance 8.5% to 9.0% FY17 Guidance -5% Growth ~5% Growth p.a p.a FY17 8.5% FY17 1,324.6 FY16 8.8% FY16 1,302.2 FY15 13.8% FY15 1,918.6 YOY ∆: +1.7% Cost-to-Income (CTI) Ratio Dividend Payout FY17 Guidance ≤57% FY17 Guidance 40% -40% FY17 57.4% FY17 40% FY16 58.8% FY16 36% FY15 45.7% FY15 43% 127,572.3 CET 1¹ FY17 Guidance 10.0% +/-1% FY17 11.6% FY16 11.3% FY15 10.5% 1. Based on Aggregated Banking Entities net of proposed dividend p. 94 p. 95 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  97. SIMPLIFIED GROUP STATEMENTS OF FINANCIAL POSITION Total Assets 7 .0% Cash and balances with banks and securities purchased under resale agreements 10.0% Cash and balances with banks and securities purchased under resale agreements 17.8% Investments in securities 15.9% Investments in securities 66.7% Loans, advances and financing FY2017 FY17 64.7% Loans, advances and financing FY2016 FY16 1.9% Statutory deposits with BNM 1.9% Statutory deposits with BNM 6.6% Other assets 7.5% Other assets Total Liabilities and Equity 69.8% Deposits from customers 67.6% Deposits from customers 0.1% Investment accounts of customers 0.1% Investment accounts of customers 1.3% Deposits and placements of banks and other financial institutions and securities sold under resale agreements 1.2% Deposits and placements of banks and other financial institutions and securities sold under resale agreements 7.7% Term funding and other borrowed funds FY17 9.4% Term funding and other borrowed funds FY16 3.0% Debt capital 3.1% Debt capital 0.2% Redeemable cumulative convertible preference share 0.2% Redeemable cumulative convertible preference share 5.2% Other liabilities 4.1% Share capital 0.8% Non-controlling interests 6.4% Other liabilities 2.2% Share capital 7.8% Reserves Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 0.7% Non-controlling interests MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 9.1% Reserves Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  98. SEGMENTAL ANALYSIS AmBank Group ’s businesses are grouped in the following business activities: Retail Banking, Wholesale Banking, Insurance and Group Funding and Others. 1,408.8 Segment PAT 1,600 1,399.5 RM’ Million 1,400 1,200 Wholesale Banking 29.2 (63.7) 174.7 196.7 49.1 42.7 49.2 200 79.4 588.8 115.4 400 68.5 356.6 600 467.2 800 654.5 1,000 0 Retail Banking Corporate & Commercial Banking Global Markets Investment Banking FY17 Fund Management Insurance Group Funding & Others Total FY16 Retail Banking Retail Banking continues to focus on building mass affluent, affluent and small business customers. Retail Banking offers products and financial solutions which includes auto finance, mortgages, personal loans, credit cards, small business loans, priority banking services, wealth management, remittance services and deposits. PAT fell by 23.7% year-on-year to RM356.6 million. The decline was largely attributable to margin compression despite higher loans growth in mortgages and lower net writeback in impairments, partly offset by lower expenses. Global Markets includes proprietary trading as well as providing full range of products and services relating to treasury activities, including foreign exchange, derivatives, fixed income and structured warrants. Investment Banking offers investment banking solutions and services, encompassing capital markets (primary) activities, broking, private banking services, corporate advisory and fund raising services (equity and debt capital). Fund Management comprises the asset and fund management services, offering a variety of investment solutions for various asset classes to retail, corporate and institutional clients. Wholesale Banking Wholesale Banking comprises Corporate and Commercial Banking, Global Markets, Investment Banking and Fund Management. Wholesale Banking’s PAT rose RM5.0 million to RM826.3 million underpinned by higher trading income and strong recoveries. Corporate and Commercial Banking offers a full range of products and services of corporate lending, trade finance, offshore banking, and cash management solutions to wholesale banking clients. p. 96 p. 97 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  99. Insurance Insurance segment offers a broad range of general insurance products , namely motor, personal accident, property and household. It also offers life insurance and takaful products namely wealth protection/savings, health and medical protection and family takaful solutions provided through our joint venture operations. The joint ventures Life Insurance businesses turnaround and reported PAT of RM54.2 million lifted by revaluation of Life and Takaful insurance liabilities. Their equity accounting contribution to the Group net profit was RM27.1 million. PAT from Insurance was up 12.6% to RM196.7 million in FY17. Group Funding and Others RM’ Million Gross Loans 95,000 87,892.3 90,985.9 Group Funding and Others comprises activities to maintain the liquidity of the Group as well as support operations of its main business units and non-core operations of the Group. General Insurance reported a PAT of RM169.6 million driven by sustained gross premium, improved historical claims experience and gain on disposal of properties, partly offset by higher expenses. After tax and non-controlling interests, General Insurance’s contribution to the Group’s net profit was RM86.5 million in FY17. 76,000 Wholesale Banking FY16 40,247.1 40,773.5 46,302.6 57,000 48,782.5 FY17 2.1 5.3 19,000 1,391.7 1,485.7 38,000 Group Funding & Others 0 Insurance Investment Banking Total Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 (54.4) Corporate & Commercial Banking (57.9) Retail Banking MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  100. RM ’ Million 95,680.9 Deposits 100,000 92,102.3 SEGMENTAL ANALYSIS 75,000 Wholesale Banking 40,438.5 49,077.9 50,000 41,519.9 52,905.4 FY17 Retail Banking p. 98 p. 99 Corporate & Commercial Banking Global Markets AMMB Holdings Berhad (223035-V) Investment Banking Annual Report 2017 806.8 1,212.5 788.8 697.7 335.7 25,000 Group Funding & Others ambankgroup.com Total FY16
  101. GROUP QUARTERLY FINANCIAL PERFORMANCE 2017 All in RM million unless stated otherwise Q1 Q2 Q3 Q4 2 ,062.9 2,099.8 1,977.9 2,145.2 Net interest income 392.3 373.4 394.7 404.2 Net income from Islamic banking 197.2 201.4 193.0 213.6 Net income from insurance business 142.2 84.1 83.3 74.0 Other operating income 214.9 284.4 162.0 314.2 4.6 11.0 20.4 0.6 (535.5) (524.5) (517.9) (582.5) 63.7 42.4 73.4 16.6 Profit before taxation and zakat 479.4 472.2 408.9 440.7 Profit attributable to shareholders 323.0 352.6 313.2 335.8 10.8 11.7 10.4 11.2 – 5.0 – 12.6 Operating revenue Share in results of associates and joint ventures Other operating expenses Write-back of impairments and provisions Basic earnings per share (sen) Dividend per share (sen) 2016 All in RM million unless stated otherwise Q1 Q2 Q3 Q4 2,109.1 2,088.1 2,116.3 2,102.5 Net interest income 423.6 431.8 394.8 387.6 Net income from Islamic banking 206.9 200.1 208.4 190.4 Net income from insurance business 109.4 100.8 81.0 88.1 Other operating income 223.7 198.3 213.8 234.6 0.2 3.9 (5.4) 3.8 (487.3) (499.5) (566.9) (620.6) 5.9 65.6 80.1 57.9 Profit before taxation and zakat 482.4 501.0 405.8 341.8 Profit attributable to shareholders 339.5 382.5 300.2 280.0 11.3 12.7 10.0 9.3 – 5.0 – 10.5 Operating revenue Share in results of associates and joint ventures Other operating expenses Write-back of impairments and provisions Basic earnings per share (sen) Dividend per share Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  102. KEY INTEREST BEARING ASSETS AND LIABILITIES FY17 FY16 Average Rate % Interest Income/ Expense RM’ million Average Balance RM’ million Average Rate % Interest Income/ Expense RM’ million 7,418 2.58% 191 12,031 2.77% 333 Financial assets held-for-trading 6,200 3.56% 221 4,629 3.95% 183 Financial investments available-for-sale 8,759 3.67% 321 10,049 3.30% 332 Financial investments held-to-maturity 3,713 2.62% 97 4,012 2.49% 100 88,366 5.34% 4,723 86,729 5.61% 4,861 87,118 3.07% 2,671 90,023 3.20% 2,877 Deposits and placements of banks and other financial institutions 2,233 3.79% 85 2,637 2.60% 69 Recourse obligation on loans and financing sold to Cagamas Berhad 3,639 3.88% 141 2,922 3.59% 105 12,374 4.60% 569 13,394 4.49% 601 Average Balance RM’ million Short-term funds, deposits and placements with banks and other financial institutions Interest earning assets Loans, advances and financing Interest bearing liabilities Deposits from customers* Term funding, debt capital and other borrowed funds * Deposits from customers includes Investment accounts of customers p. 100 p. 101 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  103. STATEMENT OF VALUE ADDED Value Added Net interest income Net income from Islamic banking Income from insurance business Other operating income FY17 RM ’million FY16 RM’million 1,564.6 1,637.8 805.2 805.8 1,437.6 1,447.8 975.5 870.4 36.6 2.5 Share in results of associates and joint ventures Insurance claims and commissions (1,054.0) (1,068.5) Other operating expenses (805.7) (907.8) Writeback for impairment on loans, advances and financing 173.5 164.1 22.6 45.4 3,155.9 2,997.5 Other provisions – net impairment writeback Value added available for distribution Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  104. DISTRIBUTION OF VALUE ADDED Distribution of Value Added To employees : Personnel expenses To the Government: Taxation To state collection centres and community: Zakat To providers of capital: Dividends paid to shareholders Non-controlling interests To reinvest to the Group: Depreciation and amortisation Retained profits and other reserves 37.8% To employees: Personnel expenses 1,111.4 390.9 329.9 1.5 1.6 467.2 611.9 84.2 97.3 160.3 155.1 857.4 690.3 3,155.9 2,997.5 0.1% To state collection centres and community: Zakat 14.8% To provider of capital: Dividends paid to shareholders FY2016 FY16 20.4% To provider of capital: Dividends paid to shareholders 2.6% To provider of capital: Non-controlling interests 3.2% To provider of capital: Non-controlling interests 5.1% To reinvest to Group: Depreciation and amortisation 5.2% To reinvest to Group: Depreciation and amortisation 27.2% To reinvest to Group: Retained profits and other reserves p. 103 1,194.4 11.0% To the Government: Taxation 0.1% To state collection centres and community: Zakat p. 102 FY16 RM’million 37.1% To employees: Personnel expenses 12.4% To the Government: Taxation FY2017 FY17 FY17 RM’million AMMB Holdings Berhad (223035-V) 23.0% To reinvest to Group: Retained profits and other reserves Annual Report 2017 ambankgroup.com
  105. CAPITAL MANAGEMENT AmBank Group ’s capital management focuses on the maintenance of a strong capital base whilst supporting the Group’s strategic objectives and risk appetite. This means the Group maintains a healthy capital position by building an efficient capital structure in order to optimise return on capital and to provide sustainable returns to shareholders. Effective capital management is essential to the sustainability of the Group and involves: (a) Always meeting regulatory capital requirements; (b) Supporting the Group’s risk appetite, business growth and strategic objectives; and (c) Maintaining good credit ratings from local and international rating agencies. The Group’s regulated banking entities maintain a set of internal capital targets that provide an adequate buffer above the minimum regulatory requirements. Key Initiatives The Group manages its capital position proactively by continuously building capital towards full implementation of Basel III requirements, whilst optimising capital use. Tools that are employed to achieve this include: (1) Liability management to address capital instruments that are no longer compliant with the new Basel III guidelines; (2) New Basel III instruments issuance; (3) Risk-weighted assets optimisation; and (4) Group-wide stress testing and impact assessment. During the financial year, AMMB Holdings Berhad issued RM750 million Basel III Tier 2 Subordinated Notes for investment in capital instruments of its banking subsidiaries. Proposed Dividends For the financial year ended 31 March 2017, the Board of Directors approved the payment of a final cash dividend payment of 12.6 sen per share, which together with the interim dividend paid of 5.0 sen per share amounts to total dividend of 17.6 sen per share. The total dividend payout ratio is 40% for FY17. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  106. DIVIDENDS FOR FY17 For the financial year ended 31 March 2017 , an interim single tier dividend of 5.0 sen per ordinary share on 3,014,184,844 ordinary shares which amounted to RM150,709,243 was approved by the Board of Directors and paid out to shareholders on 22 December 2016. A final single tier dividend of 12.6 sen per ordinary share on 3,014,184,844 ordinary shares was approved by the Board of Directors on 8 May 2017 and Bank Negara Malaysia on 30 May 2017. Dividends for FY17 30.00 44.0% 25.00 42.0% 20.00 40.0% 15.00 38.0% 10.00 36.0% 5.00 34.0% 0 32.0% FY13 FY14 Payout ratio p. 104 p. 105 AMMB Holdings Berhad (223035-V) FY15 FY16 Net dividend declared (sen) Annual Report 2017 ambankgroup.com FY17
  107. CREDIT RATINGS From a credit rating perspective , we believe in providing our stakeholders with an independent view of our banking subsidiaries as well as that of the Company. As such, we continue to maintain credit ratings with Moody’s Investors Service, S&P Global Ratings and RAM Rating Services Berhad. AMBANK (M) BERHAD AMBANK (M) BERHAD AMBANK (M) BERHAD Rating Agency Moody’s Investors Service Rating Agency S&P Global Ratings Rating Agency RAM Rating Services Berhad Rating Classification Long-term foreign currency deposit rating Short-term foreign currency deposit rating Outlook Rating Classification Foreign long-term issuer credit rating Foreign short-term issuer credit rating Outlook Rating Classification Long-term financial institution rating Short-term financial institution rating Outlook Ratings Baa1 P-2 Stable Ratings BBB+ A-2 Stable Ratings AA2 P1 Stable AMINVESTMENT BANK BERHAD AMBANK ISLAMIC BERHAD AMMB HOLDINGS BERHAD Rating Agency RAM Rating Services Berhad Rating Agency RAM Rating Services Berhad Rating Agency RAM Rating Services Rating Classification Long-term financial institution rating Short-term financial institution rating Outlook Rating Classification Long-term financial institution rating Short-term financial institution rating Outlook Rating Classification Long-term corporate credit rating Short-term corporate credit rating Outlook Ratings AA2 P1 Stable Ratings AA2 P1 Stable Ratings AA3 P1 Stable Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  108. BALANCE SHEET MANAGEMENT BALANCE SHEET MANAGEMENT INVOLVES THE MANAGEMENT OF AMBANK GROUP ’S STRUCTURAL FUNDING AND LIQUIDITY. IT ALSO MAINTAINS THE FUNDS TRANSFER PRICING (FTP) FRAMEWORK WHICH IS GOVERNED BY THE GROUP ASSET LIABILITY COMMITTEE (GALCO). Structural funding and liquidity is managed by targeting a diversified funding base and avoiding concentrations by investor type, product, maturity, source or currency and implementing wholesale funding diversification and maturity concentration limits. In setting its funding diversification policy, the Group will take into consideration the cost/benefit trade-off to ensure optimum level of funding cost. To sustain a robust funding profile and monitor the liquidity risk of the Group, we are guided by the Basel III liquidity framework, namely the Liquidity Coverage Ratio (LCR), with a primary focus of ensuring a sufficient buffer of liquid assets that could be easily converted into cash to meet the liquidity needs for up to 30 calendar days. The FTP framework promotes a precise Group-wide allocation of funding costs to the business units by taking into account the interest rate and liquidity positions of the Group. The FTP mechanism is refined according to market conditions and relevant strategies approved by the management and it is guided to reflect regulatory principles. To fund our businesses, a liquidity premium is charged to the business units based on the contractual tenor of the transactions. Business units that generate long-term, stable funding are incentivised in the form of liquidity credit. Presently the key deposit growth agenda remains to strengthen the deposit franchise, by focusing on lower cost current accounts and savings accounts (CASA), and gathering term deposits to build sufficient base to fund the loans growth. p. 106 p. 107 AMMB Holdings Berhad (223035-V) In FY17, we saw excess coverage of 5% RM94.1 billion Our core customer deposits increased in FY17 Loan & Deposit Book Funding Structure FY17 Loans are the largest component of the Group’s assets and are generally funded by core customer deposits. In FY17, we saw excess coverage of 5%, up from 4% in FY16, reflecting a healthy buffer in funding the loan book. Our core customer deposits increased by RM3.7 billion from RM90.4 billion in FY16 to RM94.1 billion in FY17, a 4% growth. We will continue to prioritise growth in core customer deposits, which are a stable and resilient source of funding. We have outlined plans to lower the cost of funding by growing CASA composition, increasing the contribution of deposits from retail and SME and optimising a stable funding mix. Annual Report 2017 ambankgroup.com
  109. INVESTOR RELATIONS Investor Relations plays a strategic role by maintaining effective two-way communication between AmBank Group and the broad investment community . A dedicated Investor Relations (“IR”) team supports the IR agenda by consistently and clearly representing the Group’s aspirations, strategies, prospects and performance messages. Additionally, the IR team is tasked with maximising opportunities for fair market valuation to enhance shareholders’ value and to bridge gaps between performance and shareholder expectations. Annual General Meeting Investor Relations activities are led by: Dato’ Sulaiman, our Group CEO took the opportunity to update our esteemed shareholders on the financial performance of AMMB Holdings Berhad for the financial year ended 31 March 2016 and unveiled the Group’s “Top 4” Aspiration that charts our strategic growth for the 4 year period of FY17 to FY20. 1. Dato’ Sulaiman bin Mohd Tahir, Group Chief Executive Officer and Chief Executive Officer of AmBank (M) Berhad 2 Jamie Ling, Group Chief Financial Officer (Appointed with effect 1 June 2017) 3. Ganesh Kumar Nadarajah, Executive Vice President, Group Finance – Business Performance & Investor Relations AMMB Holdings Berhad held its 25th Annual General Meeting (“AGM”) on 18 August 2016 in Kuala Lumpur, Malaysia. Dato’ Sulaiman responded to inquiries made by the Minority Shareholder Watchdog Group (“MSWG”) in relation to our 2016 Annual Report. Shareholders had the opportunity to seek clarification, share feedback and gain insights into the operations and financial results of the Group. All the proposed resolutions were duly passed by the shareholders in the AGM. Analyst Briefings and Media Conferences The IR team organises live analyst briefings and media conferences for our half year and full year results announcements. The live analyst briefings are held simultaneously with teleconferencing and live webcast facilities to cater for the wide geographical spread of the investment community and our stakeholders. Please note that the employment contract for Mandy Jean Simpson, our former Group Chief Financial Officer, ended on 31 May 2017 and she has repatriated to Australia on another ANZ assignment. The IR team communicates to the wider investment community through a variety of channels including analyst briefings, media conferences, one-on-one meetings, teleconferences, live webcasts, investor conferences, non deal roadshows and at the annual general meeting. AGM/ EGM Analyst xxxxx Briefings Research Coverage IR Website Meetings, Conferences & Roadshows IR Mailbox Investor Relations Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 For the Group’s first and third quarter results announcements, the analyst briefings are conducted via teleconference and live webcast services. The IR team continues to ensure that the analyst presentations, financial statements and media releases are distributed via electronic communication (e-mail) to interested parties and are accessible on the Group’s IR website (https://www.ambankgroup. com/eng/InvestorRelations/Pages/default.aspx) immediately after the announcement is made on Bursa Malaysia. Replays of the briefings are accessible on the IR website for public viewing after each briefing. This is consistent with our practice to ensure fair dissemination, non-selective and equal access to material information by stakeholders. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  110. INVESTOR RELATIONS Details of our analyst briefings and media conferences on our quarterly results announcements are tabulated below : MODE OF COMMUNICATION Analyst Briefings * Teleconferences Webcasts Investor Presentations Financial Statements Media Releases √ √ √ √ √ √* √ √ √ √ 9MFY17 results √ √ √ √ √ FY17 results √* √ √ √ √ Date Event 22-Aug-16 Q1FY17 results 21-Nov-16 H1FY17 results 24-Feb-17 31-May-17 Media Briefings Publications on AmBank Group’s IR Website √ Includes live briefing Investor Meetings In addition to our quarterly results announcements, we engage with the investment community regularly through one-on-one meetings, group meetings and via teleconferences. In FY17, we conducted a total of 34 one-on-one meetings with 129 analysts and fund managers. The discussions were generally focused on the Group’s financial and business performance, strategic direction and macroeconomic outlook. Post the Q1FY17 results announcement, we hosted a breakfast chat to guide the analyst community on the Group’s direction moving forward and commitment towards its “Top 4” Aspirations. After the H1FY17 results announcement, we hosted a breakfast meeting with Fund Managers which was organised by a Research Firm. This provided an avenue for Dato’ Sulaiman to share the Group’s strategic progress and challenges. p. 108 p. 109 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  111. Conferences and Non Deal Roadshows As part of our investor engagement programme to provide greater insights to existing and prospective investors , our management representatives participated in the following conferences and non deal roadshows: Date Event Location 31 May – 3 June 2016 Deutsche Bank Non Deal Roadshow London, Munich, Brussels, Rotterdam, The Hague 10 June 2016 AllianceDBS Non Deal Roadshow Singapore 13 – 17 June 2016 Jefferies Non Deal Roadshow New York, Boston, Chicago, San Francisco 21 June 2016 Macquarie ASEAN Banks Tour Kuala Lumpur 23 November 2016 Maybank Breakfast Chat with Investors Kuala Lumpur 24 November 2016 AllianceDBS Non Deal Roadshow Singapore 28 November 2016 UBS Non Deal Roadshow Boston 29 – 30 November 2016 UBS Global Emerging Markets One-on-One Conference New York 1 – 5 December 2016 Deutsche Bank Non Deal Roadshow London, Paris, Frankfurt 10 January 2017 Alliance Investment Bank Berhad Corporate Day Kuala Lumpur 12 January 2017 Goldman Sachs NDR HK Hong Kong 4 – 7 April 2017 UBS Malaysia Corporate Day, Singapore, Hong Kong Singapore, Hong Kong Research Coverage AmBank Group is presently covered by analysts from the following local and foreign research houses, a testament of the Group’s long standing financial strength and relationship with the investment community: No. Research House No. Research House 1 Affin Hwang Capital 12 Kenanga Investment Bank 2 AllianceDBS Research 13 Maybank Investment Bank 3 CIMB Investment Bank Berhad 14 MIDF Amanah Investment Bank 4 Citi Investment Research 15 M&A Securities 5 CLSA Securities Malaysia 16 Nomura Securities Malaysia 6 Deutsche Bank 17 Public Investment Bank 7 Goldman Sachs (Singapore) 18 RHB Research Institute 8 Hong Leong Investment Bank 19 TA Securities 9 HSBC Ltd (Singapore) 20 UBS Securities Malaysia 10 JP Morgan Securities 21 UOB Kay Hian 11 KAF – Seagroatt & Campbell Securities Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  112. INVESTOR RELATIONS Shareholdings Analysis With the diversified shareholdings base of the Group , better analytics of our shareholders and their demographics enable us to keep abreast of the changes and planning of our investor programmes. Excluding the Australia and New Zealand Banking Group Limited ("ANZ"), the Group's foreign shareholding level was at 26% in FY17. Foreign Shareholdings in AMMB Holdings Berhad (Excluding ANZ's shareholding) FY13 FY14 FY15 FY16 FY17 29% 31% 29% 26% 26% Foreign Shareholding (31 March 2008 – 31 March 2017) 38% 36% 34% 32% 30% 28% 26% 24% 22% Mar-08 p. 110 Mar-09 p. 111 Mar-10 Mar-11 Mar-12 AMMB Holdings Berhad (223035-V) Mar-13 Annual Report 2017 Mar-14 ambankgroup.com Mar-15 Mar-16 Mar-17
  113. AmBank Share Price and Volume (1 April 2016 – 31 May 2017) 5.75 5.5 5.25 Share Price 5 4.75 4.5 4.25 4 3.75 Volume Millions 3.5 30 20 10 0 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Source: Bloomberg Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  114. INVESTOR RELATIONS Shareholders ’ Returns (1 April 2008 – 31 May 2017) 200 150 100 50 0 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 -50 100 AmBank KLCI Source: Bloomberg – includes forecast of final dividends. Investor and Analyst Services The Group leverages on its corporate website at ambankgroup.com as a platform to receive feedbacks or inquiries from all stakeholders. The IR team strives to ensure all information provided under the IR section of the website is up-to-date with the latest disclosures. For further details or inquiries, the IR team can be contacted via ir@ambankgroup.com p. 112 p. 113 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  115. FINANCIAL CALENDAR 2016 18 August 25th Annual General Meeting 22 August Announcement of unaudited consolidated results for the financial first quarter ended 30 June 2016 9 September Payment of final single tier dividend of 10 .5% for the financial year ended 31 March 2016 21 November Announcement of unaudited consolidated results for the financial half year ended 30 September 2016 22 December Payment of interim single tier dividend of 5.0% for the financial year ended 31 March 2017 2017 24 February Announcement of unaudited consolidated results for the financial third quarter ended 31 December 2016 31 May Announcement of audited consolidated results for the financial year ended 31 March 2017 7 July Notice of 26th Annual General Meeting 31 July 26th Annual General Meeting Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  116. BUSINESS REVIEW WHOLESALE BANKING Raja Teh Maimunah Raja Abdul Aziz Chief Executive Officer AmInvestment Bank Managing Director Wholesale Banking Wholesale Banking ’s income in key Segment Total Income (YoY Movement) and Total Assets by Line of Business Total income RM1,645.4 million 12% RM74.8 million 43% Corporate Banking 21% 10% RM30.9 million Transaction Banking FY17 Highlights Wholesale Banking did well in FY17, recording a total income expansion of 12.9% to RM1,645.4 million. That growth was underpinned by capital market activities and higher fixed income trading and gains from the disposal of foreclosed property. Our SME loans increased 10.2% through strategic tie-ups and the introduction of segment specific products. Transaction banking delivered higher income on the back of increased trade finance volume, enhanced cash management and JomPAY solutions. Our Debt Capital Market business continued to rank in the top 3 for overall bond and sukuk issuance in Malaysia. Total Income RM1,645.4 million 14% 37% RM60.8 million Global Markets 32% RM42.9 million 11% Capital & Equity Markets 8% 7% RM8.8 million Funds Management 3% Others 32% RM13.1 million Priorities in FY18 Strategic priorities for FY18 are improving profitability and growing our business by leveraging on analytics and innovative financial solutions. We will increase our focus on the mid corporate segment, enhance foreign exchange and transaction banking propositions across all customer segments and develop digital capabilities. Transaction banking will continue to play a pivotal role in our CASA and deposit growth strategy via enhanced cash management platforms, payroll and JomPAY solutions. 60% Corporate Banking 23% Global Markets Total Assets RM57.6 billion What We Do Wholesale Banking focuses on building and developing strong relationships with clients and provides wholesale banking services supported by a wide spectrum of commercial and investment banking products and services. We continually strive for excellence in offering innovative, quality and differentiated products and services. p. 114 p. 115 AMMB Holdings Berhad (223035-V) 13% Transaction Banking 2% Capital & Equity Markets 2% Others Annual Report 2017 ambankgroup.com
  117. Corporate Finance Corporate Finance Corporate Finance provides an extensive range of corporate finance and advisory services comprising initial public offerings (IPO) mergers and acquisitions (M&A), take-overs, restructuring, issuance of equity and equity-linked instruments, valuations and independent advisory services. Our Corporate Finance Division service a diverse range of clients from various sectors including construction, infrastructure, financial institutions, plantations, property development and oil & gas. In spite of our diverse range, overall equity market transactions in Malaysia in FY17 were lower than in recent years, particularly in IPO and fund raising exercises. Capital Markets Group Capital Markets provides customised financing solutions to our sovereign, corporate and institutional clients through fixed income, derivatives and credit solutions and advisory services. Global Markets Global Markets covers all secondary market activities relating to treasury, including foreign exchange, rates, derivatives, commodities and fixed income offerings. Funds Management Funds Management provides funds management services to institutional and retail investors. Transaction Banking Transaction Banking offers business banking solutions for corporates to better manage their cash flow and trade financing. Private Banking AmPrivate Banking services high net worth Malaysian clients with investment advisory, security dealing and fund management services. AmInvestment Bank was involved in two of the six IPOs on the Main Market of Bursa Malaysia Securities Berhad in FY17. We were the Joint Underwriter for Eco World International Berhad and also for Serba Dinamik Berhad which raised RM2.6 billion and RM0.6 billion respectively. On the M&A front, notable deals include acting as the Principal Adviser for IOI Properties Group Berhad’s RM7.9 billion acquisition of land in Singapore, as well as take-over offers involving several Malaysian public listed companies, namely Aluminium Company of Malaysia Berhad, Ekowood International Berhad, Huat Lai Resources Berhad, JcbNext Berhad, ML Global Berhad and Wong Engineering Corporation Berhad. We were also the Co-Adviser for the RM1.1 billion disposal of a 40% equity interest in Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd by Ekovest Berhad. We acted as the Independent Adviser for the take-overs of GHL Systems Berhad, Mieco Chipboard Berhad as well as Shell Refining Company (Federation of Malaya) Berhad. In terms of secondary fund raising deals, we acted as the Joint Principal Adviser, Joint Managing Underwriter and Joint Underwriter for Malaysia Building Society Berhad’s rights issue (RM1.7 billion) as well as the Principal Adviser for IOI Properties Group Berhad’s rights issue (RM1.5 billion). Our commitment to delivering quality products and services through an in depth understanding of our clients’ requirements awarded us the Best Secondary Deal for 2016 by Alpha Southeast Asia for the Malaysia Building Society Berhad’s rights issue. Moving forward, our Corporate Finance Division will continue to leverage on our full-fledged advisory services to enhance value for all stakeholders. We also seek to continue utilising our underwriting abilities to provide total solutions to our clients. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  118. BUSINESS REVIEW WHOLESALE BANKING Bonds /Sukuk Arranged and Managed by AmInvestment Bank FYE2016 Capital Markets Group We continued to assert our leadership position in FY17 as a dominant capital markets player. Our track record of successfully executing deals in volatile and challenging market environments is a testament to our unwavering commitment to provide service of the highest quality to our clients. We extended our top three position on the Bloomberg Underwriter Rankings for Ringgit-denominated corporate bonds/sukuk for the 14th consecutive year in 2016. 72% Sukuk Islamic Markets were realigned under the Capital Markets Group as a dedicated unit responsible for providing Shariah advisory services for a wide range of Shariahcompliant financial and investment solutions. Islamic Markets Shariah advisory covers sukuk, Islamic financing syndication, equity-related offerings and Islamic structured finance. Sukuk represented 72% of total bonds completed in FY17. 28% Bond Corporate Bonds/Sukuk Market Malaysian corporate bonds/sukuk issuances stood at RM77.9 billion in 2016 with Government-Guaranteed issuances totalling RM27.8 billion (comprising 35.6% of total issuance) to finance infrastructure projects. Other new corporate bonds/sukuk issuances in 2016 were made up of AAA-rated issuances (24.8%), followed by AArated issuances (25.0%), unrated issuances (11.6%) and A-rated issuances (3%). New Sukuk Issuance FYE2016 by Shariah Principle The Ringgit sukuk market made a comeback despite all the headwinds of 2016, closing at RM61.3 billion, 13.5% higher than the previous year (2015: RM54.0 billion). This was driven namely by Malaysia’s economic pump-priming infrastructure-led projects. Sukuk issuances continued to denominate the overall domestic bond market, as reflected by the percentage of sukuk to total bonds issued, at 78% (2015: 69%). 90% Murabahah Amongst the largest Sukuk issuance arranged and participated by AmInvestment Bank were the RM25.0 billion Sukuk Murabahah Programme by Lembaga Pembiayaan Perumahan Sektor Awam, RM8.0 billion Perbadanan Tabung Pendidikan Tinggi Nasional and RM3.65 billion Sukuk Wakalah by Lebuhraya DUKE Fasa 3 Sdn Bhd. 5% Wakalah 5% Musharakah For 2017, we expect the same trend will continue and sukuk issuances are expected to remain at the RM65-70 billion level, based on the projected issuances in the pipeline, mainly from infrastructure, project finance and construction sectors as well as government-linked companies. Unrated bond/sukuk issuances continued to gain momentum in the Malaysian market with the removal of mandatory rating requirement for tradable bonds/ sukuk by the Securities Commission in January 2017. Drawing on our vast experience and expertise in syndication, the Capital Markets Group is committed to assisting our clients to capitalise on this opportunity and to developing private placement strategies with a diversified investor base. p. 116 p. 117 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  119. AmInvestment Bank ’s Leadership in the Corporate Bonds/Sukuk During the year in review, AmInvestment Bank won a number of prestigious awards for its innovation in Islamic structures such as the Islamic Issue of the Year for Southeast Asia (Lebuhraya DUKE Fasa 3 Sdn Bhd) by IFR Asia, the Commodity Murabahah Deal of the Year (Al Dzahab Assets Bhd) by IFN, and the Best Wakalah Deal of the Year in Southeast Asia (Lebuhraya DUKE Fasa 3 Sdn Bhd) by Alpha SEA. AmInvestment Bank was also awarded the Project Finance Bank of the Year in Malaysia by The Asset Triple A Asia Infrastructure Awards 2016. Receiving this award in two consecutive years is a testimony to our capabilities in the project financing space. Going forward, our Capital Markets Group will maintain its role as a key player in the bond, sukuk and loan/Islamic financing markets as well as exploring new opportunities for growth in production innovation in M&A financing, retail bonds/sukuk and socially responsible bonds/sukuk. Global Markets Our Global Markets business model has undergone rapid transformation over the years to cope with the ever changing landscape. The continuous reinvention of our business model has yielded positive outcomes, especially since the 2008 Global Financial Crisis, where volatility is the only constant. Loan Markets The loan syndication business complements the bond market in meeting clients’ large financing requirements, whether for corporate exercises such as mergers and acquisitions, to act as bridge financing, or to finance capital expenditure needs. We continued to extend our top 5 position on the Bloomberg Underwriter Rankings for Ringgit-denominated Malaysia Loans Mandated Arranger for the year 2016. Growth was mainly driven by real estate financing, for example AmFIRST REIT, Setia Federal Hill, Kwasa UK Trio, Eco Ardence, IOI Properties, among others. Real estate linked financing made up 41% of the total market volume in Malaysian loan syndication markets in 2016. The loan syndication business in Malaysia has showed signs of slowing down due to global market volatility and the on-going economic headwinds. Some borrowers delayed their projects or postponed fund raising exercises. Compared to the year before, Malaysian loan syndication market volume in 2016 dropped to USD12.2 billion, a 6% reduction in volume (2015: USD12.9 billion), of which 38% of total market volume constitutes refinancing of existing term loans. For 2016, there was a significant increase in cross border transactions, with foreign currency denominated deals making up to 84% of the total loan syndication market volume, compared to 68% the previous year. We anticipate the trend of local borrowers raising sizable portions of syndicated loans in foreign currency due to offshore projects and lower funding cost will continue in 2017. AmInvestment Bank continues to gain recognition in the loan syndication market. It won the Best Transport Deal in Malaysia at The Asset Triple A Asia Infrastructure Awards 2016. The Best Transport Deal in Malaysia title was also awarded to AmInvestment Bank for its capabilities in delivering quality results in providing integrated financing solutions to its sovereign, corporate and institutional clients. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 During the period under review, global rates and foreign exchange markets faced considerable volatility. Both the United Kingdom’s vote to leave the European Union and the surprise result of the US election contributed to uncertainties. The USD-RM depreciated by 12% during the period under review. There was a huge outflow of foreign funds from the Malaysian bond market causing a fall in foreign ownership of Malaysian Government Bonds from a peak of 51.9% in Nov 2016 to less than 40% by March 2017. The delicate balance between efficient usage of capital and profitability is the basis of our strategic initiatives. As a result, Global Markets’ focus is to grow flow business while leveraging on our existing Fixed Income franchise. The division continued to leverage on our relationship within the Group to harness the synergies via the various strategic initiatives to grow flow business. In addition to managing and building client relationships, our dedicated multiproduct Sales team is also tasked to deliver product solutions across all asset classes. The Sales team is supported by a professional team of traders and an equally dedicated team from Business Management, where the support functions are being housed. The slew of awards by Global Markets is a testimony of this symbiotic and enriching relationship which exists internally within the division. In FY17, we won Best FX Bank for Corporates & Financial Institutions for the 5th consecutive year from Alpha Southeast Asia Best Financial Institution Awards. We were top 3 in four categories in the Asia Money FX Poll – Best Domestic FC Providers. In The Asset Awards, we were top 5 in Local Currency Bond Individual Sales. Going forward, Global Markets will continue to build on the momentum of our commercial and mid-market segments which have started to gain traction on account of our Top 4 strategic initiatives. The division will also focus on growing flow business through collaboration by leveraging on various distribution channels and relationships within the Group for effective cross-selling. Continuous emphasis is also placed to provide innovative solutions, from a conventional as well as Islamic perspective, with the ultimate aim of growing the AmBank brand. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  120. BUSINESS REVIEW WHOLESALE BANKING Funds Management Transaction Banking Our Funds Management Division provides conventional and Shariah-compliant funds management services to both institutional and retail investors , and specialises in global sukuk and Asian equities. Transaction Banking offers business banking solutions that cater for corporate needs to better manage cash flow – both payables & receivables. Our solutions include our cash management platform via eAmBiz, online payroll via eAmPayDay & trade financing via AmTrade. As at 31 March 2017, we managed 80 institutional mandates, 78 unit trust funds, 2 exchange traded funds and 10 Private Retirement Schemes (PRS) funds. Total assets under management increased 3% or RM1.0 billion to RM37.2 billion over the last financial year, led by Shariah-compliant inflows which grew 22% over the year to RM8.7 billion. From our trade financing desk, we are focusing on Islamic offerings and launched our Over The Counter Bank Guarantee-i (OTCBG-i) this year. There will more trade financing – i related offerings in 2017. AmInvest dominates the fixed income unit trust sector with the largest market share of 14.2%. In PRS funds, we improved our ranking from 6th to 5th position in terms of market share, at the end of the year. We are currently upgrading our eAmBiz cash management platform to keep abreast of the digital payment landscape. A mobile version will be launched to enable corporate customers to access account information and to perform transactions via mobile phone and tablet. We have also embarked on security token upgrades to ensure our internet banking access is safe and secure. We launched three funds during the year, in equity, close-ended fixed income and PRS. Promotions and campaigns throughout the year were targeted towards the retail segment and the PRS market. As we continue to build on our funds management capabilities and expertise, our efforts have been validated and recognised with a total of 11 awards this year. Many were repeat wins. In terms of fund performance, AmDynamic Bond, a fixed income fund launched in 2003 was singled out under the Best Bond Ringgit – Malaysia Provident 10-year performance category at The Edge | Thomson Reuters Lipper Fund Awards 2017 and Best Malaysia Bond Fund at the Morningstar Malaysia Fund Awards 2017 respectively. AmDynamic Bond, AmCommodities Equity and AmIncome Plus were honoured this year at the Fundsupermart.com Recommended Unit Trusts Awards 2016/17. For the fourth consecutive year, AmInvest was named Malaysia’s Best Pension Fund Manager and also received top honours as Malaysia’s ETF Manager of the Year from Asia Asset Management (Hong Kong). The Asset Triple A ETF Awards 2016 also named us as the Best ETF Provider, Malaysia. World Finance (London) has acknowledged us as Malaysia’s Investment Management Company of The Year for 6 years in a row now. On the Islamic front, we were recognised as Malaysia’s Best Asset Management House of the Year from The Asset (Hong Kong) for the second time and received recognition as Most Innovative Fund Manager 2016 at the Global Islamic Finance Awards 2016. We realigned our department this year to serve our customers more efficiently and effectively. The exercise enabled us to continue striving for growth with a concentrated sales focus, backed by reinforced support in mid and back room. As part of our cash management offerings to corporates, we are actively engaged with MyClear to offer JomPAY. Through JomPAY, corporates now only need to deal with one bank to perform their collections from all participating banks in Malaysia. A single format of reporting and real time notification allows corporate customers to perform easy reconciliation in their back office. In 2016, we onboarded corporate and government agencies from the education segment, property maintenance, loan repayment and local councils. The JomPAY list will continue to expand in 2017 to utility companies and welfare agencies. Private Banking AmPrivate Banking provides high net worth Malaysian clients with unique investment banking propositions via investment advisory, security dealing and fund management services, and executed using capital market, investment and banking products and services. We complement AmBank’s expertise and resources with customised solutions to meet our clients’ investment needs. Products and services originated within the Group are channeled across to private banking clients, who may also choose from a suite of other investment providers under AmPrivate Banking’s open architecture platform. Our private bankers serve clients located throughout Malaysia, offering them access to domestic and foreign exposures in equities, bonds, currencies and alternatives. Complementing our private bankers’ advisory services are in-house fund managers offering discretionary portfolio management. We shall also continue to leverage on the momentum we have built in developing innovative Shariah compliant products and services. We also expect to grow our retail business because we have the largest number of institutional unit trust agents in the market and we have the Group’s distribution channels. p. 118 p. 119 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  121. Notable Deals and Awards in Wholesale Banking NOTABLE IPOS FOR FY17 ECO WORLD INTERNATIONAL BERHAD SERBA DINAMIK HOLDINGS BERHAD RM2 .6 billion RM0.6 billion Joint Underwriter April 2017 Joint Underwriter February 2017 NOTABLE M&A DEALS FOR FY17 IOI PROPERTIES GROUP BERHAD EKOVEST BERHAD RM7.9 billion RM1.1 billion Principal Adviser Co Adviser Acquisition of land in Republic of Singapore January 2017 Disposal of 40% equity interest in Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd December 2016 ALUMINIUM COMPANY OF MALAYSIA BERHAD EKOWOOD INTERNATIONAL BERHAD RM81 million RM22 million Principal Adviser Principal Adviser Take-over Offer October 2016 Privatisation via Scheme of Arrangement February 2017 HUAT LAI RESOURCES BERHAD JCBNEXT BERHAD RM99 million HUAT LAI RESOURCES BERHAD (Incorporated in Malaysia) (323273-T) JcbNext Berhad Principal Adviser RM104 million Principal Adviser Take-over Offer November 2016 Take-over Offer December 2016 ML GLOBAL BERHAD WONG ENGINEERING CORPORATION BERHAD RM35 million (409959-W) Principal Adviser Principal Adviser Take-over Offer May 2016 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 RM53 million Take-over Offer September 2016 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  122. BUSINESS REVIEW WHOLESALE BANKING NOTABLE INDEPENDENT ADVISER ROLES FOR FY17 SHELL REFINING COMPANY (FOM) BERHAD GHL SYSTEMS BERHAD RM576 million Independent Adviser RM239 million Independent Adviser Take-over Offer April 2017 Take-over Offer January 2017 MIECO CHIPBOARD BERHAD RM82 million Independent Adviser Take-over Offer October 2016 NOTABLE FUND RAISING DEALS FOR FY17 p. 120 p. 121 MALAYSIA BUILDING SOCIETY BERHAD IOI PROPERTIES GROUP BERHAD RM1.7 billion RM1.5 billion Joint Principal Adviser, Joint Managing Underwriter and Joint Underwriter June 2016 Principal Adviser March 2017 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  123. Notable Deals and Awards in Capital Markets AMINVESTMENT BANK ’S AWARDS AND ACCOLADES IFR Asia Awards 2016 Islamic Issue of the Year, SEA Lebuhraya DUKE Fasa 3 Sdn Bhd IFN Awards 2016 Regulatory Capital Deal of the Year Mumtaz Rakyat Sukuk Berhad Alpha SEA Deal & Solution Awards 2016 Best Wakalah Deal of the Year, SEA Lebuhraya DUKE Fasa 3 Sdn Bhd IFN Awards 2016 Commodity Murabahah Deal of the Year Al Dzahab Assets Bhd Alpha SEA Deal & Solution Awards 2016 Best Murabahah Deal of the Year, SEA Al Dzahab Assets Bhd Bloomberg Underwriter Rankings 2016 Malaysia Bonds – No. 3 with 17.7% market share Ringgit Sukuk – No. 4 with 17.5% market share RM Loan – No. 4 with 16.4% market share The Asset Triple A Asia Infrastructure Awards 2016 Project Finance Bank of the Year, Malaysia (2nd Consecutive Year) Lead Manager Award 2016 No. 3 – by Programme Value Lead Manager Awards 2016 Joint 1st – by Numbers of Issues Lead Manager Awards (Sukuk) 2016 No. 3 – by Programme Value Lead Manager Award (Sukuk) 2016 Joint 2nd – by Number of Issues Lead Manager Awards X 2016 No. 3 – by Programme Value The Asset Triple A Asia Infrastructure Awards 2016 Best Transport Deal of the Year, Malaysia (2nd Consecutive Year) Penang Port (2016) & DanaInfra (2015) Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  124. BUSINESS REVIEW WHOLESALE BANKING The Capital Markets Group ’s key transactions are as highlighted below: Legend PA Principal Adviser MLA Mandated Lead Arranger/ Bookrunner LA Lead Arranger LM Lead Manager SA Shariah Adviser JLA Joint Lead Arranger JLM Joint Lead Manager JSA Joint Shariah Advisers INFRASTRUCTURE & PROJECT FINANCING Lebuhraya DUKE Fasa 3 Sdn Bhd PA LA DanaInfra Nasional Berhad RM3.64 billion Sukuk Issuance JLM JSA RM2.68 billion GG Sukuk issuance • Largest Ringgit-denominated greenfield tolled-road project financing (in nominal value) to date. • Malaysia’s first Sukuk issuance based on the Shariah principle of Wakalah Bi al-Istithmar to fund the development and construction of an expressway. • JLM • Securing optimal pricing for the 11th issuance despite the challenging market backdrop due to post Trump address to Congress in February 2017. • RM2,105 million issuance with tenors of 5, 7, 10 and 15 years was completed via book-building mode while RM575.0 million issuance with tenors of 25 and 30 years was completed via private placement. Introduction of a Reimbursable Interest Assistance (RIA) facility of up to RM560 million by the Government of Malaysia. GOVERNMENT HOUSING Lembaga Pembiayaan Perumahan Sektor Awam (“LPPSA”) JLA EDUCATION JLA JLM Perbadanan Tabung Pendidikan Tinggi Nasional (“PTPTN”) JLA JLM JSA LM RM25.0 billion GG Sukuk Programmes RM8.0 billion GG Sukuk Programme • LPPSA is the new statutory body established and is under the purview of MoF to undertake the provision of housing financing to civil servants previously conducted by Bahagian Pinjaman Perumahan. • Established under the PTPTN Act 1997 to manage funds for tertiary education purposes, collect payments of financing and to provide and manage education savings schemes. • 3.76 times bid-to-cover ratio for the RM3.4 billion Sukuk issuance via bookbuilding. • • Tax remission enhanced the government-guaranteed Sukuk’s attractiveness to investors, thereby achieving optimum pricing. First issuance well received by the market, receiving total orders of RM5.7 billion from 52 investors account with a final bid-to-cover ratio of 1.62 times. • AmInvestment appointed as sole Lead Manager for the 2nd issuance of RM2.2 billion. p. 122 p. 123 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  125. ENERGY CONGLOMERATE Sarawak Energy Berhad JLM YTL Corporation Berhad JLM RM1 .5 billion Sukuk Issuance RM1.0 billion Medium Term Note (MTN) Issuance • Fourth Sarawak Energy issuance under the Sukuk Musharakah Programme. • Second issuance under the MTN Programme. • • Capitalised on market appetite for long-tenored papers – the Sukuk was oversubscribed by over 2 times with the majority of the interest focused on the longer tenored papers. Issue tenors of 10 and 20 years – the latter of which is the standalone corporate issuance with the longest tenor year-to-date. • Preliminary engagement and understanding of the client’s financing requirements leading up to the issuance enabled a swift time to market. FINANCIAL INSTITUTIONS Affin Bank Berhad JLM AMMB Holdings Berhad PA LA LM RM6.0 billion Medium Term Note (MTN) Programme RM10.0 billion Basel III Tier 2 Sub Notes Programme • Programme has perpetual tenor and provides flexibility to issue both subordinated MTNs and senior MTNs. • • Superior credit profile demonstrated by 1.62 times bid-to-cover ratio for the inaugural issuance of subordinated MTNs. Inaugural Basel III-compliant capital programme by AMMB Holdings, enabling it to meet BNM’s capital requirements for financial holding companies from 2019. • • Marks the first bank capital issuance by Affin Bank and the first bank capital issuance in 2017. Issuances out of the programme to be used to capitalise the banking group by subscribing to capital issuances of its banking subsidiaries. Rantau Abang Capital Berhad JLM RM1.0 billion Sukuk Issuance Al-Dzahab Assets Berhad JPA RM900 million Asset-Backed Securitisation Programme • A special-purpose vehicle established by Khazanah Nasional Berhad to raise onshore Ringgit-denominated financing. • • Inaugural Ringgit sukuk issuance in 2017. Financing vehicle for the securitisation of Islamic personal financing receivables extended to civil servants and originated by RCE Marketing Sdn Bhd. • Strong investor interest with 2.0 times bid-to-cover ratio by 28 investors. • Issuance in series in line with expected collections from the receivables pool, with tiered credit rating and overcollateralisation. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 JLA JLM Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  126. BUSINESS REVIEW WHOLESALE BANKING OIL & GAS TELECOMMUNICATION Yinson TMC Sdn Bhd PA LA Maxis Broadband Sdn Bhd JLM RM250.0 million Unrated Sukuk Issuance LM SA RM10.0 billion Unrated Sukuk Programme • Issuance by the Yinson TMC Sdn Bhd (a subsidiary of Yinson Holdings Berhad), the sixth largest floating, production, storage and offloading (“FPSO”) operator in the world. • Maxis Broadband was established to streamline Maxis Berhad’s telecommunication operations into a single operating company. • Issuance proceeds mainly utilised for spectrum fee payment(s). • Refinancing existing Syndicated Term Loan of RM234.4 million and for general working capital. • Appointed as sole Lead Manager for the RM500.0 million issuance and JLM for the RM2.45 billion issuance. • Repayment capability supported by free cash flow from the various FPSO projects and a corporate guarantee from the parent. ENTERTAINMENT/HOTELS WATER JLM GENM Capital Berhad Pengurusan Air SPV Berhad JLM RM2.6 billion Medium Term Note Issuance RM1.45 billion GG Sukuk Issuance • Inaugural 15-year issuance by GENM Capital – strong response by investors. • Final order book with bid to cover of 4.17 times. • • Interest from offshore investors – underlines the strength of GENM’s credit quality. Diversified distribution with strong support from financial institutions and insurance/pension funds. • • Considerable support from financial institutions, which subscribed up to 50% of the total issue size. Up to 8bps tighter pricing vis-à-vis other GG issuance priced in end May 2016. INFRASTRUCTURE Ekovest Berhad EDUCATION MLA Perbadanan Tabung Pendidikan Tinggi Nasional MLA RM700.0 million Syndicated Term Loan Facility RM2.0 billion GG Synd Revolving Credit-i Facility • Involved from onset of transaction via our role as project adviser and legal documentation process as the Sole MLA for the transaction. • • Equity Loan to form part of Ekovest’s effective equity contribution for the proposed construction of the Setiawangsa-Pantai Expressway. For the provision of educational Shariah-compliant financing in accordance with the PTPTN Act and/or to refinance or redeem the Syndicated Revolving Credit-i Facility (“SRC-i”). • The SRC-i is fully underwritten by Affin Islamic, AmBank Islamic, CIMB Islamic and Maybank Islamic. • It will be paid via issuance of RM8.0 billion Sukuk Programme. • Ekovest Berhad is one of the leading construction companies in Malaysia, involved in major civil engineering and building works including turnkey, project designing, project building and project management. p. 124 p. 125 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  127. SERVICES REITs North Memorial Sdn Bhd MLA AmFIRST REIT MLA RM1 .38 billion Multicurrency Facility Facilities RM250.0 million Syndicated Term Loan Facility • To part finance the privatisation exercise of Nirvana Asia Ltd (“NAL”), which is listed on the Hong Kong Stock Exchange (“Privatisation”). • Financing for the acquisition of a freehold 3-storey hypermall building in Bukit Mertajam, Pulau Pinang (Mydin HyperMall). • On 8 July 2016, CVC Capital Partners (“CVC”), an established private equity firm, made an offer to buy out NAL for a total consideration of HKD$8.1 billion (RM4.16 billion) through cash & shares to founder, Rightitan Sdn Bhd (42.7%), and its roll-over investor, Orchid Asia Group Mgmt (21.6%). • The proposed acquisition is meant to capitalise on the strong economic growth in Pulau Pinang’s retail segment and to provide a stable income stream for AmFIRST REIT. • The Privatisation aims to unlock the potential value of Nirvana group. The facility is funded by CIMB, AmBank, OCBC & Alliance. PROPERTY Wholesale Banking Global Markets Awards Global Markets Awards Won in FY17 UDA Holdings Berhad (“UDA”) MLA Alpha Southeast Asia has awarded AmBank for the 5th consecutive year at the 10th Annual Alpha Southeast Asia Best Financial Institution Awards 2016 ceremony in recognition for our ability to provide efficient and effective FX solutions and services to the needs of our wide-based customer segments. RM500.0 million Syndicated Islamic Facilities • To part-finance 8 property development projects undertaken by UDA’s subsidiaries in northern, central and southern regions of Peninsular Malaysia. • A government project with strong internal rating and payment is supported by the sales proceeds of the units for sale. • The facility is supported by corporate guarantees from the project developers and an undertaking from UDA to top up the shortfall in case of cost overrun. • It is funded by Affin Islamic, AmBank Islamic, Bank Pembangunan and Kuwait Finance House (M) Bhd. • Best FX Bank for Corporates & Financial Institutions. Asia Money FX Poll – Best Domestic FX Providers (new category for 2016) Top 3 for: a) Best Domestic Provider of FX Services b) Best for FX Options c) Best for FX Products and Services d) Best for FX Research & Market Coverage The Asset Awards: • Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 No 5. in Local Currency Bond Individual Sales (Ho Su Farn) MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  128. BUSINESS REVIEW RETAIL BANKING Jade Lee Gaik Suan Managing Director Retail Banking RETAIL BANKING FOCUSING ON LOANS GROWTH IN NON INTEREST INCOME TO MITIGATE MARGIN COMPANY Total Income (YoY Movement) and Loans by Line of Business Total income RM1,364.9 million 32% Deposits 1% RM3.5 million 21% Auto FY17 Highlights 15% RM50.3 million 18% Mortgage Retail Banking recorded a total income of RM1,364.9 million in FY17. This was 7.9% lower YoY impacted by margin compression. Our retail loan base grew 5.4% supported by robust growth in mortgages and cards. Retail CASA grew 7.7% from Retail SMEs and payroll accounts. Our targeted focus on credit cards saw cards in circulation up 10% YoY along with higher spending volumes. We continued to drive new cards issuance through innovative propositions such as the AmBank BonusLink Visa Card. We also strengthened our wealth management capabilities by becoming a distributor for Amanah Saham Nasional Berhad and Amanah Hartanah Bumiputra. 18% Cards Total Income RM1,364.9 million 22% RM8.6 million 3% Personal Financing 3% RM1.1 million 52% Mortgage 41% Auto Total Loans RM48.8 billion What We Do Retail Banking provides everyday banking to individual customers. Our comprehensive suite of financial solutions includes deposits, loans & financing, credit cards, wealth management and priority banking. p. 126 p. 127 AMMB Holdings Berhad (223035-V) 4% Cards 2% Retail SME 1% Others Annual Report 2017 ambankgroup.com 19% RM7.0 million 65% RM37.2 million Priorities for FY18 Retail Banking will continue to focus on growth in our mass affluent, affluent and retail SME segments, while strengthening our market positions in cards and wealth management. These propositions are supported by enhanced sales and distribution capabilities, including via leveraging on advanced customer data analytics and improved efficiency through process reengineering and digitalisation. 10% RM26.6 million 3% Wealth 2% Retail SME 3% Others 3% RM7.3 million
