Annual Report 2020 Corporate Financials Additional Information 01 Vision 156 Directors’ Report 421 Other Information 02 The Business 166 Statements of Financial Position 432 Local & Overseas Branches 04 Awards & Accolades 167 Statements of Income • Form of Proxy 05 Hong Leong Bank Story 168 Statements of Comprehensive 07 Corporate Milestones Income 10 Chairmanʼs Statement 169 Statements of Changes in Equity 16 Five Year Group Financial 173 Statements of Cash Flows Highlights 179 Notes to the Financial 18 Group Managing Director/ Statements Chief Executive Officerʼs Review 365 Statement by Directors 32 HLB’s COVID-19 Response 365 Statutory Declaration 36 Management Discussion & 366 Independent Auditors’ Report Analysis 371 Basel II Pillar 3 Disclosures 73 Sustainability Statement 106 Corporate Information 107 Notice of Annual General Scan the QR Code by following these simple steps: Meeting 111 Statement Accompanying Notice of Annual General Meeting 112 Board of Directorsʼ Profile 116 Key Senior Management of the Get it Group Download the “QR Code Reader” app from Google Play (Android Market), BlackBerry 122 Board Audit Committee Report AppWorld, App Store (iOS/iPhone) or Windows Phone Store 125 Board Risk Management Committee (BRMC) Report Run it 128 Board Information and Run the QR Code Reader app and point your Technology Committee Report camera at the QR Code 130 Corporate Governance Overview, Access it Risk Management & Internal Get access to Hong Leong Bank Berhad’s Control Statement website CORPORATE FINANCIALS ADDITIONAL INFORMATION To be a Highly Digital and Innovative Financial Services Company Annual Report 2020 1 The Business In line with HLB’s ethos of ‘Digital-at-the-Core’ and brand promise of ‘Built Around You’, the Bank is well on the way to ensure that Digital Banking permeates all that we do, whether it’s with our product and service offerings to customers or the way we work internally and interact and transact with customers. Further, we are seeing traction on our endeavours to build a culture where the client is at the centre of everything we do. We do this by continuing to invest in new and more accessible technologies, leveraging on consumer collaborations, research and, insights to form an integrated banking platform with the aim of personalising solutions around customer needs. Through these efforts, the Bank is able to deliver a simple, seamless and straightforward banking experience delighting our customers with experiences and interactions with us that gives them the ability to take control of their finances and financial management. Hong Leong Bank Berhad (“HLB” or “the terminals. Wealth Management services at the right time. The essence of this Bank”) is a leading Malaysian financial are offered through branches in Malaysia, approach was very apparent during services institution which provides a Singapore and Hong Kong, in addition the peak of the COVID-19 pandemic wide range of products and services and to various Priority Banking centres in the countries where we serve its innovative financial solutions in Malaysia located throughout Malaysia and one in communities. In staying true to HLB’s and across the region. Singapore. ethos of being Digital-at-the-Core and building personalised solutions by HLB’s extensive branch network extends With vast changes and numerous having a deep understanding of our beyond Malaysian borders with one developments in the banking industry customer’s needs during these trying branch each in Labuan Offshore, Singapore and financial landscape as a whole, times, we were able to accelerate help and Hong Kong respectively, four there is a need to ensure that we can through technological engagements branches in Vietnam and seven branches continue to stay ahead of our customers’ that enabled swift delivery of products in Cambodia as well as a full-service call financial needs and ambitions so that and services to customers in a bid to centre and more than 1,000 self-service we can provide the right solutions help them recover and rebuild their HONG LEONG BANK’S KEY BUSINESS PILLARS ARE: Personal Financial Services Business & Corporate Banking Principal business activities include providing banking services Principal business activities include the provision of banking and financial products to individuals so that they can fulfil solutions to SMEs, commercial and corporate clients, such as their needs for property and auto financing, personal loans/ deposit and loan services covering business current account, financing for their periodic household needs, payment products liquidity management, auto-sweep as well as fixed deposit. to facilitate everyday spend, share financing, investment and Financing options available range from asset acquisition, working insurance to provide options to grow and manage their wealth capital, business expansion and business automation. HLB also as well as protect wealth for retirement and/or the next specialises in the provision of transaction banking solutions via generation, as well as deposits and remittance products and cash management, corporate internet banking platform, trade services to individuals and small businesses for their liquidity, financing and services and merchant payment solutions. savings and payment needs. 2 HONG LEONG BANK BERHAD CORPORATE FINANCIALS ADDITIONAL INFORMATION The Business businesses. Simultaneously, we were services, private wealth management has a branch and a transaction office, able to leverage on our technology and global markets. The branch is forging both located in Ho Chi Minh City and a infrastructure spend and upskilling ahead by expanding the client segments branch each in Binh Duong and Hanoi. of our employees, so that we could value proposition, expanding employee’s quickly adapt to the way we work, capabilities and stepping-up its digital CAMBODIA OPERATIONS and from where we work, ensuring transformation to enhance clients’ In July 2013, Hong Leong Bank (Cambodia) services and support to customers experiences and operational efficiency. PLC (“HLBCAM”) commenced operations remained uninterrupted even during the as a 100% wholly owned subsidiary lock-down and recovery phases put in HONG KONG OPERATIONS providing comprehensive financial place by governments to manage the The Bank’s Hong Kong Branch operates services covering consumer banking, spread of COVID-19. under a full banking license and provides business banking, global markets and global market and wealth management transaction banking services. With seven HLB’s digital ambition will continue to see services to its customers. We are also full-fledged branches located in Phnom us have a sharp focus on building around the first bank in Hong Kong to launch an Penh, HLBCAM’s primary customer customers’ needs so that we can deliver Islamic Banking service. Currently, we are focus is towards established SME and an ever increasing personalised approach developing a value proposition to service commercial/corporate customers, high to make every banking experience SME customers as we prepare to launch net worth individuals, affluent and with us easy, contextual, efficient and our SME business proposition in the new emerging affluent as well as tech savvy seamless so that we can delight them financial year. young professionals. constantly. VIETNAM OPERATIONS INVESTMENT IN CHINA Hong Leong Bank Vietnam Limited HLB was the first Malaysian bank to enter REGIONAL FOOTPRINT (“HLBVN”), a subsidiary of the Bank, the Chinese banking sector in 2008 with a In line with our growth strategy, HLB has commenced operations in October 2009. strategic investment in Bank of Chengdu been expanding its footprint in the Asian HLBVN is a full-fledged commercial bank Co., Ltd (“Bank of Chengdu”) and has region. in Vietnam whose principal activities