  129. Retail Banking In Retail Banking , we have refined key performance indicators, given more clarity to the ownership of our channels, segments and products and redesigned our incentive schemes for branch managers and relationship managers. We were impacted by margin compression in FY17 and saw income fall 7.9% YoY. Our retail loan base grew 5.4% supported by robust growth in mortgage loans and cards. Next year, we expect to see stronger results as the benefits of our restructuring become apparent. Channels Driven by improvements in channels and cross selling, our branch productivity improved. Our average branch sales performance growth from the third quarter to the fourth quarter of FY17 was about 70%, whilst our average branch YOY growth was 58%. Output from mobile sales doubled with 52% productivity improvement for our mortgage team. Our cards team registered a four-fold productivity improvement. Customer Experience Products Our improved sales were supported by simple product innovations. In the last quarter of FY17, senior savers and other promotions garnered nearly RM3 billion in deposits. Our appointment in January 2017 as an agent for Amanah Saham Nasional Berhad unit trusts also resulted in AmBank taking RM198 million in the last quarter of FY17. Increased collaboration with AmMetLife saw our premiums grow 64% YoY. Segments The re-launch of our AmBank Signature Priority Banking led to a six-fold increase in our customer base from December 2016 to March 2017. We now have around 50,000 priority customers, making us one of the Top 4 in the industry. With increased confidence and support from affluent customers, we are seeing increased product take up, and improved revenue. In order to better serve our customers, we upgraded 2 of our 7 priority banking centres and re-energised our relationship managers and support team. We rolled out our new holistic branch model for enhanced customer experience in Sabah. We beta tested our new mobile banking application to replace AmGenie, and a new merchant portal. Straight through processing improvements from Project APEX meant we could reduce the overall account opening experience from an average of 45 minutes to less than 10 minutes. We upgraded our customer care, so all touch points are rolled into one centre that deals directly with customers to resolve and close off issues. Data Science We now have a functional enterprise data warehouse, relevant analytical tools and a modest team of data specialists to support our digital sales enablement and customer experience initiatives. Costs Management Team Our cost showed a YOY decline in spend from the rationalisation of excess terminals and premises, and the completion of the merger of MBF-branded cards into Ambank. We continued to modernise our infrastructure with the roll out of a new loan origination system, the replacement of old ATMs, and an ongoing upgrade of our debt collection system, customer management system, data science capabilities, customer on-boarding solutions and mobile banking. We have a refreshed team of seasoned bankers to lead our product, segment & distribution initiatives, supported by a strong credit and collection operations, and data science. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Looking Forward In FY18, we expect to see stronger results as the benefits of our restructuring become apparent. We will continue to focus on growth in our mass affluent, affluent and retail SME segments, while strengthening our product market positions in cards and wealth management. These propositions are supported by enhanced sales and distribution capabilities, including leveraging on advanced customer data analytics and improved efficiency through process reengineering and digitalisation. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  130. BUSINESS REVIEW BUSINESS BANKING Christopher Yap Huey Wen Managing Director Business Banking In line with our Top 4 Strategy , we have created a new division called Business Banking to enhance our focus on the small and medium size enterprise (SME) segment. This is a key growth area for AmBank and is also in line with the government’s strategic initiative to encourage entrepreneurs. Our Business Banking division started operations in April 2017 and comprises two focus areas: ENTERPRISE BANKING COMMERCIAL BANKING Focuses on companies with a business turnover of less than RM50 million and primarily looks at working capital loans under programme lending which will drive flow business of FX and trade. p. 128 p. 129 AMMB Holdings Berhad (223035-V) Focuses on companies with a business turnover of RM50 million to RM150 million and primarily looks at liabilities and discretionary lending along with ancillary solutions. Annual Report 2017 ambankgroup.com
  131. What We Do ISLAMIC BANKING As the primary Islamic banking arm of AmBank Group , AmBank Islamic offers a comprehensive range of Shariah-compliant retail and wholesale banking products and services, including treasury and trade solutions. Eqhwan Mokhzanee Muhammad We recorded a healthy profit after taxation and zakat of RM255.7 million in FY17. This was an increase of approximately 10.0% over the previous financial year and constituted 18.1% of AmBank Group’s profit after tax. Chief Executive Officer AmBank Islamic Berhad We continued to restructure our balance sheet by growing our auto financing portfolio in a selective manner and focusing on profitable growth for our wholesale banking portfolio. To create a more sustainable earnings stream, we continued to substantially grow our mortgage portfolio. In line with AmBank Group’s strategy to address the issue of margin compression, we have placed more emphasis on wealth management, credit cards and transaction banking. Profit after taxation and zakat RM268.9 million FY17 Highlights AmBank Group’s Islamic banking business constitutes AmBank Islamic Berhad (AmBank Islamic) and the Islamic banking business undertaken by AmInvestment Bank Berhad. We recorded a healthy combined profit after taxation and zakat of RM268.9 million in FY17. This was an increase of 6.4% over the previous financial year, supported by higher fees, and trading and investment income. The achievement is an attestation of our strategy to focus on profitable growth areas and non-funded income, and identify the niche market segments which have been under-penetrated. The gross impaired financing ratio improved from 2.18% to 1.78% for the financial years ended 31 March 2016 and 2017 respectively, reflecting the disciplined approach in credit risk management and collection processes. To fund business growth and have an adequate buffer in light of the more challenging and complex economic environment ahead, AmBank Islamic raised RM250 million of Tier-II capital in FY17. Coupled with the growth in profitability, we managed to maintain a strong capital position, with total capital ratio and capital equity tier 1 ratio as at 31 March 2017 of 15.1% and 10.5% respectively. Priorities in FY18 AmBank Islamic will Intensify focus on small and medium enterprise (SME) and mid corp clients via transaction banking solutions, FX, vendor and contract financing. Given that auto financing is a major contributor towards our earnings, greater emphasis would be placed on the profitable customer segments within this sector. We will continue to harness opportunities in the Islamic banking space to serve niche market segments. Target areas will include Islamic wealth management which entails the distribution of Islamic unit trusts and bancatakaful products, and term financing-i for investment in Amanah Saham Bumiputera (ASB) and ASB2, which are expected to diversify and further improve our earnings. These initiatives would be underpinned by strategies to procure low cost deposits to mitigate the impact of margin compression. We are contemplating to widen our scope of business beyond credit intermediation. Whilst credit intermediation shall continue to remain our key earnings generator and source of funding, we would explore playing an investment intermediary role as well. This could be supported by the adoption of environmental, social and governance (ESG) parameters as one of the guiding principles in the conduct of our business. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  132. BUSINESS REVIEW ISLAMIC BANKING New Focus Areas In line with AmBank Group ’s Top 4 Strategy, we focused on growing our SME portfolio. AmBank Islamic and Credit Guarantee Corporation Malaysia Berhad entered into portfolio guarantee agreements of up to RM375 million to facilitate the provision of financing to qualified SMEs which lack collateral. We also participated in SME Corporation’s Shariah SME Financing Scheme, under which eligible SMEs could receive a 2% profit expense rebate. We also promoted our Islamic banking solutions to SMEs, via a series of pocket talks and in collaboration with partners such as Halal Industry Development Corporation and SME Corporation. AmBank Islamic obtained an institutional unit trust adviser license from the Federation of Investment Managers Malaysia in FY17. This allowed us to enter into distribution agreements with unit trust management companies to augment our wealth management business by distributing Islamic unit trusts to diversify our range of products and boost fee income. We introduced term financing-i for the provision of financing to eligible individuals to invest in ASB, a unit trust fund promoted by Amanah Saham Nasional Berhad (ASNB), a wholly-owned subsidiary of Permodalan Nasional Berhad (PNB), which is currently the largest unit trust institution in Malaysia. Realising that one of the underserved areas is the provision of financing for affordable homes, AmBank Islamic and the State Government of Johor launched the Johor Affordable Home Financing Scheme in September 2016. The scheme was designed to assist home purchasers who actually qualify to secure financing, but are not approved by financial institutions because lower category of affordable homes may not be within the financial institutions’ target market. Amongst the products that were launched adopting the Tawarruq principle were: • Cash Line-i – a short-term facility made available through the current account-i for customers who require funds for working capital requirements, personal use or project/contract financing. • Home/Property Financing-i – a financing facility for the purchase of properties where the profit is calculated based on variable rates. For the benefit of the customer, the profit rate is capped throughout the financing period, as per the requirement of the Tawarruq principle. • Term Financing-i Secured by ASB – term financing facility with fixed payment period offered to eligible individuals for the purpose of investing in ASB unit trust fund. As part of our strategy to focus on trade, we have simplified our processes for trade finance products such as accepted bills-i (AB-i), outward bills purchased-i (OBP-i), credit bills negotiation-i (CBN-i), foreign currency trade financing-i (FCTF-i) and trust receipt-i (TR-i). Over-the-counter bank guarantee-i (BG-i) was introduced to improve the turnaround time for the procurement of BG-i by customers. Further, the master terms & conditions for cash management and trade finance products were introduced. We reviewed our existing products to ensure compliance with new policy documents issued by Bank Negara Malaysia (BNM) such as: • Wakalah (agency) • Kafalah (guarantee) Products and Services • Hibah (gift) We are committed to ensuring that the conduct of our business is consistent with Shariah requirements. In FY17, we conducted an exercise to migrate a number of our products to adopt the Shariah principle of Tawarruq; an arrangement that involves the sale of an asset to the purchaser on a deferred basis and subsequent sale of the asset to a third party on a cash basis to obtain cash, or vice versa. • Qard (benevolent loan) • Wadi’ah (safe-keeping) • Ijarah (lease) • Wa’d (undertaking) Shariah Governance We adopted BNM’s Shariah Governance Framework (SGF) with 4 separate Shariah pillars namely Shariah Research, Shariah Review, Shariah Risk Management and Shariah Audit. In addition, AmBank Islamic set up a Shariah Legal Section under the Shariah Research & Advisory Department. With the strengthening of the SGF, any lapses in controls or processes which could lead to Shariah Non Compliance (SNC) incidents were identified in a proactive manner. We enhanced controls to mitigate against potential SNC, including improvements in documentation and process flows, as well as manuals and guides. For FY17, no SNC incidents were recorded by AmBank Islamic. p. 130 p. 131 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  133. Senior Management Oversight Business Outlook for FY18 The oversight of our business and compliance aspects were conducted via AmBank Islamic ’s Heads of Department Forum and Oversight Forum. The Heads of Department Forum discussed strategic, financial performance, human resource, industry development, product, and other business and organisation matters. The Oversight Forum focused on Shariah, risk management, compliance, audit, liquidity, regulatory and other control issues. Whilst we expect the Malaysian banking sector and economy to pick up momentum, there remain uncertainties and challenges arising from increasing competition, and internal and external developments. Capacity Building We recruited new personnel to our management team including the Heads of Product Management Section and the Heads of Business Development Section for both our Retail Banking and Wholesale Banking Departments. We also continued our systematic and targeted training for Board members, Shariah Committee members, management and staff of AmBank Group who were involved in the Islamic banking business. This included nationwide engagements with relationships managers and training for Islamic banking champions of all 175 branches. Such internal education/awareness programmes were key to position Islamic banking as the preferred choice for customers. Brand Presence AmBank Islamic continued to focus in strengthening our brand presence and promote greater awareness and knowledge of Islamic banking activities amongst the public through participation in various events namely: • The 13th Kuala Lumpur Islamic Finance Forum (KLIFF) 2016 • Global Islamic Finance Forum 5.0 (GIFF) 2016 • The 19th SME Annual Showcase (SMIDEX 2016) • Karnival Kewangan 2017 by BNM Corporate Social Responsibility AmBank Islamic continued to serve the community through corporate social responsibility initiatives. We fulfilled our responsibilities through business zakat distribution of RM1.5 million, out of which RM414,000 was paid to state zakat collection centres whilst the balance of RM1.1 million was distributed to eligible recipients ranging from associations and charity homes throughout Malaysia, including Yayasan Pelajaran Mara (YPM). The distribution to YPM was for the ongoing Student Adoption Programme which was currently in its sixth year out of a 10-year programme. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 AmBank Islamic set up a new Business Banking Department to facilitate a seamless interface with the Group’s new Business Banking line of business in driving penetration into the SME segment. We will place greater emphasis on the profitable segments within the auto financing, corporates and trade businesses. In addition, the distribution of Islamic unit trusts and bancatakaful products, and term financing-i for investment in ASB and ASB2 are expected to diversify and further improve our earnings. Coupled with the procurement of low cost deposits, these new earnings drivers would help to mitigate the impact of margin compression. Managing asset quality via prudent credit underwriting standards and proactive collection strategies will also be a key focus. Given that adherence to Shariah norms and requirements is paramount, we will continuously review the effectiveness of our SGF, and ensure that our business and operations comply with Shariah requirements. We will continue to promote capacity building in order to have the right skill set, optimal level of resources and proper succession. To ensure the sustainability of our business and operations, training on Islamic banking shall be provided in a systematic manner to ensure consistent and relevant delivery throughout AmBank Group. Training modules shall be tailored to ensure that the specific requirements of the business are met. For the coming year, we shall continue the momentum in leveraging on the distinct value proposition offered by Islamic finance to add further value to AmBank Group. This strategy would entail further penetration into niche market segments which were hitherto under-penetrated by AmBank Group. AmBank Islamic also aspires to introduce Islamic specific offerings over the medium term to enhance our prominence and strategic focus. To this end, we will embark on financial research and development (R&D) to drive product diversification. Major challenges such as customer acceptance, and whether the existing regulatory framework and enablers are equipped for the introduction of such distinct products, would need to be overcome. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  134. BUSINESS REVIEW GENERAL INSURANCE Derek Llewellyn Roberts Chief Executive Officer AmGeneral Insurance Berhad Number One in Motor Insurance We grew our motor insurance market share by 0 .23% to 15.76% and improved our position as No.1 in the market, despite a year of slower growth in the general insurance industry. In overall general insurance market share, AmGeneral was No. 2 based on net premiums in 2016. Profit before tax RM216.9 million FY17 Highlights We grew our motor insurance market share by 0.23% to 15.76% and improved our position as number one in the market. In overall general insurance market share, AmGeneral was number two, based on net premium in 2016. We recorded a net earned premium of RM1,437.6 million, down 0.7% YoY. Profit before tax of RM216.9 million was up 7.4% YoY while profit after tax of RM190.7 million was down 1.05% due to lower tax in FY16. As part of our focus to grow our non-motor portfolio and enhance our support capability, we developed detailed reporting in a single view to enable targeted campaigns and performance tracking. This led to an increase in cross selling activities at both individual agent and distributor levels. We registered a nonmotor gross written premium (GWP) growth of 6.3% for the financial year ended 31 March 2017. We also strengthened and improved our renewal rates with the continued implementation of the Net Promoter Score (NPS) tool in line with our strategic initiative to build a customer oriented organisation. Multi-lingual short surveys are sent via short messaging service (SMS) link to customers at different touch point and the responses received provided valuable insight into customers’ preferences which helps in better managing customers’ expectations. Priorities in FY18 We have developed our risk pricing model infrastructure and increased penetration to non-motor products to prepare ourselves for the liberalisation of premium pricing for motor and fire insurance products beginning July 2017. We aim to lead in motor insurance and selected personal and commercial lines via competitive underwriting, innovative product offerings and digital transformation. What We Do AmGeneral Insurance is one of the largest motor and general insurance companies in Malaysia with over four million policy holders. It is backed by a strong partnership between AmBank Group and IAG Trading and operates under two well known and trusted brands in the Malaysian market, AmAssurance and Kurnia. We generate business through a comprehensive range of general insurance solutions distributed through a network of 32 branches, 7,000 agents and dealers, and through AmBank’s branches nationwide. p. 132 p. 133 AMMB Holdings Berhad (223035-V) We extended our Agent Portal Services (APS) to brokers and partners with the launch of Partner Portal Services (PPS) and that enabled us to grow the broking segment further with three new PPS partners signed up. Increasing our digital capabilities has been key as AmGeneral continues to tap into opportunities to improve its support and services to agents and partners as well as enhance customer experience and being agile to meet the customers’ changing demands. FY17 was a challenging year for the general motor business as the economy and consumer sentiment remained weak. The second half of the year also marked the first phase of progressive liberalisation of motor and fire insurance for the general insurance industry. In the face of all these changes and challenges, AmGeneral made significant progress, and continued to embrace change, innovation and find new avenues for further growth and opportunities, as we completed the second year of our three year strategic framework. Annual Report 2017 ambankgroup.com
  135. We successfully set up our critical requirements for market liberalisation to ensure smooth implementation and service delivery to customers . This included an innovative product, Enhanced Perfect Rider Plus, coupled with systems enhancement and embedding pricing capability and functions for more efficient process and issuance of policies. Over the year, we embarked on a 7-month corporate awareness campaign with a series of newspaper articles featuring insights on AmGeneral’s business, strategic direction, employee career development, customer experience and digitalisation plans. These articles reached a daily readership of 1.4 million in The Star and were subsequently featured in Bahasa Malaysia in the Harian Metro and in Mandarin Chinese in the Sin Chew and See Hua newspapers. Kurnia launched a brand refresh campaign to crystallise customer confidence that Kurnia will always be there in your time of need. The campaign raised awareness of Kurnia’s 24-hour auto assistance, towing services and other exclusive services for policyholders. AmAssurance launched its ‘On Tour Truck’ campaign to increase public awareness and knowledge on various AmAssurance products and services. NET EARNED PREMIUM AmGeneral will continue to focus on segmentation at product portfolio level with an overlay of customer insights to determine product design and marketing strategy. This will be the core focus, in line with our groundwork for liberalisation where both system readiness and go-to-market strategy implementation will be crucial to navigate this change. RM1,437.6 million PROFIT BEFORE TAX RM216.9 million GREW OUR MOTOR INSURANCE MARKET SHARE to 15.76% RECORDED NET EARNED PREMIUM OF RM1,437.6 MILLION 0.7% YoY PROFIT BEFORE TAX OF RM216.9 MILLION 7.4% YoY Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  136. BUSINESS REVIEW LIFE INSURANCE Ramzi Albert Toubassy AmMetLife Chief Executive Officer AmMetLife Insurance Berhad We achieved an important milestone with the completion of our core system revitalisation project , AmReady. This enhanced and improved our IT infrastructure to further support all distribution channels. We launched WealthSecure Smart in June 2016. This is a non-participating limited premium payment endowment plan with guaranteed cash payments payable every year, starting from the end of policy year one. With WealthSecure Smart, customers will be able to enjoy protection for 20 years with a premium payment term of only 5 years and at the same time receive guaranteed cash payments as long as their policy is in force. Robust growth in New Busines 40% FY17 Highlights AmMetLife achieved a robust growth of 40% in New Business and 52% in Value of New Business. Priorities In FY18 • Focus on customer centricity following the implementation of the new policy administration system • Delivering new products aligned to suit the lifestyle needs of Malaysians • Professionalise and strengthen the Agency Force • Optimise customer experience In January 2017, we launched Protect20. This is a traditional non-participating term plan which provides 20 years coverage. Benefits are payable upon death or total and permanent disability. For our corporate clients, AmMetLife expanded the suite of employee benefits offerings to include outpatient, dental and maternity benefits. AmMetLife also ran two promotional consumer campaigns to increase awareness of investment-linked and participating endowment plans distributed by our agency distribution channel. AmMetLife participated in the Karnival Kewangan in January 2017 in support of Bank Negara Malaysia’s efforts to create awareness for greater financial literacy. This was a great opportunity to boost visibility of the AmMetLife brand and at the same time underline the need for regular financial health checks to better assess the level of protection needed. What We Do AmMetLife is a strategic partnership between two well-known and trusted brands, AmBank Group and MetLife International Holdings. We offer a comprehensive range of life assurance and wealth protection solutions distributed through AmMetLife branch offices, AmBank branches and authorised life insurance agents nationwide. p. 134 p. 135 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  137. FAMILY TAKAFUL AmMetLife Takaful Berhad Family Takaful AmMetLife Takaful reported a gross contribution of RM52 million in FY17 primarily contributed by credit related products . This was marginally down on the previous year due to lower advisory sales. In addition, we discontinued the underwriting of new Group Hospitalisation and Surgical benefits coverage in FY17 due to highly competitive market conditions. Gross contribution RM52 million FY17 Highlights We reported a gross contribution of RM52 million in FY17 primarily contributed by credit related products. This was marginally down on the previous year due to lower advisory sales. Priorities in FY18 We plan to develop a direct e-Channel to complement existing channels. With our passion for the provision of excellent services, together with a deep and respectful knowledge of Shariah principles and values, we aim to be a customercentric and modern takaful operator in Malaysia. We successfully migrated to a new core certificate administration system, Integral Life, in FY17. This supports business growth, performance, maintainability and system stability. In October 2016, AmMetLife Takaful launched a refreshed web interface and a point-of-sale (Release 1) for our Agency Force and Bancatakaful partners to ease proposal submissions. The new web interface provides simpler navigation, better user experience and important customer information and represents our vision to be a modern Family Takaful provider in this digital era. AmMetLife Takaful will implement a number of strategic initiatives to improve performance and market position. As part of our five-year business plan, the development of our direct e-Channel is in progress. This will be an innovative direct channel business which will promote simple term products via an online platform. Our e-Channel will complement existing distribution channels, Bancatakaful and Agency and is expected to generate consistent regular business over the next five years. What We Do AmMetLife Takaful is a strategic partnership between two well-known and trusted brands, AmBank Group and MetLife International Holdings. We offer a comprehensive range of takaful solutions (advisory, group employee benefits and credit related) distributed by our authorised takaful agents and AmBank branches nationwide. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  139. Providing seamless experiences We are highly committed in providing the best financial services and solutions to our customers anytime , anywhere.
  140. SUSTAINABILITY STATEMENT 140 141 142 147 148 162 168 Chairman ’s Sustainability Message About the Sustainability Statement Embedding Sustainability Managing Sustainability Responsible Banking Employer of Choice Positive Societal Impact
  142. CHAIRMAN ’S SUSTAINABILITY MESSAGE AMBANK GROUP IS A LEADING MALAYSIAN FINANCIAL SERVICES GROUP WITH OVER 40 YEARS OF HERITAGE IN SUPPORTING MALAYSIANS IN THEIR ECONOMIC DEVELOPMENT AND WELL-BEING. We are a major employer and a significant tax payer to the Government of Malaysia (Government) whilst concurrently supporting our communities. Throughout our 42 years in business, we have been mindful of environmental, economic and social (EES) risks and opportunities in our business conduct. This year, we are adopting a formal materiality assessment and governance process with regard to sustainability matters such that we clearly identify our material EES risks and opportunities. In presenting our first Sustainability Statement (Statement), we have identified several material sustainability matters and grouped them into three themes as follows: We are committed to being a responsible financial services group I am pleased to report that the material sustainability matters assessed as being of significance this year underpin our strategy to be a top 4 Malaysian bank by the year 2020. Going forward, we will conduct this sustainability assessment on an annual basis. It is an important tool for identifying and evaluating concerns raised by our stakeholders and formulating our plans for sustainable business growth. Responsible Banking We recognise the need to maintain an engaging and inclusive workplace that lets people achieve their aspirations Employer of Choice Positive Societal Impact The second part of this review goes into depth on the material sustainability matters identified and explains what we are currently doing in these areas in terms of policy, process and action. We contribute to a more sustainable future by considering carefully our business decisions, the environmental impacts of our activities and how we interact with our wider communities Our Sustainability Statement is determined after conducting assessments to identify the material sustainability matters which are of significance to both our stakeholders and AmBank Group. A comprehensive and sustained integration of material sustainability matters will inevitably take time. Nonetheless, we have started to formally recognise the oversight by the board of directors (Board) over AmBank Group’s sustainability framework. This will bring a greater focus on, and accountability for, sustainability. By identifying the existing processes and actions in our material sustainability matters and improving in these areas, AmBank Group can focus on what we do best, helping individuals and businesses in Malaysia grow and win together. TAN SRI AZMAN HASHIM Chairman, Non-Independent Non-Executive Director Kuala Lumpur 30 June 2017 p. 140 p. 141 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  143. ABOUT THE SUSTAINABILITY STATEMENT THE OBJECTIVE OF OUR SUSTAINABILITY STATEMENT IS TO INFORM OUR STAKEHOLDERS ABOUT AMBANK GROUP ’S MANAGEMENT AND ANTICIPATION OF CURRENT AND FUTURE EES RISKS AND OPPORTUNITIES. The Statement outlines our achievements and the way in which we identify and manage the issues considered most material to our businesses, both by us and our stakeholders. It has been prepared in accordance with the Sustainability Reporting Guide and Toolkits, issued by Bursa Malaysia Securities Berhad (Bursa Malaysia). Sustainability Statement Structure The Statement comprises two sections. The first outlines how AmBank Group embeds sustainability in our business conduct via governance and risk management framework, our approach to the identification and prioritisation of material sustainability matters, and our engagement with stakeholders. The second details our management approach and our performance relevant to the material sustainability matters identified. In addition to this Statement, our website, ambankgroup.com, also contains information about our corporate social responsibility and governance structures. Sustainability Statement Scope The Statement covers AmBank Group’s operations pertaining to its three main subsidiaries: AmBank (M) Berhad, AmBank Islamic Berhad and AmInvestment Bank Berhad, hereinafter AmBank or the Group for the purposes of the Sustainability Statement, for the financial year ended 31 March 2017 (FY17). The three subsidiaries account for more than 80% of the Group’s revenue, as well as most of the EES impacts. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  144. EMBEDDING SUSTAINABILITY FOR MANY YEARS , THE FINANCIAL SERVICES INDUSTRY HAS CONTRIBUTED TO SOCIETY THROUGH THE PROVISION OF CREDIT TO BOTH INDIVIDUALS AND CORPORATES, AS WELL AS THROUGH PARTICIPATING IN PRIVATE AND GOVERNMENT INITIATIVES. In line with the United Nations Sustainable Development Goals that were formally adopted in September 2015 and came into effect in January 2016, AmBank Group is striving to create a sustainable future for its employees, customers, and shareholders as well contributing towards a sustainable future for Malaysians. Four of the sustainable development goals INDUSTRY, INNOVATION AND INFRASTRUCTURE DECENT WORK AND ECONOMIC GROWTH Sustainability Governance The establishment of the Sustainability Working Group (SWG) in 2017 marked a milestone in the implementation of a governance structure for AmBank Group’s sustainability considerations and initiatives. The Board works alongside the SWG in providing formal oversight of our corporate sustainability strategy and in ensuring that sustainability considerations are integrated into our decisions. To ensure a broad representation of AmBank matters, the members of SWG are represented by Group Chief Executive Officer’s Office, Group Finance, Group Human Resource, Group Corporate Communications and Marketing, Group Risk Management Department, Group Retail Banking, Group Business Banking, Group Wholesale Banking and Islamic Banking. The Board is ultimately accountable for overseeing the management of material sustainability matters and is responsible for setting and embedding sustainabilityrelated strategies into our business operations. The SWG has the responsibility of developing AmBank Group’s Sustainability Statement in line with the Amendments to the Listing Requirements of Bursa Malaysia. SUSTAINABLE CITIES AND COMMUNITIES RESPONSIBLE CONSUMPTION AND PRODUCTION The Board’s Risk Management Committee of Directors assists in oversight by reviewing the Sustainability Statement prior to submission to the Board for approval. The Audit and Examination Committee of Directors and the Governance Committee also provide support in driving sustainability initiatives at Board level. Board of Directors are directly related to the ability of the Group to support improved economic well-being, which consequently increases the ability of families and the government to improve social outcomes. Risk Management Committee of Directors (RMCD) As a responsible business, we take EES factors into account in offering sustainable products and services, and we integrate EES factors into our business decisions. We aspire to be an employer of choice and we focus on developing our employees and supporting their well-being so that we continue to attract, retain and reward appropriately. Group Chief Executive Officer We uphold our commitment to creating a positive societal impact by conducting our business activities with reduced environmental impact and by fulfilling our social responsibilities towards local communities. p. 142 p. 143 AMMB Holdings Berhad (223035-V) Sustainability Working Group (SWG) Annual Report 2017 ambankgroup.com
  145. Stakeholder Engagement We have actively engaged a wide range of stakeholders via various channels throughout the year , to gauge their feedback and address their expectations. In addition, we conducted an exercise to identify and prioritise a wide range of stakeholder groups. The SWG mapped AmBank Group’s stakeholders by identifying the stakeholders with the highest level of influence and dependence on AmBank Group. Customers, investors and shareholders, employees, government and regulators, community and the media were identified as the key stakeholders for AmBank. Stakeholder Groups Engagement Channels Customers • • Online platforms (e.g. corporate website, social media, smartphone applications & mobile messaging) Customer satisfaction surveys Investors and Shareholders • • • • • • Annual general meetings Analyst briefings Investor presentations and meetings Financial statements Press releases Conferences and roadshows Employees • • • • • • • • • • • Employee surveys Employee induction training Employee engagement expo Town hall meetings AmBank Group internal publications (e.g. Scoop!, Berita) Connected 2.0 Intranet portal Learning and development programmes Corporate volunteering programmes Employee performance appraisals Direct employee and electronic feedback (e.g. SpeakUp!) Senior management visits to touch points (e.g. branches) Government and Regulators • • Public partnerships (e.g. Credit Guarantee Corporation Malaysia Berhad (CGC), Zoo Negara) One-on-one meetings Community • • • Online platforms (e.g. social media & smartphone applications) Corporate volunteering programmes (e.g. community events, knowledge-sharing initiatives & partnerships with non-governmental organisations) Zakat contributions • • • Press conferences and events Media releases Media interviews Media Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  146. EMBEDDING SUSTAINABILITY Materiality Assessment Materiality assessment has become a strategic business tool to identify , review and prioritise our current material EES risks and opportunities as well as the emerging risks that affect business and stakeholders. For FY17, AmBank Group has adopted a materiality assessment approach guided by the Sustainability Reporting Guide and Toolkits, issued by Bursa Malaysia. In identifying relevant sustainability matters, we have considered the operating environment and emerging risks associated with the financial services industry. We have based our approach on internationally-recognised sustainability frameworks and industry-specific references such as the SDG Industry Matrix for Financial Services, the Global Reporting Initiative Sustainability Reporting Standards (GRI Standards) and the Dow Jones Sustainability Index (DJSI). Engagements with the Group Chief Risk Officer also substantiated the internally-identified risks and opportunities faced by AmBank. The material sustainability matters identified are presented in the table below: Responsible Banking Employer of Choice Positive Societal Impact We are committed to being a responsible financial services group We recognise the need to maintain an engaging and inclusive workplace that lets people achieve their aspirations We contribute to a more sustainable future by considering carefully our business decisions, the environmental impacts of our activities and how we interact with our wider communities • • Conducive and Inclusive Workplace Workplace Diversity Rewards and Recognition Employee Engagement Group Culture and Transformation Safety and Health Safety and Health Training Wellness Programme • Environmentally and Socially Responsible Investment Islamic Finance • Community Investment and Development AmKasih Kelab AmBank Group Yayasan Arab-Malaysian Zakat Contributions Human Capital Development Talent Attraction Talent Retention and Leadership Development Learning and Development • Energy, Water and Waste Management Energy Management and Greenhouse Gas Emissions Energy Management Green Building Paper Usage Customer Statements • Customer Satisfaction Customer Feedback Survey Project APEX Enhancing Customer Experience Data Science Awards Training Ethics, Governance and Compliance Code of Ethics Whistle-blower Protection Policy Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Framework Trading in AmBank Shares Policy Group Compliance Policy and Framework Group Risk Appetite Framework Guidance and Training Shariah Compliance • Data Security, IT Infrastructure and Digital Transformation Digital Transformation Data Security and IT Infrastructure • Financial Inclusion and Responsible Lending Small and Medium-Sized Enterprises (SMEs) Affordable Home Financing Islamic Finance • Responsible Sourcing and Procurement Sourcing Policy Strategic Sourcing • Responsible Marketing, Product and Service Design Product and Service Governance Islamic Products & Services Social Media Corporate Website Management p. 144 p. 145 • AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  147. We conducted surveys with internal stakeholders to determine the level of importance they gave to the identified material sustainability matters . We engaged in particular with selected SWG members, selected members of senior management and selected members of the Board to conduct sustainability assessment exercises. These determined the level of impact of each of the material sustainability matters to the Group. As this is our first year of reporting, we have only engaged with internal stakeholders. We are planning to engage directly with more stakeholder groups in the future to obtain additional feedback regarding material sustainability matters. AmBank is committed to transparency and disclosure and to dealing responsively with all stakeholders. The outcome of our materiality assessment, as shown in the matrix below, was presented to and approved by the Board. Details of our initiatives in managing the Group’s material sustainability matters are discussed in the following section. Critical Materiality Matrix of AMMB Holdings Berhad 4 Customer Satisfaction 2 Ethics, Governance and Compliance 3 Data Security, IT Infrastructure and Digital Transformation 4 Employer of Choice 5 Community Investment and Development 6 Environmentally and Socially Responsible Investment 7 Financial Inclusion and Responsible Lending 8 Responsible Sourcing and Procurement 9 Responsible Marketing, Product and Service Design 10 Energy, Water and Waste Management 1 3 6 Important 5 9 7 8 10 Medium Importance to Stakeholders 1 2 Medium Important Critical Importance to AMMB Holdings Berhad Legend by Theme Responsible Banking Positive Societal Impact Employer of Choice Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  148. EMBEDDING SUSTAINABILITY Supporting our Top 4 Aspiration Most of the material sustainability matters we identified directly support our aspiration to be a Top 4 Malaysian bank by the year 2020 . The targeted segments to reach the Top 4 or maintain the Top 4 status by the year 2020 are encapsulated as follows: 1 2 3 4 Be Top 4 in our four growth segments – mass affluent, affluent, SME and mid corporates Be Top 4 in our four key products – cards & merchants, transaction banking & current account, markets & FX and wealth management; Sustain Top 4 in our existing engines – corporate loans/financing, debt and capital markets and funds management; and Be one of the Top 4 employers in Malaysia 1 Top 4 Aspirations relating to AmBank Group’s material sustainability matters 1. Customer Satisfaction 2. Ethics, Governance and Compliance 3. Data Security, IT Infrastructure and Digital Transformation 4. Employer of Choice 5. Community Investment and Development p. 146 p. 147 AMMB Holdings Berhad (223035-V) Top 4 in our growth segments Annual Report 2017 2 3 4 Top 4 in our key products Sustain our Top 4 position in our existing engines Top 4 employer in Malaysia ambankgroup.com
  149. MANAGING SUSTAINABILITY IN OUR MATERIALITY ASSESSMENT APPROACH , WE IDENTIFIED THE MATERIAL SUSTAINABILITY MATTERS FOR AMBANK AND FURTHER CATEGORISED THESE INTO THE FOLLOWING THREE THEMES: Employer of Choice Responsible Banking Positive Societal Impact In this second section of the Sustainability Statement, we provide the details on the material sustainability matters that we identified. We lay out what AmBank is currently doing in these material sustainability matters in terms of policy, process and action. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  150. RESPONSIBLE BANKING Customer Satisfaction WE ARE COMMITTED TO BEING A RESPONSIBLE FINANCIAL SERVICES GROUP Meeting the expectations of our stakeholders in terms of trust , service delivery, accessibility and also adapting to change is essential for the sustainability of our business. The following are the material sustainability matters grouped under Responsible Banking: Customer Satisfaction • Ethics, Governance and Compliance • Data Security, IT Infrastructure and Digital Transformation • Responsible Sourcing and Procurement • Financial Inclusion and Responsible Lending • Responsible Marketing, Product and Service Design p. 149 Over the years, our strategy has been centred on building convenience for customers and engaging customers with banking solutions to improve customer experience. As the way our customers interact with us is changing, we are increasingly embracing digital banking. We have identified customer satisfaction and turnaround time as one of three non-financial metrics to measure our progress in our Top 4 Strategy. In order to manage and monitor customer trust and confidence towards AmBank Group, we conduct customer feedback surveys to measure, manage and improve customer relationships. • p. 148 The trust and confidence of our customers is the key to AmBank Group’s long term sustainability. AMMB Holdings Berhad (223035-V) In seeking to understand our customers’ behaviours and attitudes better, we are able to customise our products and services to meet the needs and expectations of our customers, thereby adding value to our customers. Annual Report 2017 ambankgroup.com
  151. Customer Feedback Survey In December 2016 , an independent survey by Ipsos Malaysia was carried out to measure the levels of customer satisfaction in retail banking in Malaysia. The findings indicated that customer attitudes towards AmBank Group placed us in sixth position amongst the local banks. Customers chose AmBank as their main bank because of our suite of products and services, and accessibility to branches and self-serving machines (SSMs). AmBank’s retention rate for customers indicated a positive trend due to promotions and offers given to customers. The emotional associations of our customers towards AmBank were relatively strong and focused on being trustworthy, caring, safe and secure. However, emotional associations were weak towards being youthful, innovative and progressive. The project is divided into two stages known as Wave 1 and Wave 2. Over the period of Wave 1, the initiatives taken to improve customer experience were self-service migration, the rationalisation of branch reports, call deflection and cheque decentralisation processing. Twelve branches have undertaken the cheque decentralisation process. In the first quarter of 2017, Project APEX Wave 2 rolled out, involving simplification and improvement across four core areas i.e. Current Account and Savings Account (CASA) opening, branch teller functions, auto finance account opening and collections – paving the way towards paperless branches. CASA on-boarding was rolled out nationwide by May 2017. WAVE 1 The Relationship Strength Index (RSI) for AmBank transaction banking was 6.23, with customers expressing general happiness with the services. This level of RSI was marginally behind the industry benchmark of 6.51. RSI a metric derived from six factors comprising overall satisfaction, competitive comparison, responsiveness, trust, value for money and likelihood to shift – price resistance. • • • • Self-service migrations Rationalisation of branch reports Call deflection Cheque decentralisation processing WAVE 2 We have taken several initiatives to improve our customer experience, predominantly through Project AmBank Process Excellence (APEX) which focuses on Group-wide process re-engineering and resource efficiency. IN FY17, FIVE BRANCHES PILOTED CASA STRAIGHT THROUGH PROCESSING, REDUCING THE OVERALL ACCOUNT OPENING EXPERIENCE FROM AN AVERAGE OF 45 MINUTES TO LESS THAN 10 MINUTES. Project APEX Largely in response to our customers’ feedback, Project APEX was initiated in September 2016 to drive straight through processing and cost savings across four key areas and eleven processes in retail banking. The main objectives of Project APEX are to boost: • Current Account and Savings Account (CASA) on-boarding • Bank teller transactions (on-going) • Auto finance account opening (on-going) • Collections Enhancing Customer Experience Retail Banking We are refreshing our branch model, wherein our new branches are designed with a holistic customer journey in mind. The first branch to adopt this design was our branch in Plaza Shell Kota Kinabalu which was launched in November 2016. Recently, we launched our latest branch in Nu Sentral which adopted the same design. These are one stop centres which cater to retail customers (including priority banking customers), SME and commercial customers. We will see more of such branch models in the future. • Customer experience We strive to better serve our customers by: • Enable straight through processes for retail banking • • Improve internal operation processes Upgrading two of our seven priority banking centres and empowering the centre managers and support teams • Better manage and control risk • Upgrading older branches to be more customer-friendly • Upgrading SSMs • Launching a new mobile banking application to replace AmGenie • Beta testing a new merchant portal in collaboration with a financial technology company (fintech) • Simplified CASA opening Project APEX focuses on process re-engineering and boosting resource efficiency in order to provide seamless customer experience with the implementation of three key design principles. These are paperless operation processes, straight through processing to achieve faster turnaround time and better risk management and control. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  152. RESPONSIBLE BANKING AmBank continued to modernise its infrastructure with the roll out of a new loan origination system , upgrade of our debt collection system and customer management system. LOAN ORIGINATING PROCESS REENGINEERING  414 EMPLOYEES WERE TRAINED TO DELIVER LOAN PROCESSING WITHIN IMPROVED PROCESSING TURNAROUND TIMES AS PART OF PROVIDING BETTER CUSTOMER EXPERIENCE. We have signed-up more than 50 JomPAY billers which include Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN), Indah Water Konsortium Sdn Bhd (IWK) and Perbadanan Islam Johor to facilitate several types of online payments such as student loan repayments, bill payments and to make waqaf contributions. Trade Financing and FX Recognising that Shariah intrinsically supports trade and productive activities, we have simplified processes for Islamic trade finance products such as accepted bills-i (AB-i), outward bills purchased-i (OBP-i), credit bills negotiation-i (CBN-i), foreign currency trade financing-i (FCTF-i) and trust receipt-i (TR-i). We introduced master terms & conditions for cash management and trade finance products. Over-the-counter bank guarantee-i (BG-i) was introduced to improve the turnaround time for the procurement of BG-i by customers. Transaction Banking Alpha Southeast Asia awarded AmBank the Best FX Bank for Corporates & Financial Institutions for the 5th consecutive year in recognition for our ability to provide efficient and effective FX solutions and services to meet the needs of our wide-based customer segments. We are currently upgrading our corporate internet banking and cash management platform to leverage the current digital payment landscape. A mobile version will be launched which enables corporate customers to access account information and perform transactions via mobile phone and tablet. We have also embarked on a security token upgrade to enhance the security of our internet banking access. Islamic Banking We are actively engaged with Malaysian Electronic Clearing Corporation Sdn Bhd (MyClear) to offer JomPAY. This is a payment solution for corporates to simplify the collection of recurring receivables. Through JomPAY, corporates would only need to deal with one bank to perform their collections via participating banks in Malaysia. A single format report and real time notification is provided to corporate customers for easy reconciliation at their back office. Education and awareness programmes are key to positioning Islamic banking as the ethical choice for customers. AmBank Islamic continued to conduct Islamic banking training via a systematic and targeted approach for Board members, Shariah Committee members, management and staff of the Group who are involved in Islamic banking business. A series of Islamic banking training sessions, nationwide engagements with relationship managers and Islamic banking champions of all our 175 branches were organised. During the year, Islamic Markets has been realigned under the Capital Markets Group as a dedicated unit responsible for providing Shariah advisory services for a wide range of Shariah-compliant funding and investment solutions with strong emphasis on end-to-end Shariah-compliance for AmInvestment Bank’s Islamic services and product offerings. During the financial year, we continued to maintain a strong record, being the Top 3 in Bloomberg’s Malaysian corporate bonds and sukuk league table. Further to which, we received Top 3 in the Lead Manager Awards (Sukuk) by RAM Ratings. We currently have a 27.5% market share for sukuk as at 31 March 2017. For FY18, we expect the same trend to continue and sukuk issuances are expected to remain at the RM65-RM70 billion level, based on the projected issuances in the pipeline from infrastructure, project finance and construction sectors, as well as government-linked companies. AmBank Group Malaysian e-Payments Excellence Awards (MEAA) 2017 1. Outstanding Contribution to JomPAY 2. MyDebit Top Acquirer (First Place) Malaysian e-Payments Excellence 3. Outstanding Contribution to MyDebit Awards p. 150 p. 151 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  153. New Sukuk Issuance 2016 by Shariah Principle Data Science We have an enterprise data warehouse , relevant analytical tools and a team of data specialists to support our digital sales enablement & customer experience initiatives. Awards 90% Murabahah As a manifestation to our commitment towards providing value to our customers, we obtained the following awards during the year: • IFN Awards 2016: Regulatory Capital Deal of the Year (Mumtaz Rakyat Sukuk Berhad) • IFN Awards 2016: Commodity Murabahah Deal of the Year (Al Dzahab Assets Berhad) • Alpha SEA Deal & Solution Awards 2016: Best Wakalah Deal of the Year, SEA (Lebuhraya DUKE Fasa 3 Sdn Bhd) • Alpha SEA Deal & Solution Awards 2016: Best Murabaha Deal of the Year, SEA (Al Dzahab Assets Berhad) • The Asset Triple A Asia - Infrastructure Awards 2016: Project Finance Bank of the Year, Malaysia (2nd Consecutive Year) • The Asset Triple A Asia - Infrastructure Awards 2016: Best Transport Deal of the Year, Malaysia (2nd Consecutive Year- Penang Port - 2016 & DanaInfra 2015) • Best Secondary Deal for 2016 by Alpha Southeast Asia for being Joint Principal Adviser, Joint Managing Underwriter and Joint Underwriter for Malaysia Building Society Berhad’s rights issue of RM1.7 billion. • Bloomberg Underwriter Rankings 2016: 5% Wakalah 5% Musharakah Bond Sukuk Arranged and Managed by AmInvestment Bank 2016 72% Sukuk 28% Bond • Malaysia Bonds No. 3 with 17.7% market share • MYR Loan No. 4 with 16.4% market share • Lead Manager Award 2016 No. 3 - by Programme Value • Lead Manager Awards 2016 - Joint 1st - by Numbers of Issues • Lead Manager Awards X 2016 - No 3 - by Programme Value We have also been awarded with the Asia Money FX Poll – Best Domestic FX Providers (new category for 2016) Top 3 for: Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • Best Domestic Provider of FX Services • Best for FX Options • Best for FX Products and Services • Best for FX Research & Market Coverage MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  154. RESPONSIBLE BANKING Training Ethics , Governance and Compliance We place significant emphasis on training in respect of our products and services, customer engagement and process enhancement to ensure that our customers are satisfied with our products and services, and also the manner in which these are delivered. Ethics, governance and compliance are issues of the highest importance to our stakeholders. Given that ethical conduct, good governance and fair conduct is critical to building and maintaining trust and confidence as well as delivering transparent and responsible banking services, AmBank has embarked on several on-going cultural change initiatives across the Group. Name of Training Programme Description of Training Number of participants trained Role-based Training of Retail Banking Developed and rolled out 22 programmes 6,873 participants nationwide with 83% of the classroom based training conducted by internal trainers Coverage Learning Pathways of Wholesale Banking Developed and rolled out 22 programmes 1,654 participants Islamic Champion Rolled out 8 sessions to develop champions for each retail branch nationwide 134 participants Rolled out group’s Top 4 Aspirations to ensure branches were SME segment ready 151 employees nationwide Developed, managed and delivered in-house 382 employees attended and were trained in the AmBank’s ATM card/debit card system Banking SME Ready Branches Multi-Channel Switch Training Amanah Saham Nasional Berhad (ASNB) Training Loan Originating Process Re-engineering p. 152 p. 153 Aimed to market and promote ASNB over the counter Aimed at delivering improved loans processing turnaround times in order to improve the customer experience The implications of not addressing these matters, especially in terms of regulatory non-compliance, are serious and could result in AmBank facing potential adverse implications from loss of reputation, or the erosion of trust and confidence from customers. These eventualities could affect the Group’s ability to conduct business. AmBank’s Board is fully committed to ensuring that the Group maintains the highest standards in corporate governance, with a view to enhancing the value and protecting the interests of all stakeholders. The Board takes cognisance on the importance of continually developing our practice and instilling best in class corporate governance practices whilst delivering sustainable performance in line with corporate objectives. Policies are regularly reviewed to ensure that they reflect any changes in legislative requirements, and include: • Anti-Money Laundering and Counter-Terrorism Financing Framework • Group Compliance Framework • Code of Ethics • Whistle-blowing Policy • Policy of Conflict of Interest (incorporated in the Code of Ethics) • Compliance Policy • Record Management Policy 1,189 employees nationwide with 13 Black Belt trainers for the system are now in place • Expense Management Policy • Trading in AmBank Shares Policy • Occupational Safety and Health Policy Statement • Group Compliance Framework 414 employees • Sourcing Policy • Shariah Governance Framework and Shariah related policies AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  155. Code of Ethics Whistle-blower Protection Policy On 19 May 2016 , a refreshed Code of Ethics took effect and was launched officially Group-wide. The Code of Ethics addresses issues of confidentiality, conflicts of interest, integrity in reporting, and the fair treatment of customers. The upgrade entailed making the Code of Ethics reader-friendly and accessible to all employees in the Group. The launch was officiated by Tan Sri Azman Hashim, AmBank Group Chairman, and attended by Dato’ Sulaiman Mohd Tahir, AmBank Group Chief Executive, members of the senior management team and department heads across the Group. The Group actively encourages openness, integrity and accountability. Our Whistle-blower Protection Policy (WPP) provides an avenue for employees, suppliers, business partners and customers to voice grievances and raise concerns about malpractices involving the Group without fear of repercussions. On 1 April 2016, the Group launched a revised WPP, updating a 2012 policy. All Group employees are required to comply with our Code of Ethics. It comprises six guiding principles that set the standards for the way we do business at AmBank: C – Compliant R – Responsible One new key feature in the revised WPP is the assigning of the Group Chief Executive Officer, Group Chief Human Resource Officer and the Group Chief Compliance Officer as the Ombudspersons who are authorised to receive information from any employee, shareholder or external party who reasonably believes he/she may have evidence of improper conduct. These Ombudspeople are responsible for ensuring protection for the whistle-blower and that appropriate actions are taken. The WPP entails ten principles governing whistle-blower protection with the aim to: E – Ethical A – Accurate T – Trustworthy E – Equitable The Code of Ethics provides a clear direction for conducting business, interacting with community, government and business partners, and general workplace behaviour. It has been cascaded to all employees through various methods and media, such as e-learning modules and physical workshops conducted by respective senior management to their team members. This is to ensure full understanding of the Code of Ethics and for proper embedding into the work culture of all businesses within the Group. • Promote whistle-blowing in a positive manner • Facilitate timely escalation of improper conduct confidentially • Protect persons making such disclosures from detrimental action • Investigate and manage disclosed or reported improper conduct • Establish appropriate processes to ensure consistent and timely response • Safeguard the organisation’s commercial reputation Confidentiality of all matters raised and the identity of the whistle-blower are protected under this scope. The Code of Ethics sets standards for the way we work at AmBank. We have high expectations of the work ethics embodied in AmBank’s core values of principled, proactive, appreciative, connected and evolving. The Code of Ethics is supported by a number of more detailed policies that form part of the Group’s policy framework. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  156. RESPONSIBLE BANKING Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Framework Our Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) Policy establishes minimum standards, guiding and directing our Group-wide approach to detecting and deterring money laundering and terrorism financing activities. AmBank Group has taken several initiatives in its Group-level strategy in terms of Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) requirements. On-going efforts in managing AML/CFT include conducting customer due diligence via tracking with enhanced monitoring scenarios for specific transaction typology, exploring a tailored review process for higher risk customer segments as well as establishing a more robust AML Programme. DURING FY17, THERE WERE 23 AML RELATED INTERNAL AND ETRAINING PROGRAMMES CONDUCTED, INVOLVING 4,168 PARTICIPANTS ACROSS THE GROUP. Such transaction monitoring enables us to identify and respond to any potential money laundering or terrorism financing event. In ensuring adequacy in the incorporation of the Framework, staff records on AML/CFT training and employees’ awareness of compliance matters are monitored. Trading in AmBank Shares Policy The Group has in place a Trading in AmBank Shares Policy which sets out the responsibilities and trading procedures for directors and designated employees of the Group when trading in the Company’s shares. Directors and designated employees of the Group who have access to pricesensitive information relating to the Company’s shares must not trade in the Company’s shares until such time the information is publicly available. Directors and designated employees of the Group who do not have access to price-sensitive information can deal in the Company’s shares provided that the procedures set out in the Listing Requirements of Bursa Malaysia are adhered to. Notices on the closed period for trading in the Company’s share are sent to the directors, principal officers and designated employees of the Group on a quarterly basis by the Group Company Secretary. p. 154 p. 155 AMMB Holdings Berhad (223035-V) Group Compliance Policy and Framework AmBank Group has a Compliance Policy in place that sets out roles and responsibilities of the Board, senior management, business units, group shared services, Group Compliance and Group Internal Audit within the Group’s Compliance Framework. Their role is to oversee the management of compliance risk with the aim of promoting the safety and security of the Group by minimising financial, reputational and operational risks arising from legal and regulatory non-compliance. The senior management team is responsible for communicating the Group Compliance Framework to all AmBank Group employees and ensuring that appropriate remedial or disciplinary actions are taken for any non-compliance. Across the Group, 21 remediation projects were identified, spanning across governance, process, compliance culture and technology. These key projects were initiated to address root cause and to formulate remedial actions. Our measures included: • Revision of manuals in transaction monitoring processes. • Development and deployment of guides on the investigation approach to detecting early warnings, the escalation process and reporting. Group Compliance is responsible for providing oversight on the dissemination of regulations and ensuring the implementation of regulatory requirements under the First Line of Defence in risk management and internal control. The effectiveness of implementation is assessed through risk-based review and testing. In discharging its responsibilities, Group Compliance must give greater focus to areas where compliance risk is assessed to be high while preserving appropriate coverage of all compliance risks identified. The operation of the Group Compliance Framework is supplemented via the issuance of Guidance Notes by Group Compliance: • Group Risk Appetite Framework (GRAF) • Management of New Regulations Guidance Note • Compliance Monitoring & Reporting Guide • Compliance Assessment Methodology Guide Annual Report 2017 ambankgroup.com
  157. Group Risk Appetite Framework (GRAF) AmBank Group has embedded a Group Risk Appetite Framework (GRAF) for Board controls on regulatory compliance. The objectives of GRAF are as follows: • To manage regulatory compliance risk by setting a positive compliance culture and ensuring that the letter and spirit of regulatory requirements, applicable laws, rules and standards in the respective jurisdictions are complied with. • To manage Shariah risk by ensuring operations, business, affairs and activities are in compliance with the rulings of Bank Negara Malaysia (BNM)’s Shariah Advisory Council (SAC) and AmBank Islamic’s Shariah Committee. The Board will be informed about reports pertaining to regulatory compliance as there will be zero tolerance towards non-compliance and breach of regulatory and statutory requirements. Under the Compliance Assessment Methodology Guide, compliance assessments are carried out by the Compliance Assessment team under Group Compliance, in order to provide senior management and business with a degree of assurance that compliance risks are assessed and managed effectively and efficiently. Group Compliance conducts the following compliance assessments: • • Department Compliance Assessment – a routine compliance assessment to measure the department’s adherence to applicable regulations. Thematic Assessment – conducted to assess a current or emerging risk relating to a theme and issue across a number of departments/units within the Group. Guidance and Training Group Compliance is responsible for ensuring adequate training is provided to AmBank Group employees. Group-wide policies are regularly reviewed to ensure that adequate internal training programmes are in place to support relevant legal and regulatory requirements governing AmBank Group’s activities. Guidance is provided on the implementation of internal controls to manage compliance risk. AmBank Group provides compliance training and awareness programmes to all staff through: • Baseline training, which is mandatory via annual e-learning for all staff • A compliance driven Train-the-Trainer programme • Business driven training programmes where the training materials are subject to review and approval by Group Compliance Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 DURING FY17, THERE WERE 6,713 PARTICIPANTS FROM VARIOUS EMPLOYEE CATEGORIES WHO ATTENDED COMPLIANCE PROGRAMMES AND A TOTAL OF 29,148 TRAINING HOURS WERE LOGGED. Shariah Compliance With regard to Shariah compliance, AmBank Islamic must comply with the rulings of BNM’s SAC and AmBank Islamic’s Shariah Committee. AmBank Islamic’s Shariah control function structure is guided by BNM’s Shariah Governance Framework (SGF) which encompasses the following organs in safeguarding Shariah requirements: • Board of Directors • Shariah Committee • Shariah Research • Shariah Risk Management • Shariah Review • Shariah Audit We have also put in place policies to govern the conduct of our business in ensuring Shariah compliance which include: • Shariah Governance Policy • Shariah Policy on Eligibility Criteria of Underlying Assets for Islamic Financing • Shariah Policy on Purification of Shariah Non-Compliant Income We have aligned the focus of our Shariah Review and Shariah Audit functions to the areas that have been identified by our Shariah Risk Management to have significant risk of Shariah Non-Compliance (SNC). Pursuant thereto, AmBank has enhanced controls to mitigate against potential SNC incidents, including improvements to documentation and process flows, as well as manuals and guides. For FY17, no SNC incidents were recorded by AmBank Islamic. AmBank will continuously review the effectiveness of the SGF, and ensure that our Islamic banking business complies with Shariah requirements. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  158. RESPONSIBLE BANKING Data Security , IT Infrastructure and Digital Transformation Re-imagining Customer Experience AmBank Group is always looking at innovative ways to grow our business in a sustainable manner. Doing so requires agility in delivering IT and Operations to support the needs of the business. In line with our Top 4 Strategy, we are focusing our efforts on enhancing the Group’s performance via digitalisation and improvement of our existing IT infrastructure. We have also combined Group Information Systems, Group Operations and Digital Banking into one division for efficiency and speed to market. With emerging technologies like Open Authorisation and Application Programme Interface (API) gateways, a whole range of possibilities have opened up for re-imagining customer experience. These enablers can be seamlessly embedded in the customer’s ecosystem. One of the first initiatives we launched to extend banking in this manner is an API that allows our car distributor partners to originate car financing right at the point of sale. Digital Transformation Digitalisation is recognised as the future, especially in today’s technology driven financial services industry. While AmBank Group has a broader digital agenda, our focus for FY17 was to respond to immediate consumer needs for more efficient online banking. New Mobile Banking Platform We have invested RM59 million on a highly flexible and agile digital mobile banking platform. We will be launching the first release of our mobile roadmap encompassing convenient and empowered banking to all our customers soon. Our new mobile banking platform, Mobile First, is designed and anchored on three key principles, which are simple, fast and secure. The objectives are to: • Appeal to consumers, cutting across all segments • Differentiate from existing online banking experiences • Break through clutter by providing an ergonomic and easy to navigate user experience with well organised and personalised personal finance insights The initial launch in the second half of 2017 will include online fund transfers and bill payments. The platform will continue to add new and improved features that are relevant to customers on mobile. This is planned in our 24 month implementation roadmap for mobile banking. Data Analytics To facilitate the on-going digital transformation, we are investing in data analytics. Advanced analytics and ‘Big Data’ are allowing banks to drive their customers’ journey by further increasing loyalty, revenue and profitability. With this in mind, we embarked on a first of its kind Big Data analytics POC (Proof of Concept) to gain new insights from our customer data. The journey into Data Analytics will continue in-house to build future capability. To push AmBank Group into the next age of digitalisation, we will look into real time analytics to allow us to better cross sell and upsell our products and services to our customers. If digital is the engine, then data is the fuel. p. 156 p. 157 AMMB Holdings Berhad (223035-V) Realising this potential, we have instituted a strategic bank-as-a-service programme. We are committed to creating greater convenience and lifestyle integration by securely extending access to customer information and the ability to originate financial transactions digitally based on consent from the customer to trusted partners and fintechs. We are also actively participating in BNM’s Financial Technology Initiatives by Financial Institutions where we are a working group member alongside other banks in Malaysia. Data Security and IT Infrastructure Our Private Cloud Capability has empowered AmBank Group to modernise its IT infrastructure from one that was an amalgamation of legacy systems that were costly, complex and difficult to maintain, to a software-defined data centre that is highly efficient, agile and responsive to business needs. To date, 60% of AmBank Group’s current infrastructure needs are on this platform. As a result, the Group has been able to accelerate delivery of digital banking services, as part of its efforts to stay at the forefront of digital innovation. Through automation and centralised management of AmBank Group’s virtual infrastructure, the Group’s IT function is now able to operate with fewer support staff as a result of automated provisioning and deployment capability. Technology has enabled our IT administrators to be more productive – they can troubleshoot issues faster, spend less time in the data centres and focus more on critical issues. Keeping critical systems up and running is imperative for financial institutions. AmBank Group is now able to trigger recovery across data centres without the need for IT administrators to manually kick start the Data Recovery (DR) process, resulting in less human error and enhanced recovery. Virtualisation has enabled AmBank Group to achieve business continuity and reduce its Recovery Time Objective (RTO). In addition, it has enabled full visibility of its DR capabilities to auditors, paving the way for a smoother auditing process. The move to a virtual infrastructure with a smaller hardware footprint has helped AmBank Group reduce its utility costs as well. Costs have reduced to a third, partly through the elimination of inefficient services and the use of advanced IT components. Annual Report 2017 ambankgroup.com
  159. Over the past year , the Group has strengthened its network infrastructure with the implementation of the multi-tiered and multi-zoned network architecture in its Tier-3 Disaster Recovery Data Centre to make it equivalent to the production data centre. The Group has continued to strengthen protection of its information assets with further implementation of multi-factor authentication for its applications and full disk encryption of all PCs in addition to the encryption of laptops and tape media which are already in place. With an increased focus on cyber security in the IT sector, the Group engaged an independent party to perform a Cyber Security Maturity Assessment and the results of the assessment will be in our IT security programme to ensure the Group is well positioned to address new and developing threats. AmBank Group has also operationalised the First Line of Defence and Second Line of Defence operating structure which directly supports the IT risk management framework in monitoring and managing risks of critical information systems. THE GROUP HAS CONTINUED TO MAINTAIN ITS ISO 27001:2013 CERTIFICATION AND RECORDED NO NON CONFORMITIES IN A CERTIFICATION AUDIT CONDUCTED IN APRIL 2017. ALL ASSESSMENTS WERE CONDUCTED AGAINST THE NIST US NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY FRAMEWORK, WHICH IS ONE OF THE MOST ROBUST FRAMEWORKS AVAILABLE Financial Inclusion and Responsible Lending Responsible lending plays a significant part in the Group’s business sustainability strategy. We understand the need to lend responsibly as the consequences of not doing so could pose significant risks to not only the borrower concerned, but also to the Group and society. We adhere to BNM’s Responsible Financing guidelines to ensure effective contributions and benefit to the economy as a whole. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Small and Medium-Sized Enterprises (SMEs) SMEs constitute a large part of the Malaysian economy and serve as a major source of employment. Driving our Top 4 Strategy, the SME segment is one of the key growth areas for AmBank. It is also in line with the government’s strategic initiative to encourage the growth of the SMEs. Business Banking Business Banking is a new line of business of AmBank which was established in April 2017. The function of our Business Banking is to provide conventional and Islamic banking solutions to Commercial and SME customers. In addition to discretionary lending, our Business Banking has set-up an enterprise banking lending programme (EBLP). The EBLP handbook would be revised to incorporate environmental and social considerations. SME Ready Branches In line with our focus on growing our SME business, we have made all our 175 branches ‘SME ready’ with 35 dedicated SME relationship managers and 140 clustered relationship managers. We have also created customised product bundles. There has been positive growth in our Retail SME business where we have achieved higher loan/financing disbursement from less than RM10 million per month in the beginning of the financial year to more than RM60 million per month in early 2017. Portfolio Guarantee Scheme AmBank and Credit Guarantee Corporation Malaysia Berhad (CGC) have entered into portfolio guarantee (PG) agreements totalling RM950 million so that qualified SMEs that lack collateral could receive loan/financing from AmBank. Since the SME segment is one of our key growth areas, the tie up with CGC is timely for AmBank to increase our market share and contribute to economic growth in Malaysia. The PG Scheme has proven to be a success, not only in serving our business partners’ needs, but also for the high approval rates for SMEs. The high approval rates were also contributed by efficiencies in process flow and our online application submission capabilities. Shariah SME Financing Scheme For Islamic financing facilities, eligible SMEs could receive a 2% profit expense rebate from SME Corporation under the Shariah SME Financing Scheme, under which the Government has given an allocation of up to RM1 billion until 31 December 2017. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  160. RESPONSIBLE BANKING Financing Packages Islamic Finance We launched two financing packages , AmBank BizSolutions Kontrak and an enhancement of an existing financing package, AmBank BizSolutions 2Trad3 which offers financing products and solutions tailored for Commercial and SME customers. For our Islamic banking business, Shariah has outlined the activities which are prohibited. To this end, we will continuously review exposure to Shariah noncompliant activities as and when necessary. The Shariah non-compliant activities or Shariah negative list elements are as follows: • • AmBank BizSolutions Kontrak offers contract financing facilities which are specifically tailored for a project or contract. The finance package varies in accordance to the type of project, such as construction, supply and services. Enhanced AmBank BizSolutions 2Trad3 extends necessary financial assistance to fund import and export transactions for auto parts and food industries respectively. The auto parts import industry has over 500 industry members with more than RM1 billion in sales comprising local and import trade. The local food export industry is expected to grow as the world is projected to require 50% more food and energy by 2030. Award As a manifestation to our commitment towards the development of SMEs, AmBank was awarded the ‘Preferred Bank for Star Outstanding Business Awards (SOBA) 2016 SME businesses’. Affordable Home Financing The 11th Malaysia Plan continues to give priority to the provision of adequate and quality affordable housing for Malaysians due to the rising demand for affordable housing arising from socioeconomic changes, urbanisation and evolving demography. Johor Affordable Home Financing Scheme Realising that one of the areas which is under served is the provision of financing for affordable homes, AmBank Islamic and the State Government of Johor in September 2016 launched the Johor Affordable Homes Financing Scheme to assist qualified applicants from Johor to acquire homes. We have earmarked RM300 million for this scheme. The Johor Affordable Home Financing Scheme was designed to assist home purchasers who actually qualify to secure financing, but are not approved by financial institutions because lower category of affordable homes may not be within the financial institutions’ target market. Perbadanan PR1MA Malaysia In partnership with Perbadanan PR1MA Malaysia’s special end financing scheme named Skim Pembiayaan Fleksibel, AmBank has embarked on an end-financing scheme, in collaboration with BNM, Employees Provident Fund Board and three other local banks. This end-financing scheme is aimed at providing eligible buyers with monthly home loan instalments that are at affordable levels. p. 158 p. 159 AMMB Holdings Berhad (223035-V) • Financial services business based on usury (interest), conventional insurance or any kind of contracts which are not allowed under Shariah principles • Business activities which are deemed as Shariah non-compliant activities such as gambling, gaming and immoral activities • Shariah non-compliant entertainment • The manufacture, supply or sale of non-halal products such as alcoholic drinks, pork and any non-halal ingredients • The manufacture, supply or sale of tobacco, tobacco-related products and vape • Selling or promoting usury-based products, conventional insurance or any kind of services deemed as non-Shariah compliant • Stockbroking or share trading for Shariah non-compliant securities • Any kind of business which is classified as Shariah non-compliant by BNM’s SAC or Securities Commission Malaysia (SC) We have also put in place policies and guides to govern the conduct of our business in ensuring that we uphold to Shariah principles which include: • Shariah Guides on Nonpermissible Items for Financing Facilities • Shariah Policy on Financing for Business with Mixed Business Activities Responsible Sourcing and Procurement Sourcing is increasingly recognised as an important aspect of corporate responsibility. The utilisation of third party services to carry out selected operations has allowed us to save costs, especially in highly operational processes, and also see increases in efficiency. By responsibly sourcing the materials needed to operate our facilities, we can also minimise our environmental impact on the wider global footprint. Aligned with our Sourcing Policy, we seek to promote responsible and inclusive procurement practices and apply standards of integrity and good practice in managing related social and ethical impacts through our supply chain. With increasing interest from stakeholders, sustainability in supply chain will be embedded more rigorously into our operations going forward. Our procurement spending encompasses mainly IT and professional services, as well as facilities and maintenance. Annual Report 2017 ambankgroup.com
  161. Sourcing Policy Responsible Marketing , Product and Service Design The principles of responsible sourcing and procurement practices are sustained and guided by AmBank Group’s Sourcing Policy. The objectives of this Sourcing Policy are: Responsible marketing and product & service design is an important matter because it underpins customer trust and confidence towards AmBank Group’s products and services. • To set appropriate governance and accountability delegation for sourcing implementation • To determine appropriate and comprehensive processes, including documentation requirements, to manage outsourcing arrangements • To outline the role and responsibilities of respective personnel • To ensure the existence of a process to adequately gauge the impact and prepare continuity planning on externalities arising from the outsourcing activity Our Sourcing Policy adheres strictly to BNM Guidelines and the SC Licensing Handbook. We have due diligence practices in place to ensure suppliers satisfy relevant laws and regulatory requirements and are able to prove adherence to applicable laws and policies, including: • BNM Guidelines on Outsourcing of Banking Operations and Islamic Banking Operations • BNM Guidelines on Outsourcing for Insurers • BNM Guidelines on Management of IT Environment • SC’s Licensing Handbook on Outsourcing Arrangement by Capital Markets Services License Holders Strategic Sourcing Under the Sourcing Policy, we have a strategic sourcing function that is headed by the Group Strategic Sourcing Management Committee. Our strategic sourcing function has a structured and systematic policy and procedure to ensure responsible sourcing, which aims to deliver sustainable cost savings. The function engages in consultancy on all sourcing activities across the Group. Product and Service Governance Responsible marketing enhances the reputation of AmBank Group and prevents adverse financial consequences. As such we place great emphasis in communicating and conveying clear and concise product information to our customers. We engage our employees and customers when there are changes that impact them, through feedback channels and open communication. We have a rigorous framework in place for branding, advertising and integrated marketing in order to develop and manage AmBank Group’s overall branding and advertising initiatives. This supports our brand and product awareness, including corporate branding, product campaigns and promotion support. In order to develop our marketing and communication programmes, we have a Campaign Marketing Review Checklist which entails a systematic approval and evaluation process reviewed by the relevant parties and endorsed by the project owner, product owner and Group Compliance, as required. The marketing of our products and services must comply to various guidelines, including: • BNM Guidelines on Product Transparency and Disclosure • AmBank Shariah Guidelines on Marketing and Promotional Materials The development of our products and services adopt a governance process to ensure compliance with regulatory guidelines and ethical conduct, and uphold our brand values. We adopt an integrated approach which considers the EES impacts of our products and services. This is operationalised through strict internal product approval and evaluation process for new products and services, and existing product and service enhancements. We carry out several processes such as vendor evaluation and selection and risk impact assessments before outsourcing. The risk impact assessment criteria for classification of outsourcing are sustainability-related, and outline our minimum requirements for suppliers in relation to customer satisfaction and reputation, ethical business practices and regulatory requirements. A permanent Outsourcing Working Committee is established for each outsourced process to manage all post implementation operational matters as continuous monitoring. We carry out yearly audits and visits to the offices, factories and warehouses of our suppliers to assess the various aspects of their business practices, in order to meet the BNM requirements pertaining to outsourcing. To achieve AmBank Group’s Top 4 strategy, we have plans to drive better efficiency in vendor management. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  162. RESPONSIBLE BANKING Islamic Products & Services AmBank is committed in ensuring that the Islamic banking products and services offered comply with Shariah requirements and meet customer needs. AmBank Islamic conducted an exercise to migrate a number of its products to the Shariah principle of Tawarruq. The products which have migrated to adopt the Tawarruq principle included Cash Line-i, Home or Property Financing-i and Term Financing-i secured by Amanah Saham Bumiputera (ASB). The design of our Islamic products and services must comply with various guidelines, including: • Shariah Guides on Bai’ inah/BBA Based Products • Shariah Guides on Murabahah Apart from that, AmBank Islamic has reviewed its existing products to ensure compliance with new policy documents issued by BNM such as: • Wakalah (agency) • Kafalah (guarantee) • Hibah (gift) • Qard (benevolent loan) • Wadi’ah (safe-keeping) • • Official social media sites, accounts and facilities of AmBank Group are managed in accordance with the Group’s Social Media Brand Voice under the joint custodianship of Group Corporate Communications & Marketing and the relevant business units or department. We have a systematic framework in place to create a social media facility and update on social media updates. We have a Social Media Management and Corporate Website Management group to plan, drive, initiate and manage branding and advertising strategies and communications, including digital-led initiatives and communications across the Group. The objective is to provide guidance to all AmBank Group employees about making appropriate decisions on the use of social media. The information to be shared is in accordance with the requirements of Information Classification and Handling Guidelines. It is important to manage social media proactively as AmBank Group engages actively with employees and customers through various social media such as: • Social networking sites (e.g. Facebook, Myspace, LinkedIn, Bebo, Yammer) • Micro-blogging (e.g. Twitter) • Video and photo sharing websites (e.g. Flickr, YouTube, Instagram) • Blogs, including corporate blogs, personal blogs or blogs hosted by external media outlets (e.g. Blogspot, Wordpress, comments section of a blog site) Ijarah (lease) • Wikis and online collaborations (e.g. Wikipedia, Dropbox, Google Docs) Wa’d (undertaking) • Forums, discussion boards and groups (e.g. Lowyat.NET, Cari.com.my) • Geo-spatial tagging (e.g. Foursquare) • Chat messaging applications (e.g. Whatsapp, Line, WeChat, Short Messaging Services) • Other emerging electronic and/or digital communication applications. Over the medium term, AmBank Islamic aspires to introduce differentiated Islamic banking products which are underpinned by the distinct features of Shariah principles. To this end, AmBank Islamic will embark on financial research and development (R&D) to drive product diversification beyond the current banking products being offered by both conventional and Islamic banks. This could enhance AmBank Islamic’s competitive advantage and prominence, and contribute towards the development of the industry and betterment of society. Major challenges such as market awareness, and whether the existing regulatory framework and enablers are equipped for the introduction of such differentiated banking products, would need to be overcome. Social Media We have a Social Media Guideline to ensure that the product and service information conveyed to customers via social media is conveyed in a clear and concise manner in order to provide relevant information to the customers and avoid potential reputational risks to the organisation. p. 160 p. 161 AMMB Holdings Berhad (223035-V) Corporate Website Management We have a Corporate Website Management Framework in place to provide business users with a single clear approval process for information published on the corporate website as well as to identify the parties who are responsible at each stage of the process to help ensure information is properly maintained and updated efficiently. This entails a systematic approach to update corporate website content, to request a corporate webpage homepage banner, to request a corporate website announcement update, and to request ad-hoc corporate website updates. Highlights of social media activities in FY17 are in the table below. Annual Report 2017 ambankgroup.com
  163. Date Type of event Remarks Apr 2016 UKEC –Graduan’s Malaysian Fair in London – July 2016 Perodua Bezza motorcade LIVE coverage including video Featuring GCEO, garnered 8.9k views, 106 shares Dec 2016 Card’s JFL launch event coverage and a Live video Featuring GCEO and senior management, garnered over 1.3k views and 5 shares Feb 2017 AmInvestment Bank: IFN Awards @ Mandarin Oriental – Social Media Updates GCCM (Initiatives, Projects, including Digital) July 2016 Star Outstanding Business Awards first–leg awareness workshop in Georgetown – Official AmBank Twitter Content & Customer Management Handled 85 customer cases on Twitter’s Messages Posted 229 tweets on events and promotions Social videos Dec 2016 Christmas Greeting video featuring Chairman and GCEO garnered 646 views, 5 shares Feb 2017 Chinese New Year Greeting video featuring Chairman, GCEO and other Senior Management garnered 230k views, 670 shares Social Media Channels Growth in FY17 (number of followers and friends) 138,000 Legend 128,524 Actual Target 16,500 2,007 2,000 7,750 189 100 AmBankMalaysia @AmBankMY @AmBankMY AmBank Group Friends Followers Followers Connections Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  164. EMPLOYER OF CHOICE Conducive and Inclusive Workplace WE RECOGNISE THE NEED TO MAINTAIN AN ENGAGING AND INCLUSIVE WORKPLACE THAT LETS PEOPLE ACHIEVE THEIR ASPIRATIONS Employees are key assets to AmBank Group and we work to ensure we provide a work environment in which our people are valued , are able to develop their skills and talents, and are ready to take on new challenges. Workplace Diversity With AmBank’s transformation plans underway, the way we work, the skills and behaviours required to perform our tasks, and even the structure of our organisation is transforming. We recognise the need to maintain an engaging and inclusive workplace that lets people achieve their aspirations, as well as allowing for the development of our employee capabilities to respond to the challenges posed by digitalisation, new service offering and ever-improving customer service. Conducive and Inclusive Workplace • Human Capital Development p. 162 p. 163 In terms of gender balance, five of the eleven people on our management board are women, and the majority of our employees are women. Diversity in AmBank Group encompasses gender, culture, family and relationship status, sexual orientation, socio-economic background, disability, age and religion. There are 10 employees with disabilities working at AmBank Group. We celebrated International Women’s Day on 8 March 2017. Staff were encouraged to dress in the colour purple in support of the women of the world. Photo booths were set up in the foyers of Bangunan AmBank Group and Menara AmBank in Kuala Lumpur. Employer of Choice covers information pertaining to: • To meet the needs of our customers and to compete effectively, we need a workforce that reflects the diversity of the communities in which we operate. AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  165. Employee Breakdown by Gender as at 31 March 2017 Male Female Total Management Board 6 5 11 Senior Management 151 88 239 Middle Management 585 520 1 ,105 2,654 4,507 7,161 713 1,443 2,156 4,109 6,563 10,672 Junior Management Non-Executives Total Employee Breakdown by Age as at 31 March 2017 Less than 30 30 to 39 40 to 49 50 and above Total Management Board 0 0 5 6 11 Senior Management 0 18 120 101 239 Middle Management 10 322 491 282 1,105 1,436 2,816 2,147 762 7,161 372 847 778 159 2,156 1,818 4,003 3,541 1,310 10,672 Junior Management Non-Executives Total Rewards and Recognition The Group has in place various policies to ensure that our employees receive competitive remuneration and enjoy appropriate benefits. We provide our employees with medical insurance/takaful coverage, retirement benefits, and interest free festive loans, as well as loan/financing schemes for home and vehicle purchase. In addition to annual leave entitlement, special leave of up to five working days per annum may be granted in circumstances such as the death of an immediate family member, or natural disasters. AmBank continues to emphasise the importance of recognising employees’ contributions. An independent yearly review of the Group’s Total Reward Philosophy against the financial services industry is carried out to ensure our competitiveness and alignment with industry practices. Reward practices are reviewed to ensure greater adherence to a differentiated variable pay approach, based on performance, and the adoption of variable pay and performance linked incentives. Employee Engagement Several initiatives are in place to sustain a workplace that is vibrant and exciting, and where employees’ views are encouraged and always appreciated. The Group continued the publication of Scoop!, a quarterly human resources newsletter launched last year. Through this one-stop publication, employees are kept informed of all the activities and people initiatives across the Group, as well as leadership and people management insights. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 AmBank’s intranet, Connected, helps disseminate and archive information, conduct our pulse surveys, and support human resources, through employee and manager self-service functionality. Employee engagement sessions involved town halls with the Chairman and Group Chief Executive Officer (GCEO), lunches with the GCEO, senior management town halls, skip level interviews and stay interviews. A pulse survey was conducted with the Group’s employees during the last quarter of 2016. Results showed that: • 91% of respondents understood and were confident in achieving the Group’s strategy • 96% were excited and willing to take on new challenges and tasks • 98% understood the need to change to stay relevant • 88% were confident in their colleagues/supervisors in achieving the strategy • 96% felt AmBank’s leadership will steer us to success MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  166. EMPLOYER OF CHOICE AmBank Group won the HR Asia Best Company to Work For In Malaysia Award 2016 . We are encouraged by this outcome based on HR Asia’s independent survey gathering of employee inputs to gauge their levels of energy and engagement. This strengthens our resolve to continue our endeavours to make AmBank Group a Top 4 employer in Malaysia by 2020. In the future, we will work on further developing the Group’s value proposition to employees and support the various needs and priorities of the workforce in view of changing demographic trends, work and family issues, health and pension patterns, adjustments to the economy, and the plight of low wage earners. We will also maintain employee engagement activities and programmes around personal mindfulness, social interactions and wellness, with the focus of ensuring sustainability and community building capability. There is also an initiative driven by Group HR and assisted by the Sports Club to conduct sports activities for new joiners to boost morale. Similarly, for new C-Suites, a structured on-boarding programme was designed and carried out recently. This induction programme was presented by various Heads of Departments covering topics such as an overview of AmBank’s businesses, group strategy and transformation initiatives, risk, audit, compliance and governance framework. We also designed an induction programme for newly appointed Board Directors. The programme outlines the line of businesses, group strategy and transformation initiatives, people initiatives, risk, audit, compliance and governance framework. The session is led by the GCEO, with presentations made by various Heads of Departments. 12 new Directors across the Group attended the programme during FY17. Group Culture and Transformation In light of the challenges posed by AmBank’s on-going transformation, we embarked in FY17 on a Group-wide culture programme to empower and encourage the necessary conditions for individual and team ownership of high performance. We have also initiated several human resources initiatives aimed at aligning organisational and people goals, as well as ensuring consistency between organisation structures and reporting lines for greater clarity and accountability. This year, the workforce alignment is as follows: Subsidiaries AmBank AmInvestment AmGeneral Number of employees Percentage of employees (%) 8,527 79 784 7 1556 14 The ratio of employees involved in sales to non-sales is 34% to 66%. The current talent pool in the Group is 10% of population. The Senior Management Team met for a two-day Senior Management Meeting in Putrajaya in February 2017. Our GCEO led his team to review the Group’s Top 4 Strategy and financial results as well as our transformation plans thus far. Working outdoors, team learning activities cultivated and cemented new relationships, a key ingredient to building our corporate value of collaboration across the Group. Individually, there was time for reflection and to get ready for the new financial year ahead. Related to this, efforts were placed on developing and aligning key performance indicators to drive performance with a view to increase collaboration between business units. A Group-wide project is underway to review, develop and deploy plans to strengthen compliance practices in this key area of people and culture. Safety and Health Healthy employees are happy employees and will have more rewarding lives both inside and outside the office. AmBank places a great emphasis on occupational safety and health (OSH) and endeavours to ensure the safety, health and welfare of all our employees throughout the Group. Induction A new 30 day on-boarding process for new hires has been implemented across the Group. The process requires new hires to attend an HR Orientation session on the first day of work, followed by a Department Walkthrough led by the Manager in their respective work areas. In addition, within the first month, new hires are expected to attend the Group Induction Programme. The AmBank OSH Management System is guided by the Group OSH Manual and Procedure and AmBank Group OSH Policy which are in compliance with the Occupational Safety and Health Act 1994, Factories and Machinery Act 1967, Fire Services Act and other relevant acts, regulations and statutory requirements. The safety and health management system of AmBank consists of 4 major components which are Plan, Do, Check and Act. The Group Induction Programme provides opportunities for new hires to connect and network with colleagues from different departments and business units. 756 new hires completed the Group Induction Programme during FY17. For continuous programme improvement purposes, feedback via a survey is also obtained. p. 164 p. 165 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  167. AmBank Group OSH Committee is committed to continuously improve the Group ’s safety culture. Under the Group OSH Committee, there are two subcommittees comprising the Building OSH Committees and the Regional OSH Committees. The Building OSH Committees oversee the OSH aspects of the 10 buildings in Selangor and Kuala Lumpur while the Regional OSH Committees oversee the OSH aspects of the 39 buildings across the country. Occupational safety and health indicators FY15 FY16 FY17 Accident with fatality 0 0 0 Accident with lost workdays 8 14 18 101 447 872.5 Accident without lost workdays 0 0 0 Total no. of accidents 8 14 18 Fatality rate 0 0 0 Lost Time Injury Frequency rate (LTIFR) 0.27 0.45 0.64 Lost Time Injury Incident rate (LTIIR) 0.68 1.22 1.6 No. of safety and health training programmes 3 4 5 No. of employees trained on safety and health 162 418 409 Total workdays lost Each of the committees has identified risks and implemented controls to minimise risk. Measurable objectives and targets are set through strategic and operational health and safety plans across all divisions. We also have a division OSH audit which involves yearly inspections at all AmBank buildings across Malaysia. We have established the OSH Communication Plan to ensure all employees are aware of safety and health development in the Group. While we are active in conveying safety knowledge and work hazards, we actively seek feedback from the employees regularly pertaining to issues on health and safety. Safety and Health Training We have provided several health and safety training programmes in FY17 in order to maintain the Group’s safety culture. OSH e-learning is one of our core initiatives in promoting OSH group wide. The topics covered in the e-learning module include potential hazards identification and the incident report mechanism in the event of emergency. Note: The reporting year is from January 2016 to December 2016. It is our target that 100% of AmBank employees shall complete the OSH e-learning modules. As of FY2017, we have achieved 98.95% completion rate since the official launch in February 2015. Much of the increase in workdays lost is due to an increased focus on monitoring and recording accidents in the work place. Moving forward, we have plans to carry out Emergency Response Training (ERT) and OSH induction to further increase awareness on OSH. We also have plans for OSH awards in recognition of the good practices pertaining to OSH. In FY17, we have invested approximately RM150,000 in conducting health and safety related training programmes as shown below:’ Wellness Programme No. Type of Training No. of participants Remarks 1 Contractor Safety Training 30 – 2 OSH Secretary Roles & Responsibility 66 2 sessions 3 First Aid & CPR Training – Regional 61 10 sessions 4 OSH Committee Training 28 2 days 5 Defensive Riding 24 Held at Headquarters Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Our employee’s psychological health is supported through our stress management training. Last year, we invested about RM240,000 on wellness programmes promoting healthier lifestyles. Moving forward, we have plans to carry out Emergency Response Training (ERT) and OSH induction to further increase awareness on OSH. We also have plans for OSH awards in recognition of the good practices pertaining to OSH. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  168. EMPLOYER OF CHOICE Human Capital Development Organisational Design /Review Policy Recruiting and developing our future workforce is key to achieving the Group’s Top 4 aspiration to be a Top 4 employer in Malaysia. Attracting and retaining talented individuals and meeting our employees’ aspirations supports the development of new products and services, the exploration of new business segments and the transformation of our organisation. AmBank Group has a structured Organisation Design/Review Policy and processes to manage the end-to-end process of designing/reviewing through to obtaining approval for new or revised organisation structures at department, division and Group level so that there is consistency and governance in methodology and application across the Group. Talent Attraction The Head of Division/Department must ensure that a comprehensive Change Management Plan is put in place prior to the implementation of the revised organisation structure. The HR Departments in the Divisions/Departments are responsible for ensuring that Organisation design/review policies and procedures are executed and adhered to by the respective Divisions/Departments. Various policies support our recruitment, learning and development initiatives, and these include the Recruitment Policy and the Professional Membership Policy. Increased presence and visibility in social media has generated desirable outcomes for our employer brand, particularly in providing easier access to careers and gathering employment insights into our Group. In particular, our LinkedIn followers increased four-fold, from 4,000 to 17,000 within FY17. This culminated in AmBank Group receiving the Employer Branding Award 2016 by the World HR Congress. AmBank Group is continuously striving to recruit new talent. We participated in 14 external career fairs in the financial year, ranging from campus fairs and notable public events to significant overseas recruitment drives. Our brand tagline ‘Fly High with AmBank’ earned us much attention and interest. In November 2016, our inaugural internal career fair, Career Bazaar, brought together career information and opportunities from across the Group under one roof. Over 200 employees visited the career booths manned by employees from business units and group functions, who marketed their respective careers paths. A total of 829 job applications were lodged, providing a ready pool of resources to select and deploy within the Group. This reflects our employee value proposition of growing across AmBank Group. Job Grading Policy AmBank Group has a Job Grading policy in place so there is consistency in approach and application across the Group. Job grading impacts human capital decisions such as sourcing, job pricing, staffing planning, career management, performance management, key performance indicators, competency levels and talent as well as succession management. AmBank Group has a systematic job evaluation process and system, in which the Group’s job grading structure is reviewed every 4 to 5 years. This evaluation may occur more frequently if there are significant changes in business via expansion and growth that impact the number of jobs and job grades required. The job grading structure also allows for career planning and employee mobility both vertically and laterally. There are several criteria that are taken into consideration to implement job grades such as qualifications, relevant experience, performance track record, and a combination of assessments and behavioural interviews. Promotion Policy Talent Retention and Leadership Development To develop and retain talent and leadership with the ability to operate successfully in diverse cultures and locations, we have established a robust talent management framework that is well exercised, managed and monitored by various policies such as: • Talent & Succession Management Policy • Organisational Design/Review Policy • Job Grading Policy • Promotion Policy Learning and Development All eligible employees are appraised annually. We measure the productivity of our employees through performance appraisals and productivity enhancing initiatives. We also monitor our profit before tax per employee and our net income per employee indices. p. 166 p. 167 Promotion Management is part of an overall career management continuum. Following the appointment of an employee into the organisation, the employee will undergo movement up the career ladder through promotions, supported with the appropriate performance management and development. In AmBank Group, we have a merit-based Promotion Policy and processes to assist us in managing the talent and succession in a fair and consistent manner. AMMB Holdings Berhad (223035-V) Our efforts to strengthen our leadership bench capabilities continue with the inclusion of best-in-class learning approaches from reputable learning partners, business schools and management institutes with regional and global presence and proven track records. Annual Report 2017 ambankgroup.com
  169. Employee Participation in Trainings in FY17 Total number of participants : 123,508 To develop talents and ensure our managers can transition to leadership positions, the Group has developed two Management Enterprise Leadership Development programmes: • The Emerging Leaders programme is a leadership development programme. 70 employees across the group have completed this 18-month programme this year. • Since its inception, the Management Development Programme has seen 27 high-potential middle managers complete the programme. Another cohort of 20 participants will complete by August 2017. 90% Technical 5% Development 4% Certification We designed the Management Development Academy to develop and build a sustainable bench strength of effective people managers across all levels in the Group. A total of 140 employees from Executive level to Executive Vice President level have started these programmes which run for a period of 12 to 18 months. • Advance Leaders Programme • Future Leaders Programme • New Managers Programme • Emerging Managers Programme 1% Compliance Amount Invested on Training in FY17, RM Total amount invested: RM8,655,854.40 Looking forward, the Group is planning to increase the pipeline of future leaders by recruiting talents into the AmGraduate programme. 60% Technical Our employees are encouraged to pursue professional certifications to further enhance their competency and professional development. This year, 21 employees successfully completed various Asian Institute of Chartered Bankers professional certifications including the Professional Banker and Executive Banker certifications. 29% Development 10% Certification 1% Compliance To cater to individual learning needs, we designed and developed 20 ondemand programmes covering essential banking courses, comprehensive business communications skills, project management and Microsoft office skills. Employees experienced a blended learning approach which combines classroom, e-learning and bite sized digital learning accessible via mobile phone devices. More than 700 employees nationwide were trained. Training hours invested in FY17 (hours) Total training hours: 601,499 hours Role-based learning is a key initiative to deliver the Group’s performance goals. Multiple academies were built to upskill and ensure the efficiency and effectiveness of teams across retail and wholesale banking in core delivery competencies such as needs based selling/cross selling, credit and risk assessment as well as wealth management. 85% Technical 8% Development Next year, the Group aims to implement more active initiatives related to career management, talent development and building succession throughout the Group. 5% Certification 2% Compliance AS OF 31 MARCH 2017, THE PERCENTAGE OF KEY POSITIONS WITH SUCCESSION PLANNING WAS 92%. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  170. POSITIVE SOCIETAL IMPACT Environmentally and Socially Responsible Investment WE CONTRIBUTE TO A MORE SUSTAINABLE FUTURE BY CONSIDERING CAREFULLY OUR BUSINESS DECISIONS , THE ENVIRONMENTAL IMPACTS OF OUR ACTIVITIES AND HOW WE INTERACT WITH OUR WIDER COMMUNITIES This theme clusters the following material sustainability matters: • Environmentally and Socially Responsible Investment • Community Investment and Development • Energy Management and Greenhouse Emissions • Waste Management p. 168 p. 169 AMMB Holdings Berhad (223035-V) The global increase in demand for socially responsible investing (SRI) and other ethical related investments present an enormous opportunity for Islamic Finance, as its inherent principles of fairness and social responsibility are intrinsically linked to being Shariah compliant. The growth of Islamic Finance has shown how it contributes to realising a sustainable future both inside and outside the Muslim world. Islamic Finance Our Islamic banking arm, AmBank Islamic, is contemplating the widening of its scope of business beyond credit intermediation. Whilst credit intermediation shall continue to remain AmBank Islamic’s key earnings generator and source of funding, AmBank Islamic would explore to undertake an investment intermediation role as well. This would encompass the offering of investment account (IA), which would be distributed via the Group’s own distribution channels and the Investment Account Platform (IAP). Annual Report 2017 ambankgroup.com
  171. The IA is a product which allows providers of funds (Investors) to invest directly in productive economic activities or asset classes which are within the Investors’ investment mandate, thus providing the Investors with the potential to reap higher returns and fulfilling other investment criteria (e.g. social impact of the investment). Meanwhile, the users of funds are provided with a wider range of funding sources, thus promoting the growth of productive economic activities which could also positively impact society. This risk-sharing element is widely advocated by Shariah. Nonetheless, since the Investors’ capital is neither guaranteed nor protected, the IA is a product with higher risk which requires greater disclosure to and assessment by prospective Investors. values which are universal to all regardless of religion, race, culture or creed. As part of this medium term journey, AmBank Islamic will put into motion initiatives to align itself with value-based banking. The initiatives would involve ascertaining the exposures which are most susceptible to ESG risks, prioritising certain sectors and generating a baseline overview of the ESG portfolio risk profile in a systematic manner. AmBank Islamic will also develop its ESG risk principles and appetite, ESG governance framework and introduce ESG related products, to benefit society whilst working within the Shariah and the public ecosystem. The IAP facilitates effective matching between sources of funds with diverse financing needs of the real economy, leveraging on a tech-driven avenue which is in line with AmBank Islamic’s digital intent. The benefits of this initiative would include the promotion of a sustainable ecosystem via reduced negative externalities, upliftment of socioeconomic standards, financial stability, innovation to create new market opportunity and efficient use of resources. These are the intrinsic values extolled by Shariah. Underpinning AmBank Islamic’s credit and intermediation roles is the aspiration to be a value based intermediary whereby its business conduct would be driven to generate positive and sustainable impact to the environment, economy and society by adopting amongst others, environmental, social and governance (ESG) principles. AmBank Islamic’s value based intermediation role would also integrate the elements of Maqasid Shariah, which encapsulate positive and sustainable Our Islamic Markets advisory services cover sukuk, Islamic financing syndication, equity-related offerings and Islamic structured finance. Guided by Shariah requirements, we strive to be the adviser of choice to our clients through our end-to-end product offerings and value adding services, assisting them with their fund-raising activities in promoting the real sector of the economy and positively impacting society. Amongst the largest sukuk issuances which met these criteria and were arranged and participated by us in FY17 were: Type Amount (RM) Details Infrastructure & Project Financing RM3.64 billion • Largest Ringgit-denominated greenfield toll-road project financing which was raised by Lebuhraya DUKE Fasa 3 Sdn Bhd, for the construction of the Setiawangsa-Pantai Expressway. • Malaysia’s first Sukuk issuance based on the Shariah principle of Wakalah Bi al-Istithmar to fund the development and construction of an expressway. • Sukuk programme for Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN). • PTPTN was established under the PTPTN Act 1997 to manage funds for tertiary education purposes, collect payments of financing and to provide and manage education saving schemes. • Joint lead arranger and manager for a Sukuk Issuance for Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA). • LPPSA is the new statutory body established and is under the purview of Ministry of Finance to undertake the provision of housing financing to civil servants previously conducted by Bahagian Pinjaman Perumahan. Education RM8.0 billion Government Housing RM25.0 billion Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  172. POSITIVE SOCIETAL IMPACT Community Investment and Development • On 18 June 2016, a charity shopping session was organised for 170 children from various local orphanages (i.e. Pertubuhan Kebajikan dan Pendidikan Permata Hatiku Kuala Lumpur dan Selangor, Pusat Jagaan Budaya Harapan, Pertubuhan Kebajikan Sentuhan Budi Kuala Lumpur and Pertubuhan Rahoma Darul Fakir Malaysia). This was in conjunction with Hari Raya and the 170 children, aged between three to 19 years old, were invited to a local hypermarket to purchase new traditional Malay costumes. • Subsequently, a Majlis Berbuka Puasa Amal Bersama Tan Sri Azman Hashim was held at Bangunan AmBank Group on 24 June 2016 where the 170 children ‘berbuka puasa’ together with the Chairman of AmBank Group, Tan Sri Azman Hashim, senior management and staff of AmBank Group. • KAG also organised a Feed the Homeless exercise on 1 July 2016 where KAG members went out to the streets of Kuala Lumpur to distribute Hari Raya delectables and toiletries to the homeless. This volunteer exercise was conducted in conjunction with Hari Raya Aidilfitri in order to spread joy in the homeless community, regardless of race, religion and ethnicity, • Approximately 70 members of various business units took part in this exercise, including Group CEO, Dato’ Sulaiman Mohd Tahir and his wife, Datin Khairani Muhammad. Over 500 Hari Raya delectables were distributed to the homeless covering areas in Kuala Lumpur around Cahaya Suria and Jalan Tuanku Abdul Rahman. AmBank takes a leading role in reaching out to society and demonstrates a caring, connected and committed role in addressing a wide range of matters pertaining to the development of sustainable communities. The contributions, grants and volunteering activities that we are investing in enable us to connect with local communities and help them thrive. AmBank believes in giving back to the community in which we do business. We do this through a number of programmes to engage various segments of the less fortunate in Malaysia including single mothers, orphans, the disabled and senior citizens of Malaysia. AmKasih Programme Our AmKasih programme, serves as a platform to reach out to the community and conduct food aid initiatives in order to provide targeted groups with an allowance to help offset the cost of essential daily food items. Kelab AmBank Group Through the Kelab AmBank Group (KAG), which is the Group’s sports and recreation club for all staff, we organise various events in support of the needy, poor and less fortunate. The events that took place in FY17: Other activities carried out in FY17 included: No Projects/Campaigns Date of Event Line of Business/Entity 1 Official Launch of Tunku Arishah Sports Arena Saturday, 8th October 2016 th AmGroup Foundation/Yayasan Azman Hashim 2 Sponsorship: Mahathir Science Award Foundation Wednesday, 26 October 2016 AmGroup Foundation 3 Flood Relief : Rehabilitation of Kg Pasir Era Project (2nd Phase) From January 2014-to date AmGroup Foundation/Yayasan Azman Hashim 4 Presentation of life jackets to Jabatan Bomba & Penyelamat Malaysia (Bahagian Kelantan) From January 2014 until to date AmBank Group 5 Charity Food Distribution to the homeless in Kuala Lumpur Friday, 2nd July 2016 KAG 6 Charity Food Distribution to the homeless in Johor Bahru Friday, 12th August 2016 KAG 7 Charity Food Distribution to the homeless in Pulau Pinang Saturday, 27th August 2016 KAG th 8 Majlis Berbuka Puasa Amal Bersama Tan Sri Azman Hashim (Charity Shopping Session) Saturday, 18 June 2016 AmBank Group/KAG 9 Majlis Berbuka Puasa Amal Bersama Tan Sri Azman Hashim di Bangunan AmBank Group Friday, 24th June 2016 AmBank Group/KAG 10 Majlis Berbuka Puasa Amal di Pertubuhan Rahoma Darul Fakir Monday, 27th June 2016 AmBank Group/KAG 11 12 Contribution for Orchid Run & Ride 2016 (Petronas) Kuala Lumpur Islamic Finance Forum (KLIFF) 2016 p. 170 p. 171 th Sunday, 25 September 2016 st Monday, 21 November 2016 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com AmBank Group AmBank Group – Special Project
  173. No Projects /Campaigns Date of Event Line of Business/Entity 13 AmBank Group Blood Donation Drive (Central Region – BAG & MAB) Tuesday, 4th October 2016 & Wednesday, 5th October 2016 KAG 14 KAG Blood Donation Drive 2016 (Northern – Penang) Saturday, 27th August 2016 KAG 15 KAG Blood Donation Drive 2016 (Southern Region – Johor Bahru) th KAG Wednesday, 9 November 2016 th 16 KAG Blood Donation Drive 2016 (Sabah) Monday, 14 November 2016 KAG 17 KAG Blood Donation Drive 2016 (Sarawak) Tuesday, 15th November 2016 KAG 18 KAG Blood Donation Drive 2016 (Terengganu) Monday, 24th October 2016 KAG 19 20 KAG Hiking Activity @ Bukit Nanas, Kuala Lumpur th KAG Sunday, 5 February 2016 KAG Saturday, 26 November 2016 th KAG FRIM Jungle Trekking Adventure Yayasan Arab-Malaysian Furthermore, the Group established a foundation, Yayasan Arab-Malaysian, to receive and administer funds for religious, educational, scientific, medical, charitable and cultural purposes. The purpose is further elaborated according to these set out mandates: Religion To subscribe, foster, develop and improve the knowledge of all forms of religion and religious activities and to grant donations for construction of religious schools and places of worship. Education To foster, develop and improve education of all kinds approved under the education laws of Malaysia and in such manner as may, from time to time, be decided upon by the Foundation including but without prejudice to the generality of this provision, the founding and maintaining of scholarships, chairs at schools, colleges and universities in Malaysia. Research To foster, subscribe and contribute towards scientific, medical research and teaching, and to provide or to subscribe and to grant donation for providing medical and surgical facilities and services of all kinds. Human Rights To subscribe and to grant donations to local or national institutions or organisations approved by the Director General of Inland Revenue, Malaysia and to organise, carry out and support schemes for the relief of human suffering, improvement of the standard of human life and the treatment of sickness and diseases. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  174. POSITIVE SOCIETAL IMPACT Aside from the community investments , AmBank has sponsored Zoo Negara’s Dromedary Camel for over 25 years and plans are being made to extend the sponsorship in order to continue preserving the wellbeing of the camels. The Group is looking into investing in more meaningful and impactful community programmes such as the AmKasih-Mydin Food Aid Programme for the urban hardcore poor and participation in the Financial Industry Community Invest Initiatives Programme (FICII). This collective CSR programme was initiated by BNM for the financial industry to work collaboratively in providing positive societal impacts. Zakat Contributions Similar to previous years, AmBank Islamic continued to serve the community through corporate social responsibility initiatives. We fulfilled our responsibilities through business zakat distribution of RM1.5 million, out of which RM414,000 was paid to state zakat collection centres whilst the balance of RM1.1 million was distributed to eligible recipients ranging from associations and charity homes throughout Malaysia, including Yayasan Pelajaran Mara (YPM). The distribution to YPM was for the on-going Student Adoption Programme which was currently in its sixth year out of a 10-year programme. Launched in FY17, the replacement of fluorescent light bulbs covers all premises under AmFirst Reit’s management – Bangunan AmBank Group and Menara AmBank, Menara AmFirst (Petaling Jaya), Wisma AmFirst (Kelana Jaya), Jaya 99 (Melaka), and Summit USJ (Subang Jaya). All T8 fluorescent tubes at car parks, staircases and common areas in the buildings have been replaced with LED lighting, except for Summit USJ, where replacement was conducted only partially. In addition, we have embarked on a pilot project to reduce our electricity consumption in our AmBank Desa Sri Hartamas branch. The energy audit that was carried out indicated a saving of 64% or approximately RM5,000 per annum after installing energy saving LED lights. We would also reduce by about 40kg of our CO2 emissions annually in this branch. Managing our air-conditioning system Air-conditioning is one of the main components in electricity consumption. We have taken several initiatives in managing our air-conditioning system. In August 2016, we rescheduled the air-conditioning system timing at Bangunan AmBank Group in order to reduce energy and cost. We also turn on the air-conditioning system in a staggered manner instead of turning on all the systems at once. Energy, Water and Waste Management AmBank’s efforts in managing energy and water consumption efficiently contribute to reducing our broader environmental impact, especially in areas where we strive to increase resource efficiency and reduce wastage. The Group recognises that additional measures are still needed. We will continue to actively identify areas and put in place processes to make continuous improvements in energy efficiency, reducing greenhouse gas emission and resource conservation. Among others, this includes increasing employee awareness in conservation programmes. RESULTS SHOWED A REDUCTION OF 27% IN TERMS OF ELECTRICITY CONSUMPTION AND CHARGES SINCE THE IMPLEMENTATION OF STAGGERED TIMING ON THE AIR CONDITIONING SYSTEM. To ensure sustainability and positive long-term value creation, we continue to measure and reduce our impacts, undertaking environmental initiatives that are valued by our customers and our employees, as well as beneficial to our bottom line. Energy Management and Greenhouse Gas Emissions Lighting with energy efficient LED lights Energy management is an important environmental concern as the Group’s electricity consumption directly contributes to the increase of its carbon footprint. One of AmBank Group’s on-going initiatives to reduce electricity consumption is to replace T8 fluorescent light bulbs with energy-saving LED lights. p. 172 p. 173 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  175. Electricity Consumption and Electricity Charges since the Implementation of Rescheduling the Air-conditioning System Timing in Bangunan AmBank Group 300 200 500 100 0 Electricity charges , RM'000 Electricity Consumption, '000 kWh 1,000 0 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Consumption (kWh) Jan-17 Feb-17 Mar-17 Cost (RM) In FY17, we also implemented auto-timers for the air-conditioning system to replace manual operation. Additionally, we have installed a green chiller system at our Menara AmFirst building in Section 19 Petaling Jaya. The green chiller was procured from one of the world leaders in producing high-technology heating, air-conditioning and refrigeration solutions. Moving forward, we have plans to adjust the air-conditioning timer accordingly, especially at Menara AmBank, to further reduce the energy and cost. While we have not yet obtained any certifications or awards related to implementing energy management systems, we are exploring the options to enhance building features to incorporate green designs. We are proud to share that AmMetLife Insurance Berhad has recently moved into a new building in Kuala Lumpur Sentral which incorporates green design and technology. It obtained Leadership in Energy and Environmental Design (LEED) Silver and Green Building Index (GBI) Certification. Other on-going ‘green’ initiatives are: • Three of the Group’s buildings are designated as non-smoking buildings – Bangunan AmBank Group, Menara AmBank and the AmBank Group Leadership Centre – to provide cleaner air for employees and customers alike • Gardens and lush landscapes are most notable in Bangunan AmBank Group and Menara AmBank in Kuala Lumpur, and provide pockets of soothing beauty that make for a more pleasant banking experience Green Building We are committed to improving the energy efficiency of our building portfolio and shifting to low carbon energy sources. Moving forward, we will be driving gradual reductions in our energy-related footprint across our commercial and retail premises. As we are tenants in our main building and not the building owner, we will focus on improving the energy efficiency of the internal office spaces. We strive to improve our disclosure pertaining to energy management in the future. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  176. POSITIVE SOCIETAL IMPACT Waste Management Efforts to minimise our environmental footprint are mirrored in AmBank Group ’s proactive approach to reducing waste in our daily operational processes. Wastage reduction is an area of priority for the Group as most waste produced by the financial industry is made up of office materials. Waste management practices underway in AmBank to reduce primary types of waste streams include paper and IT- related waste, e-financial statements, reports, paperless transactions, paper recycling and paper printing. Throughout our buildings and regional offices, practices like double-sided printing, minimising colour prints and using electronic communications instead of hard copy printouts are encouraged. AmBank Group’s approach to waste management is to continuously and progressively adopt automation in operational processes to avoid unnecessary paper consumption and waste generation. The Group has waste management practices in place for paper collection, recycling and disposal. We use several contractors for the disposal of waste, i.e. obsolete electrical items, old furniture, paper etc. The disposal of bigger items is conducted on an annual basis, whereas smaller items are disposed on a quarterly basis or as and when necessary. There is a recycling initiative conducted by the Group, mainly on the disposal of scrap paper. Paper Usage We have been encouraging our employees to move towards a paperless environment. Year-on-year data tracking is carried out to measure the progress of our efforts. The total usage of paper in FY17 reduced by 10% as compared to FY16. Total weight of waste collected against its cost value Total usage of A4 & A3 paper (sheets) 20 10 85,000 8 68,000 10 4 No. of sheets 6 Cost, RM’000 Weight, ’000 kg 15 51,000 34,000 5 0 FY15 Total weight of waste collected (kg) FY16 FY17 2 17,000 0 0 FY15 Total cost value (RM) Note: Waste collected from Head Office Department in Menara AmBank, Bangunan AmBank Group, Menara Dion, Menara MBF & Tropicana. p. 174 p. 175 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com FY16 FY17
  177. Customer Statements We also encourage our customers to move towards a paperless environment . Customer statements are now available online or via e-mail. We are working to improve our digital banking in order to improve our customer experience as well as to reduce our environmental footprint. Total number of customers statement or notices 12 No. of statements, '000,000 10 8 6 4 2 0 FY15 FY16 FY17 There was a surge in paper customer statements in FY16, mainly due to the change of terms of certain AmBank card services. In FY17, several statements including of deposit and merchant credit cards have been permanently migrated to e-statement. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  179. Delivering customised solutions At AmBank Group , we provide, deliver, and integrate our financial services to suit our customers’ needs. With our customers’ unwavering support, we shall remain at our best to stay relevant in serving our customers’ evolving needs.
  180. CORPORATE GOVERNANCE 180 Chairman ’s Statement on Corporate Governance 181 Statement of Corporate Governance 202 Compliance with Bursa Securities Listing Requirements 203 Compliance with the Malaysian Code on Corporate Governance 2017 214 Statement on Risk Management and Internal Control 216 Audit and Examination Committee Report 219 Statement on Internal Audit 221 Group Risk Management Report 222 Group Compliance 223 Shariah Committee Report
  182. CHAIRMAN ’S STATEMENT ON CORPORATE GOVERNANCE DEAR VALUED SHAREHOLDERS, ON BEHALF OF THE BOARD OF DIRECTORS OF AMMB HOLDINGS BERHAD, I AM PLEASED TO PRESENT OUR CORPORATE GOVERNANCE STATEMENT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2017. THIS REPORT GIVES DETAILS OF OUR PROGRESS, ACHIEVEMENTS AND CHALLENGES AND ALSO THE AREAS IN WHICH WE SEEK TO IMPROVE. At AmBank Group, we believe good corporate governance is the key to maintaining the trust that our investors and customers place in us. We believe good corporate governance is a cornerstone of a successful and sustainable company. Throughout the year, we have continued to develop our practices. We approved our revised Board Charter on 27 July 2016, and recently completed our independent Board Effectiveness Evaluation. This encompasses the effectiveness of the Board as a whole, and the effectiveness of each Board Committee and individual Director. One of the most important aspects of my role as Chairman is to foster the right dynamic on the Board so we have Directors with the right range and balance of skills, expertise and attributes to ensure constructive challenge and support of the executive team led by our Group Chief Executive Officer. In line with best practice, we plan to increase the number of independent directors on the Board by two (2), and maintain the number of Non-Independent Directors, so that the majority of the Board will be made up of Independent Directors. For the Boards of our three (3) main subsidiaries, we already have a majority of Independent Directors. At AmBank Islamic Berhad, all five (5) Directors are independent. Both AmInvestment Bank Berhad and AmBank (M) Berhad have three (3) Independent Directors and one (1) Non-Independent Director. Central to an effective board, and to the effectiveness of the contributions of Independent Directors, is to ensure that the Board is provided with the right information at the right time. I continue to place great emphasis on ensuring that this is done and that Board and Board Committee agendas cover the right issues. We currently have five (5) committees operating at Board level: • Group Nomination and Remuneration Committee • Group Information Technology Committee • Risk Management Committee of Directors • Audit and Examination Committee • Governance Committee In terms of the composition of the Board during this financial year, we appointed Datuk Shireen Ann Zaharah binti Muhiudeen and Seow Yoo Lin as Independent Directors. We also appointed Graham Kennedy Hodges as Non-Independent Director. He is a board representative of our largest shareholder, Australia and New Zealand Banking Group Limited. At the end of the financial year, Tun Mohammed Hanif bin Omar, who has been on the Board for more than 22 years, retired from the Board. I would like to extend my heartfelt gratitude to Tun Mohammed Hanif for his guidance and insight over the years. I also thank Wasim Akhtar Saifi, who was an Independent Director and resigned in order to focus on an executive role overseas. He remains as an Independent Director of AmBank Islamic Berhad, a wholly owned subsidiary of the Company. We are grateful to all of our stakeholders for your support this year. Together we can focus on what we do best, helping individuals and businesses in Malaysia grow and win together. TAN SRI AZMAN HASHIM Chairman, Non-Independent Non-Executive Director Kuala Lumpur 30 June 2017 p. 180 p. 181 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  183. STATEMENT OF CORPORATE GOVERNANCE THE BOARD OF DIRECTORS OF THE COMPANY (BOARD) IS FULLY COMMITTED TO ENSURING THAT THE COMPANY CONTINUES TO MAINTAIN THE HIGHEST STANDARDS IN CORPORATE GOVERNANCE, WITH A VIEW TO CONTINUOUSLY ENHANCE THE VALUE AND PROTECT THE INTERESTS OF ALL STAKEHOLDERS. The Board believes in being transparent and responsive to stakeholders at all times, with unwavering integrity when conducting business and affairs. The Company subscribes to and conforms to the principles and recommendations stated as follows:• Bank Negara Malaysia (BNM) Policy Document on Corporate Governance (BNM Corporate Governance) • Main Market Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) • Malaysian Code on Corporate Governance (MCCG) 2012, save for the recommendation that the Board must comprise a majority of independent directors where the Chairman of the Board is not an independent director. The Board consists of a majority of Non-Independent Non-Executive Directors. However, the Independent Directors are able to exercise strong independent judgement and provide balance to the Board with their unbiased and independent views, advice and judgement in all Board deliberations. The Board took cognisance of the new MCCG 2017, published in April 2017, which will be applicable to annual reports published from 2018 onwards. This statement describes how AMMB Holdings Berhad (AMMB) has applied the practices and complied with the principles of the MCCG 2012 (and wherever possible the practices of MCCG 2017) during the financial year under review. Principle A Principle B Principle C Board Leadership & Effectiveness Effective Audit & Risk Management • • • • • • • • • • • • • • • • Roles of the Board, the Chairman & Group Chief Executive Officer and the Group Company Secretary Board Composition Board Independence Tenure of Independent Directors Board Diversity Appointment of Directors Re-election & Re-appointment of Directors Performance Evaluation Meetings and Time Commitment Board Conduct, Board Charter and Code of Ethics Directors’ Training & Development Leadership Succession Remuneration • • • Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Audit & Examination Committee Risk Management Committee of Directors Suitability & Independence of External Auditors Internal Control Trading in AmBank Shares Policy Related Party Transactions Integrity in Corporate Reporting & Meaningful Relationship with Stakeholders • • • • Access to Information & Advice Conduct of General Meetings Statement of Directors’ Responsibility in respect of the Audited Financial Statements Whistleblowing Policy MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  184. STATEMENT OF CORPORATE GOVERNANCE PRINCIPLE A : Board Leadership and Effectiveness Roles of the Board The Board’s pivotal role is to lead and establish AmBank Group’s vision, strategic direction, key policies and framework, including the management of the succession planning process of the Group and the appointment of key senior management. In view thereof, the Board’s roles and responsibilities include but are not limited to the following: • • • Reviewing and approving the strategic business plans of the Group developed by Management in alignment with the approved risk appetite and taking into account the sustainability of the Group’s businesses. This encompasses the annual budget, medium term aspirations, new investments/divestments as well as mergers and acquisitions. Overseeing the conduct of the business to ascertain its proper management including setting clear objectives and policies within which senior executives are to operate. Identifying and approving policies pertaining to the management of all risk categories including but not limited to, credit, financial, market, liquidity, operational, legal and reputational risks. • Reviewing the adequacy and the integrity of internal controls and management information systems, including systems for compliance with applicable laws, rules, regulations, directives and guidelines. • Reviewing the leadership and succession planning of the Group with a view to ensuring the Group’s continued ability to sustain and compete effectively in the market. • Serving as the ultimate approving authority for all significant financial expenditure. • Promoting sound corporate culture and overseeing the Group’s adherence to high standards of conduct, ethics and corporate professional behaviour. Roles of the Chairman and Group Chief Executive Officer The roles of the Chairman and Group Chief Executive Officer remain separate and distinct. The Chairman of the Board is non-independent and non-executive. The Chairman plays an important leadership role within the Group and is responsible for: • Setting the agenda for meetings of the Board that focus on strategic direction and performance. • Maintaining on-going dialogue and relationship of trust with and between the Directors and Management. • Ensuring clear and relevant information is provided to Directors in a timely manner. • Ensuring sufficient time is allowed for the discussion of complex or critical issues. p. 182 p. 183 AMMB Holdings Berhad (223035-V) The Board delegates the authority and responsibility for managing the everyday affairs of the Group to the Group Chief Executive Officer, and through him and subject to his oversight, to other Senior Management. The Board monitors the performance of the Group Chief Executive Officer on behalf of the shareholders. Role of the Group Company Secretary The Group Company Secretary reports directly to the Board and is the source of guidance and advice to the Directors on areas of corporate governance, relevant legislation, regulations and policies, besides ensuring compliance with the Main Market Listing Requirements of Bursa Securities and other regulatory requirements. The Group Company Secretary attends Board and Board Committees meetings and is responsible for the accuracy and adequacy of records of the proceedings of Board and Board Committees meetings and resolutions. The Group Company Secretary also serves closed period notices to Directors and Senior Management for trading in the Company’s shares and briefs the Board on the content and timing of sensitive or material announcements to Bursa Securities. Board Composition The Board is chaired by a Non-Independent Non-Executive Director and currently comprises nine (9) Directors, four (4) of whom are Independent Non-Executive Directors. The Board continues to achieve a balance of skills, knowledge, experience and perspective among its Directors. The profiles of the Directors are set out on pages 42 to 50 of this Annual Report. The Group Nomination and Remuneration Committee (GNRC) and the Board are actively searching for an additional two (2) independent directors in order to ensure the Board has a majority of independent directors. One (1) potential candidate has been identified for appointment, pending the approval of the regulator. The Board plans to increase the total number of independent directors to six (6) and maintain the number of non-independent directors at five (5). The Directors collectively provide the necessary mix of knowledge, skills and experience in key areas. These include banking, fund management, accountancy, finance, risk management, governance, economics, international relations, human resource, and information technology amongst others. Annual Report 2017 ambankgroup.com
  185. Changes to the composition of the Board during the financial year under review were as follows : • Tun Mohammad Hanif bin Omar retired on 31 March 2017, having been on the Board for more than 22 years. • Wasim Akhtar Saifi resigned on 1 April 2017 to focus on an executive role overseas. He remains as an Independent Non-Executive Director of AmBank Islamic Berhad, a wholly owned subsidiary of the Company. Board Independence The Independent Non-Executive Directors bring with them a variety of relevant experience that enables them to exercise independent judgement and to participate objectively in the proceedings and decision-making processes of the Board. Board Diversity The Board acknowledges the importance of Board diversity, including gender, ethnicity, age and business experience, to the effective functioning of the Board. While it is important to promote such diversity, the normal selection criteria of a Director, based on effective blend of competencies, skills, extensive experience and knowledge in areas identified by the Board should remain a priority so as not to compromise on the effectiveness in carrying out the Board’s functions and duties. Hence, the Board is committed to ensuring that its composition not only reflects the diversity as recommended by MCCG, as best as it can, but also has the right mix of skills and balance to contribute to the achievement of the Group’s goals. The Board currently comprises three (3) women directors, reflecting a 33% female representation among the Directors on the Board. Decision-making on key issues regarding the Company and its subsidiaries is deliberated by the Directors. Board decisions are made taking into account the views of the Independent Non-Executive Directors, which carry substantial weight. They fulfil their roles in ensuring that strategies proposed by the Management are discussed and examined as well as ensuring that the interest of shareholders and stakeholders of the Company are safeguarded. 5 Age 50-59 Age Each of the Independent Non-Executive Directors is required to provide a declaration of his or her independence annually. This declaration is assessed by the GNRC. Based on the outcome of the Board Effectiveness Evaluation (BEE) for the Assessment Year 2017, which was conducted by an independent external consultant and reported to the GNRC as well as to the Chairman of the Board, all the Independent Non-Executive Directors have scored highly and there are no conflicts or potential conflicts of interest that may affect their independent judgement. 3 Age 60-69 1 Age 70 and above The Board also believes that each independent director has retained their independence throughout the tenure and had not in any circumstances formed any association with Management that might compromise their ability to exercise independent judgement which ultimately affects the interest of stakeholders. Tenure of Independent Directors The Company’s Board Charter states that an Independent Non-Executive Director shall not serve more than a cumulative term of nine (9) years. 67% Male Gender 33% Female As at the date of this Statement, none of the Independent Directors has served more than nine (9) years on the Board. This is in line with the MCCG and the Company’s Board Charter. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  186. STATEMENT OF CORPORATE GOVERNANCE Appointment of New Directors b . Once shortlisted, three (3) members of the GNRC will interview the potential candidates to assess the suitability in terms of technical expertise, experience and the behavioural and culture fit with the Board in addition to ascertain the candidates’ interest, availability and terms of appointment. c. Upon completion of interview, interview results and the interviewers’ assessment of candidates will be tabled at the GNRC for further discussion and deliberation on whether candidates are suitable to be recommended to the Board for appointment. d. Once potential Director candidates are shortlisted for recommendation, the Company Secretary will conduct comprehensive reference checks, including checks on financial and character integrity, in line with regulatory requirements on the candidates. e. Upon completion of reference checks, the GNRC will recommend the proposed candidate to the Board of the Company. f. The Board will deliberate on the recommended candidates(s) and, if deemed appropriate, shall approve subject to BNM’s approval. g. Upon approval by the Board, an application for the proposed appointment is submitted to BNM. The Company’s Constitution permits the Board to appoint a person to be a Director of the Company at any time, either to fill a casual vacancy or as an addition to the existing Directors, not exceeding twelve (12). The policies and procedures for new appointments are as follows: Policies a. b. The GNRC will establish the minimum requirements on the skills and core competencies of a Director based on the annual review of the required mix of skills, experience and core competencies within the Board as well as to ascertain the ‘fit and proper’ criteria for each Director. When assessing a person for nomination to the Board, the qualifications and skills to be considered by the GNRC shall include, but are not limited to: • c. Whether or not the person qualifies as a Director who is ‘independent’ under applicable laws and regulations, including applicable provisions of the Main Market Listing Requirements of Bursa Securities, and whether the person is qualified under applicable laws and regulations to serve as a Director of the Company. • Whether or not the person meets the ‘fit and proper’ criteria under applicable laws and regulations, including BNM Guidelines. • Whether or not the person is willing to serve as a Director and to commit the time necessary to perform the duties as a Director. h. Once approval from BNM is obtained, the candidate has to complete the required statutory form. • The contribution that the person can make to the Board and to the overall desired Board composition, taking into account the person’s business experience, education and such other factors as the Board may consider relevant. i. Upon appointment of the candidate, a letter of appointment will be signed off by the Chairman of the Company and issued to the candidate(s). • The character and integrity of the person. a. Newly appointed Board members would attend the Company’s Induction Programme which includes mandatory core programmes required pursuant to BNM regulations and internal briefings by relevant Management personnel. b. The new Board members are fully briefed on the terms of their appointment, duties and responsibilities, as well as on the nature, operations and current issues of the Company. The GNRC may identify Director candidate(s) using executive search firms and/or via recommendation from other Directors. Procedures a. Director Induction The GNRC will perform a preliminary assessment of potential candidates based on referrals from executive search firms or other Directors and shortlist candidates for interview. p. 184 p. 185 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  187. c . The GNRC will review the induction processes on a periodic basis to ensure that all pertinent information is provided to Directors, and that adequate time had been given for Directors to familiarise themselves with the Company, its Board and operations. Review of Board-wide, skills, knowledge, experience and perspective Policies a. Retirement of Directors by rotation will follow the requirements stipulated in the Constitution of the Company. b. Tenure of Directorship will follow the requirements stipulated in the BNM Corporate Governance for Licensed Institutions. Procedures Identification of gaps and additional needs a. The GNRC will assess the performance and contribution of each Director to the Board and Board Committees based on the results of the annual BEE and individual Directors’ self and peer assessment. b. The GNRC will consider the current Directors in the same manner as other candidates, taking into consideration the Director’s performance during his or her term, including consideration of the following factors: Sourcing suitable candidates by executive search firms and/or referral by the Board • Compliance with governing legislation, regulations or guidelines, particularly conflict of interest, confidentiality, fit and proper criteria, and duty of care provisions. • Whether or not an independent director still qualifies as ‘independent’ under applicable laws and regulations, including applicable provisions of the Main Market Listing Requirements of Bursa Securities. Interview and evaluation by GNRC Appointment by the Board and re-election at AGM by Board Members c. Based on the assessment results, the GNRC will recommend the Directors seeking re-appointment/re-election to the Board, who will then recommend to the shareholders for approval at the AGM. d. For Directors seeking re-appointment pursuant to BNM-approved tenure, an application for the proposed re-appointment will be submitted to BNM for approval, upon approval by the Board. Performance Evaluation Diagram: Process on Selection of Directors Re-election and Re-appointment of Directors A candidate who is appointed as Director of the Company must seek re-election by shareholders at the next Annual General Meeting (AGM). The Constitution of the Company further provides for the rotation of Directors whereby one third or more of the Directors are to retire at every AGM of the Company and that all Directors must retire at least once in three (3) years and shall be eligible for reelection. Directors who are due for re-election at the forthcoming AGM, who have given their written consent to be re-appointed, are as set out in the Notice of the AGM. Directors who are due for re-election/re-appointment are also subject to the following policies and procedures: Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 As the Board is ultimately responsible for the oversight of the Management, the Board has, through the GNRC, annually reviewed the Management on overall performance, compliance and governance of the Group. As a result, the Board and Board Committees have been evaluated based on the expectation that they are expected to perform their duties in a manner which should create and continue to build sustainable value for shareholders and in accordance with duties and obligations imposed upon them under the law and guidelines issued by the regulatory authorities. The Group conducts an annual BEE exercise with the objective of assessing the performance of the Board as a whole, Board Committees, and individual Directors. The results of the BEE form part of the basis for evaluation by the GNRC for the appointment and re-appointment of Directors. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  188. STATEMENT OF CORPORATE GOVERNANCE To ensure the integrity , independence and objectivity of the evaluation process, the Board continues with its practice of engaging an external facilitator for the BEE for Assessment Year 2017. A robust and comprehensive assessment framework was used for the BEE exercise, encompassing the following areas: Meetings and Time Commitment Board The calendar of meetings of the Board and Board Committees is drawn up and distributed to the Board in the quarter preceding the beginning of the new calendar year. This is to enable the members of the Board to meet the time commitment for the meetings. Part A: Board Effectiveness In addition to the above, all Directors of the Company have complied with the Main Market Listing Requirements of Bursa Securities of not holding more than five (5) directorships in listed issuers at any given time. This is to ensure the Directors do not have competing time commitments that may impair their ability to discharge their responsibilities effectively. • Board responsibilities • Board composition • Board administration and process • Board conduct • Board interaction and communication • Chairman's evaluation • Group Chief Executive Officer/Chief Executive Officer’s evaluation Part B: Individual Committee Effectiveness • Structure and processes • Accountability and responsibilities • Committee Chairman's evaluation At Board meetings, the Chairman encourages constructive and healthy debates, and Directors are free to express their views. Any Director who has a direct or deemed interest in a material transaction or material arrangement shall be excused from the Board meeting where the material transaction or material arrangement is being deliberated by the Board. Decisions of the Board are made unanimously or by consensus with dissenting views raised by any Director being recorded in the Minutes of meetings. Part C: Directors’ Self and Peer Evaluation • Board dynamics and participation • Integrity and objectivity • Technical competencies • Recognition • Independence The Board meets a minimum of eight (8) times per year, wherein Board papers and reports are circulated to the Directors not later than five (5) days preceding each meeting to allow the Directors sufficient time to review and peruse the Board papers and reports from the Management or if deemed necessary to seek independent professional advice at the Group’s expense. Additional Board meetings are convened whenever necessary. The Senior Management of the subsidiaries is invited to attend Board meetings to provide presentations and detailed explanations on matters to be tabled. The BEE exercise was a rigorous process involving a questionnaire based selfassessment exercise where Directors assessed the performance of the Board, Board Committees and individual Directors. The assessment of individual Directors considered the contribution and performance of Directors as regards to their experience, competencies, integrity and commitment, and integrity in meeting the requirements of the Group. This was followed by in-depth interviews with individual Directors and selected Senior Management to gain further insights and suggestions to enhance Board effectiveness. The results of the BEE exercise were presented to the GNRC in May 2017 and the Board in June 2017 to enable the Board to identify and put in place actions to address areas for improvement. p. 186 p. 187 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  189. The Directors ’ commitment to carry out their duties and responsibilities is affirmed by their attendance at the Board meetings held during the financial year ended 31 March 2017 (FY17) as set out below. Twelve (12) Board meetings were held during FY17. Number of Board Meetings Board Committees The Board delegates certain responsibilities to the Board Committees. The Committees that assist the Board are as follows: 1. 2. 3. 4. 5. Group Nomination and Remuneration Committee Group Information Technology Committee Risk Management Committee of Directors Audit and Examination Committee Governance Committee Held During Tenure in Office Attended % Tan Sri Azman Hashim (Non-Independent Non-Executive Chairman) 12 12 100 The criteria for membership are based on a Director’s skills and experience, as well as his or her ability to add value to the Board Committee. Graham Kennedy Hodges (Appointed on 30 June 2016) (Non-Independent Non-Executive Director) 10 9 90 The Group Chief Executive Officer, the Chief Executive Officers and other Senior Management are invited to attend relevant Board Committee meetings. Suzette Margaret Corr (Non-Independent Non-Executive Director) 12 12 100 Soo Kim Wai (Non-Independent Non-Executive Director) 12 12 100 Dato’ Rohana binti Tan Sri Mahmood (Senior Independent Non-Executive Director) 12 12 100 Dato’ Seri Ahmad Johan bin Mohammad Raslan (Non-Independent Non-Executive Director) 12 12 100 Voon Seng Chuan (Independent Non-Executive Director) 12 12 100 Datuk Shireen Ann Zaharah binti Muhiudeen (Appointed on 30 June 2016) (Independent Non-Executive Director) 10 10 Seow Yoo Lin (Appointed on 30 June 2016) (Independent Non-Executive Director) 10 Tun Mohammed Hanif bin Omar (Resigned on 31 March 2017) (Non-Independent Non-Executive Director) Wasim Akhtar Saifi (Resigned on 1 April 2017) (Independent Non-Executive Director) Name of Director Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 1. Group Nomination and Remuneration Committee (GNRC) The Committee comprises five (5) members, all of whom are Non-Executive Directors and is chaired by the Senior Independent Non-Executive Director. The Committee is responsible for: • Regularly reviewing the overall composition of the Board, in terms of the appropriate size, skills, experience, qualification and diversity in terms of gender, ethnicity and age, as well as the balance between Executive Directors, Non-Executive Directors and Independent Directors. • Recommending the appointment of Directors to the Board and Committees of the Board as well as annually reviewing the mix of skills, experience and competencies that Non-Executive and Executive Directors should bring to the Board. 100 • Assessing the performance and effectiveness of individuals and collective members of the Board and Board Committees of the Company and its banking subsidiaries. 10 100 • 12 10 83 Recommending to the Board a formal and transparent procedure for developing the remuneration policy for Directors, key management personnel, the Chief Internal Auditor and staff for the approval of the Board. The Committee shall ensure that compensation is competitive and consistent with the Group’s culture, objectives and strategy and reflects the responsibility and commitment which goes with Board membership and key management personnel. 12 12 100 • Overseeing the implementation of the Executives’ Share Scheme (ESS) in accordance with the By-Laws of the ESS as approved by the shareholders of the Company and to perform such other functions as may be requested by the Board. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  190. STATEMENT OF CORPORATE GOVERNANCE The Committee met eight (8) times during FY17: Number of Meetings Held During Tenure in Office Attended % Dato’ Rohana binti Tan Sri Mahmood (Chairman) (Senior Independent Non-Executive Director) 8 8 100 Suzette Margaret Corr (Non-Independent Non-Executive Director) 8 8 100 Soo Kim Wai (Non-Independent Non-Executive Director) 8 8 100 Voon Seng Chuan (Independent Non-Executive Director) 8 8 100 Datuk Shireen Ann Zaharah binti Muhiudeen (Appointed as member on 30 June 2016) (Independent Non-Executive Director) 6 6 100 Tun Mohammed Hanif bin Omar (Resigned as member on 31 March 2017) (Non-Independent Non-Executive Director) 8 Wasim Akhtar Saifi (Resigned as member on 1 April 2017) (Independent Non-Executive Director) 8 Name of Committee Members 2. 8 • To oversee the adequacy and utilisation of the Group’s IT resources including computer hardware, software, personnel who are involved in the development, modification and maintenance of computer programmes and related standard procedures. • To review IT planning and strategy, including the financial, tactical and strategic benefits of proposed significant information technology-related projects and initiatives. • To advise the Board on matters within the scope of GITC, as well as any major IT related issues that merit the attention of the Board. • To review and approve deviations as allowed under BNM guidelines. Held During Tenure in Office Attended % Voon Seng Chuan (Chairman) (Independent Non-Executive Director) 9 9 100 Dato' Seri Ahmad Johan bin Mohammad Raslan (Non-Independent Non-Executive Director) 9 8 89 Seow Yoo Lin (Appointed as member on 30 June 2016) (Independent Non-Executive Director) 7 6 86 Name of Committee Members 5 63 To ensure the establishment of Group-wide IT policies, procedures and frameworks including IT security and IT risk management to ensure the effectiveness of internal control systems and the reliability of the management information systems. p. 189 To establish key performance indicators (KPI) and service level agreements in measuring and monitoring the overall performance, efficiency and effectiveness of IT services delivered or received by the Group. 100 To provide strategic direction for IT development within the Group and ensure that IT, digitisation and technology-related innovation strategic plans are aligned and integrated with the Group’s business objectives and strategy. p. 188 • Number of Meetings The Committee comprises three (3) members, all of whom are Non-Executive Directors and is chaired by an Independent Non-Executive Director. The Committee is responsible for providing governance for Information Technology (IT) and to ensure that the overall strategic IT direction is aligned with the Group’s business objectives and strategy. GITC’s key responsibilities include the following: • To provide oversight of the Group’s long-term IT strategic plans and budgets and implementation. There were nine (9) meetings held during FY17: Group Information Technology Committee (GITC) • • AMMB Holdings Berhad (223035-V) 3. Risk Management Committee of Directors (RMCD) The summary of activities of the RMCD is disclosed on page 199 of this Annual Report. 4. Audit and Examination Committee (AEC) The summary of activities of the AEC is disclosed on pages 199 and 216 of this Annual Report. Annual Report 2017 ambankgroup.com
  191. 5 . Governance Committee (GC) The Committee comprises four (4) members, all of whom are Non-Executive Directors. The GC is chaired by the Senior Independent Non-Executive Director. The GC is established as a committee of the Board to assist the Group in the implementation of governance initiatives, including specific tasks as mandated by the Board. For purposes of this Committee, the Group comprises the following entities: • AMMB Holdings Berhad • AmBank (M) Berhad • AmInvestment Bank Berhad • AmBank Islamic Berhad The Directors shall declare any conflict of interest they have in material transactions or material arrangements with the Company and shall not be present when the matter is being deliberated at the Board and/or Board Committee meeting. The Directors shall devote sufficient time to prepare for and attend Board and Board Committee meetings, and maintain a sound understanding of business of the Company as well as relevant market and regulatory developments. This includes a commitment to on-going education. The Directors shall also ensure that their appointment(s) in other companies are not in conflict with the Company’s business and do not affect the discharge of their duties as Directors of the Company. Prior to accepting appointment(s) in other companies, the Directors shall notify the Chairman of the Board and the Company Secretary of their new appointment(s) in other companies within 14 days of the appointment(s). Board Charter The GC met eight (8) times during FY17: Number of Meetings Held During Tenure in Office Attended % Dato’ Rohana binti Tan Sri Mahmood (Chairman) (Senior Independent Non-Executive Director) 8 8 100 Mr Graham Kennedy Hodges (Appointed as member on 27 July 2016) (Non-Independent Non-Executive Director) 4 3 75 Soo Kim Wai (Non-Independent Non-Executive Director) 8 8 100 Dato’ Seri Ahmad Johan bin Mohammad Raslan (Non-Independent Non-Executive Director) 8 8 100 Wasim Akhtar Saifi (Resigned as member on 1 April 2017) (Independent Non-Executive Director) 8 7 88 Name of Committee Members The Board Charter sets out the detailed roles, responsibilities and functions of the Board and Board Committees in accordance with the principles of good corporate governance. Apart from the Board Charter, the Board had also adopted a formal Schedule of Matters Reserved for the Board that sets out decision making powers reserved for the Board. The Board Charter is reviewed periodically to ensure its relevance with the latest statutory and regulatory requirements, as well as the Group’s operational and business direction. The Board Charter was last updated in July 2016 and is available on the Company’s corporate website at ambankgroup.com. Board Conduct The Board commits itself and its Directors to ethical, business and lawful conduct, including proper use of authority and appropriate decorum when acting as Board members. Accordingly, all Directors shall apply ethical principles and standards of behaviour as set out in the Code of Ethics of the Group and other applicable governance documentation approved by the Board setting out standards of ethical conduct and behaviour. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Code of Ethics The Group has adopted a Code of Ethics based on six (6) principles, i.e. compliant, responsible, ethical, accurate, trustworthy and equitable. The Code of Ethics provides a clear direction on conducting business, interacting with community, government and business partners, and general workplace behaviour. It also includes guidance on disclosure of conflict of interests, maintaining confidentiality and disclosure of information, good practices, internal controls and the duty to report where there is a breach of Code of Ethics. The Code of Ethics has been cascaded to all Directors and employees through various methods and media, such as eLearning modules and physical workshops conducted by respective Senior Management to their team members. This is to ensure full understanding of the Code of Ethics and for proper embedding into the work culture across all businesses within the Group. The Code of Ethics is published on the Company’s website at ambankgroup.com. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  192. STATEMENT OF CORPORATE GOVERNANCE Directors ’ Training & Development The Board recognises the importance of ensuring that Directors are continuously being developed to acquire or enhance the requisite knowledge and skills to discharge their duties effectively. All new Directors appointed to the Board attend a formal induction programme to familiarise themselves with the Group’s strategy and aspiration, understanding of the line of businesses and corporate functions, key financial highlights, audit, compliance and risk management. The programme is conducted by the various Managing Directors/Chief Executive Officers/Heads of the business units as well as Senior Management, and is organised by the Group Learning and Development Unit. The Company Secretary also provides the new Directors with an information kit regarding disclosure obligations of a Director, Board Charter, Code of Ethics, the Constitution of the Company, Board Committees’ Terms of Reference, Schedule of Matters Reserved for the Board, amongst others. Apart from the Mandatory Accreditation Programme (MAP) and the Financial Institutions Directors’ Education (FIDE) Programme, both accredited by the ICLIF Leadership and Governance Centre (ICLIF), all Directors appointed to the Board, have also attended other relevant training programmes, talks, seminars, dialogue sessions and focus group sessions organised by regulatory authorities, the FIDE Forum (an alumni association for Financial Institutions Directors) and professional bodies to further enhance their business acumen and professionalism in discharging their duties to the Group. No. 1. The Board, together with the Board members of the subsidiaries of AMMB would also attend offsite Strategy Meeting to have an in-depth understanding and continuous engagement with Management pertaining to the Group’s strategic direction. In addition, the Directors are constantly updated on information relating to the Group’s development and industry development through discussion at Board meetings with the Senior Management team. The Board will ensure that a structured Director Learning and Education Programme is in place for its members. This programme shall ensure members have access to an appropriate continuing education programme and are kept up to date with current business, industry, regulatory and legislative developments and trends that will affect the Company’s business operations. The GNRC will review the training and development needs of the Directors on an annual basis, taking into consideration the Company’s strategy for the next several years and the current combined skills on the Board. Thereafter, the GNRC will identify and recommend the relevant courses to be included as part of the annual Board Training Calendar, going to the Board for approval. The Group Learning and Development Unit undertakes the role to coordinate, organise and manage Directors’ learning and development requirements. The Directors of the Company attended the following training programmes, talks, seminars, dialogue sessions and focus group sessions during the FY17:- Name of Directors Date List of Training/Conference/Seminar/Workshop attended Tan Sri Azman Hashim 19 – 20 April 2016 55th Session of The Asian Productivity Organization (APO) Governing Body Attended as Chairman, Malaysia Productivity Corporation 29 April 2016 Asian Banking School – Graduate Programme FLAME – Delivered Closing Remarks in capacity as Chairman, Asian Institute of Chartered Bankers 3 May 2016 Malaysia South-South Association Luncheon Talk – “Update on Economic Outlook & Potential in Myanmar-Post Elections” by Mr Zaw Min Min – Delivered Welcome Remarks as Chairman of MASSA 10 May 2016 Asia Pacific Financial Forum (APFF) Workshop: Developing an Islamic Infrastructure Investment Platform (13P) – Delivered Welcome Remarks as Co-Chair, APEC Business Advisory Council (ABAC) Finance & Economics Working Group & Chairman, AmBank Group 23 May 2016 Open University Malaysia (OUM)’s Public Lecture in conjunction with OUM’s 15th Anniversary – Delivered the Opening Remarks as Pro Chancellor OUM 26 May 2016 The 20th Malaysian Banking Summit ”Future Banking: Reimagining Banks-Driving Transformation & Innovation” – Delivered Introductory Speech-in capacity as Chairman, Asian Institute of Chartered Bankers p. 190 p. 191 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  193. No . 1. 2. 3. Name of Directors Date List of Training/Conference/Seminar/Workshop attended Tan Sri Azman Hashim (Cont’d.) 1 – 2 June 2016 34th JAMECA-MAJECA Joint Conference – Delivered Closing Speech as President of MalaysiaJapan Economic Association (MAJECA) 29 July 2016 Capital Market Director Program Module 4: Current and emerging regulatory issues in the Capital Market 22 August 2016 Capital Market Director Program Module 1: Directors as Gatekeepers of Market Participants 29 August 2016 Securities Commission & FIDE Forum Dialogue FinTech’s Impact on Financial Institution 6 September 2016 Capital Market Director Program Module 3: Risk Oversight & Compliance 23 September 2016 Bank Negara Malaysia conference – “Future Finance Conference” 18 October 2016 Asian Productivity Organisation Workshop-Meeting of Heads 22 December 2016 Dialogue with Syariah Committee & AmMetLife Takaful Board members 12 January 2017 International Investment Fund Forum 2017 13 – 14 February 2017 37th East Asia Business Council Meeting (EABC) representing Malaysia 20 – 23 February 2017 1st ABAC Meeting, 2017 representing Malaysia 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 14 March 2017 Attended the Launching of International Organization of Securities Commissions (IOSCO) Asia Pacific Hub at the Global Emerging Markets Regulatory Conference 14 March 2017 Cyber Security Awareness 13 – 14 October 2016 Mandatory Accreditation Programme 5 – 7 April 2016 FIDE Core Programme: Module B (Banks) by ICLIF 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 8 – 13 May 2016 The Cranlana Programme – Leadership Programme on Ethics 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 Graham Kennedy Hodges Suzette Margaret Corr Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  194. STATEMENT OF CORPORATE GOVERNANCE No . 4. 5. Name of Directors Date List of Training/Conference/Seminar/Workshop attended Soo Kim Wai 25 – 29 April 2016 Linkage 20 Conversations @ Harvard by Linkage 4 August 2016 FinTech: Business Opportunity or Disruptor by FIDE Forum, BNM 23 August 2016 Brexit and Malaysia – A New Opportunity by British Malaysian Chamber of Commerce 14 September 2016 Identify the Right Board Talent by FIDE Forum, BNM 21 September 2016 Investment Roundtable with UK Financial Secretary to the Treasury, Jane Ellison MP by British High Commission UK Trade & Investment 26 September 2016 Malaysia Investment Forum by Malaysian Investment Development Authority 20 October 2016 Post–Brexit Impact on UK Commercial & Residential Investment and Development by British Malaysian Chamber of Commerce 15 – 16 November 2016 MIA Conference 2016 by Malaysian Institute of Accountants (MIA) 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 2 March 2017 Linkage Breakfast Series – Top of mind: What the world’s best CEOs need for the future by Linkage Asia 7 March 2017 Breakfast Talk with ACGA: CG Watch 2016 – Ecosystems Matter by ICLIF & Malaysian Directors Academy 14 March 2017 Cyber Security Awareness 23 March 2017 Wealth Insights Series: Back to Basics by J.P. Morgan 27 – 30 March 2017 Credit Suisse 20th Annual Asian Investment Conference: Beginning of a new era? by Credit Suisse 1 – 2 April 2016 Singapore Forum 25 – 28 April 2016 ABAC Meeting in Papua New Guinea 10 May 2016 Islamic Infrastructure Investment Forum 30 May – 1 June 2016 ISIS 20th Asia Pacific Roundtable 1 – 3 August 2016 ABAC Meeting in China 14 September 2016 FIDE Forum Directors Register: Identify the Right Board Talent 26 – 27 September 2016 Khazanah Megatrends Forum 2016 10 October 2016 Capital Market Directors Programme: Module 1: Directors as Gatekeepers of Market Participants 10 October 2016 Capital Market Directors Programme: Module 2A: Business Challenges & Regulatory Expectations Dato’ Rohana binti Tan Sri Mahmood p. 192 p. 193 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  195. No . 5. 6. 7. Name of Directors Date List of Training/Conference/Seminar/Workshop attended Dato’ Rohana binti Tan Sri Mahmood (Cont’d.) 11 October 2016 Capital Market Directors Programme: Module 2B: Business Challenges & Regulatory Expectations – What Directors Need 14 – 17 November 2016 ABAC Meeting in Lima 18 January 2017 Capital Market Directors Programme: Module 4 20 – 23 January 2017 ABAC 1 Meeting in Bangkok 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 21 March 2017 Capital Market Director Programme Module 26 April 2016 BNM – FIDE FORUM Dialogue with Deputy Governor on Corporate Governance Concept Paper 2 June 2016 Implementation of FIDE FORUM’s Directors Register 6 – 7 July 2016 The Effective Non-Executive Director Programme 5 – 7 October 2016 FIDE Core Programme: Module B (Banks) by ICLIF 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 5 – 7 April 2016 FIDE Core Programme: Module B (Banks) by ICLIF 19 April 2016 FIDE FORUM – 2nd Distinguished Board Leadership Series – "Avoiding Financial Myopia" by Prof. Jeffery L. Sampler 26 April 2016 BNM – FIDE FORUM Dialogue with Deputy Governor on Corporate Governance Concept Paper 31 May 2016 Audit Committee Workshop A: Functions of the Audit Committee by MIA 25 July 2016 FIDE FORUM – 3rd Distinguished Board Leadership Series – “Effective Board Evaluation” by Ms Beverly Behan 29 August 2016 Securities Commission – FIDE FORUM Dialogue – FinTech's Impact on Financial Institution by Mr Chin Wei Min 1 September 2016 FIDE Elective Programme – Understanding the Evolving Cybersecurity Landscape 14 November 2016 FIDE FORUM Dialogue Session – Strategy to Leverage Technology for Business Solutions 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 1 March 2017 FIDE FORUM's Focus Group Discussion with BNM's Senior Management 14 March 2017 Cyber Security Awareness 27 March 2017 4th BNM-FIDE FORUM Annual Dialogue with the Deputy Governor of BNM Dato’ Seri Ahmad Johan bin Mohammad Raslan Voon Seng Chuan Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  196. STATEMENT OF CORPORATE GOVERNANCE No . 8. 9. Name of Directors Date List of Training/Conference/Seminar/Workshop attended Datuk Shireen Ann Zaharah binti Muhiudeen 29 May 2016 Module 2A: Business Challenges and Regulatory Expectations – What Directors Need to Know (Equities and Futures broking) 30 May 2016 Module 3: Risk oversight and compliance – Action plan for Board of Directors 31 May 2016 Module 2B: Business challenges and regulatory expectations – What directors need to know (Fund Management) 30 June 2016 Induction: Board of Directors – AMMB (Day 1 & Day 2) 11 July 2016 Induction: Board of Directors – AMMB (Day 3) 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 1 March 2017 FIDE FORUM's Focus Group Discussion with BNM's Senior Management 1 April 2016 FIDE Directors Register 26 April 2016 2016 ACI Breakfast Roundtable 27 June 2016 Future of Auditor Reporting – The Game Changer for Boardroom – As Panelist 30 June 2016 Induction: Board of Directors – AMMB (Day 1 & Day 2) 11 July 2016 Induction: Board of Directors – AMMB (Day 3) 25 July 2016 Effective Board Evaluation by Beverly Behan 4 August 2016 Fintech: Business Opportunity or Disruptor? By Marcus Gnirck and Mr Veiverne Yuen 29 August 2016 Fintech Impact on Financial Institutions by Mr Chin Wei Min 27 February 2017 Sustainability Reporting 27 February 2017 Highlights of the new Companies Act 2016 1 March 2017 FIDE FORUM's Focus Group Discussion with BNM's Senior Management 7 March 2017 Breakfast Talk with ACGA: CG Watch 2016 – Ecosystems Matter 13 March 2017 Sustainability Engagement Series for Directors/Chief Executive Officers 2017 Seow Yoo Lin Leadership Succession AmBank Group has established programmes to identify employees with potential and nurture them through career development opportunities for senior management positions. The development programme is closely monitored and managed by the Group Talent Council (GTC) comprising relevant members of senior management. The GTC administers various programmes in accordance with the Board-approved Talent and Succession Management (TSM) Policy and terms of reference. During the year, the GNRC is entrusted by the Board to review the succession planning policy and process and the talent pipeline for senior management positions. The GNRC guides Management in refining the accelerated development approach to creating a robust pool of qualified banking experts and supporting professionals. This includes pairing identified individuals with mentors and executive coaches, creating cross-functional training and exposure, and formal learning and assignments. In the event that there is no suitable internal candidate within the accelerated development time frame, the Group identifies external candidates. p. 194 p. 195 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  197. The GNRC closely monitors management positions and succession pipelines , including top management positions at Group level and heads of subsidiaries, and in particular, the Chief Executive Officer and Chief Financial Officer, whose appointments are subject to the approval of the central bank. In addition to appointments, the GNRC reviews several areas including the reasons behind management-level and senior executive resignations, expat employee transfer of knowledge, manpower analysis and staffing requirements. These all go towards ensuring that the Group continues to be able to attract, motivate and retain the right talent pool. The Board has also entrusted the GNRC with the responsibility of reviewing the Board’s succession plans for Directors, including recommending candidates for Non-Executive Director positions. Board – Provides strategic direction and approves TSM outputs for implementation with regards to succession plan for C-Suite and expatriate-filled position GNRC - Review and recommend proposed succession and C-Suite and expatriate appointment to the Board of Directors for approval The remuneration structure of the Non-Executive Directors is laid out as follows: Directors’ Fees (per annum) Chairman Deputy Chairman Non-Executive Director RM210,000 RM210,000 RM200,000 Note: Directors’ fees are payable after shareholders’ approval at AGM Board Committee Allowance (per annum) Chairman Member Audit and Examination Committee RM25,000 RM20,000 Risk Management Committee of Directors RM25,000 RM20,000 Group Nomination & Remuneration Committee RM25,000 RM20,000 Group Information Technology Committee RM15,000 RM10,000 Governance Committee RM25,000 RM20,000 Other Allowances Group Talent Council – review and approve TSM outputs and development plans for implementation and conduct annual talent review Ombudsman Allowance (per annum) RM25,000 – RM50,000 Chairman Allowance (per annum) RM1,440,000 Meeting Allowance (including Board and Board Committee meetings and meetings with Management Working Committee Groups and Regulatory Authorities) Diagram: Governance of Talent and Succession Management Remuneration The Board believes in a competitive and transparent remuneration framework that supports the Directors’ and Senior Management’s responsibilities and fiduciary duties in managing the Group to achieve its long term objectives and enhance stakeholders’ value. One of the principle authorities of the Board delegated to the GNRC is to review, deliberate and recommend to the Board a remuneration policy for Directors and Senior Management guided by the Group Human Resource policy, market norms and industry practice. RM1,000 per meeting Directors’ and Officers’ Liability Insurance A combined and shared policy limit of RM300 million in the aggregate during the policy period covers the Group’s Directors in respect of any liabilities arising from acts committed in their capacity as Directors and Officers of AmBank Group. However, the insurance policy does not indemnify a Director or principal officer if he or she is proven to have acted negligently, fraudulently or dishonestly, or in breach of his or her duty of trust. The Directors and Officers are required to contribute jointly towards a portion of the premiums of the said policy. The Company is in the midst of developing a Remuneration Framework for Directors. Meanwhile, the Directors are being paid Directors’ fees, Board Committee allowance, other allowances, directors & officers insurance coverage and outpatient medical claims. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  198. STATEMENT OF CORPORATE GOVERNANCE Aggregate Remuneration of the Directors The details on the aggregate remuneration of the Directors of the Company [comprising remuneration received and/or receivable from the Company and its subsidiaries (Subsi) during FY17] are, as follows: Emoluments 2 (RM’000) Fee (RM’000) Salary and Bonus1 AMMB Subsi AMMB Subsi Benefit in kind 3 (RM’000) Tan Sri Azman Hashim – 210 847 1,456 859 43 3,415 Graham Kennedy Hodges – 151 112 46 52 1 362 Name of Director Total (RM’000) Suzette Margaret Corr – 200 – 44 – 1 245 Soo Kim Wai – 200 – 96 – 19 315 Dato’ Rohana binti Tan Sri Mahmood – 200 150 94 76 12 532 2,647 66 – 22 – 112 2,847 Dato’ Seri Ahmad Johan bin Mohammad Raslan Voon Seng Chuan – 200 150 126 88 1 565 Datuk Shireen Ann Zaharah binti Muhiudeen – 151 – 54 – 1 206 Seow Yoo Lin – 151 – 49 – 1 201 Tun Hanif bin Mohammad Omar (Resigned on 31 March 2017) – 200 – 45 – 1 246 Wasim Akhtar Saifi (Resigned on 1 April 2017) – 200 150 94 89 – 533 Notes: 1 Salary and Bonus comprised basic salary, bonus, EPF and SOCSO. 2 Emoluments comprised Board Committee allowance and other allowances. 3 Benefit in kind comprised provision of a company motor vehicle, driver, petrol allowance, insurance and phone bill. The number of Directors of the Company whose total remuneration during the financial year fall within the following bands, is as follows: Number of Directors Range of remuneration Executive Non-Executive RM200,001 – RM250,000 – 4 RM250,001 – RM300,000 – – RM300,001 – RM350,000 – 1 RM350,001 – RM400,000 – 1 ~ RM500,001 – RM550,000 – 2 RM550,001 – RM600,000 – 1 ~ RM1,000,001 and above 1* 1 Notes: * Dato’ Seri Ahmad Johan bin Mohammad Raslan was redesignated as a Non-independent Non-Executive Director of the Company, effective 1 December 2016. p. 196 p. 197 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  199. Group Remuneration Objectives The Group ’s remuneration practice, which is applicable to all divisions and subsidiaries within the Group, seeks to ensure that we are able to attract, motivate and retain employees to deliver long-term shareholder returns, taking into consideration risk management principles and standards set out by BNM Corporate Governance. When formulating and periodically reviewing and refining the remuneration strategy, consideration is given to aligning our remuneration approach with the Group’s medium- to long-term strategic objective, culture and values in order to drive desired behaviours and achieve objectives set out in the balanced scorecard. The following is the main thrusts of the Group’s remuneration strategy: a. Pay for performance measured against the balanced scorecard • Instill and drive meritocracy • Ensure linkages between total compensation and annual, medium- and long-term strategic objectives • Balance employees’ actual fixed and variable pay mix to drive sustainable performance and alignment to the Group’s culture and value of assessing both behavioural and quantitative KPI achievements b. Provide market competitive pay • Benchmark total compensation against other peer organisations of similar size and standing in the markets and businesses where we operate • Drive pay-for-performance differentiation with differentiated benchmarking quartiles for top performing employees c. Guard against excessive risk-taking • Focus on achieving risk-adjusted returns that are consistent with the Group’s prudent risk and capital management, as well as emphasis on long-term sustainable outcomes • Design variable pay payout structures with long-term performance through deferral and allowance for clawback arrangements The Group’s Approach to Remuneration The Group’s remuneration is made up of two components; fixed pay and variable pay. Components What Why and Linkages to Strategy How Fixed Pay • Base Salary Pay for Position • • Fixed Allowances (or market value of the job) to attract and retain by ensuring the fixed pay is competitive vis-à-vis comparable organisations Adhering to the market value of the job at the individual’s competency level, skills, experience and responsibilities • Fixed amount paid monthly • Typically reviewed and revised annually • Based on the performance of the Group, line of business or subsidiary and the employee’s individual performance • Measured against a balanced scorecard with KPIs and targets agreed at the beginning of each financial year • Awards for individuals in senior management positions and/or positions with significant organisational responsibilities that have material impact on the Group’s performance and risk profile is subject to deferral • Deferral remunerations are paid in AMMB shares with the objective of: • Retaining key employees (retention bonus), and • Driving the Group’s long-term performance and sustainability (AMMB ESS) • Administration of both deferral remunerations provides for malus and forfeiture arrangements Variable Pay • • Short Term Incentive (Performance Bonus) • Long Term Incentive (AMMB ESS) • Pay for Performance Focus employees on the achievement of objectives which are aligned to value creation for the shareholders Align payout to time horizon of risk to avoid excessive risk taking and provide for deferral, malus and forfeiture arrangements Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  200. STATEMENT OF CORPORATE GOVERNANCE Determination of Short Term Incentive (Performance Bonus) Pool and Individual Award The follow mechanics are used to derive the Group’s short term incentive pool and the incentive pools for business units’ and/or subsidiaries: Group’s Short Term Incentive Pool Business Unit’s/Subsidiaries Short Term Incentive Pool Allocation A function of profits benchmarked against peer comparators and calibrated against: Guided by the Group’s performance against the balanced scorecard set in the beginning of the financial year; • Risk adjustments • • Distribution of earning between shareholders and employees Comprises financial and non-financial metrics covering employees, customers, shareholders, risks and compliance objectives • reviewed and evaluated by the GNRC and subsequently approved by the Board The Group pool is reallocated to the business units/subsidiaries taking into account: • each unit’s actual performance achievement against target, and • the relative performance of each unit Inputs from control functions (Audit, Compliance and Risk) are sought. Currently only the Chief Internal Auditor is measured independently with the performance outcome being recommended by the AEC. measured through each unit’s balanced scorecard and evaluated by the GCEO and GNRC Individual awards are based on the employee’s performance, measured through a balanced scorecard that takes into account qualitative and quantitative objectives as set out in the individual’s KPIs. Sales employees are incentivised via respective sales incentive plans to promote the development of mutually beneficial long-term relationships with their customers, rather than short term gains. As such, non-financial metrics such as customer satisfaction and fair dealing principles incorporated into their KPIs and with compliance as payout triggers. Long Term Incentive (AMMB Executives’ Shares Scheme) Variable Pay Deferrals The AMMB ESS forms the Group’s long-term compensation component that is forward looking, with rewards based on the Group’s future performance. The ESS allows for the following objectives to be met: Variable pay for individuals in senior management positions and/or positions with significant organisational responsibilities that have material impact on the Group’s performance and risk profile is subject to deferral. • Align long-term interest of senior management with those of shareholders, • Retain key employees of the Group whose contributions are essential to the long-term growth and profitability of the Group, • Attract potential employees with the relevant skills to contribute to the Group and to create value for shareholders, and • Deliver compensation in a manner that drives the long-term performance of the Group. The deferral award is paid in the form of AMMB performance shares with the objective of: • Retaining key employees (Retention Award), and • Drive the Group’s long-term performance and sustainability (Main ESS Award) Malus of unvested awards will be triggered by material violation, negligence, willful misconduct and fraud as outlined in the ESS By-Laws. The ESS is delivered in the form of performance shares which comprise of two elements: • Main Award, that vests over a period of three (3) years in equal payouts, contingent on the Group meeting long-term performance targets. • Retention Award, administered through the ESS plan vested in two equal instalments over a period of two years. No further performance condition applies. p. 198 p. 199 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  201. There were six (6) meetings held during FY17: PRINCIPLE B: Effective Audit and Risk Management Number of Meetings Audit and Examination Committee (AEC) The Committee comprises three (3) members, all of whom are Non-Executive Directors and is chaired by an Independent Non-Executive Director. The AEC is responsible for the oversight and monitoring of: • The Group’s financial reporting, accounting policies and internal controls. • The Group’s Internal Audit functions. This includes the appointment, performance evaluation, transfer and dismissal of the Chief Internal Auditor. • Compliance with regulatory requirements. • The appointment, scope of work and evaluation of the external auditor. Held During Tenure in Office Attended % Datuk Shireen Ann Zaharah binti Muhiudeen (Chairman) (Appointed as member on 30 June 2016 and assumed Chairmanship on 3 May 2017) (Independent Non-Executive Director) 5 5 100 Graham Kennedy Hodges (Appointed as member on 27 July 2016) (Non-Independent Non-Executive Director) 5 5 100 Voon Seng Chuan (Independent Non-Executive Director) 6 6 100 Wasim Akhtar Saifi (Resigned as member on 1 April 2017) (Independent Non-Executive Director) 5 4 80 Dato’ Rohana binti Tan Sri Mahmood (Resigned as member on 8 June 2016) (Senior Independent Non-Executive Director) 1 1 100 Name of Committee Members It is the Board’s policy that at least one (1) member of the AEC shall have an accounting qualification or experience in the field of finance. This is met with the membership of Mr Soo Kim Wai and Mr Seow Yoo Lin. The AEC meets regularly with Group Internal Auditors and meets twice a year with the external auditors without the presence of the Management. Details of the AEC members and their attendance record and the activities undertaken by the AEC during FY17 are set out in the AEC Report on page 216 to 218 of this Annual Report. Risk Management Committee of Directors (RMCD) The RMCD oversees the adequacy of risk management within the Group. Suitability and Independence of External Auditors The Committee comprises three (3) members, all of whom are Non-Executive Directors and is chaired by an Independent Non-Executive Director. The responsibilities of the Committee include the review and evaluation of: • Senior Management’s activities in managing risk. • High-level risk exposures and risk portfolio composition. • The Company/Group’s risk management strategies, policies, frameworks, methodologies and risk tolerance standards. • The overall effectiveness of the control and risk management infrastructure (together with Group Internal Audit Department) and reporting to the Board. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Messrs. Ernst & Young (EY) is the Company’s statutory external auditor and the auditor of the Group’s consolidated accounts for the preparation of this Annual Report. The external auditor performs independent audits in accordance with the approved standards on auditing in Malaysia, and reports directly to the AEC. The AEC additionally: • Approves all audit and non-audit services. • Regularly reviews the independence of the external auditor. • Evaluates the effectiveness of the external auditor. • Meets with the statutory external auditor at least twice a year, without the presence of Management. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  202. STATEMENT OF CORPORATE GOVERNANCE The AEC engages in regular discussion with the senior audit partner from EY and acts as the key representative for overseeing the Group ’s relationship with the external auditors. In compliance with the Malaysian Institute of Accountants ByLaw (On Professional Ethics, Conduct and Practice), audit partners are rotated every five (5) years to ensure objectivity, independence and integrity of the audit opinions. The AEC undertakes annual independent assessment of the external auditors and the external auditors would also provide a written assurance to the AEC on their independence. The Group’s non-audit services for FY17 comprised the following assignments: a) Regulatory-related fees • Limited review for 6-month period ended 30 September for AMMB • Limited review for 6-month period ended 30 September for banking subsidiaries • Review of BNM submission documents for AMMB and banking subsidiaries • Review of statutory returns and Risk-based Capital reporting forms for insurance subsidiaries • Report on agreed-upon procedures in relation to submission to PIDM for banking subsidiaries • Report on agreed-upon procedures in relation to submission to PIDM for insurance subsidiaries • Report on agreed-upon procedures in relation to client asset requirements for AmInvestment Bank Berhad and certain subsidiaries • Review of Statement of Risk Management and Internal Control for AMMB • Accounting advice for establishment of new Tier 2 Subordinated Debt of AMMB • Assurance on Credit Risk Model Validation b) Other fees • Review of the adequacy of the policies/processes relating to Corporate Finance division • Specific Scope Review and Assessment requested by regulatory authorities • Secrecy provision review The current Engagement Partner of EY, Mr Chan Hooi Lam has been heading the audit of the Group for the past three (3) years. The statutory external auditor is re-appointed by the shareholders of the Company annually, based on the recommendation of the Board. The statutory external auditor may not provide services that are perceived to be in conflict with its role. These include assisting in the preparation of the financial statements and sub-contracting of operational activities normally undertaken by Management, and engagements where the auditor may ultimately be required to express an opinion on its own work. Specifically the Group’s policy: • Limits the non-audit service that may be provided • Requires that audit and permitted non-audit services must be approved by the AEC The AEC has reviewed the summary of the non-audit services provided by the external auditor in FY17 and has confirmed that the provision of services is compatible with the general standard of independence for auditors. During the financial year, the amount incurred by AMMB Holdings in respect of audit fees and non-audit related fees for services rendered by EY are as follows: FY17 Audit Services Non-Audit Services Total Fees FY16 Company (RM’000) Group (RM’000) Company (RM’000) Group (RM’000) 106 2,498 103 2,554 41 3,403 25 3,537 147 5,901 128 6,091 Overall, the AEC was satisfied with the suitability of EY as external auditors of the Group based on the quality of audit services provided based on the professional and experienced staff assigned to perform the audit for the Group. Internal Control The Board understands that the ultimate responsibility for ensuring a sound internal control system which provides reasonable assurance on the effectiveness and efficiency of the system lies with the Board. The Group’s system of internal control is designed to manage the risk of failure to achieve the Company’s corporate objectives, as well as safeguard the shareholders’ investments and the Group’s assets, but not to provide absolute assurance from risks. Details of the Group’s internal control system are set out in the Statement on Risk Management and Internal Control on pages 214 to 215 of this Annual Report. Trading in AmBank Shares Policy The Company has in place a Trading in AmBank Shares Policy which sets out the responsibilities and trading procedures for Directors and designated employees of the Group when trading in the Company’s shares. Directors and the designated employees of the Group who have access to pricesensitive information relating to the Company’s shares must not trade in the Company’s shares until such time the information is publicly available. p. 200 p. 201 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  203. Directors and the designated employees of the Group who do not have access to price-sensitive information can deal in the Company ’s shares provided that the procedures set out in the Main Market Listing Requirements of Bursa Securities are strictly adhered to. Notices on the closed period for trading in the Company’s shares are sent to the Directors, principal officers and the designated employees of the Group on a quarterly basis by the Group Company Secretary. Related Party Transactions The Board is responsible at all times for determining potential or actual conflict of interest in relation to any matter which comes before the Board. The Board through the AEC reviews all recurring related party transactions in addition to other new related party transactions entered into during the financial year. Details of these transactions are set out under Note 43 to the Financial Statements on pages 152 to 155 of the Financial Report. PRINCIPLE C: Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders Access to Information and Advice Conduct of General Meetings Details of the communication to stakeholders and the conduct of General Meetings are set out in the Investor Relations Report from pages 107 to 112 of this Annual Report. Statement of Directors’ Responsibility in respect of the Audited Financial Statements The Board is required by the Companies Act 2016 to prepare financial statements for each financial year which give a true and fair view of the Group and its state of affairs, results and cash flows, at the end of the financial year. Following discussions with the statutory external auditors, the Directors consider if the appropriate accounting policies are consistently applied and supported by reasonable as well as prudent judgements and estimates, and that all accounting standards which they consider applicable have been followed during the preparation of the financial statements. The Board of Directors is responsible for ensuring that the Group keeps accounting records which are disclosed with reasonable accuracy, and for ensuring that the financial statements comply with the Companies Act 2016. The Board and Board Committees have the general responsibility for taking such steps to safeguard the assets of the Group. In the discharge of their duties, all Directors have direct access to the Senior Management and have complete and unrestricted access to information pertaining to the Group’s businesses and affairs. The Group Chief Executive Officer together with the relevant Senior Management personnel are invited to attend Board meetings to report to the Board on matters relating to their areas of responsibility. Whistleblowing Policy The respective Chairmen of Board Committees would also provide salient points on recommendations or reports endorsed by the Board Committee to be submitted to the Board for notification and/or approval. The policy sets out the procedures covering: • Dedicated Ombudspersons, email address and postal address for reporting the suspected incidents of misconduct and wrongdoing To facilitate productive and meaningful deliberation, the proceedings of Board meetings are conducted in accordance with a structured agenda. The meeting agenda and meeting papers would be circulated to the Directors in advance to ensure the Directors are given sufficient time to read the Board papers and seek any clarification that they may need from Management before the Board meeting. • Internal investigators and where applicable external expert forensic investigators to analyse reports • Recommendations on corrective action • Appropriate communications, reporting and record maintenance In order to maintain confidentiality, meeting papers on issues or corporate proposals which are deemed highly confidential and privileged will only be distributed to Directors at the Board meeting itself or put in a sealed envelope with strict instructions to be opened only by the Directors themselves. The Ombudspersons will treat all such disclosures in a confidential and sensitive manner. The identity of the whistleblower will be kept confidential and the whistleblower’s consent will be sought should his or her identity be required in evidence or to assist in investigation. To further assist Directors in discharging their duties, each Director has the right to seek independent professional advice regarding his or her responsibilities at the expense of the Group. In addition, the Board and each Board Committee, at the expense of the Group, may obtain the professional advice that they require to assist them in their decision-making process and enable them to discharge their duties effectively. The details of the Whistleblower Protection Policy are available on the Company’s website at ambankgroup.com Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 AmBank Group has a Whistleblower Protection Policy which provides for any individual to report any suspected/ actual misconduct and/or wrongdoing by an employee, customer, vendor or third party in confidence. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  204. COMPLIANCE WITH BURSA SECURITIES LISTING REQUIREMENTS 1 . Material Contracts There were no material contracts (not being a contract entered into in the ordinary course of business) entered into by the Group, which involved directors and shareholders, either still subsisting at the end of the financial year or entered into since the end of the previous financial year. 2. Utilisation of Proceeds Raised from Corporate Proposals During the financial year ended 31 March 2017, the followings issuances were made by the Group:- a) RM750 million Subordinated Notes under the RM10.0 billion Subordinated Notes Programme by AMMB as follows:(i) (ii) Tranche 1, RM10.0 million Subordinated Notes issued on 30 December 2016; and Tranche 2, RM740.0 million Subordinated Notes issued on 15 March 2017. The proceeds raised have been utilised for investment in capital instruments of AmBank (M) Berhad and AmBank Islamic Berhad. b) RM500.0 million Subordinated Notes under the RM4.0 billion Subordinated Notes Programme by AmBank (M) Berhad as follows:(i) c) Tranche 2, RM500.0 million Subordinated Notes issued on 15 March 2017. RM250.0 million Subordinated Sukuk Murabahah under the RM3.0 billion Subordinated Sukuk Murabahah Programme by AmBank Islamic Berhad as follows:(i) (ii) Tranche 4, RM10.0 million Subordinated Sukuk issued on 30 December 2016; and Tranche 5, RM240.0 million Subordinated Sukuk issued on 15 March 2017. The proceeds raised by AmBank (M) Berhad and AmBank Islamic Berhad have been utilised for working capital and general banking purposes. 3. Recurrent Related Party Transactions Of A Revenue Or Trading Nature Pursuant to paragraph 10.09(2)(b), Part E, Chapter 10 of the Main Market Listing Requirement of Bursa Securities, the details of the recurrent related party transactions conducted with the Related Parties and their subsidiaries and associated companies, where applicable during the financial year ended 31 March 2017 pursuant to the Shareholders’ Mandate, are set out in the table below. Actual Value (RM’000) Related Parties Nature of Transaction Amcorp Group Berhad Provision of travelling arrangement Australia and New Zealand Banking Group Limited (ANZ) Provision of technical services and business collaboration – Modular Group Provision of electronic card technologies and services 8,230 p. 202 p. 203 AMMB Holdings Berhad (223035-V) Annual Report 2017 Relationship with the Company 5,707 ambankgroup.com Companies in which a Director and major shareholder were deemed to have an interest
  205. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 The table below outlines AMMB ’s application in accordance with the Malaysian MCCG 2017. Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness I. Board Responsibilities 1.1 1.2 1.3 The board should set the company’s strategic aims, ensure that necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company’s values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met. Applied A chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed. Applied The position of chairman and CEO are held by different individuals. Applied Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • The roles and responsibilities of the Board of Directors (the Board) are set out in the Board Charter and the Board Committees’ roles and responsibilities in discharging its functions which had been delegated by the Board are set out in each respective Board Committees’ Terms of Reference (TOR). • The Board and employees of AmBank Group are committed to adhere to the Code of Ethics which was last revised in 2016. • The Board has overall responsibility for promoting the sustainable growth and financial soundness of the Company and its subsidiaries. • The Company’s sustainability strategies are captured in the Sustainability Statement which provides a more insightful view into the Company’s initiatives to deliver balanced growth in a responsible and sustainable manner. A sustainability working group has been formed. • Role of the Chairman of the Board is set out in the Board Charter. • The Chairman’s Statement on Corporate Governance is disclosed in the Annual Report. • The positions of Chairman and Group Chief Executive Officer are held by different individuals who are not related to each other. • The Chairman is a Non-Independent Non-Executive Director. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  206. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness I. Board Responsibilities (Continued) 1.4 The board is supported by a suitably qualified and competent company secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices. Applied • The Board is supported by Ms Koid Phaik Gunn, a Chartered Secretary (MAICSA 7007433) and fellow member of the ICSA. She also holds a Bachelor of Laws (Honours) Degree. Ms Koid’s experience is disclosed in the Company’s Annual Report. 1.5 Directors receive meeting materials, which are complete and accurate within a reasonable period prior to the meeting. Upon conclusion of the meeting, the minutes are circulated in a timely manner. Applied • Meeting papers are to be circulated to the Board and Board Committee 5 days (calendar days) prior to the meeting as stated in the Board Charter and the respective Board Committees’ TOR. • Minutes of meetings are circulated and confirmed as a correct record by the Board and Board Committees at the following meeting. Intended outcome: Every company is headed by a board, which assumes responsibility for the company’s leadership and is collectively responsible for meeting the objectives and goals of the company. 2.1 The board has a board charter which is periodically reviewed and published on the company’s website. The board charter clearly identifies: • the respective roles and responsibilities of the board, board committees, individual directors and management; and • issues and decisions reserved for the board. Applied • The Company’s Board Charter is subject to review from time to time to ensure the Company remains at the forefront of best practices in Corporate Governance. • The Board Charter was last revised in July 2016. • The Board Charter is publicly made available on the Company’s website at ambankgroup.com. • The roles and responsibilities of the Board, Chairman, Group Chief Executive Officer, Senior Independent Director, Individual Directors, Company Secretary and Board Committees are set out in the Company’s Board Charter. • A formal Schedule of Matters Reserved for the Board had been adopted since 2016, which is subject to changes and updates when the need arises. Intended outcome: There is demarcation of responsibilities between the board, board committees and management. There is clarity in the authority of the board, its committees and individual directors. p. 204 p. 205 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  207. Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness I. Board Responsibilities (Continued) 3.1 The board established a Code of Conduct and Ethics for the company, and together with management implements its policies and procedures, which include managing conflicts of interest, preventing the abuse of power, corruption, insider trading and money laundering. Applied The Code of Conduct and Ethics is published on the company’s websites. 3.2 The board establishes, reviews and together with management implements policies and procedures on whistleblowing. Applied • The Company has a Code of Ethics (C.R.E.A.T.E) which was last revised in 2016 with six (6) principles i.e. Compliant, Responsible, Ethical, Accurate, Trustworthy and Equitable. • Board Charter of the Company lays out the ethical, business and lawful conduct of the Board. • The Code of Ethics is publicly made available on the Company’s website at ambankgroup.com. • The Company has a Whistleblower Protection Policy which is publicly made available on the Company’s website at ambankgroup.com. Intended outcome: The board is committed to promote good business conduct and to maintaining a healthy corporate culture that engenders integrity, transparency and fairness. The board, management, employees and other stakeholders are clear on what is considered acceptable behaviour and practice in the company. Principle A – Board Leadership and Effectiveness II. Board Composition 4.1 At least half of the board comprises independent directors. For Large Companies*, the board comprises a majority of independent directors. In progress • Note: * Companies on the FTSE Bursa Malaysia Top 100 Index or companies with market capitalisation of RM2 billion and above at the start of the companies’ financial year. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Independent Directors comprise 44.4% of the current Board composition, exceeding the Bursa Securities’ requirement of one third (33.3%). The Board is in the midst of achieving MCCG’s and BNM’s requirement of more than 50%. The Board had submitted the application to the regulator for an additional independent director and is pending for the approval. With that, it will bring the level of independent director to 50%. The Board is actively searching for another independent director to bring the level of Independent director on the Board to a majority level. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  208. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness II. 4.2 Board Composition (Continued) The tenure of an independent director does not exceed a cumulative term limit of 9 years. Upon completion of 9 years, an independent director may continue to serve on the board as a non-independent director. Applied • The Board Charter stipulates that “the tenure of an independent director shall not exceed a cumulative term of 9 years”. • It is the Company’s policy not to extend the tenure of the Independent Director who had reached the tenure of 9 years. • As per Practice 4.2 above. • The current Independent Directors of the Company do not exceed the tenure term of 9 years. • The Board Charter stipulates that “the Board is committed to ensuring diversity in its composition and embraces the proposition that having a diverse Board would have a positive, value-adding impact on the Company. While the Board acknowledges the importance of boardroom diversity, appointments to the Board shall always be based on merit.” • The criteria for the recruitment process and annual assessment of Directors are contained in the Nomination Policy for NonExecutive Directors which was approved for adoption by the Board in March 2016. • The Board currently comprises 33% female representation among the Directors on the Board. • Approximately 50% of the Senior Management team comprises women. • The above information is disclosed under the Corporate Governance and Sustainability Statements in the Company’s Annual Report. If the board intends to retain an independent director beyond 9 years, it should justify and seek annual shareholders’ approval. If the board continues to retain the independent director after 12 years, the board should seek annual shareholders’ approval through a 2-tier voting process. 4.3 4.4 4.5 The board has a policy which limits the tenure of its independent directors to 9 years. Applied Appointment of board and senior management are based on objective criteria, merit and with due regard for diversity in skills, experience, age, cultural background and gender. Applied The board discloses in its Annual Report the company’s policies on gender diversity its targets and measures to meet those targets. For Large Companies, the board must have at least 30% women directors. p. 206 p. 207 AMMB Holdings Berhad (223035-V) Applied Annual Report 2017 ambankgroup.com
  209. Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness II. Board Composition (Continued) 4.6 4.7 In identifying candidates for appointment as directors, the board does not solely rely on recommendations from existing board members, management or major shareholders. The board utilises independent sources to identify suitably qualified candidates. The Nominating Committee is chaired by an Independent Director or the Senior Independent Director. Applied Applied • Under the Nomination Policy for Non-Executive Directors the Group Nomination and Remuneration Committee (GNRC) may source candidates to act as a Director of the Company via executive search firms or recommendation from other directors. • During FY17, all the independent directors recruited were from executive search firms. • The GNRC is chaired by the Senior Independent Director. Intended outcome: Board decisions are made objectively in the best interests of the company taking into account diverse perspective and insights. 5.1 The board should undertake a formal and objective annual evaluation to determine the effectiveness of the board, its committees and each individual director. The board should disclose how the assessment was carried out and its outcome. Applied For Large Companies, the board engages independent* experts periodically to facilitate objective and candid board evaluations. • The annual Board Effectiveness Evaluation (BEE) encompasses the assessment on the effectiveness of the Board as a whole, the effectiveness of each board committee and individual directors. The Company’s BEE was conducted by an independent facilitator for the past three (3) years. • The Company’s BEE exercise processes include questionnaire and in-depth interviews of the Directors. Senior Management’s feedbacks were sought as well. Note: * Independence in this context means no connection with the company, directors or major shareholders. Intended outcome: Stakeholders are able to form an opinion on the overall effectiveness of the board and individual directors. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  210. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 Status of Application MCCG Practice Remarks Principle A – Board Leadership and Effectiveness III. 6.1 6.2 Remuneration The board has in place policies and procedures to determine the remuneration of directors and senior management, which take into account the demands, complexities and performance of the company as well as skills and experience required. The policies and procedures are periodically reviewed and made available on the company’s website. The board has a Remuneration Committee to implement its policies and procedures on remuneration including reviewing and recommending matters relating to the remuneration of board and senior management. Applied Applied The Committee has written Terms of Reference which deals with its authority and duties and these Terms are disclosed in the Company’s websites. • Though the company is in the process of drawing up a Remuneration Framework for the Non-Executive Directors, the directors’ fees, board committee membership fees, chairman allowances and meeting allowances have been reviewed by the GNRC and the Board, thereafter, recommends to the shareholders for approval. • The remuneration structure of the Non-Executive Directors is disclosed under the Corporate Governance Statement in the Company’s Annual Report. • The remuneration structure, approvals and governance of the Group’s Senior Management is disclosed under the Corporate Governance Statement in the Annual Report. • This requirement is met by the GNRC. • The TOR of the GNRC are in line with recommendations of MCCG and BNM Policy Document on Corporate Governance. The TOR is publicly available on the Company’s website at ambankgroup.com. • The remuneration structure, approvals and governance of the Group’s Senior Management is disclosed under the Corporate Governance Statement in the Company’s Annual Report Intended outcome: The level of composition of remuneration of directors and senior management takes into account the company’s desire to attract and retain the right talent in the board and senior management to drive the company’s long-term objectives. Remuneration policies and decisions are made through a transparent and independent process. 7.1 There is detailed disclosure on named basis for the remuneration of individual directors. The remuneration breakdown of individual directors includes fees, salary, bonus, benefit-in-kinds and other emoluments. p. 208 p. 209 AMMB Holdings Berhad (223035-V) Applied Annual Report 2017 • Each directors’ remuneration package is disclosed in the Company’s Annual Report and financial statement. ambankgroup.com
  211. MCCG Practice Status of Application Remarks In progress • The directors’ remuneration is being disclosed in bands of RM50,000 under the Corporate Governance Statement of the Annual Report. • The Chief Executive Officer’s remuneration was disclosed in the Notes to the Financial Statements. • We are working towards this disclosure for Senior Management • We are working towards this disclosure for Senior Management Principle A – Board Leadership and Effectiveness III. Remuneration (Continued) 7.2 The board discloses on a named basis the top 5 senior management’s remuneration component including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000. 7.3 Companies are encouraged to fully disclose the detailed remuneration of each member of senior management on a named basis. In progress Intended outcome: Stakeholders are able to assess whether the remuneration of directors and senior management is commensurate with their individual performance, taking into consideration the company’s performance. Principle B – Effective Audit and Risk Management I. Audit Committee 8.1 The Chairman of the Audit Committee is not the Chairman of the board. Applied • The Chairman of the Audit and Examination Committee (AEC) is an independent director, who is not the Chairman of the Board. 8.2 The Audit Committee has a policy that requires a former key audit partner to observe a cooling-off period of at least 2 years before being appointed as a member of Audit Committee. Applied • The Chairman of the AEC, Mr Seow Yoo Lin, was the Managing Partner of KPMG Malaysia from 2007 to 2010 and retired from the firm in 2011. • The revised TOR of AEC was approved in January 2016, and is publicly made available on the Company’s website at ambankgroup.com. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  212. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 Status of Application MCCG Practice Remarks Principle B – Effective Audit and Risk Management II. 8.3 Risk Management and Internal Control Framework The Audit Committee has policies and procedures to assess the suitability objectivity and independence of the external auditor. Applied • Procedures to assess the suitability, independence and performance of external auditors have been established, mainly in accordance with BNM Guidelines on External Auditors. • In addition to written assurance on the independence of the External Auditor obtained during the year, the Policy on NonAudit Services by the Group’s External Audit Firm had also been established to ensure the independence of the external auditors. 8.4 The Audit Committee should comprise solely of Independent Directors. In progress • The AEC comprises a majority of independent directors, with a Non-Independent Director as a member. The Company will take steps to comply with this recommended practice, going forward. 8.5 Collectively, the Audit Committee should possess a wide range of necessary skills to discharge its duties. All members should be financial literate and are able to understand matters under the purview of the Audit Committee including the financial reporting process. Applied • All members of the AEC are financially literate and possess financial background or knowledge as well as necessary experience. • The Chairman of the AEC, Mr Seow Yoo Lin, was a retired Managing Directors of KPMG and another member, Mr Soo Kim Wai, is a member of MIA and Malaysian Instituted of Certified Public Accountant, Australia, and also a fellow of the Certified Practising Accountant, Australia and the Association of Chartered Certified Accountants, United Kingdom. Intended outcome: There is an effective and independent Audit Committee. The board is able to objectively review the Audit Committee’s findings and recommendations. The company’s financial statement is a reliable source of information. 9.1 The board should establish an effective risk management and internal control framework. p. 210 p. 211 AMMB Holdings Berhad (223035-V) Applied Annual Report 2017 • The Board has established framework & policies to ensure that risk management and internal controls across the various risk classes (credit risk, market risk & operational risk) are managed within risk appetite set by the Board. • To ensure their continuous effectiveness, the framework and policies are reviewed periodically, and when there are significant regulatory changes. • This is supported by dedicated oversight function within the significant business units & functional lines. ambankgroup.com
  213. Status of Application MCCG Practice Remarks Principle B – Effective Audit and Risk Management II. Risk Management and Internal Control Framework 9.2 9.3 The board should disclose the features of its risk management and internal control framework, and the adequacy and effectiveness of this framework. The board establishes a Risk Management Committee, which comprises a majority independent directors, to oversee the company’s risk management framework and policies. Applied Applied • Details of the feature of risk management and internal control framework, which include the governance, processes and measurement of the risk are disclosed in the Company’s Annual Report. • Adequacy and effectiveness of the key risk management and internal control processes are also reviewed and disclosed under the Statement on Risk Management and Internal Control of the Company’s Annual Report. • The Risk Management Committee of Directors (RMCD) comprises a majority of independent directors. • The Chairman of the RMCD is an independent director. Intended outcome: Companies make informed decisions about the level of risk they want to take and implement necessary controls to pursue their objectives. The board is provided with reasonable assurance that adverse impact arising from a foreseeable future event or situation on the company’s objectives is mitigated and managed. 10.1 The Audit Committee should ensure that the internal audit function is effective and able to function independently. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Applied • The Group Internal Audit operates under a charter mandated by the AEC that gives unrestricted access to review all activities across the Group. • The Group Internal Audit reports directly to the AEC. The AEC approves the Group Internal Audit’s annual plan, monitors the progress of the completion of the Audit plan, as disclosed in the AEC Report. • The AEC reviews the adequacy of the Group Internal Audit’s resources and evaluates the performance of the Group Chief Internal Auditor. • All Audit Reports are tabled to the AEC and an Internal Audit Activity Report is tabled at every AEC meeting, highlighting key issues and concerns arising from the audits conducted. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  214. COMPLIANCE WITH THE MALAYSIAN CODE ON CORPORATE GOVERNANCE 2017 Status of Application MCCG Practice Remarks Principle B – Effective Audit and Risk Management II. 10.2 Risk Management and Internal Control Framework The board should disclose – • Applied whether internal audit personnel are free from any relationships or conflicts of interest, which could impair their objectivity and independence; • the number of resources in the internal audit department; • name and qualification of the person responsible for internal audit; and • whether the internal audit function is carried out in accordance with a recognised framework. • The Group Internal Audit is independent from the business and undertakes activities as stated in the AEC Report. • The profile of the Chief Internal Auditor, Mr Thein Kim Mon, is disclosed in the Company’s Annual Report detailing his declaration, qualification and experience. • A brief statement on the Internal Audit Function with a summary of its key activities is disclosed under the Corporate Governance Statement in the Company’s Annual Report. • The availability of resources in the internal audit department is being closely monitored against its budgeted headcount and the staffing position is updated regularly to the AEC. Intended outcome: Companies have an effective governance, risk management and internal control framework and stakeholders are able to assess the effectiveness of such a framework. Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders I. 11.1 Communication with Stakeholders The board ensures there is effective, transparent and regular communication with its stakeholders. p. 212 p. 213 AMMB Holdings Berhad (223035-V) Applied Annual Report 2017 • Communication and engagement with stakeholders are made through various platforms and media other than general meeting(s), including investors’ conferences, roadshows, analyst briefings and via electronic means such as social media and website. • Events conducted by Investor Relations of the Company were listed in the Company’s website at ambankgroup.com. • Stakeholders are encouraged to direct their inquiries via email at ir@ambankgroup.com. ambankgroup.com
  215. Status of Application MCCG Practice Remarks Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders I. Communication with Stakeholders 11.2 Large Companies are encouraged to adopt integrated reporting based on globally recognised frameworks. Applied • Corporate information is disseminated via the Company’s website, announcements made via Bursa LINK and the Company’s official social media. • The Company’s Annual Report consists of information such as Annual Financial Statements, Corporate Governance, Sustainability Statements and such other disclosures listed under the content of the Company’s Annual Report. Intended outcome: There is continuous communication between the company and stakeholders to facilitate mutual understanding of each other’s objectives and expectations. Stakeholders are able to make informed decisions with respect to the business of the company, its policies on governance, the environment and social responsibility. Principle C – Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders II. Conduct of General Meetings 12.1 Notice for an Annual General Meeting should be given to the shareholders at least 28 days prior to the meeting. Applied • The Company’s Annual General Meeting (AGM) to be held on 31 July 2017 and notice is dated 30 June 2017 (30 days prior to the AGM). • The notice of the AGM contain details of resolutions to be approved by the shareholders with explanatory notes. 12.2 All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management and other committees provide meaningful response to questions addressed to them. Applied • All directors attended the AGM held on 18 August 2016 and all directors have confirmed their attendance for the forthcoming AGM to be held on 31 July 2017. 12.3 Listed companies with a large number of shareholders or which have meetings in remote locations should leverage technology to facilitate – Applied • Shareholders are entitled to appoint representatives or proxy/ proxies to vote on their behalf in their absence. • The Company’s General Meetings has always been held in the same state as its Registered Office. • voting including voting in absentia; and • remote shareholders’ participation at General Meetings Intended outcome: Shareholders are able to participate, engage the board and senior management effectively and make informed voting decisions at General Meetings. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  216. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Responsibility THE BOARD OF DIRECTORS (“BOARD”) IS RESPONSIBLE FOR THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM AND FOR REVIEWING ITS ADEQUACY AND INTEGRITY. THE BOARD HAS INSTITUTED AN ONGOING PROCESS FOR IDENTIFYING, EVALUATING AND MANAGING THE SIGNIFICANT RISKS FACED BY THE GROUP THROUGHOUT THE FINANCIAL YEAR UNDER REVIEW. THIS PROCESS IS REGULARLY REVIEWED BY THE BOARD AND ACCORDS WITH THE GUIDANCE ON INTERNAL CONTROL, STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL: GUIDELINES FOR DIRECTORS OF LISTED ISSUERS. In establishing and reviewing the risk management and internal control system, the Directors have considered the materiality of relevant risks, the likelihood of losses being incurred and the cost of control. Accordingly, the purpose of the risk management and internal control system is to manage and minimise rather than eliminate the risk of failure to achieve the policies and objectives of the Group and to provide reasonable but not absolute assurance against risk of material misstatement or losses. The management assists the Board in the implementation of the Board’s policies on risk management and internal control by identifying and evaluating the risks faced by the Group for consideration by the Board and designs, operates and monitors the system of risk management and internal control to mitigate and control the risks. Key Risk Management and Internal Control Processes The Group has adopted a coordinated and formalised approach to risk management and internal control, which is operationalised through the “Three Lines of Defense” concept. The Business Units form the first line of defense, Risk and Compliance the second line of defense while Internal Audit forms the third line of defense. The key risk management and internal control processes are implemented via the following: • The Board has formed a Risk Management Committee of Directors (“RMCD”) to assist in the oversight of the overall risk management structure. At Senior Management level, a number of management-level risk committees have been established to assist the Board to holistically manage the risks and businesses of the Group. These committees, namely the Group Management Committee, Group Management Risk Committee, Shariah Committee, Shariah Oversight Committee, Group Asset and Liability Committee, Group Management Governance and Compliance Committee and the Credit and Commitments Committee, address all classes of risk within Board delegated mandates: balance sheet risk, credit risk, legal risk, operational risk, market risk, shariah risk, compliance risk, regulatory compliance risk, reputational risk, product risk and business and IT project risk. • Risk management principles, policies, practices, methodologies and procedures are made available to appropriate staff in the Group. These are regularly updated to ensure they remain relevant and in compliance with regulatory requirements. The policies, methodologies and procedures are enhanced whenever required to meet the changes in operating environment and/or for continuous improvement in risk management. Conclusion For the year under review, the Board has received the reports of the Audit and Examination Committee and Risk Management Committee of Directors. An annual assessment of the effectiveness of risk and internal control processes has been conducted and the Board has also received the assurance from the Chief Executive Officer and Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively in all material aspects, based on the risk management model adopted by the Group. The Board is of the view that the risk management and internal control system in place for the year under review and, up to the date of issuance of the financial statements, is adequate and effective to safeguard shareholders’ investment, the interests of customers, regulators and employees, and the Group’s assets. p. 214 p. 215 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  217. • The organisation structure is designed to clearly define the accountability, reporting lines and approving authorities to build an appropriate system of checks and balances, corresponding to the business and operations activities’ needs. This includes the empowerment and setting of authority limits for proper segregation of duties. • The Audit and Examination Committees (“AECs”) of the Company and its major subsidiaries assist the Board to evaluate the adequacy and effectiveness of the Group’s internal controls systems. The AECs review the Group’s financial statements and reports issued by Group Internal Audit, the external auditors and regulatory authorities and follow-up on corrective actions taken to address issues raised in the reports. • Group Internal Audit conducts independent risk-based audits and provides assurance that the design and operation of the risk and control framework across the Group is effective. The AECs review the work of the Group Internal Audit Department, including reviewing its audit plans, progress and reports issued. • The Group’s focus is on achieving sustainable and profitable growth within its risk management framework. Annual business plans and budgets are prepared by the Group’s business divisions and submitted to the Board for approval. Actual performances are reviewed against the budget with explanation of major variances on a monthly basis, allowing for timely responses and corrective actions to be taken to mitigate risks. • The Group emphasises human resource development and training as it recognises the value of its staff in contributing to its growth. There are proper guidelines within the Group for staff recruitment, promotion and performance appraisals to promote a high performance culture by rewarding high performers and counseling poor performers. Our Short Term Incentive (STI) and Long Term Incentive (LTI) are used primarily to reward and encourage outstanding individuals for their contribution to value creation while protecting the shareholders’ interest. Structured talent management and training programmes are developed to ensure staff are adequately trained and competent in discharging their responsibilities and to identify future leaders for succession planning. • A code of ethics has been formulated to protect and enhance the Group's reputation for honesty and integrity. The Code of Ethics is based on the following principles: compliance with the law both in letter and in spirit, this code and AmBank Group policies and procedures; upholding the highest level of integrity and acting with honesty and professionalism; identifying and managing conflicts of interest responsibly; ensuring completeness and accuracy of underlying records, financial or otherwise; ensuring fair and equitable treatment to all; and ensuring confidentiality of information and transactions. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • The Group has in place a compliance framework to promote the safety and soundness of the Group by minimising financial, reputational and operational risks arising from regulatory non-compliance. The Group believes in and embraces a stronger compliance culture to reflect a corporate culture of high ethical standards and integrity where the Board of Directors (Board) and Senior Management lead by example. The Group continues to exercise and enhance its due diligence governance process and remains vigilant towards emerging risk as well as sensitive towards heightened regulatory surveillance and enforcement. • Training is provided to employees of the Group on relevant legal and regulatory requirements governing its activities and guidance on implementation of internal controls to manage compliance risk. Review of Statement by External Auditors As required by Bursa Malaysia’s Main Listing Requirements Paragraph 15.23, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was in accordance with Recommended Practice Guide (RPG) 5 (Revised) Guidance for Auditors on Engagements to Report on the Statement of Risk Management and Internal Control, issued by the Malaysian Institute of Accountants. This does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of AmBank Group. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  218. AUDIT AND EXAMINATION COMMITTEE REPORT Purpose The Audit and Examination Committee (AEC) of Directors is established to provide assistance to the Board with the following primary objectives: • • Provide independent oversight of the Company/Group’s financial reporting and internal control systems that facilitate appropriate checks and balances within the Company/Group. Serve as an independent party to objectively review the financial information of the Company and Group (which is presented by the Management to the Board and Shareholders). The AEC’s detailed roles and responsibilities are set out in its Terms of Reference, which is published on the Group’s corporate website ambankgroup.com. In discharging its roles and responsibilities, the AEC is assisted by the respective AECs of the major subsidiaries within the Group, as follows: • AmBank (M) Berhad • AmBank Islamic Berhad • AmInvestment Bank Berhad • AmGeneral Insurance Berhad • AmFunds Management Berhad • AmIslamic Funds Management Sdn Bhd • Am ARA REIT Managers Sdn Bhd Composition & Set-Up The members of the above AECs comprise Non-Executive Directors, with the majority of the members, including the respective Chairmen, being Independent Non-Executive Directors. The AEC currently comprises three (3) members, two (2) of whom are Independent Non-Executive Directors. The past and present AEC members are as follows: Attendance of Meetings 1. A total of 41 AEC meetings of the Company and major subsidiaries were held during FY17. Four (4) meetings of the Company’s AEC were held, and details of meeting attendance are set out below: 2. Mr. Seow Yoo Lin (Chairman) • Appointed as member on 30 June 2016 • Assumed chairmanship on 1 August 2016 (Independent Non-Executive Director) Number of AEC Meetings Mr. Voon Seng Chuan • Vacated chairmanship on 31 July 2016 • Re-designated as member on 1 August 2016 (Independent Non-Executive Director) 3. Mr. Soo Kim Wai (Non-Independent Non-Executive Director) 4. Dato’ Rohana binti Tan Sri Mahmood • Resigned as AEC Member on 30 June 2016 (Senior Independent Non-Executive Director) 1 p. 216 p. 217 2 Held During Tenure in Office Attended % Seow Yoo Lin (Chairman) (Appointed on 30 June 2016) (Independent Non-Executive Director) 3 3 100 Voon Seng Chuan (Independent Non-Executive Director) 4 4 100 Soo Kim Wai (Non-Independent Non-Executive Director) 4 4 100 Dato’ Rohana binti Tan Sri Mahmood (Resigned on 30 June 2016) (Senior Independent Non-Executive Director) 1 1 100 Name of Committee Members 3 4 AMMB Holdings Berhad (223035-V) The Group Chief Financial Officer (GCFO) and Group Chief Internal Auditor (GCIA) and their representatives attended all the AEC meetings to present their respective financial and audit reports. In addition, the Group Chief Executive Officer (GCEO) and respective CEOs of the subsidiaries or their representatives are permanent invitees to the respective AEC meetings and had attended all the meetings held Annual Report 2017 ambankgroup.com
  219. in FY17 As and when necessary , the Company’s and subsidiaries’ AECs had also requested the attendance of relevant Management personnel at the meetings to brief on specific issues arising from the financial and audit reports. 6. Reviewed the audit reports issued by Regulators and Management’s responses to the Regulators’ recommendations, and timeliness of remedial actions taken. Prior to each AEC meeting, the GCIA held private sessions with the respective AEC Chairmen to highlight key issues of concern that would be raised in the meetings. 7. Deliberated on the status of resolution of previous audit issues and the remedial actions taken by the Management, including tracking and monitoring of completion timelines set. The AEC also held 2 private sessions in May 2016 and January 2017 with the external auditors (EY), without the presence of Management and the GCIA to deliberate on relevant issues and obtain feedback for improvements. In addition, the external auditors also attended AEC meetings to present their audit planning memoranda, memoranda of recommendations, the results of their limited review of half-year financial performances of the Group’s banking entities, and the results of their review on the annual audited financial statements of the Company and the Group. 8. Reviewed Management’s proposals for debts write-off, and GIAD’s verification reports on the proposals, prior to recommending the write-offs to the Board. 9. After each AEC meeting, a summary of significant audit reports and key issues deliberated was tabled to the Board for noting and/or further deliberation. 10. Reviewed GIAD’s progress in completing its planned assignments on a halfyearly basis. 11. Reviewed and assessed the GCIA’s performance, and approved his remuneration package. Minutes of all the AEC meetings were tabled to the Board for noting. In addition, the AEC Chairman also conveyed matters of significant concern to the Board as and when such matters were highlighted by the external auditors and internal auditors. Annual Report Summary of AEC’s Key Activities The AEC had, with the assistance of the respective AECs within the Group, carried out the following activities in discharging their roles and responsibilities throughout the financial year ended 31 March 2017: 12. Reviewed and endorsed the Statement of Risk Management and Internal Control for Board’s approval and inclusion in the Annual Report. 13. Reviewed and endorsed the AEC Report for inclusion in the Annual Report. Financial Reporting Internal Audit 1. 2. 3. 14. Reviewed the adequacy and effectiveness of the system of internal controls, reporting and risk management to ensure there was a systematic methodology in identifying, assessing and mitigating risk areas. Deliberated and approved Group Internal Audit Department’s (GIAD) Annual Audit Plan (AAP) for FY17, including its resource needs, to ensure audit emphasis was placed on critical risk areas based on assessments of the risk levels of all the auditable areas. Deliberated and approved revisions to GIAD’s AAP during the course of the year to ensure it remained relevant, taking into account significant developments within the Group as well as requests from Regulators and Management. 4. Deliberated on GIAD’s audit reports and recommendations and Management’s responses, and directed Management to implement necessary timely remedial actions. Where necessary, separate presentations by Management were requested to provide justifications for significant audit issues raised. 5. Deliberated on internal investigation reports issued by GIAD and directed Management to take necessary remedial actions and consequent management. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Ensure compliance with salient Regulatory requirements set out under the: • Companies Act 2016 • Financial Services Act 2013 • Islamic Financial Services Act 2013 • Capital Markets and Services Act 2007 • Securities Commission Act 1993 • Main Market Listing Requirements of Bursa Malaysia Securities Berhad 15. Reviewed the quarterly unaudited financial results and annual audited financial statements of the Company and the Group to ensure that the financial reporting and disclosure requirements, particularly relating to changes in accounting policies, as well as significant and unusual events or transactions are in compliance with the accounting standards before recommending the financial statements to the Board for approval. 16. Reviewed the Group’s Basel II Pillar 3 Disclosures before recommending to the Board for approval. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  220. AUDIT AND EXAMINATION COMMITTEE REPORT 17 . Reviewed and deliberated on high level financial impact analysis on the Group arising from new accounting standards that will significantly impact the Group. For FY17, the AEC had regular updates and discussion on impact due to implementation of Malaysian Financial Reporting Standard (MFRS) 9. • The quality of previous audit or work done and level of engagement with the AEC and Management. These included active participation in AEC meetings attended, highlighting areas of concern, and recommendations for improvements in control systems, and updating the AEC on applicability of significant accounting and reporting standards. For the FY17, the internal auditors had attended AEC meetings to present their Audit Planning Memorandum, Limited Review Report, Report on Financial Audit and Memorandum of Recommendations. • The adequacy in audit coverage, effective planning and conduct of audit, which were assessed to be adequate. • The timeliness of service deliverables. The external auditors had met timelines agreed with Management in respect of the audited financial statements, with no delays in regard to submissions to Regulatory authorities. • The independence and objectivity of external auditors by reviewing the following: External Audit 18. Reviewed and discussed the following with the external auditors: • • 19. The Audit Planning Memorandum, scope of work for the year which included areas of emphasis and new areas, such as changes in laws and regulations, accounting standards, Information Technology systems, audit timeline and statutory audit fees; and The results of the audits, relevant audit reports and memorandum of recommendations (Management Letters) as well as Management’s responses to the issues highlighted. Reviewed and assessed the suitability and independence of external auditors in accordance with Bank Negara Malaysia’s Guidelines on External Auditor, and recommended their reappointment and annual audit fees to the Board. The criteria for appointment and annual assessment of the external auditors’ independence and performance was based on the following: • • a) List of non-audit services provided by external auditors to the Group and the Banks; b) List of advisory services rendered by the engagement partner and the concurring partner in the last two (2) years; c) Statutory declaration by the engagement partner which confirms they have no relationship with, or interest in shares of the Group and the Banks; and d) Existing engagement partner has not served the Company and/or the Group for a continuous period of more than five (5) years. The professional conduct of external auditors as follows: a) The appointed external auditors are registered auditors of public interest entities with the Audit Oversight Board; b) The appointed external auditors have not been convicted of any offence under the Financial Services Act 2013, Islamic Financial Services Act 2013, Companies Act 2016, or any other written law involving fraud and dishonesty; and c) The engagement partner did not have any record of disciplinary actions taken against them for unprofessional conduct. 20. Reviewed the written assurance provided by external auditors in respect of their independence. 21. Reviewed and approved the appointment of the external auditors for the provision of non-audit services to the Company and the Group. There is a Group policy for the appointment of the statutory auditor for provision of non-audit services where the criteria and threshold for fees are set out, to ensure the auditors’ independence is not impeded. The professionalism, expertise, knowledge and relevant experience of external auditors, and any potential conflict of interest are also considered prior to the appointment. The external auditors’ level of knowledge, capabilities and experience by reviewing the following: a) Curriculum vitae of the engagement partner and concurring partner; b) List of public interest entities audited by the engagement partner and concurring partner in the last two (2) years prior to the date of statutory declaration; c) Years of experience of the engagement partner in auditing financial institutions; and d) Man-days spent by the engagement partner and the concurring partner in previous audits. p. 218 p. 219 AMMB Holdings Berhad (223035-V) Related Party Transactions 22. Reviewed related party transactions and the adequacy of the Group’s procedures in identifying, monitoring, reporting and reviewing related party transactions. 23. Reviewed quarterly reports on recurrent related party transactions of a revenue and trading nature. 24. Reviewed and deliberated on the draft Circular to Shareholders on Recurrent Related Party Transactions. Annual Report 2017 ambankgroup.com
  221. STATEMENT ON INTERNAL AUDIT Internal Audit Function THE GROUP HAS AN IN-HOUSE INTERNAL AUDIT FUNCTION WHICH IS CARRIED OUT BY GROUP INTERNAL AUDIT DEPARTMENT (GIAD) AND HEADED BY THE GROUP CHIEF INTERNAL AUDITOR (GCIA) MR. THEIN KIM MON. GIAD IS INDEPENDENT FROM THE ACTIVITIES OR OPERATIONS OF OTHER OPERATING UNITS WITHIN THE GROUP AND THE GCIA REPORTS DIRECTLY TO THE COMPANY’S AEC AND THE AECS OF THE RESPECTIVE ENTITIES WITHIN THE GROUP. It operates under an audit charter mandated by the AEC which gives it unrestricted access to review all activities of the Group. The internal audit function is conducted on an AmBank Group-wide basis to ensure consistency in the control environment and the application of policies and procedures. The main objective of the audit reviews is to assess the adequacy and effectiveness of risk management and systems of internal controls (including IT systems and infrastructure), in the activities carried out by Group, as follows: • Retail Banking GIAD focuses its efforts in accordance with the Annual Audit Plan (AAP) approved by the respective AECs, which is prioritised based on a comprehensive risk assessment of all activities undertaken by the Group. This structured risk assessment approach ensures that all risk-rated areas are kept in view to ensure appropriate audit coverage and audit frequency (e.g. higher risk auditable areas in each business units are audited more frequently). The risk-based audit plan is reviewed periodically, taking into account the changes in the business and risk environment. • Islamic Banking • Wholesale Banking • Investment Banking • General Insurance • Funds & Asset Management • Other Non-Financial Institutions • Group Support Functions Apart from the above, GIAD also performs investigations and ad-hoc reviews where there are improper, illegal and dishonest acts, or when requested by Regulators or Management. In addition, GIAD participates actively in major system developments and project committees to advise on risk management and internal control matters. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  222. STATEMENT ON INTERNAL AUDIT All GIAD reports are submitted to the respective entities AECs for review and deliberation . The AECs review and deliberate on the control lapses highlighted by GIAD along with the audit recommendations as well as Management’s responses and action plans to rectify these lapses. All significant issues deliberated at the respective AECs are also reported to the AEC of AMMB Holdings Berhad, for information. In addition, there is also an effective process in place to ensure prompt resolution of audit issues by Management. GIAD tables regular updates to the AECs on all significant audit issues until such audit issues are satisfactorily resolved. In order to perform its functions effectively, auditors within GIAD are continuously being sent for training courses to equip themselves with the requisite knowledge and skills, particularly in areas relating to Islamic banking, credit operations, investment banking, markets, general insurance and Regulatory matters. The total costs incurred to maintain the internal audit function for FY17 amounted to RM14.1 million (FY16: RM14.7 million), comprising mainly salaries, travelling and accommodation expenses, and subsistence allowance. GIAD has a budgeted headcount of 95. 5. Conducted investigations into activities or matters as directed by the AECs or requested by Management including whistleblower cases. The outcomes from the investigations were presented to the AEC concerned for deliberation. 6. Monitored, and validated the resolution of previous audit issues and reported on the status of key outstanding audit issues to the Management Committee and to the AEC concerned. 7. Provided independent and objective reviews on the adequacy and effectiveness of internal controls established to mitigate the risk exposures in the implementation of new projects undertaken by the business. 8. Participated in the various Business Continuity Management exercises to gauge and assess the readiness of the businesses/systems to resume operations within agreed timelines in the event of a disruption or disaster. 9. Attended meetings held by Group Management Committee, Group Management Risk Committee, Group Information Technology Committee and the Group Management Governance and Compliance Committee as an invitee to provide independent feedback on the risk management, control and governance aspects. Summary of GIAD’s Key Activities GIAD undertook the following activities during FY17: 1. Determined and risk assessed all areas of activities within the Group and established the Annual Audit Plan (AAP), which set out the audit roadmap for the year and key areas of audit focus and emphasis. 2. Completed various audit assignments as set out in the AAP, to provide independent assessment and objective assurance on the adequacy and the effectiveness of risk and management controls over the business operations. Reports concluding results of the audits conducted along with detailed audit observations, management responses, and audit recommendations to improve and enhance the existing system of internal controls and work procedures/processes were prepared and issued to the auditees concerned, Senior Management and the respective AECs. 3. Conducted ad-hoc assignments and special reviews as directed by the AECs, requested by Management or Regulators. Results of reviews undertaken were presented to the respective AECs for deliberation. 4. Conducted compliance reviews mandated by the Regulators to assess the level of compliance by the business units. Non-compliances were duly highlighted to Management for prompt rectification. p. 220 p. 221 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  223. GROUP RISK MANAGEMENT REPORT AMBANK GROUP EMBRACES RISK MANAGEMENT AS AN INTEGRAL PART OF THE GROUP ’S BUSINESS, OPERATIONS AND DECISION-MAKING PROCESSES. AGAINST THE BACKDROP OF A CHALLENGING ECONOMIC ENVIRONMENT WHERE FINANCIAL MARKETS HAVE BECOME MORE VOLATILE, IT IS CRITICAL FOR THE GROUP TO HAVE A ROBUST AND EFFECTIVE RISK MANAGEMENT SYSTEM TO ENSURE CONTINUOUS PROFITABILITY AND TO ACHIEVE SUSTAINABLE GROWTH IN SHAREHOLDER VALUE. Risk Strategy Our Priorities In FY18 Our overall risk strategy is centered around the following initiatives: Group Risk will continue to support the Group’s business strategies while continuing to be vigilant: • Enhancing risk governance • Upgrading risk infrastructure • Developing a more comprehensive risk appetite strategy, execution and monitoring framework • Improving funding and liquidity risk management • Improving underlying asset quality and enhancing portfolio diversification • Materially lowering loan loss provisions Key Highlights In FY17 • Developing robust risk/reward pricing models The key highlights of progress made in FY17 were as follows: • Ensuring International Financial Reporting Standard (IFRS) readiness • Refined the credit processes for SMEs. • Positioning AmBank for IRB status under Basel II • Introduced an accelerated approval process for high quality mid-corp and Institutional deals. • All identified credits models under the advanced Internal Ratings Based (AIRD) project had been rebuilt. • The IRB capital engine has been implemented. • The FRS9 project has started and implementation is on track. • The bank’s cyber risk maturity profile has been completed and enhancements are on-going to ensure this risk is managed and controlled. Risk Governance Our risk governance and culture is driven across the Group through the “Three Lines of Defence” framework, with the motto “risk is everyone’s responsibility”. Supporting this framework are policies and procedures to enforce our core standards. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • Enhancing the Group’s risk management capabilities to identify and control new emerging risks, including cyber risks • Continue to drive risk and compliance culture across the Group • Ensure the Group’s capital position is strong and earnings growth is achieved in a sustainable manner MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  224. GROUP COMPLIANCE IN THE PAST YEAR , THE AMBANK GROUP COMPLIANCE DEPARTMENT HAS EMBARKED ON A JOURNEY OF TRANSFORMATION TO ENSURE THE FRANCHISE IS WELL EQUIPPED TO ADAPT AND ADJUST TO AN EVOLVING REGULATORY LANDSCAPE. THE HEIGHTENED SCRUTINY ON THE CULTURE OF COMPLIANCE OF FINANCIAL INSTITUTIONS REQUIRES A PARADIGM SHIFT TO EMBED COMPLIANCE WITHIN THE BUSINESS FUNCTIONS. The four-year transformational journey focuses on integrating the compliance function as a strategic element of the business, working in partnership, to operate within the framework prescribed by our regulators. As a priority, the function has been restructured, with the right subject matter expertise and skill sets. Reporting lines have been re-aligned to ensure independence. Further, measures have been taken to strengthen the key enablers for the function which includes: policies, procedures, training, technology and systems. Process People Technology Culture of Ethics & Compliance Training Governance Top Down Approach Bottom Up Approach • Compliance culture driven from the top • All levels throughout organisation take ownership and participate in ensuring adherence to compliance • Frequent communications from the top with regards to compliance • Adopt a mindset to ethics and compliance • On-going coaching on compliance from supervisors • KPIs & Targets alignment p. 222 p. 223 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  225. SHARIAH COMMITTEE REPORT Currently , the appointed Shariah Committee members are as follows: Introduction PURSUANT TO ISLAMIC FINANCIAL SERVICES ACT 2013 (“IFSA”) AND SHARIAH GOVERNANCE FRAMEWORK (“SGF”) ISSUED BY BANK NEGARA MALAYSIA (“BNM”), AMBANK ISLAMIC BERHAD (“THE BANK”) IS REQUIRED TO ESTABLISH A SHARIAH COMMITTEE FOR THE PURPOSE OF ADVISING THE BANK AND THE BANK’S BOARD OF DIRECTORS IN ENSURING THAT THE BANK’S BUSINESSES, AFFAIRS AND ACTIVITIES COMPLY WITH SHARIAH PRINCIPLES. In addition, AmInvestment Bank Berhad (“AmInvestment Bank”), an investment banking arm of the AmBank Group is currently leveraging on the AmBank Islamic Shariah Committee (“Shariah Committee”) to provide advice and guidance for Shariah matters pertaining to Islamic capital markets. Nonetheless, AmInvestment Bank may also engage other independent external Shariah adviser(s) as approved by Securities Commission Malaysia whenever necessary and will be on ad-hoc basis. Shariah Committee Members Shariah Committee comprises of five (5) eminent industry professionals and distinguished Shariah scholars who have the necessary Shariah certification required by BNM. All the members have vast knowledge and experience in Islamic banking and finance spanning from five (5) to more than ten (10) years’ experience and are also members of the Association of Shariah Advisers in Islamic Finance (ASAS). Three (3) of the members serve on the Shariah Committee for AmMetLife Takaful Berhad, a takaful solutions provider under the AmBank Group and two (2) of the members are also registered Shariah Advisers with the Securities Commission Malaysia. Having the Shariah Committee members on board with their proven credentials, and extensive experience in the Islamic banking and finance industry has empowered the Bank in its mission for continuous success and growth of business. It also enables the Bank to implement best practices in all business dealings, research & developments and operations ensuring all activities are in compliance with the Shariah principles. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 No. Name of Shariah Committee Member Nationality Status 1. Assistant Professor Dr. Tajul Aris Ahmad Bustami Malaysian Chairman 2. Professor Dr. Amir Husin Mohd Nor Malaysian Member 3. Associate Professor Datin Dr. Noor Naemah Abdul Rahman Malaysian Member 4. Associate Professor Dr. Adnan Yusoff Malaysian Member 5. Dr. Asmak Ab Rahman Malaysian Member Functions and Duties of The Shariah Committee The Shariah Committee is responsible and accountable for all its decisions, view and opinions related to Shariah matters. The main functions and duties of the Shariah Committee shall include, but are not limited to the following: (a) to advise the Bank’s Board of Directors and the Bank on Shariah matters to ensure the business operations of the Bank are in compliance with Shariah principles at all times; (b) to review and endorse the Shariah policies and procedures of the Bank and to ensure contents are in accordance to Shariah principles; (c) to review and approve relevant documentation in relation to the Bank’s products to ensure that the products are in compliance with Shariah principles; (d) to perform oversight on the work carried out by the Shariah Research and Advisory, and Shariah Review functions and to assess the work carried out by Group Internal Audit relating to the Shariah Audit function and the Shariah Risk Management Unit relating to Shariah Risk Management function. This is to ensure compliance with Shariah matters which form part of their duties in providing their assessment of Shariah compliance and assurance information in the annual report; (e) to provide assistance to related parties of the Bank such as its legal counsel, auditor or consultant on Shariah matters upon request; (f) to provide advice and guidance on management of business zakat fund, charity and other social program or activities; and (g) to oversee strategies and initiatives implemented by key organs carrying out the Shariah functions including the Shariah Research & Advisory, Shariah Review, Shariah Audit and Shariah Risk Management functions. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  226. SHARIAH COMMITTEE REPORT Shariah Oversight Committee Shariah Committee members also sit on the Shariah Oversight Committee , a subcommittee to the Shariah Committee. The Shariah Oversight Committee was established to assist the Shariah Committee in discharging its responsibilities relating to the oversight from Shariah perspectives of the Shariah Review function. In addition, the Shariah Oversight Committee is also responsible to assess the work related to Shariah Audit function and Shariah Risk Management function that was carried out by the Group Internal Audit relating and Shariah Risk Management Unit respectively in order to ensure compliance with Shariah matters. The main functions and duties of Shariah Oversight Committee shall include, but are not limited to the following: (a) determine and confirm actual and potential Shariah non-compliance incidents and endorse corresponding rectifications plans; (b) recommend alternative ways to rectify issues found through Shariah Audit, Shariah Review and Shariah Risk Management activities and other sources; (c) provide advice on the recognition of income pursuant to Shariah noncompliance incidents and its disposal; and (d) recommend possible implementation methods to improve the Bank’s Shariah business activities in line with applicable statutes and guidelines/policies/ circulars issued by relevant regulatory bodies. Meetings and Engagement with Board of Directors A total of eight (8) Shariah Committee meetings were held throughout the financial year, which were mainly to discuss and deliberate on product proposals and issues. The Shariah Oversight Committee also convened five (5) times to discuss work carried out by Shariah Audit, Shariah Review and Shariah Risk Management and reported Shariah-related incidences. The attendance of the members for both meetings are as follows: Name of Shariah Committee Member Shariah Committee Shariah Oversight Committee Held Attended Held Attended Assistant Professor Dr. Tajul Aris Ahmad Bustami 8 8 5 5 Professor Dr. Amir Husin Mohd Nor 8 8 5 4 Associate Professor Datin Dr. Noor Naemah Abdul Rahman 8 8 5 5 Associate Professor Dr. Adnan Yusoff 8 6 5 4 Dr. Asmak Ab Rahman 8 8 5 5 p. 224 p. 225 AMMB Holdings Berhad (223035-V) Following an initiative for the Shariah Committee to be actively engaged with the Bank’s Board of Directors, the following actions were implemented: (a) two (2) sessions between the Shariah Committee and member(s) of the Board; (b) Shariah Committee member(s) attending meetings of Audit and Examination Committee of Directors; and (c) Board member(s) attending meetings of Shariah Committee and Shariah Oversight Committee. Main Activities The Shariah Committee discussed and deliberated on various Shariah principles and the contracts relating to the products and services as proposed by the Bank during the financial year. The Shariah Committee has also reviewed numerous legal documentations, Shariah policies and guides that were introduced by the Bank. Furthermore, Shariah advisory services were also provided to other aspects of the Bank activities, ranging from issues arising from Islamic banking operations to zakat distributions ensuring all decisions and actions are in compliance with applicable Shariah principles. Apart from that, the Shariah Committee, through the Shariah Oversight Committee discussed and deliberated on Shariah review and Shariah audit plans and audit reports prepared by Shariah Review and Group Internal Audit teams respectively. In matters relating to AmInvestment Bank, the Shariah Committee has deliberately reviewed a number of Sukuk structures and legal documentation of Sukuk issuance. Performance Assessment Shariah Committee’s performance assessment is conducted annually. The evaluation process are focused on competency, knowledge, contribution and overall effectiveness of the Shariah Committee members. The assessment are also aimed to identify relevant development areas or relevant exposure needed by the Shariah Committee members of the Bank. Continuous Training Programme As part of the Shariah Committee’s continuous development plan, the Bank has structured dedicated training programmes conducted by respected and wellexperienced trainers for the Shariah Committee. The training programmes that were planned and implemented during the financial year are as following: (a) Briefing on the Bank’s Base Rate by an internal subject matter expert held on 19 April 2016. (b) Fundamentals of Derivatives and Structured Products held on 19 September 2016, in collaboration with the International Shari’ah Research Academy for Islamic Finance (ISRA). Annual Report 2017 ambankgroup.com
  227. (c) Trade Finance Operations & Products held on 12 January 2017, in collaboration with ISRA. (d) Management: responsible to make reference to Shariah Committee or the external independent Shariah advisor and/or the Shariah Oversight Committee on Shariah matters and to take necessary measures for implementation. The Management is also responsible in setting the infrastructure and providing the environment and adequate resources to support the Shariah governance structure. This includes putting in place adequate systems and controls in order to ensure compliance with Shariah and to mitigate Shariah noncompliance risk. (e) Shariah Research & Advisory: responsible for providing day-to-day Shariah advisory on Islamic banking and finance, including Shariah legal aspects, conducting Shariah research, formulating Shariah policies and acting as the Secretariat to the Shariah Committee and the Shariah Oversight Committee. Besides the planned training programmes, the Shariah Committee members participated in various conferences and seminars as follows: (a) Global Islamic Finance Forum 2.0 held on 10-11 May 2016 at Sasana Kijang, BNM. (b) Muzakarah Cendekiawan Syariah Nusantara Ke-10 held on 1-2 June 2016 at Hotel Sama-Sama, Kuala Lumpur. (c) Muzakarah Ahli Majlis Penasihat Syariah Institusi Kewangan Di Malaysia Kali Ke-12 held on 21 July 2016 at Institut Latihan Islam Malaysia, Bangi, Selangor. (d) Ijtima’ ASAS Peringkat Kebangsaan held on 25 July 2016 at Lanai Kijang, BNM. (e) National Seminar on Abandoned Housing Projects: Causes & Solutions held on 7-8 September 2016 at International Islamic University Malaysia, Gombak, Selangor. (f) 13th Kuala Lumpur Islamic Finance Forum held on 21-22 November 2016 at Hotel Istana, Kuala Lumpur. (g) Muzakarah Penasihat Syariah Kewangan Islam 2016 held on 23 November 2016 at Hotel Istana, Kuala Lumpur. (h) Securities Commission’s Shariah Advisers’ Programme on Sukuk: Driving Growth Through Innovation held on 24 November 2016 at Securities Commission Malaysia, Bukit Kiara. Shariah Governance Besides the Shariah Committee, the Bank is also required to establish a Shariah Governance structure to effectively manage Shariah compliance matters within the Bank. The Shariah Governance structure comprises the following: (a) Board of Directors: accountable and responsible for the overall oversight on the Shariah governance and Shariah compliance of the Bank. (b) Shariah Committee: responsible and accountable on matters related to Shariah. This includes advising the Board and Management on Shariah matters and endorsing and validating Islamic banking, finance and capital market products and services, Shariah policies and the relevant documentation in relation to the Bank’s Islamic finance and Islamic capital markets operations and business activities. (c) Shariah Oversight Committee: a sub-committee to the Shariah Committee that performs an oversight function on Islamic banking, finance and capital market products and services from the Shariah perspective. The Shariah Oversight Committee provides guidance and advice on matters pertaining to Shariah non-compliant incidences as well as treatment of Shariah noncompliant income (if any). Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Shariah Research & Advisory consists of four (4) functions: Shariah Secretariat & Coordination; Shariah Policy & Research; Shariah Advisory; and Shariah Legal. (f) Shariah Risk Management: a function to systematically identify, measure, monitor and control Shariah non-compliance risks to mitigate any possible non-compliance events. (g) Shariah Review: the objective of the Shariah review function is to provide reasonable self-assurance for the Bank in its daily activities and operations thus to add value and improve the degree of Shariah awareness and compliance. (h) Shariah Audit: a designated team within the Group Internal Audit Department is responsible for conducting independent assessments on the level of Shariah compliance of Islamic banking, finance and capital market products and services and operations through Shariah Audit function. The Shariah audit covers all activities particularly the operational components of the Bank that are subjected to the risk of Shariah non-compliance including but not limited to products, operational processes, the technology supporting the operations, the people involved in key areas of risk, documentation and contracts, policies and procedures and other activities that require adherence to Shariah principles. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  228. HIGHLIGHTS AND ACHIEVEMENTS 228 Calendar Of Events 228 Business Activities 233 Social And Sports Activities 234 Notable Achievements 236 Media Highlights
  230. CALENDAR OF EVENTS BUSINESS ACTIVITIES 9 January 2017 AmBank Group appointed as agent of Amanah Saham Nasional Berhad AmBank Group appointed as agent for Amanah Saham Nasional Berhad (ASNB). All ASNB unit trusts are now available through AmBank branches and distribution channels. 25 January 2017 AmInvestment Bank Receives Three Top Awards at the 10th Annual Alpha Southeast Asia Deal and Solution Awards AmInvestment Bank wins three top awards at the 10th Annual Alpha Southeast Asia Deal and Solution Awards, including best Wakalah Deal of the Year in Southeast Asia for Lebuhraya DUKE Fasa 3 Sdn Bhd’s RM3.64 billion Sukuk Wakalah. 1 March 2017 AmInvest’s AmDynamic Bond Honoured at Lipper Awards AmInvest wins the Best Bond Malaysian Ringgit – Malaysian Provident 10-year category at The Edge/ Thomson Reuters Lipper Fund Awards 2017. Its unit trust fund, AmDynamic Bond, clocked a return of around 93 percent since 2006, exceeding the peer average return of around 50 percent. 8 March 2017 Weststar’s Maxus G10 makes special appearance at Menara AmBank AmBank Group’s Chief Executive Officer, Dato’ Sulaiman Mohd Tahir test drives the Weststar Maxus G10. The prestige vehicle made a special appearance at Menara AmBank, and there were special discounts for AmBank Group customers and staff. 13 p. 228 April 2016 AmInvest Launches Global Dividend Fund AmInvest launches the Global Dividend Fund targeted at investors seeking regular income and longterm capital growth plus exposure to global equities. The fund is a collaboration with global asset manager, Fidelity International. p. 229 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  231. 3 May 2016 Tan Sri Azman Hashim receives Honorary Doctorate in Management from Universiti Sains Malaysia AmBank Group Chairman , Tan Sri Azman Hashim, receives an Honorary Doctorate in Management from Universiti Sains Malaysia. This was the fourth honorary doctorate conferred on Tan Sri Azman. 12 May 2017 ‘AmAssurance On Tour’ insurance truck campaign AmBank launches ‘AmAssurance On Tour’ insurance truck campaign. The truck stationed for a day in each of the 147 AmBank branches in peninsular Malaysia, in order to increase public awareness and knowledge on various AmAssurance products and services. 23 June 2016 AmBank teams up with Toyota and Samsung in Cards and Deposits Campaign AmBank teams up with Toyota and Samsung for a cards and deposits campaign. Customers who deposit funds in their AmBank accounts or spend with their AmBank credit cards stand a chance of winning one of the all-new 2016 Toyota Vellfires and one of 200 Samsung Galaxy S7 smart phones. 30 June 2016 AmBank Group wishes Selamat Hari Raya Aidilfitri to its customers The senior management team of AmBank Group, led by AmBank Group Chairman Tan Sri Azman Hashim, wishes AmBank Group customers Selamat Hari Raya Aidilfitri. 13 July 2016 The all new Proton Perdana test drive at Menara AmBank In conjunction with the launch of the all-new Proton Perdana, a motorcade of Proton Perdana sedan cars visits Menara AmBank. The cars were available to the public and members of staff for test drive. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  232. CALENDAR OF EVENTS BUSINESS ACTIVITIES 22 July 2016 Perodua Bezza Convoy 2016 Visits Menara AmBank A convoy of five Perodua Bezza sedans visits Menara AmBank to mark the launch of Perodua ’s first sedan model. The motorcade was flagged off by AmBank’s Group Chief Executive Officer Dato’ Sulaiman Mohd Tahir. Hajis Bin Sanep was the first customer to get AmBank financing approval for a new Perodua Bezza. 8 August 2016 AmBank Islamic and CGC signs Portfolio Guarantee -Further RM300 million allocated to finance high growth sectors AmBank Islamic and Credit Guarantee Corporation Malaysia Berhad (CGC) sign a RM300 million portfolio guarantee agreement to enhance Small Medium Enterprise (SME) financing in Malaysia. 9 August 2016 AmBank (M) Berhad appointed as New Distributor for Amanah Hartanah Bumiputera Fund AmBank is appointed as a new distributor for Malaysia’s first fixed price Shariah-compliant real estate backed unit trust fund, Amanah Hartanah Bumiputera Fund. 13 August 2016 The State Government of Johor Launches The Johor Affordable Home Financing Scheme with AmBank Islamic The Johor State Goverment and AmBank Islamic sign an agreement to offer Islamic home financing to those earning a monthly wage below RM5,000. The scheme, offering up to RM300 million in financing, is in line with the state’s aspirations for its people to own affordable homes. 23 September 2016 University Malaya Unveils Bangunan Azman Hashim His Royal Highness Sultan Nazrin Muizzuddin Shah, the Sultan of Perak Darul Ridzuan, who is also the Chancellor of University Malaya, unveils the new Bangunan Azman Hashim at University Malaya. AmBank Group Chairman Tan Sri Azman Hashim made a personal contribution of RM25 million via Yayasan Azman Hashim for the construction of the building. p. 230 p. 231 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  233. 13 October 2016 PTPTN Partners AmBank for Easier Payments with JomPAY AmBank and Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) sign an agreement with JomPAY to make it easier for borrowers to service their PTPTN loan repayments. 16 November 2016 AmBank Group launches New Branch in Kota Kinabalu, Sabah Datuk Tawfiq Abu Bakar Titingan, Minister of Youth and Sports, Sabah officially opens the AmBank Plaza Shell branch in Kota Kinabalu. The branch is a new model – one stop centre that caters to retail, SME and commercial customers. 14 December 2016 AmBank launches #JoyFortuneLove Credit Card Campaign AmBank launches the #JoyFortuneLove credit card campaign, where two cardholders stand a chance to win the Grand Prize of an Audi TT 2.0 TFSI. There are also 30 Samsung GALAXY S7 Edge phones as prizes. 19 December 2016 Sarawakian is AmBank Credit Card’s “Swipe and Spot the 8 to Win an all-new Toyota Vellfire” Campaign Grand Prize Winner Ling Siew Ching from Kuching, Sarawak was the Grand Prize winner of a Toyota Vellfire in the AmBank ‘Swipe and Spot the 8’ credit card campaign. The Mathematics Lecturer at UITM Sarawak has banked with AmBank since 2004. 22 December 2016 Lucky AmBank Credit Cardholder wins “Caltex: Fill, Swipe & Win” Campaign Grand Prize of RM50,000 Hairunazuan Bin Nordin from Johor receives the RM50,000 Grand Prize in our ‘Caltex: Fill, Swipe & Win’ Campaign. Hairunazuan has been an AmBank credit card holder since 2014. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  234. CALENDAR OF EVENTS BUSINESS ACTIVITIES 24 December 2016 AmInvestment Bank and AmInvest Win at The Asset Triple A Islamic Finance Awards AmInvestment Bank and AmInvest won three awards at The Asset Triple A Islamic Finance Awards 2016 which was held in Kuala Lumpur . AmInvest won the ‘Best Islamic Asset Management House of the Year, Malaysia’ while AmInvestment Bank won the ‘Best Local Currency Sukuk’ and ‘Best Loan Syndication’. 12 May 2017 AmInvestment Bank Wins Five RAM Awards AmInvestment Bank garnered a total of five awards at the 14th Annual RAM League Awards 2017. The RAM League Awards recognise accomplishment and leadership in the Malaysian bond and sukuk market. 22 May 2017 AmBank Wins Three Awards for Electronic Payments AmBank won three awards at the Malaysian e-Payments Excellence Awards, which recognise excellence, innovation and growth in electronic payments. The awards were for outstanding contributions to JomPAY and MyDebit and for top MyDebit acquirer. p. 232 p. 233 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  235. CALENDAR OF EVENTS SOCIAL AND SPORTS ACTIVITIES Kelab AmBank Group (KAG) is the Group’s sports and recreation club. KAG organises a combination of activities in support of the needy, poor and less fortunate and activities to encourage staff engagement. Highlights of the year included a Majlis Berbuka Puasa hosted by AmBank Group Chairman Tan Sri Azman Hashim for underprivileged children and a blood donation drive amongst staff. In addition, there was a KAG outing to Zoo Negara to visit the dromedary camels that are sponsored by AmBank Group, and KAG hiking, paintballing, bowling and go-karting activities. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  236. NOTABLE ACHIEVEMENTS AmBank Group Alpha Southeast Asia Malaysian e-Payments Excellence Awards (MEAA) 2017 1. Most Improved Investor Relations 2. Top 3 – Most Organised Investor Relations, Strongest Adherence to Corporate Governance and Most Consistent Dividend Policy 1. Outstanding Contribution to JomPAY 2. Regulatory Capital Deal of the Year AmInvestment Bank – Joint Lead Manager for Mumtaz RM300 million Subordinated Sukuk Murabahah 3. Commodity Murabahah Deal of the Year AmInvestment Bank – Joint Lead Arranger and Joint Lead Manager for Al Dzahab Assets RM339 million Sukuk Murabahah Malaysian e-Payments Excellence Awards (MEAA) 2017 1. MyDebit Top Acquirer (First Place) 2. Outstanding Contribution to MyDebit NACRA Certificate of Merit of the NACRA 2016 Annual Report Awards p. 234 p. 235 AmInvestment Bank 1. Islamic Issue of the Year AmInvestment Bank – Principal Adviser, Lead Arranger and Joint Lead Manager for Lebuhraya DUKE Fasa 3 Sdn Bhd’s RM3.64 billion Sukuk Wakalah AMMB Holdings Berhad (223035-V) Annual Report 2017 Global Market 1. ambankgroup.com Tenth Annual Alpha Southeast Asia Best Financial Institution Awards
  237. Corporate Finance 5 . Most Innovative Fund Manager 2016 AmBank 1. 6. Best ETF Provider, Malaysia VISA Malaysia Bank Awards 7. AmDynamic Bond (Bond – Foreign Exposed) 1. 8. AmCommodities Equity (Sector Equity – Global Resources) Issuing Awards: Highest Payment Volume Growth – Consumer Credit 2. 9. AmIncome Plus (Bond – Malaysia, Short Duration) Payment Volume Growth Awards: Highest Payment Volume Growth – Visa Signature cards 3. Highest Card Growth – Consumer Credit Secondary Deal of the Year AmInvestment Bank for Malaysia Building Society’s RM1.71 billion Rights issue AmInvest 1. Best Malaysia Bond Fund – AmDynamic Bond 2. Best Bond Ringgit – Malaysia Provident, 10 years – AmDynamic Bond 10. Best Investment Management Company, Malaysia, 2016 3. Best Pension Fund Manager, Malaysia 4. ETF Manager of the Year, Malaysia 11. Best Asset Management House of the Year, Malaysia (2 consecutive years) Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  238. MEDIA HIGHLIGHTS p . 236 p. 237 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  239. Overview Key Highlights Key Messages About Us Leadership p . 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  240. STAKEHOLDERS INFORMATION 240 Analysis of Shareholdings 244 Top 10 Properties of AmBank Group 245 Notice of Twenty-Sixth Annual General Meeting 252 Statement Accompanying Notice Of Annual General Meeting 253 Administrative Details For The 26th Annual General Meeting 255 Group Corporate Directory 263 Group Branch Network 265 Form of Proxy
  242. ANALYSIS OF SHAREHOLDINGS AS AT 31 MAY 2017 Issued and Paid-up Share Capital Class of Share Voting Rights : RM3,014,184,844 comprising 3,014,184,844 Ordinary Shares : Ordinary Share : 1 vote per ordinary share on a poll Distribution of Shareholders based on size of Shareholdings Size of Shareholdings No. of Shareholders % of Shareholders No. of Shares % of Shareholdings 1,752 5,212 9,784 2,529 735 3 8.75 26.04 48.88 12.64 3.67 0.01 49,765 3,642,860 38,169,043 70,618,449 1,677,185,132 1,224,519,595 0.00 0.12 1.27 2.34 55.64 40.63 20,015 100.00 3,014,184,844 100.00 Less than 100 100 – 1,000 1,001 – 10,000 10,001 – 100,000 100,001 to less than 5% of the issued shares 5% and above of issued shares Total Substantial Shareholders based on Register of Substantial Shareholders No. of Shares Substantial Shareholder Tan Sri Azman Hashim ANZ Funds Pty Limited Australia and New Zealand Banking Group Limited Amcorp Group Berhad Clear Goal Sdn Bhd Employees Provident Funds Board Direct Interest % Indirect Interest % – 716,841,483 – 391,069,003 – 286,970,363 – 23.78 – 12.97 – 9.52 391,069,0031 – 716,841,4832 – 391,069,0031 – 12.97 – 23.78 – 12.97 – Notes: 1 Deemed interested by virtue of Section 8(4) of the Companies Act, 2016 held through Amcorp Group Berhad. 2 Deemed interested by virtue of Section 8(4) of the Companies Act, 2016 held through ANZ Funds Pty Limited. p. 240 p. 241 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  243. Directors and Chief Executive ’s Interest in the Company and Its Subsidiaries No. of Shares Name of Director Direct Interest % Indirect Interest % Tan Sri Azman Hashim Graham Kennedy Hodges Suzette Margaret Corr Soo Kim Wai Dato’ Rohana binti Tan Sri Mahmood Dato’ Seri Ahmad Johan bin Mohammad Raslan Voon Seng Chuan Datuk Shireen Ann Zaharah binti Muhiudeen Seow Yoo Lin – – – – – – – – – – – – – – – – – – 391,069,0031 – – – – – – – – 12.97 – – – – – – – – Group Chief Executive Officer2 Dato’ Sulaiman bin Mohd Tahir - - - - Note: 1 Deemed interested by virtue of Section 8(4) of the Companies Act, 2016 held through Amcorp Group Berhad. Tan Sri Azman Hashim, by virtue of his interest in the shares of AMMB Holdings Berhad (‘AMMB’), is also deemed to have an interest in the shares of the subsidiaries of AMMB to the extent that AMMB has an interest. 2 The Group Chief Executive Officer is not a director of the Company. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  244. ANALYSIS OF SHAREHOLDINGS AS AT 31 MAY 2017 30 Largest Shareholders (Without aggregating the securities from different securities accounts belonging to the same Depositor) Name No. of Shares % 1. ANZ Funds Pty Limited 716,841,483 23.78 2. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 277,977,663 9.22 3. CIMB Group Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Amcorp Group Berhad (CB4-AMCORPCAPLL) 229,700,449 7.62 4. CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Bank Berhad (LBNOFFSHORE-EDG) 115,423,652 3.83 5. Kumpulan Wang Persaraan (Diperbadankan) 91,792,100 3.05 6. Amcorp Group Berhad 82,668,554 2.74 7. AmanahRaya Trustees Berhad Amanah Saham Wawasan 2020 65,174,200 2.16 8. AmanahRaya Trustees Berhad Amanah Saham Bumiputera 54,350,000 1.80 9. Cartaban Nominees (Asing) Sdn Bhd Exempt An for State Street Bank & Trust Company (WEST CLTOD67) 51,159,119 1.70 10. HSBC Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Amcorp Group Berhad 44,200,000 1.47 11. HSBC Nominees (Asing) Sdn Bhd BBH and Co Boston for Vanguard Emerging Markets Stock Index Fund 35,862,258 1.19 12. AmanahRaya Trustees Berhad Amanah Saham Malaysia 35,539,400 1.18 13. Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 1) 34,162,500 1.13 14. Citigroup Nominees (Tempatan) Sdn Bhd Exempt An for AIA Bhd 27,439,818 0.91 15. Scotia Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Amcorp Group Berhad 26,750,000 0.89 16. AmanahRaya Trustees Berhad AS 1Malaysia 26,100,000 0.87 17. Cartaban Nominees (Tempatan) Sdn Bhd PAMB for Prulink Equity Fund 24,729,000 0.82 p. 242 p. 243 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  245. Name No . of Shares % 18. DB (Malaysia) Nominee (Asing) Sdn Bhd BNYM SA/NV for Asian Dragon Fund (Blackrock GBL F) 24,588,200 0.82 19. Citigroup Nominees (Asing) Sdn Bhd CBNY for Dimensional Emerging Markets Value Fund 24,531,962 0.81 20. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad for Public Regular Savings Fund (N14011940100) 24,484,400 0.81 21. HSBC Nominees (Asing) Sdn Bhd Exempt An for The Bank of New York Mellon (MELLON ACCT) 24,102,075 0.80 22. HSBC Nominees (Asing) Sdn Bhd JPMCB NA for Vanguard Total International Stock Index Fund 24,010,300 0.80 23. Cartaban Nominees (Asing) Sdn Bhd GIC Private Limited for Government of Singapore (C) 23,029,341 0.76 24. HSBC Nominees (Asing) Sdn Bhd TNTC for Mondrian Emerging Markets Equity Fund L.P. 23,015,600 0.76 25. Citigroup Nominees (Asing) Sdn Bhd Exempt An for Citibank New York (NORGES Bank 9) 21,445,297 0.71 26. HSBC Nominees (Asing) Sdn Bhd TNTC for Mondrian Large Cap Concentrated Emerging Markets Equity Fund, L.P. 16,884,600 0.56 27. Pertubuhan Keselamatan Sosial 15,771,130 0.52 28. CIMB Group Nominees (Tempatan) Sdn Bhd Yayasan Hasanah (AUR-VCAM) 14,780,700 0.49 29. DB (Malaysia) Nominee (Asing) Sdn Bhd SSBT Fund TC3H for California State Teachers Retirement System 13,701,300 0.45 30. Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board (CIMB PRIN) 13,398,900 0.44 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  246. TOP 10 PROPERTIES OF AMBANK GROUP As at 31 March 2017 The top ten properties (excluding those classified under Assets held for sale) owned by the Group are as follows: Location Description Age of Property Tenure Net Book Value (RM’000) Built-Up Area (Sq. Ft.) Date of Acquisition Wisma AmBank 113, Jalan Pudu 55100 Kuala Lumpur One unit of twelve-storey office building for operations and branch premises 31 years Freehold 14,137.68 55,700 4 Nov 1991 Damansara Fairway 3 6C, Persiaran Tropicana Tropicana Golf & Country Resort 47410 Petaling Jaya One unit of thirteen-storey office building for operations 26 years Leasehold Term: 99 years Expiry: 25 Oct 2090 13,800.43 76,120 13 Oct 2000 257, Jalan Haji Taha 93400 Kuching Seven-storey office building for branch premises and rental 18 years Leasehold Term: 855 years Expiry: Jul 2792 9,470.88 51,906 31 Dec 1994 8th & 9th Floor Menara AmMetLife 1, Jalan Lumut 50400 Kuala Lumpur Office space for operations 24 years Freehold 5,387.75 26,414 18 May 1994 85, 87, 89 , 107, 109 & 111 Jalan 3/93, Taman Miharja 55200 Kuala Lumpur Six units of three-storey shoplots for rental purposes 27 years Leasehold Term: 99 years Expiry: 11 Aug 2086 1,904.38 30,528 9 Mar 1992 19-01 to 19-04 & 20-01 to 20-04, Susur 4 Jalan Tun Abdul Razak 80100 Johor Bahru Two units of four-storey shop offices with mezzanine for operations 13 years Leasehold Term: 99 years Expiry: 29 Sep 2096 1,662.82 10,587 13 Oct 1998 2 & 4, Jalan 23/70A Desa Sri Hartamas 55048 Kuala Lumpur Two units of four-storey shoplots for rental purposes 18 years Freehold 1,590.21 13,504 23 Apr 1998 12, 12a & 12b Jalan Padi Satu Bandar Baru Uda 81200 Johor Bahru One unit of three-storey shopoffice for operations 24 years Freehold 1,540.93 9,363 21 Feb 2000 35 & 36 - Phase 1 Prai Business Point 322 Prai Perdana 12000 Seberang Prai Two units of vacant three-storey shopoffices 17 years Freehold 1,196.23 10,307 28 Nov 1998 22 & 23 Jalan Dato’ Lee Fong Yee 70000 Seremban Two units of four-storey shoplots for branch premises 32 years Freehold 924.43 22,000 15 Mar 1990 p. 244 p. 245 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  247. NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Twenty-Sixth (“26th”) Annual General Meeting (“AGM”) of AMMB Holdings Berhad (“AMMB” or “the Company”) will be held at the Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on Monday, 31 July 2017 at 10.00 a.m. for the following purposes: ITEM AGENDA RESOLUTION As Ordinary Business 1. To receive the Audited Financial Statements for the financial year ended 31 March 2017 and the Reports of the Directors and Auditors thereon. (Please refer to Note (i) of the Explanatory Notes) 2. To approve the payment of a final single-tier dividend of 12.6% for the financial year ended 31 March 2017. Resolution No. 1 3. To approve the payment of Directors’ fees and benefits of RM2,659,151 for the financial year ended 31 March 2017. Resolution No. 2 4. To approve the payment of benefits payable to the Directors (excluding Directors’ fees) up to an aggregate amount of RM2,626,000 from 1 April 2017 until the next AGM of the Company. Resolution No. 3 5. To re-elect the following Directors who retire by rotation pursuant to Article 89 of the Company’s Constitution: i. ii. iii. Suzette Margaret Corr Dato’ Rohana binti Tan Sri Mahmood Voon Seng Chuan Resolution No. 4 Resolution No. 5 Resolution No. 6 6. To re-appoint Tan Sri Azman Hashim as Director of the Company. Resolution No. 7 7. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to determine their remuneration. Resolution No. 8 As Special Business To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions: Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company Pursuant to the Company’s Executives’ Share Scheme 8. Resolution No. 9 “THAT pursuant to the Company’s Executives’ Share Scheme (“ESS”) as approved at the Extraordinary General Meeting of the Company held on 26 September 2008, the Directors of the Company be and are hereby authorised to allot and issue such number of new ordinary shares in the Company from time to time as may be required for the purpose of the ESS, provided that the total number of new and existing ordinary shares in the Company to be allotted and issued and/or transferred, as the case may be, under the ESS, shall not exceed ten percent (10%) in aggregate of the total number of issued shares of the Company at any point of time throughout the duration of the ESS.” Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  248. NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING ITEM AGENDA RESOLUTION 9 . Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company to Dato’ Sulaiman bin Mohd Tahir, the Group Chief Executive Officer of the Company Pursuant to the Company’s Executives’ Share Scheme Resolution No. 10 “THAT subject to the passing of Ordinary Resolution No. 9, the Directors of the Company be and are hereby authorised to allot and issue such number of new ordinary shares in the Company to Dato’ Sulaiman bin Mohd Tahir, the Group Chief Executive Officer of the Company, from time to time pursuant to the Executives’ Share Scheme as approved at the Extraordinary General Meeting of the Company held on 26 September 2008 and in accordance with the By-Laws as set out in Appendix I to the Circular to Shareholders dated 4 September 2008 and as amended on 28 June 2011.” 10. Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company for the Purpose of the Company’s Dividend Reinvestment Plan Resolution No. 11 “THAT the Directors of the Company be and are hereby authorised to allot and issue such number of new ordinary shares in the Company from time to time as may be required for the purpose of the Company’s Dividend Reinvestment Plan as approved at the Extraordinary General Meeting of the Company held on 2 September 2010, which gives the shareholders of the Company the option to elect to reinvest their cash dividend entitlements in new ordinary shares of the Company.” 11. Proposed Authority to Allot and Issue New Ordinary Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016 Resolution No. 12 “THAT subject to the approvals from the relevant authorities, where such approval is necessary, full authority be and is hereby given to the Board of Directors pursuant to Sections 75 and 76 of the Companies Act, 2016 to allot and issue new ordinary shares in the Company at any time upon such terms and conditions and for such purposes as the Directors, may, in their discretion, deem fit provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the total number of issued shares of the Company for the time being.” 12. Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Australia and New Zealand Banking Group Limited Group “THAT the shareholder mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with Australia and New Zealand Banking Group Limited and any of its subsidiaries and/or associated companies (“ANZ Group”) which are necessary for the day-to-day operations of the Company and/or its subsidiaries in the ordinary course of business on terms not more favourable to ANZ Group than those generally available to and/or from the public and which are not detrimental to the minority shareholders of the Company, particulars of which are set out in Part 2.2.1 of Section 2.2 of the Circular to Shareholders dated 30 June 2017 be hereby renewed and to continue in force until the conclusion of the next Annual General Meeting of the Company and that disclosure be made in the annual report of the Company of the aggregate value of such transactions conducted during the financial year pursuant to the shareholder mandate granted herein and THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary or in the interests of the Company and/or its subsidiaries and to give effect to the transactions contemplated and/or authorised by this resolution.” p. 246 p. 247 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com Resolution No. 13
  249. ITEM AGENDA RESOLUTION 13 . Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Amcorp Group Berhad Group Resolution No. 14 “THAT the shareholder mandate for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with Amcorp Group Berhad and any of its subsidiaries and/or associated companies (“Amcorp Group”) which are necessary for the day-to-day operations of the Company and/or of its subsidiaries in the ordinary course of business on terms not more favourable to Amcorp Group than those generally available to and/or from the public and which are not detrimental to the minority shareholders of the Company, particulars of which are set out in Part 2.2.2 of Section 2.2 of the Circular to Shareholders dated 30 June 2017 be hereby renewed and to continue in force until the conclusion of the next Annual General Meeting of the Company and that disclosure be made in the annual report of the Company of the aggregate value of such transactions conducted during the financial year pursuant to the shareholder mandate granted herein and THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary or in the interests of the Company and/or its subsidiaries and to give effect to the transactions contemplated and/or authorised by this resolution.” 14. Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Modular Techcorp Holdings Berhad Group “THAT approval be and is hereby given for the Company and/or its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with Modular Techcorp Holdings Berhad and any of its subsidiaries and/or associated companies (“Modular Group”) which are necessary for the day-to-day operations of the Company and/or its subsidiaries in the ordinary course of business on terms not more favourable to Modular Group than those generally available to and/or from the public and which are not detrimental to the minority shareholders of the Company, particulars of which are set out in Parts 2.2.3 of Section 2.2 of the Circular to Shareholders dated 30 June 2017 be hereby renewed and to continue in force until the conclusion of the next Annual General Meeting of the Company and that disclosure be made in the annual report of the Company of the aggregate value of such transactions conducted during the financial year pursuant to the shareholder mandate granted herein and THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary or in the interests of the Company and/or its subsidiaries and to give effect to the transactions contemplated and/or authorised by this resolution.” 15. To transact any other business of which due notice shall have been received. Resolution No. 15 FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this 26th AGM, the Company shall be requesting from Bursa Malaysia Depository Sdn. Bhd. in accordance with the provisions under Articles 66(1), 66(2) and 66(3) of the Company’s Constitution and Section 34(1) of the Securities Industry (Central Depositories) Act 1991 to issue a General Meeting Record of Depositors (“ROD”) as at 25 July 2017. Only a depositor whose name appears in the ROD as at 25 July 2017 shall be entitled to attend this 26th AGM or appoint a proxy(ies) to attend, speak and vote on his/her behalf. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  250. NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING Notice of Dividend Entitlement and Payment NOTICE IS HEREBY GIVEN THAT the final single-tier dividend of 12 .6% for the financial year ended 31 March 2017, if approved by the shareholders at the 26th AGM, will be paid on 22 August 2017 to shareholders whose names appear in the Record of Depositors on 8 August 2017. A depository shall qualify for entitlement to the dividend only in respect of: a. b. Shares transferred into the depositor’s securities account before 4.00 p.m on 8 August 2017 in respect of ordinary transfers; and Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. By Order of the Board Koid Phaik Gunn (MAICSA 7007433) Group Company Secretary Kuala Lumpur 30 June 2017 p. 248 p. 249 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  251. Notes : (A) Appointment of Proxy (1) A member of the Company entitled to attend and vote at the AGM is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. (2) A proxy need not be a member of the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the AGM shall have the same rights as the member to speak at the AGM. (3) Where a member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account. The appointments shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies. (4) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. The appointments shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies. (5) The instrument appointing a proxy in the case of an individual shall be signed by the appointor or of his attorney duly authorised in writing or, in the case of a corporation, the instrument appointing a proxy or proxies must be under seal or under the hand of an officer or attorney duly authorised. (6) The instrument appointing a proxy must be deposited at the office of the Company’s Share Registrar, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time appointed for holding the AGM or any adjournment thereof. (B) Explanatory Notes to the Agenda (i) The Audited Financial Statements are laid out in accordance with Section 340 (1)(a) of the Companies Act, 2016 for discussion only. They do not require shareholders’ approval and hence, item 1 of the Agenda will not be put forward for voting. (ii) Directors’ Remuneration Ordinary Resolution No. 2 Pursuant to Section 230(1) of the Companies Act, 2016 which came into force on 31 January 2017, shareholders’ approval is now required for Directors’ fees and benefits received from the Company. In view of the new requirements of the Companies Act 2016, the Company is seeking shareholders’ approval for the payment of Directors fees totaling RM1,928,356 for the financial year ended 31 March 2017 and benefits due to the directors for the period from 1 February 2017 to 31 March 2017 amounting to RM730,795. Details of the above are set out on pages from 195 to 196 of the Annual Report 2017. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  252. NOTICE OF TWENTY-SIXTH ANNUAL GENERAL MEETING Ordinary Resolution No . 3 The Company is also seeking shareholders’ approval for the payment of benefits up to an aggregate amount of RM2,626,000 from 1 April 2017 until the next AGM of the Company. The estimated amount payable to the Directors for the benefits is based on the assumption that the Company increase the Board composition from the current nine (9) members to eleven (11) members. The proposed payment of benefits comprise allowances payable to the Chairman and members of the Board and Board Committees, based on the following structure:Board Committee Allowance (per annum) Chairman Member Audit and Examination Committee RM25,000 RM20,000 Risk Management Committee of Directors RM25,000 RM20,000 Group Nomination & Remuneration Committee RM25,000 RM20,000 Group Information Technology Committee RM15,000 RM10,000 Governance Committee RM25,000 RM20,000 Other Allowances Ombudsman Allowance (per annum) RM25,000 – RM50,000 Chairman Allowance (per annum) RM1,440,000 Meeting Allowance (including Board and Board Committees meetings and meetings with Management Working Committee Group and Regulatory Authorities) RM1,000 per meeting (iii) Ordinary Resolution No. 7 – Re-appointment of Director Under the new Companies Act, 2016, the requirement to put forth re-appointment of Director of or over the age of 70 years had been abolished. At the 25th AGM held on 18 August 2016, AMMB had obtained a mandate from the shareholders for the re-appointment of Tan Sri Azman Hashim as a Director of the Company and for him to continue in office as a director until the conclusion of the next AGM of the Company. As the mandate from the shareholders would be expiring at the conclusion of the forthcoming 26th AGM, AMMB is requesting shareholders’ approval for the re-appointment of Tan Sri Azman Hashim as a Director of the Company. Going forward, Tan Sri Azman Hashim’s retirement at the AGM will be in accordance with Article 89 of the Company’s Constitution. p. 250 p. 251 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  253. (iv) Ordinary Resolutions No. 9 and 10 – Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company Pursuant to the Company’s Executives’ Share Scheme and Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company to Dato’ Sulaiman bin Mohd Tahir, the Group Chief Executive Officer of the Company Pursuant to the Company’s Executives’ Share Scheme Ordinary Resolutions No. 9 and 10, if passed, will empower the Directors of the Company to allot and issue new ordinary shares in the Company pursuant to the Company’s Executives’ Share Scheme and in accordance with the By-Laws as set out in Appendix I to the Circular to Shareholders dated 4 September 2008 and as amended on 28 June 2011. The authority conferred by such renewed mandate will be effective from the date of the forthcoming AGM and unless revoked or varied at a general meeting, will expire at the next AGM. (v) Ordinary Resolution No. 11 – Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company for the Purpose of the Company’s Dividend Reinvestment Plan Ordinary Resolution No. 11, if passed, will empower the Directors of the Company to issue new ordinary shares pursuant to the terms and conditions of the Company’s Dividend Reinvestment Plan (“DRP”) which are contained in the DRP Statement set out in Appendix I to the Circular to Shareholders dated 11 August 2010 (as may be amended in accordance with the provisions of the said DRP). The authority conferred by such renewed mandate will be effective from the date of the forthcoming AGM and unless revoked or varied at a general meeting, will expire at the next AGM. The Directors of the Company did not allot, or issue ordinary shares pursuant to the authority given by the shareholders at the previous AGM. (vi) Ordinary Resolution No. 12 – Proposed Authority to Allot and Issue New Ordinary Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016 Ordinary Resolution No. 12, if passed, will give the Directors of the Company, from the date of the forthcoming AGM, authority to allot and issue ordinary shares from the unissued share capital of the Company up to an aggregate amount not exceeding ten percent (10%) of the total number of issued shares of the Company for the time being, as and when the need or business opportunities arise which the Directors consider would be in the interest of the Company and/ or in connection with proposals previously approved by the shareholders for issuance of shares. This authority, unless revoked or varied at a general meeting, will expire at the next AGM. (vii) Ordinary Resolutions No. 13 to 15 – Proposed Shareholder Mandates for Recurrent Related Party Transactions of a Revenue or Trading Nature with Australia and New Zealand Banking Group Limited Group, Amcorp Group Berhad Group and Modular Techcorp Holdings Berhad Group The proposed Ordinary Resolutions No.13 to 15, if passed, will enable the Company and/or its subsidiaries (“the Group”) to enter into recurrent related party transactions, which are in the ordinary course of business and necessary for the Group’s day-to-day operation, subject to the transactions being on terms not more favourable to a related party than those generally available to and/or from the public and are not detrimental to the interests of minority shareholders. The Proposed Shareholder Mandates are intended to enhance the Group’s ability to pursue business opportunities, especially those which are time-sensitive in nature, and will eliminate the need for the Company to convene a separate general meeting on each occasion to seek shareholders’ prior approval for such recurrent related party transactions. This would reduce substantial administrative time and expenses associated with the convening of such meetings without compromising corporate objectives of the Group or affecting the business opportunities available to the Group. The Proposed Shareholder Mandates are subject to renewal on an annual basis. Further information on the Recurrent Related Party Transactions are set out in the Circular to Shareholders of the Company dated 30 June 2017 which is despatched together with the Company’s Annual Report 2017. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  254. STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) 1. Details of persons who are standing for election as Directors (excluding Directors standing for re-election) No individual is seeking election as a Director at the 26th AGM. 2. A statement relating to general mandate for issue of securities in accordance with Paragraph 6.03(3) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The proposed Ordinary Resolution No. 12 for the general mandate for issue of securities is a renewal mandate. As at the date of this Notice, no new share was issued pursuant to the said mandate granted to the Directors at the last Annual General Meeting held on 18 August 2016. Personal data privacy: By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof), and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty. p. 252 p. 253 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com
  255. ADMINISTRATIVE DETAILS FOR THE 26TH ANNUAL GENERAL MEETING Day /Date : Monday, 31 July 2017 Time : 10:00 a.m. Venue : Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia 1. REGISTRATION • • • • • 4. Registration will commence at 8:00 a.m. and shareholders/proxies are requested to be punctual. Please present your original identity card to the registration staff for verification purposes. No person will be allowed to register on behalf of another person even with the original identity card of the other person. Upon verification, you will be given an identification wristband and you will only be allowed to enter the meeting hall if you are wearing the identification wristband. There will be no replacement in the event you lose or misplace the identification wristband. After registration, please proceed to the Ground floor to redeem your set meal. • • • • 5. 2. • Please proceed to the Registration Help Desk for any clarification or enquiry. The Registration Help Desk will also handle revocation of proxy’s appointment, i.e. in the event you have submitted your Form of Proxy prior to the meeting and subsequently decided to attend the meeting in person. • • 6. 3. • • • • • Coffee/Tea and cookies will be available from 8.00 a.m. to 9:30 a.m. Each shareholder who attends the meeting will be entitled to one (1) meal coupon upon registration, to be exchanged for a takeaway set meal. If you are attending the meeting as a shareholder as well as a proxy, you will be entitled to one (1) meal coupon. Proxy/corporate representative will be entitled to only one (1) meal coupon regardless of the number of proxies held. In the case where two (2) proxies are appointed, the proxy who redeems the meal coupon first will be entitled for the takeaway set meal. There will be no replacement in the event you lose/misplace your meal coupon. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 • • 7. The voting for the AGM will be conducted via e-polling at Ballroom 1. Symphony Share Registrars Sdn Bhd is appointed as the Poll Administrator to conduct the polling process. An independent Scrutineer will verify and validate the results of the poll. Please follow the instructions given for the e-polling process. MEETING HALL • FOOD & BEVERAGE Each shareholder who attends the meeting will be entitled to one (1) gift coupon upon registration, to be exchanged for a door gift. If you are attending the meeting as a shareholder as well as a proxy, you will be entitled to two (2) gift coupons. Proxy/corporate representative will be entitled to only one (1) gift coupon regardless of the number of proxies held. In the case where two (2) proxies are appointed, the proxy who redeems the gift coupon first will be entitled to the door gift. There will be no replacement in the event you lose/misplace your gift coupon. VOTING PROCEDURE • • HELP DESK • DOOR GIFT All shareholders/proxies will be allowed to enter the Grand Ballroom from 9.30 a.m. onwards. All shareholders/proxies are encouraged to be seated at least ten (10) minutes before the commencement of the AGM. Please ensure that all your mobile devices (i.e. phones/other sound emitting devices) are switched off or put on silent mode during the entire proceeding of the AGM. ANNUAL REPORT 2017 • • The Annual Report 2017 will be available on the Company’s website at ambankgroup.com The Annual Report 2017 is also available on the website of Bursa Malaysia Securities Berhad at bursamalaysia.com under Company Announcements of AMMB Holdings Berhad. MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  256. ADMINISTRATIVE DETAILS FOR THE TH 26 ANNUAL GENERAL MEETING 8 . PARKING • 9. Indoor parking is freely available at Sime Darby Convention Centre (subject to availability). FIRST AID • An ambulance is on standby for any medical emergency. Please refer to the Help Desk/First Aiders should any assistance be required. 10. PERSONAL BELONGINGS • Please take care of your personal belongings. The organiser will not be held responsible for any item that has gone missing. 11. LOCATION MAP TO SIME DARBY CONVENTION CENTRE Jal a Sime Darby Convention Centre 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia n GPS Coordinates : N3 08.297 E101 38.916 kit Bu ra Kia SRI HARTAMAS Bukit Kiara Equestrian CLub BUKIT DAMANSARA Securities Commision INTAN Tournament Players Club Kuala Lumpur (TPCKL) m fro (formerly known as KLGCC) SIME DARBY CONVENTION CENTRE Jalan Da ara mans Eastin Hotel PETALING JAYA p. 254 p. 255 AMMB Holdings Berhad (223035-V) KUALA LUMPUR CITY CENTRE nsara ama D r a nd Ba BANGSAR Parlimen Mid Valley Ke ri k Lin hi nc From Damansara Utama/ TTDI sat Pu ta Du an Jal National Science Centre BUKIT KIARA Menara Telekom ay ighw H l a er Fed Angkasapuri Annual Report 2017 ambankgroup.com Istana Negara
  257. GROUP CORPORATE DIRECTORY Correspondence Address : P. O. Box 10233, 50708 Kuala Lumpur Tel: 03-2036 2633 Fax: 03-2078 2842 (General), 03-2032 1914 (Group Company Secretary) Website: ambankgroup.com AMMB HOLDINGS BERHAD 22nd Floor, Bangunan AmBank Group No. 55, Jalan Raja Chulan 50200 Kuala Lumpur PREFERRED BRANCH CENTRAL REGION Taman Connaught No. 110 & 112, Jalan Cerdas Taman Connaught Cheras 56000 Kuala Lumpur ABB : 5290 & 5363 GL : 03-9101 4855/03-9101 7562/ 03-9102 4292 Fax : 03-9100 1271 Taman Maluri No. 1 Jalan Jejaka 2 Taman Maluri Off Jalan Cheras 55100 Kuala Lumpur ABB : 5291 & 5364 GL : 03-9285 5266/03-9282 2917/ 03-9284 5428 Fax : 03-9282 6261 Sri Petaling No. 18 & 20, Jalan Raden Tengah Sri Petaling 57000 Kuala Lumpur ABB : 5284 GL : 03-9059 4152/03-9059 4462/ 03-9059 5458 Fax : 03-9056 2512 Puchong Ground Floor No. 14A & 15A Jalan TK1/11A Taman Kinrara Seksyen 1 Batu 7 1/2 Jalan Puchong 47100 Puchong Selangor ABB : 5645 & 5646 GL : 03-8075 4461/03-8075 4680/ 03-8075 2478 Fax : 03-8070 3336 Bangsar Baru No. 45 & 47, Jalan Telawi Tiga Bangsar Baru 59100 Kuala Lumpur ABB : 5623 & 5624 CC : 03-2178 8888 Fax : 03-2282 8741 Kepong Baru 61 Jalan Ambong 2 Kepong Baru 52100 Kuala Lumpur ABB : 5634 GL : 03-6251 3322/03-6251 3355 Fax : 03-6258 4146 Petaling Jaya – SS2 No. 30 & 32, Jalan SS2/61 47300 Petaling Jaya Selangor ABB : 5640, 5641 & 5407 CC : 03-2178 8888 Fax : 03-7874 2517 Rawang Country Homes No. 51, 53 & 55, Jalan Pusat BCH 1A Bandar Country Homes 48000 Rawang, Selangor ABB : 5648 GL : 03-6092 5732/03-6092 5731/ 03-6092 5730 Fax : 03-6092 5735 Klang – PSI Wisma Sh Ng No. 42-44 Persiaran Sultan Ibrahim 41300 Klang Selangor ABB : 5673 GL : 03-3341 3252/03-3342 6010/ 03-3343 7949 Fax : 03-3344 3744 Port Klang-Wisma Palmbase 2998G Wisma Palmbase Persiaran Raja Muda Musa 41100 Port Klang Selangor ABB : 5688 & 5316 GL : 03-3371 7672/03-3371 7697/ 03-3371 7698 Fax : 03-3371 8749 Setapak No. 16, Jalan 3/50C Taman Setapak Indah Jaya Off Jalan Genting Kelang 53300 Kuala Lumpur ABB : 5285 GL : 03-4023 6381/03-4023 6410 Fax : 03-4023 6551 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Bandar Baru Rawang No. 13 & 14, Jalan Ipoh Batu 18, Bandar Baru Rawang 48000 Rawang Selangor ABB : 5405 GL : 03-6091 6835/03-6091 6837/ 03-6093 1609 Fax : 03-6091 8612 NORTHERN REGION Bagan Ajam Lot 7174, Ground, 1st & 2nd Floor Jalan Bagan Ajam 13000 Butterworth Penang DL : 04-331 9005 GL : 04-331 9020/04-331 9080 Fax : 04-331 9024 (OPS)/04-324 2034 (HP) Pulau Tikus Ground & Mezzanie Floor No. 368-1-16 & 368-1-17 Belissa Row, Jalan Burmah 10350 Pulau Tikus Penang ABB : 5584 & 5585 GL : 04-229 8942/04-229 8943/ 04-229 8944 Fax : 04-229 8945 Bayan Baru 56 & 58, Jalan Mahsuri Bandar Bayan Baru 11909 Bayan Baru Penang ABB : 5573 & 5378 GL : 04-644 8142/04-644 8149 Fax : 04-644 8163 Sungai Bakap No. 1388 & 1389 Jalan Sungai Bakap Taman Sungai Bakap Permai 14200 Sungai Jawi Penang ABB : 5102 & 5379 GL : 04-582 1296/04-582 4579/ 04-582 2507/04-582 2368 Fax : 04-582 5827 Ayer Itam – Jln Paya Terubong No. 135-J & 135-K Jalan Paya Terubong 11500 Ayer Hitam Penang ABB : 5570 GL : 04-828 8566/04-826 3015/ 04-827 0154 Fax : 04-829 1414 Teluk Intan No. 1049 Jalan Mahkota 36000 Teluk Intan Perak ABB : 5119 & 5302 GL : 05-621 1795/05-622 1102 Fax : 05-621 2120/05-622 2721 Kampar 50, Jalan Balai 31900 Kampar Perak ABB : 5613 & 5305 GL : 05-465 1964/05-466 5657 Fax : 05-465 1534 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  258. GROUP CORPORATE DIRECTORY Batu Gajah 19 , Jalan Kemajuan 31000 Batu Gajah Perak ABB : 5120 & 5304 GL : 05-366 1372/05-366 1442 Fax : 05-366 5009 Sitiawan 23 & 24 Taman Setia Jalan Raja Omar 32000 Sitiawan Perak ABB : 5598 & 5599 GL : 05-691 7645/05-691 2496/ 05-691 2484 Fax : 05-691 6935 Alor Setar No. 1567, Wisma Landag 05000 Alor Setar Kedah ABB : 5556 GL : 04-730 1905/04-731 1984/ 04-733 3833/04-734 4389/ 04-734 0659/04-733 2212 Fax : 04-731 3901 (OPS)/04-731 7638 (HP) Telex: MA46010 Sungai Petani No. 24-H & 24-J, Jalan Kampung Baru 08000 Sungai Petani Kedah ABB : 5568, 5569 & 5377 DL : 04-422 9095 GL : 04-422 3611/04-422 3277/ 04-422 7980 Fax : 04-422 8191 (OPS)/04-421 9831 (HP) Kulim No. 171 & 172 Jalan Tunku Putra 09000 Kulim, Kedah ABB : 5580 & 5581 DL : 04-490 0163 GL : 04-491 3666/04-490 3667/ 04-490 3669/04-490 6838/ 04-491 3866 Fax : 04-490 0162 (OPS)/04-490 6993 (HP) Taiping 52-54 Jalan Taming Sari 34000 Taiping, Perak ABB : 5118 GL : 05-808 7788/05-808 3108 Fax : 05-807 2108 p. 256 p. 257 SOUTHERN REGION Pontian 663 & 664 Jalan Taib 82000 Pontian Johor ABB : 5278 & 5323 GL : 07-687 3171/07-687 3176/ 07-687 3169 Fax : 07-687 3067 Kluang 21, 22 & 23, Jalan Dato’ Teoh Siew Khor 86000 Kluang Johor ABB : 5693, 5694 & 5695 GL : 07-771 1948/07-772 3178/ 07-772 1089 Fax : 07-772 6268 Skudai 5 & 7 Jalan Nakhoda 1 Taman Ungku Tun Aminah 81300 Skudai Johor ABB : 5717 GL : 07-556 8031/07-556 6402/ 07-558 4771 Fax : 07-556 9121/07-558 1927 Batu Pahat – Jln Rugayah 178 Jalan Rugayah 83000 Batu Pahat Johor ABB : 5690, 5325 & 5390 GL : 07-431 9848/07-431 9846 Fax : 07-431 6214 Johor Bahru – Melodies Garden 77 & 79 Jalan Meranti Merah Melodies Garden 80250 Johor Bahru Johor ABB : 5710 GL : 07-334 1054/07-334 1061 Fax : 07-334 8800 Tampin 2430 Jalan Besar Pulau Sebang 73000 Tampin Negeri Sembilan ABB : 5684 GL : 06-441 1330/06-441 3301/ 06-443 4029 Fax : 06-441 4735 AMMB Holdings Berhad (223035-V) Port Dickson No. 1001 & 1002, Jalan Bandar 71000 Port Dickson Negeri Sembilan ABB : 5678, 5679 & 5385 GL : 06-646 1011/06-646 1012/ 06-646 1013 Fax : 06-647 4033 Segamat 1-2 Jalan Muhibbah Taman Utama 85000 Segamat Johor GL : 07-931 9050/07-931 9051/ 07-931 9052 Fax : 07-931 6159 Tangkak LC 285 Jalan Muar 84900 Tangkak Johor ABB : 5073 & 5328 GL : 06-978 1331/06-978 9519/ 06-978 3979 Fax : 06-978 2144 Mantin No. 48A, Jalan Besar Mantin, 71700 Mantin Negeri Sembilan ABB : 5091 & 5314 GL : 06-758 3630/06-758 3631/ 06-758 1240/06-758 2798 Fax : 06-758 2251 Rasah Jaya No. 3820 & 3821, Jalan RJ 6/8 Taman Rasah Jaya 70300 Seremban Negeri Sembilan ABB : 5094 GL : 06-632 8463/06-632 8420 Fax : 06-632 8382 Seremban – Jln DLFY 22 & 23 Jalan Dato’ Lee Fong Yee 70000 Seremban Negeri Sembilan ABB : 5089 & 5317 GL : 06-762 4463/06-763 5201 Fax : 06-763 5905 Annual Report 2017 ambankgroup.com SARAWAK Sibu – Jln Pedada No. 14-15, Ground Floor Pusat Pedada, Jalan Pedada 96000 Sibu Sarawak ABB : 5149 & 5342 GL : 084-337 791/084-339 105 Fax : 084-337 736 SABAH Sandakan Lot 32-34, Blok HS-3 Sandakan Harbour Square Phase 2 Jalan Pryer 90000 Sandakan Sabah ABB : 5152 & 5345 GL : 089-21 5322/089-21 2627 Fax : 089-27 3666 EAST COAST REGION Kuantan – Jln Beserah A-3786 Jalan Beserah 25300 Kuantan Pahang ABB : 5045, 5732, 5733 & 5737 GL : 09-560 1818/09-560 1830/ 09-567 8368 Fax : 09-566 5776/09-567 0695 Mentakab 28 Jalan Zabidin 28407 Mentakab Pahang ABB : 5039, 5332 & 5397 GL : 09-277 2260/09-277 1196/ 09-277 7962 Fax : 09-277 5427 FLAGSHIP CENTRAL REGION Jln Yap Kwan Seng Level 1, Bangunan AmBank No. 8 Jalan Yap Kwan Seng 50450 Kuala Lumpur ABB : 5280 GL : 03-2167 6202 DL : 03-2167 6229/03-2167 3657 Fax : 03-2162 1606
  259. Jln Raja Chulan Gr . Floor Bangunan AmBank Group 55 Jalan Raja Chulan 50200 Kuala Lumpur ABB : 5633 & 5350 GL : 03-2078 2100/03-2078 2166/ 03-2078 2177/03-2078 1960 Fax : 03-2032 3935 NORTHERN REGION Penang – Liang Court Ground & Mezzanine Floor Menara Liang Court No. 37 Jalan Sultan Ahmad Shah 10050 Penang ABB : 5897 DL : 04-228 2491 GL : 04-226 3939 Fax : 04-226 1313 Telex : MA 40679 SOUTHERN REGION Johor Bahru – Metropolis Tower Ground & Mezzanine Floor Metropolis Tower Jalan Dato’ Abdullah Tahir 80300 Johor Bahru ABB : 5909 GL : 07-335 0600/07-335 0695/ 07-335 0696 Fax : 07-335 0469 Kuching – Jln Abell 166 & 168 Jalan Abell 93100 Kuching Sarawak ABB : 5777, 5783 & 5402 GL : 082-24 4608/082-24 4604 Fax : 082-23 2023 SABAH KK – Sagunting G1-G4, UniAsia Building No. 1 Jalan Sagunting 88816 Kota Kinabalu Sabah ABB : 5437 GL : 088-28 0101/088-28 0103 Fax : 088-24 8967/28 1880 RETAIL MASS CENTRAL REGION Bandar Sri Permaisuri 79 & 81 Dataran Dwi Tasik Jalan Dwi Tasik 1 Bandar Sri Permaisuri 56000 Kuala Lumpur ABB : 5008 GL : 03-9172 4934/03-9172 6414 Fax : 03-9172 4803 Pudu – Jln Pasar No. 48 Jalan Pasar Off Jalan Pudu 55100 Kuala Lumpur ABB : 5697 & 5352 GL : 03-2141 3635/03-2141 3617/ 03-2141 3634 Fax : 03-2144 0313 Berjaya Times Square No. G 52, Ground Floor Berjaya Times Square 1, Jalan Imbi 55100 Kuala Lumpur ABB : 03-2141 8003 Fax : 03-2141 2413 OUG No. 24 & 26, Jalan Hujan Rahmat 2 Overseas Union Garden 58200 Kuala Lumpur ABB : 5638 & 5639 GL : 03-7784 7035/03-7784 7036/ 03-7784 7038 Fax : 03-7784 7041 Bandar Puteri Puchong Ground Floor, No. 4 & 6, Jalan Puteri 1/1 Bandar Puteri 47100 Puchong Selangor CC : 03-2178 8888 Fax : 03-8060 6532 Jalan Klang Lama No. 14332 & 14333 Batu 4, Jalan Klang Lama 58100 Kuala Lumpur GL : 03-7980 8069/03-7980 8079/ 03-7980 8704/03-7980 8714 Fax : 03-7980 7908 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Nu Sentral Lot No. 18A, Nu Sentral Mall Jalan Tun Sambathan, Brickfields 50470, Kuala Lumpur ABB : 5017 GL : 03-2272 1967/03-2272 1964/ 03-2272 1969 Fax : 03-2272 1970 Subang Jaya Lot No. A6 & A7 Jalan SS15/4D 47500 Subang Jaya Selangor ABB : 5287 GL : 03-5636 5683/03-5636 4434/ 03-5636 5683 Fax : 03-5634 5088 Solaris Mont Kiara No. 7 & 9, Jalan Solaris 1 Solaris Mont’ Kiara 50480 Kuala Lumpur GL : 03-6203 7920/03-6203 7921 03-6203 7922 Fax : 03-6203 7930 Taman Tun Dr Ismail Ground Floor, No. 6-1-G Jalan Tun Mohd Fuad 3 Tamn Tun Dr Ismail 60000 Kuala Lumpur GL : 03-7940 0999/97 Fax : 03-7940 0998 Desa Sri Hartamas No. 2 & 4, Jalan23/70A 50480 Desa Sri Hartamas Kuala Lumpur GL : 03 6201 0054 Fax : 03 6201 0524 USJ Sentral No 5 & 7, Jln USJ Sentral 2 USJ Sentral, Subang Jaya 47620 Selangor GL : 03-8025 9390/03-8025 9379 Fax : 03-8025 9378 Petaling Jaya – New Town No. 6, Road 52/4 New Town Centre 46200 Petaling Jaya Selangor ABB : 5643 & 5644 GL : 03-7956 9077/03-7956 9103/ 03-7956 3748 Fax : 03-7959 3146 Dataran Mentari No. 20, Jalan PJS8/17 Dataran Mentari, Petaling Jaya Selangor GL : 03-5622 2451/03-5622 2452 Fax : 03-5622 2488 Amcorp Mall G-01, Block A, Menara PJ 18, Jalan Persiaran Barat 46050 Petaling Jaya Selangor ABB : 5618 & 5356 GL : 03-7954 1327/03-7954 4401 Fax : 03-7955 2575 Kelana Jaya Unit E102 & 103 Ground Floor, Kelana Park View No. 1, Jalan SS6/2 Kelana Jaya 47301 Petaling Jaya Selangor ABB : 5036 & 5351 GL : 03-7803 4574/03-7804 3508/ 03-7804 3509 Fax : 03-7803 4781 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Kota Damansara No. 23 & 25, Blok T Jalan PJU 5/3, Dataran Sunway Kota Damansara 47810 Petaling Jaya Selangor GL : 03-6141 7470/03-6141 7471/ 03-6141 7472/03-6141 7473 Fax : 03-6141 7466 Subang New Village No. 8A Lebuh Raya 8 Subang New Village 40150 Shah Alam Selangor ABB : 5288 GL : 03-7846 7053/03-7846 7052/ 03-7846 7371 Fax : 03-7846 7364 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  260. GROUP CORPORATE DIRECTORY Sungai Buloh No . 388 & 389 Jalan 1A/1 Bandar Baru Sungai Buloh 40160 Sungai Buloh Selangor ABB : 5289 GL : 03-6157 2249/03-6157 7500 Fax : 03-6156 6000 Bandar Bukit Tinggi Klang No. 37 & 39, Lorong Batu Nilam 1A Bandar Bukit Tingg 41200 Klang Selangor ABB : 5087 GL : 03-3324 6275/03-3324 6325/ 03-3324 5695 Fax : 03-3324 4043 Selayang No. 159 & 161, Jalan 2/3A Pusat Bandar Utara Off Km12, Jalan Ipoh 68100 Batu Caves Kuala Lumpur ABB : 5281, 5362 & 5408 GL : 03-6136 8560/03-6136 8561 Fax : 03-6136 8559 Shah Alam – Seksyen 15 47 & 49 Jalan Utas B/15B Section 15 40000 Shah Alam Selangor ABB : 5030 & 5387 GL : 03-5510 6991/03-5510 6995/ 03-5510 6960 Fax : 03-5510 6968/03-5511 5725 Kota Kemuning No. 1-1, Jalan Anggerik Vanilla BE31/BE Kota Kemuning, Seksyen 31 40460 Shah Alam, Selangor Tel : 03-5120 1186 Fax : 03-5120 1185 Sungai Besar 58E Jalan Mahsuri 45300 Sungai Besar Selangor ABB : 5028 & 5319 GL : 03-3224 1455/03-3224 2128/ 03-3224 1153 Fax : 03-3224 2177 Shah Alam – Seksyen 13 Grd Flr, Lot 13-1 & Lot 14-1 Laman Seri Business Park, Seksyen 13 40100 Shah Alam Selangor ABB : 5286 & 5354 GL : 03-5519 5702/03-5519 5691/ 03-5519 5645 Fax : 03-5510 2416 Klang – Bandar Puteri Ground Floor No. 1, Lorong Sanggul 1F Bandar Puteri Klang 41200 Klang Selangor GL : 03-5161 2653/03-5161 3324/ 03-5161 2853/03-5161 2969/ 03-5161 2976/03-5161 3104 Fax : 03-5161 3341 Setia Alam No. 15 & 17 Jalan Setia Prima RU13/R Setia Alam, Seksyen U13 40170 Shah Alam Selangor GL : 03-3343 7740/03-3343 7758/ 03-3343 7792 Fax : 03-3343 7794 p. 258 p. 259 Banting No. 139 & 141, Wisma Mutiara Jalan Sultan Abdul Samad 42700 Banting Selangor ABB : 5668, 5311 & 5384 GL : 03-3187 7462/03-3187 1330/ 03-3187 1919 Fax : 03-3187 0190 Ampang Point Lot 1A, Jalan Mamanda 7 Ampang Point, 4 1/2 Miles 68000 Ampang Selangor ABB : 5620 & 5357 GL : 03-4252 2630/03-4251 5761/ 03-4251 5814 Fax : 03-4252 4160 Jln Ipoh Batu 3 468-11A, Ground Floor Block C, Rivercity 3rd Mile, Jalan Ipoh 51200 Kuala Lumpur ABB : 5015 GL : 03-4042 3577/03-4042 7192/ 03-4043 7489 Fax : 03-4042 0237 Tanjung Karang Lot 132 132A & 133B Jalan Besar 45500 Tanjung Karang Selangor ABB : 5376 GL : 03-3269 5429/03-3269 8518 Fax : 03-3269 8997 Bandar Manjalara No. 2 & 2A, Wisma Manjalara Jalan 7A/62A, Bandar Manjalara 52200 Kuala Lumpur GL : 03-6274 1315/03-6274 1353/ 03-6274 1385 DL : 03-6274 0916 (Branch Manager) Fax : 03-6274 1232 Tanjung Malim 14 & 15 Jalan Douglas 35900 Tanjung Malim Perak ABB : 5043 GL : 05-459 6649/05-459 0825/ 05-459 8751 Fax : 05-459 6371 Wangsa Maju No. 54 & 56, Jalan 1/27F Pusat Bandar Wangsa Maju 53300 Kuala Lumpur ABB : 5295 & 5366 GL : 03-4149 5191/03-4149 5209 Fax : 03-4149 5242 AMMB Holdings Berhad (223035-V) Annual Report 2017 ambankgroup.com NORTHERN REGION Sungai Dua 1 & 3, Lorong Murni 6 Taman Desa Murni Sungai Dua 13800 Butterworth Penang ABB : 5586 & 5300 DL : 04-356 1326 GL : 04-356 6494/04-356 1328/ 04-356 7691/04-356 1353 Fax : 04-356 1159 Tanjung Bungah No. 2T & 2U, Jalan Lembah Permai 11200 Tanjung Bungah Penang ABB : 5587 & 5301 GL : 04-890 4502/04-890 4628/ 04-890 4658 Fax : 04-890 4690 Jelutong No. 546-548, Jalan Jelutong 11600 Jelutong Penang ABB : 5103 & 5297 DL : 04-659 2410 GL : 04-659 2396/04-657 2339/ 04-656 2755 Fax : 04-657 1644 Gelugor 723D & 723E, Ground Floor Vanda Business Park, Jalan Sungai Dua 11700 Penang ABB : 5574 & 5575 DL : 04-658 2650 GL : 04-658 2652/04-657 1284/ 04-657 2148 Fax : 04-657 2004 Balik Pulau No. 23 & 25, Jalan Sardon MK.6, Balik Pulau 11000 Penang ABB : 5571 & 5572 GL : 04-866 0863/04-866 8633 Fax : 04-866 8430
  261. Bercham No . 225, 227 & 229 Jalan Bercham 31400 Ipoh, Perak ABB : 5609 GL : 05-548 7109/05-545 9695/ 05-545 9697 Fax : 05-545 9702 Silibin No. 309 & 401, Jalan Silibin Taman Seri Tahan 30100 Ipoh Perak ABB : 5133 & 5307 GL : 05-527 7715/05-527 7716 Fax : 05-527 7719 Ayer Tawar 79, Jalan Besar 32400 Ayer Tawar Perak ABB : 5607 GL : 05-672 2201/05-672 2126 Fax : 05-672 2205 Langkap No. 1 & 2, Lorong 1 Projek Perumahan Awam Langkap 2 Pekan Langkap 36700 Langkap Perak ABB : 5615 GL : 05-659 1227/05-659 2735 Fax : 05-659 2888 Menglembu 5E & 5F, Jalan Tranchell 31450 Menglembu Perak ABB : 5129 & 5306 GL : 05-281 0402/05-281 0403/ 05-281 0400 Fax : 05-281 0408 Langkawi No. 20 & 22, Jalan Pandak Mayah 5 Pusat Bandar Kuah 07000 Langkawi Kedah ABB : 5582 & 5583 GL : 04-966 3130/04-966 3133/ 04-966 3134 Fax : 04-966 3129 Jitra Ground & 1st Floor No. 56 & 57, Pekan Jitra 3 06000 Jitra Kedah ABB : 5110 DL : 04-917 6725 GL : 04-917 2910/04-917 5555 Fax : 04-917 2911 Sungai Siput No. 181, Jalan Besar 31100 Sungai Siput Utara Perak ABB : 5132 GL : 05-597 2357/05-597 2355 Fax : 05-597 2359 SOUTHERN REGION Jasin No. 1800, Pusat Bandar Baru 77000 Jasin Melaka ABB : 5072 GL : 06-529 4433/06-529 4362/ 06-529 4361 Fax : 06-529 4363 Kangar No. 21 & 23, Jalan Bukit Lagi 01000 Kangar Perlis ABB : 5115 DL : 04-976 3388 GL : 04-976 9161/04-976 9177/ 04-976 9190/04-976 9157 Fax : 04-976 3201/04-976 4217 Sungai Petani – Lagenda Heights No 95, 96 & 97, Jalan Lagenda 1 Lagenda Heights 08000 Sungai Petani Kedah GL : 04-420 2382 Fax : 04-425 3587 Bagan Serai 244-D & 244E, Jalan Besar 34300 Bagan Serai Perak ABB : 5593 & 5594 GL : 05-721 5805/05-721 1808/ 05-721 1080 Fax : 05-721 1392 Key Highlights Key Messages About Us Leadership p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 Batu Pahat – Jln Rahmat No. 35, Jalan Rahmat 83000 Batu Pahat Johor ABB : 5911 GL : 07-432 4208/07-431 8218 Fax : 07-431 8961 Ulu Tiram No. 2, Jalan Badik 15 Taman Putra Wangsa 81800 Ulu Tiram Johor ABB : 5062 GL : 07-867 1005/07-867 1004/ 07-867 1002 Fax : 07-867 1006 Johor Bahru – Bukit Indah No. 28 & 30, Jalan Indah 16/5 Taman Bukit Indah 81200 Johor Bahru Johor GL : 07-235 4708/07-235 4722 Fax : 07-235 4834 Sungai Rengit No. 33, Jalan Haji Abu Bakar Pengerang 81620 Sungai Rengit Johor ABB : 5720 & 5721 GL : 07-826 3017/07-826 3013/ 07-826 3012/07-826 3011 Fax : 07-826 3359 Parit Buntar 2 & 4, Jalan Temenggong Taman Krian Tambahan 6 34200 Parit Buntar Perak ABB : 5198 & 5303 GL : 05-716 2366/05-716 1732 Fax : 05-716 4287 p. 1 - p. 7 Johor Jaya No. 1 Jalan Ros Merah 2/8 Taman Johor Jaya 81100 Johor Bahru Johor ABB : 5711, 5329 & 5391 GL : 07-355 7759/07-354 7033/ 07-354 6819 Fax : 07-356 2624 Pasir Gudang No. 1, Jalan Sejambak 14 Taman Bukit Dahlia, Pasir Gudang 81700 Johor ABB : 5712 & 5713 GL : 07-251 0164/07-251 0861/ 07-251 9588 Fax : 07-251 8908 Kuala Kangsar No. 5 & 6 Jalan Raja Chulan 33000 Kuala Kangsar Perak ABB : 5191 GL : 05-776 1186/05-776 1195 Fax : 05-776 4008 Overview Permas Jaya No. 13 & 15 Jalan Permas Jaya 10/1 Bandar Baru Permas Jaya 81750 Johor Bahru Johor ABB : 5714 & 5715 GL : 07-386 9842/07-387 8978 Fax : 07-387 7748 Kota Tinggi 8F-8G Jalan Lombong 81900 Kota Tinggi Johor ABB : 5696 & 5322 GL : 07-883 3233/07-883 4978/ 07-882 2095 Fax : 07-883 4507 Johor Bahru – Setia Tropika Lot No. G3, Tropika Welcome Center Jalan Setia Tropika 1/21 Taman Setia Tropika, Kempas 81200 Johor Bahru, Johor DL : 07-236 1124 Fax : 07-235 1127 Bahau No 122 & 123, Jalan Mewah 72100 Bahau Negeri Sembilan ABB : 5667, 5310 & 5383 GL : 06-455 3000/06-455 3001/ 06-455 3002 Fax : 06-454 3998 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  262. GROUP CORPORATE DIRECTORY Melaka – Melaka Raya 1 & 3, Jalan Melaka Raya 11 Taman Melaka Raya 75000, Melaka ABB : 5917, 5370 & 5410 GL : 06-282 5785/06-282 5897/ 06-282 5804 Fax : 06-282 5979 Ayer Keroh 28, Lorong Setia 1 Ayer Keroh Height 75450 Melaka ABB : 5099 & 5321 GL : 06-232 3866/06-232 3146/ 06-232 6221 Fax : 06-232 3466 Bandar Utama Cheng No. 53 & 55, Jalan Inang 3 Taman Paya Rumput Utama 76450 Melaka Tel : 06-335 6066 Fax : 06-335 8106 Yong Peng No. 100, Jalan Besar 83700 Yong Peng Johor ABB : 5078 GL : 07-467 4100/07-467 3766/ 07-467 3546/07-467 2499 Fax : 07-467 2668 Balakong S-13, Taman Indah, Batu 11 Cheras Balakong 43200 Selangor ABB : 5621 & 5349 GL : 03-9074 4120/03-9074 4078/ 03-9074 4013 Fax : 03-9074 4148 Bandar Baru Bangi 43-G-01 & 43A-G-01 Jln Medan PB 2B, Sek 9 Bandar Baru Bangi 43650 Bangi Selangor ABB : 5087 GL : 03-8925 1124/03-8925 3313/ 03-8926 9728 Fax : 03-8925 2005 p. 260 p. 261 Semenyih 43-G & 45-G, Grd Flr Jln Semenyih Sentral 1 43500 Semenyih Selangor ABB : 5088 & 5318 GL : 03-8723 9897/03-8723 7605/ 03-8723 9609 Fax : 03-8723 9571 Serian Ground Floor Lot 295 Serian Town District 94700 Serian Sarawak ABB : 5781 & 5782 GL : 082-875 158/082-875 177/ 084-875 178 Fax : 082-875 155 Seri Kembangan No. 7 & 9 Jalan Perusahaan 2 Off Jalan Kolej Taman Jinma 43300 Seri Kembangan Selangor ABB : 5283 & 5353 GL : 03-8942 5364/03-8942 5370 Fax : 03-8942 5373 Bau Ground Floor, Block B L 273, Jalan Market Bau Town District 94000 Bau, Sarawak ABB : 5147 & 5339 GL : 082-762 322/082-762 325/ 082-762 319 Fax : 082-762 320 Bandar Mahkota Cheras No. 36 & 38, Jalan Temenggung 1/9 Bandar Mahkota Cheras 43200 Cheras Selangor GL : 03-9010 5901/03-9010 5902/ 03-9010 5903 Fax : 03-9010 5896 Bintulu Lot 506 Right Wing Bangunan BDA Jalan Sommerville 97000 Bintulu Sarawak ABB : 5754 & 5755 GL : 086-33 4152/086-33 4153/ 086-33 4154 Fax : 086-31 1400 (HP)/086-33 2400 (OPS) Nilai Lot PT 7437 Jalan BBN 1/2F Putra Point 1 Bandar Baru Nilai 71800 Nilai Negeri Sembilan ABB : 5687 & 5315 GL : 06-850 0648/06-850 0649/ 06-850 0650 Fax : 06-850 0647 SARAWAK Miri Lot 2504 & 2505 Boulevard Commercial Centre KM3 Jalan Miri-Pujut 98000 Miri Sarawak ABB : 5916 GL : 085-437 908/085-437 909/ 085-437 910/085-437 912 Fax : 085-437 915 AMMB Holdings Berhad (223035-V) Kuching – Jalan Penrissen Ground & First Floor Lot 16, 17 & 18 Golden Court Commercial Centre Batu 4½, Jalan Penrissen 93250 Kuching Sarawak GL : 082-45 5532/082-45 5560/ 082-45 7652 (HP)/082-45 7930 (HP) Fax : 082-45 5596 Tabuan Jaya Ground Floor, Lot 41 & 42 Pusat Komersil Tabuan Stutong Jalan Setia Raja 93350 Kuching Sarawak GL : 082-36 1581/082-36 0644/ 082-36 0740/082-36 0761/ 082-36 0859 Fax : 082-36 0942 Annual Report 2017 ambankgroup.com Kuching – Premier 101 Lot 92, 93 & 94, Ground Floor Premier 101, Jalan Tun Jugah 93350 Kuching, Sarawak GL : 082-46 6116 Fax : 082-46 6106 Sarikei Ground & 1st Floor No. 18A & 18B, Lorong Tun Razak 96100 Sarikei Sarawak ABB : 5779 & 5780 GL : 084-65 6804 (HP)/084-65 5777 (OPS) Fax : 084-65 6764 (HP)/084-65 5775 (OPS) SABAH Lahad Datu A154 &155, Block 24 Sedco ShopHouse 91100 Lahad Datu Sabah ABB : 5153 & 5344 GL : 089-88 4562/089-88 1561 Fax : 089-88 1778 Keningau Lot 41 & 42 Ground & First Floor Adika Commercial Complex 89007 Keningau Sabah ABB : 5775 & 5776 GL : 087-33 1393/087-33 3745/ 087-33 1088/087-33 3150 Fax : 087-33 1818 KK – Metro Town Unit 1-3, Block M, Metro Town Jalan Bunga Ulam Raja, Off Tuaran Road 88300, Kota Kinabalu, Sabah ABB : 5161 GL : 088-42 1534/088-42 9704/ 088-42 7851 Fax : 088-42 8830 Kudat Lot 9 & 10, Sedco Building Jalan Melor P.O. BOX 344 89058 Kudat Sabah ABB : 5158 GL : 088-61 3194/088-61 2558/ 088-61 2301 Fax : 088 -61 2253
  263. Labuan Lot U0205 Jalan Tanjung Kubong PO Box 80109 87007 Labuan , Sabah ABB : 5162 GL : 087-41 7891/087-41 7898/ 087-41 0778 Fax : 087-41 8090 Kuala Terengganu No. 69/2 Ground & Mezz Floor Bangunan UMNO Terengganu Jalan Sultan Ismail 20200 Kuala Terengganu ABB : 5900 GL : 09-624 9957/09-624 9958/ 09-624 9959/09-624 9960 Fax : 09-624 9916 EAST COAST REGION Kemaman No. 12487 & 12488 Jalan Kubang Kurus 24000 Kemaman Terengganu ABB : 5745, 5746 & 5747 GL : 09-858 2994 (BM D/L)/ 09-859 3535/09-859 2533/ 09-859 2534 Fax : 09-859 4433 (Operations)/ 09-859 5410 (Hire Purchase) Temerloh 60 & 61 Jalan Ahmad Shah 1 28000 Temerloh Pahang ABB : 5740, 5741 & 5333 GL : 09-290 1113/09-290 1128/ 09-296 5887 Fax : 09-296 5889 Bentong 105 Jalan Loke Yew 28700 Bentong Pahang ABB : 5742 GL : 09-222 3888/09-222 6850/ 09-222 1629 Fax : 09-222 4622 USJ 24, Jalan USJ 10/1 USJ Taipan Triangle 47620 Subang Jaya Selangor ABB : 5293 & 5355 GL : 03-5631 0878/03-5637 4059 Fax : 03-5637 2899 NORTHERN REGION Bukit Mertajam No. 1394, Jalan Padang Lallang 14000 Bukit Mertajam Penang ABB : 5558, 5559 & 5560 DL : 04-530 2394 GL : 04-530 2392/04-530 2393/ 04-530 2391 Fax : 04-530 2395/04-530 6151 Seberang Jaya No. 52 Jalan Todak 2 Pusat Bandar Bandar Seberang Jaya 13700 Prai Penang ABB : 5898 GL : 04-397 9569/04-397 9570/ 04-397 9564 Fax : 04-397 9564 BUSINESS CENTRAL REGION Menara Dion Level 1, Menara Dion Jalan Sultan Ismail 50250 Kuala Lumpur ABB : 5905 GL : 03-2026 3939 Fax : 03-2026 6048 Raub No. 5 Bandar Raub Perdana 27600 Raub Pahang ABB : 5750 & 5751 GL : 09-356 1846/09-356 1850/ 09-355 3166 Fax : 09-356 1852 Medan Pasar Ground Floor, Wisma Maran No. 28, Medan Pasar 50050 Kuala Lumpur ABB : 5906 & 5375 CC : 03-2178 8888 Fax : 03-2072 9014 Triang No. 21A & 22A Jalan Temerloh 28300 Triang Pahang ABB : 5042 GL : 09-255 3304/09-255 3124 Fax : 09-255 3198 Damansara Utama 56, 58, 60G, Jalan SS 21/35 Damansara Utama 47400 Petaling Jaya Selangor ABB : 5631 & 5359 CC : 03-2178 8888 Fax : 03-7726 3658/03-7726 3650 Kota Bharu Ground & First Floor Lot 343 Section 13 Jalan Sultan Ibrahim 15000 Kota Bharu, Kelantan ABB : 5725, 5726 & 5727 GL : 09-741 9499/09-741 9477 Fax : 09-741 9507 Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 SOUTHERN REGION Kulai No. 34 & 35 Lorong Dua 81000 Kulai Johor ABB : 5699 & 5700 GL : 07-663 1567/07-663 4830/ 07-663 3288 Fax : 07-663 1155 Muar Ground Floor No. 111, Jalan Abdullah 84000 Muar Johor ABB : 5912 & 5372 GL : 06-954 0069/06-954 0073 Fax : 06-954 0076 Melaka – Jln Munshi Abdullah 154 & 156, Kompleks Munshi Abdullah Jalan Munshi Abdullah 75100 Melaka ABB : 5309 GL : 06-282 8114/06-286 6530/ 06-286 2870 Fax : 06-283 6926 Penang – Leboh Pantai No. 15, Leboh Pantai 10300 Penang ABB : 5565 GL : 04-261 5263/04-263 2520/ 04-263 2523 Fax : 04-263 1468 Kajang 6 & 7 Jalan S10/1, Section 10 Off Jalan Bukit 43000 Kajang Selangor ABB : 5670 & 5671 GL : 03-8736 8177/03-8737 6272/ 03-8737 8700 Fax : 03-8736 7333 Ipoh Greentown No. 7, Greentown Utama Jalan Dato’ Seri Ahmad Said 30450 Ipoh, Perak ABB : 5308 & 5381 GL : 05-208 5610/05-208 5619/ 05-208 5625 Fax : 05-208 5607/05-208 5608 Putrajaya Lot G02, Ground Floor Alamanda Shopping Complex 62000 Putrajaya Wilayah Persekutuan GL : 03-8888 3898/03-8889 5241/ 03-8889 5298/03-8889 5326 Fax : 03-8889 5352 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
  264. GROUP CORPORATE DIRECTORY Seremban Unit No . 5-G, 5-1, 6-G & 6-1 AmBank Business Centre Jalan Pasar 70000 Seremban Negeri Sembilan ABB : 5908 GL : 06-764 7734/06-764 7735 Fax : 06-764 1536/06-764 1537/ 06-764 1538 SARAWAK Miri – Beautiful Jade Centre Lot 244 & 246 Beautiful Jade Centre 98007 Miri, Sarawak ABB : 5139 GL : 085-41 4988/085-41 1257 Fax : 085-41 9676 Satok Ground Floor & Mezzanine Floor Bangunan AmBank Lot 257, Section 8 Jalan Haji Taha 93400 Kuching, Sarawak ABB : 5141 GL : 082-24 4597/082-25 6594/ 082-20 7299/082-42 8925 Fax : 082-24 4611 (HP)/ 082-25 6600 (OPS) Sibu – Jln Tunku Osman Jln Tunku Osman No. 21 To 25 & Ground & 1st Floor Jalan Tuanku Osman 96000 Sibu Sarawak ABB : 5915 GL : 084-32 1777 (HP)/ 084-34 8746 (OPS) Fax : 084-32 1788 (HP)/ 084-34 8745 (OPS) Sibu-Tanahmas Lot 115, 101 & 102 Wisma Sibu Chinese Chamber of Commerce & Industry Jalan Chambers 96000 Sibu, Sarawak ABB : 5140 & 5341 GL : 084-31 4126/084-32 1789 Fax : 084-31 8786 p. 262 p. 263 SABAH KK – Plaza Shell Ground Floor, Plaza Shell No. 29 Jalan Tunku Abdul Rahman 88000 Kota Kinabalu Sabah GL : 08-82 76726/08-82 76720/ 21/22/23/25 Fax : 08-82 76730 Bandar Pasaraya Lot 77 & 78 Bandar Pasaraya Mile 4, North Road 90009 Sandakan Sabah GL : 089-21 8240/089-21 3419/ 089-20 8237/089-21 8231 Fax : 089-21 8226 Tawau Lot 13 & 14, Sabindo Square Jalan Dunlop 91007 Tawau Sabah ABB : 5154 & 5346 GL : 089-77 0430/089-76 4905/ 089-76 4932/089-76 3450 Fax : 089-76 4971 EAST COAST REGION Kuantan – Jln Haji Abd Aziz 93 Jalan Haji Abdul Aziz 25000 Kuantan Pahang ABB : 5330 & 5393 GL : 09-516 4389/09-516 2607/ 09-516 9507 Fax : 09-555 3782/09-516 3782 SERVICE TRANSACTION Bestari Jaya No. 28 B, Jalan Besar 45600 Batang Berjuntai Selangor ABB : 5035 & 5312 GL : 03-3271 0988/03-3271 0380/ 03-3271 0379/03-3271 0378 Fax : 03-3271 0376 NORTHERN REGION SARAWAK Tanah Rata No. 43, Jalan Besar 39000 Tanah Rata Cameron Highlands Pahang ABB : 5603 & 5604 GL : 05-491 1088/05-491 1089 Fax : 05-491 1087 Sibu Jaya Lot 1195 S/L 37, Ground Floor Block 1, Menyan L.D. Sibu Jaya 96000 Sibu Sarawak GL : 084-23 7849/084-23 6978/ 084-23 7030 Fax : 084-23 7927 Pangkor No. 5, Main Road 32300 Pangkor Perak ABB : 5616 GL : 05-685 1051 Fax : 05-685 2161 EAST COAST REGION Kuala Sepetang No. 27, Jalan Trump Kuala Sepetang 34650 Taiping Perak ABB : 5130 GL : 05-858 1997/05-858 1773 Fax : 05-858 1996 SOUTHERN REGION Tampoi No. 4 & 6, Ground Floor Jalan Padi Emas 6/1 Pusat Bandar Tampoi 81200 Johor Bahru ABB : 5070 & 5327 GL : 07-234 1217/07-234 1216 Fax : 07-234 1131 CENTRAL REGION UIA – Gombak Azman Hashim Complex International Islamic University Malaysia Jalan Gombak, 53100 Kuala Lumpur MAB : 5965/5966 GL : 03-6185 6577/03-6185 6579/ 03-6185 6581 DL : 03-6185 6570 Fax : 03-6185 6584 AMMB Holdings Berhad (223035-V) Gateway @ KLIA2 Level 3-03, Gateway @ KLIA2 Terminal 2 Kuala Lumpur International Airport Jalan KLIA2/1, 64000 KLIA Sepang, Selangor GL : 03-8787 8153 Fax : 03-8787 8150 Sepang No. 56, Jalan Besar 43900 Sepang Selangor ABB : 5086 GL : 03-3142 2250/03-3142 2171 Fax : 03-3142 2170 Annual Report 2017 ambankgroup.com Jerantut Lot K-1, Jalan Dewangsa Jerantut New Town 27000 Jerantut Pahang ABB : 5041 & 5334 GL : 09-266 3005/09-266 5005/ 09-266 6211 Fax : 09-266 5046 Dungun No. 50, Jalan Lim Teck Wan 23000 Dungun Terengganu ABB : 5196 GL : 09-848 5221/09-848 5220 Fax : 09-845 6220 Pasir Mas Lot 151, Jalan Masjid Lama 17000 Pasir Mas Kelantan ABB : 5046 GL : 09-790 1952/09-790 0702/ 09-790 0701 Fax : 09-790 0703 Jerteh No. 164-G, Jalan Tuan Hitam 22000 Jerteh Terengganu ABB : 5193, 5331 & 5394 GL : 09-697 2511/09-697 2512/ 09-697 2516/09-697 2515 Fax : 09-697 2513
  265. GROUP BRANCH NETWORK NORTHERN REGION CENTRAL REGION EAST COAST REGION PERLIS INDERA KAYANGAN WILAYAH PERSEKUTUAN KUALA LUMPUR • AmBank (M) Berhad/AmBank Islamic Berhad [24] • Wholesale Banking Coverage [1] • Transaction Banking [2] • AmInvestment Bank Berhad [1] • Markets [1] • AmFutures Sdn Bhd [1] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [3]* • AmInvestment Management Sdn Bhd [1] • AmIslamic Funds Management Sdn Bhd [1] • AmResearch Sdn Bhd [1] • AmCard Services Berhad – Merchant Business Centre [1] PAHANG DARUL MAKMUR • AmBank (M) Berhad/AmBank Islamic Berhad [9] • Wholesale Banking Coverage [1] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [2]* • AmCard Services Berhad – Merchant Business Centre [1] WILAYAH PERSEKUTUAN PUTRAJAYA • AmBank Islamic Berhad [1] KELANTAN DARUL NAIM • AmBank (M) Berhad/AmBank Islamic Berhad [2] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [1]* • AmCard Services Berhad – Merchant Business Centre [1] • AmBank (M) Berhad/AmBank Islamic Berhad [1] • AmGeneral lnsurance Berhad [1]* KEDAH DARUL AMAN • AmBank (M) Berhad/AmBank Islamic Berhad [6] • AmMetLife/AmMetLife Takaful [2] • AmGeneral lnsurance Berhad [2]* • AmCard Services Berhad – Merchant Business Centre [3] PULAU PINANG • AmBank (M) Berhad/AmBank Islamic Berhad [14] • Wholesale Banking Coverage [2] • Transaction Banking [2] • AmInvestment Bank Berhad [2] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [2]* • AmCard Services Berhad – Merchant Business Centre [2] PERAK DARUL RIDZUAN • AmBank (M) Berhad/AmBank Islamic Berhad [19] • Wholesale Banking Coverage [1] • Transaction Banking [1] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [3]* • AmCard Services Berhad – Merchant Business Centre [2] NEGERI SEMBILAN DARUL KHUSUS • AmBank (M) Berhad/AmBank Islamic Berhad [7] • Wholesale Banking Coverage [1] • Transaction Banking [1] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [1]* • AmCard Services Berhad – Merchant Business Centre [1] CENTRAL REGION MELAKA • AmBank (M) Berhad/AmBank Islamic Berhad [6] • Wholesale Banking Coverage [1] • Transaction Banking [1] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [1]* • AmCard Services Berhad – Merchant Business Centre [1] SELANGOR DARUL EHSAN • AmBank (M) Berhad/AmBank Islamic Berhad [38] • Wholesale Banking Coverage [3] • Transaction Banking [1] • AmInvestment Bank Berhad [1] • AmBank Islamic Berhad [2] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [4]* • Am ARA REIT Managers Sdn Bhd [1] • AmTrustee Berhad [1] • AmCard Services Berhad – Merchant Business Centre [1] * SOUTHERN REGION JOHOR DARUL TAKZIM • AmBank (M) Berhad/AmBank • Islamic Berhad [21] • Wholesale Banking Coverage [5] • Transaction Banking [3] • AmInvestment Bank Berhad [2] • AmMetLife/AmMetLife Takaful [2] • AmGeneral lnsurance Berhad [3]* • AmCard Services Berhad – Merchant Business Centre [4] TERENGGANU DARUL IMAN • AmBank (M) Berhad/AmBank Islamic Berhad [4] • AmMetLife/AmMetLife Takaful [1] • AmGeneral lnsurance Berhad [1]* • AmCard Services Berhad – Merchant Business Centre [1] SABAH AND SARAWAK SABAH • AmBank (M) Berhad/AmBank Islamic Berhad [9] • Wholesale Banking Coverage [1] • Transaction Banking [1] • AmInvestment Bank Berhad [1] • AmMetLife/AmMetLife Takaful [2] • AmGeneral lnsurance Berhad [2]* • AmCard Services Berhad – Merchant Business Centre [3] SARAWAK • AmBank (M) Berhad/AmBank Islamic Berhad [15] • Wholesale Banking Coverage [4] • Transaction Banking [3] • AmInvestment Bank Berhad [1] • AmMetLife/AmMetLife Takaful [3] • AmGeneral lnsurance Berhad [3]* • AmCard Services Berhad – Merchant Business Centre [4] FEDERAL TERRITORY OF LABUAN LABUAN • AmBank (M) Berhad/AmBank Islamic Berhad [1] • Wholesale Banking Coverage [1] • AmInternational (L) Ltd [1] • AmBank (M) Berhad, Labuan Offshore Branch [1] • AmCard Services Berhad – Merchant Business Centre [1] AmGeneral Insurance Berhad branches operate under the brand names of AmAssurance/Kurnia Insurans. Overview Key Highlights Key Messages About Us Leadership p. 1 - p. 7 p. 8 - p. 9 p. 10 - p. 21 p. 22 - p. 37 p. 38- p. 67 MD&A Strategic Review MD&A Performance Review MD&A Business Review Sustainability Statement Corporate Governance p. 70 - p. 87 p. 88 - p. 113 p. 114 - p. 135 p. 138 - p. 175 p. 178 - p. 225 Highlights and Achievements Stakeholders Information p. 226 - p. 237 p. 238 - p. 266
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  267. FORM OF PROXY No . of shares held CDS Account No. Telephone No. Proportion of holdings to be represented by each proxy Proxy 1 % I/We Proxy 2 AMMB Holdings Berhad (223035-V) (Incorporated in Malaysia) % NRIC No./Company No. (Full name in capital letters) of (Full address) being a member of AMMB Holdings Berhad, hereby appoint NRIC No. of (Full address) or failing him/her NRIC No. of (Full address) or failing him/her, THE CHAIRMAN OF THE MEETING, as my/our proxy to vote for me/us and on my/our behalf at the Twenty-Sixth Annual General Meeting of the Company to be held at the Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on Monday, 31 July 2017 at 10.00 a.m. or at any adjournment thereof, as indicated below: No. Resolution For 1. Approve the payment of a final single-tier dividend of 12.6% for the financial year ended 31 March 2017. 2. Approve the payment of Directors’ fees and benefits for the financial year ended 31 March 2017. 3. Approve the payment of benefits payable to the Directors from 1 April 2017 until the next Annual General Meeting of the Company. 4. Re-election of Suzette Margaret Corr as Director under Article 89. 5. Re-election of Dato’ Rohana binti Tan Sri Mahmood as Director under Article 89. 6. Re-election of Voon Seng Chuan as Director under Article 89. 7. Re-appointment of Tan Sri Azman Hashim as Director of the Company. 8. Re-appointment of Messrs Ernst & Young as Auditors and to authorise the Directors to determine their remuneration. 9. Approve the Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company Pursuant to the Company’s Executives’ Share Scheme. 10. Approve the Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company to Dato’ Sulaiman bin Mohd Tahir, the Group Chief Executive Officer of the Company Pursuant to the Company’s Executives’ Share Scheme. 11. Approve the Proposed Renewal of Authority to Allot and Issue New Ordinary Shares in the Company for the Purpose of the Company’s Dividend Reinvestment Plan. 12. Approve the Proposed Authority to Allot and Issue Shares Pursuant to Sections 75 and 76 of the Companies Act, 2016. 13. Approve the Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Australia and New Zealand Banking Group Limited Group. 14. Approve the Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Amcorp Group Berhad Group. 15. Approve the Proposed Renewal of Existing Shareholder Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature with Modular Techcorp Holdings Berhad Group. Against Please indicate with a ‘X’ or ‘√ ’ in the boxes above how you wish your vote to be cast. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit. Dated this day of 2017. Signature of Shareholder (If the shareholder is a corporation, this part should be executed under seal)
  268. Please fold here to seal Notes : (1) A member of the Company entitled to attend and vote at the Annual General Meeting (“AGM”) is entitled to appoint not more than two (2) proxies to attend and vote instead of him. Where a member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. (2) A proxy need not be a member of the Company. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the AGM shall have the same rights as the member to speak at the AGM. (3) Where a member of the Company is an authorised nominee as defined in the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint not more than two (2) proxies in respect of each securities account it holds in ordinary shares of the Company standing to the credit of the said securities account. The appointments shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies. (4) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. The appointments shall be invalid unless the proportion of shareholdings to be represented by each proxy are specified in the instrument appointing the proxies. (5) The instrument appointing a proxy in the case of an individual shall be signed by the appointor or of his attorney duly authorised in writing or, in the case of a corporation, the instrument appointing a proxy or proxies must be under seal or under the hand of an officer or attorney duly authorised. (6) The instrument appointing a proxy must be deposited at the office of the Company’s Share Registrar, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than forty-eight (48) hours before the time appointed for holding the AGM or any adjournment thereof. Please fold here to seal AFFIX STAMP The Share Registrar for AMMB Holdings Berhad SYMPHONY SHARE REGISTRARS SDN BHD Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor Darul Ehsan Malaysia Please fold here to seal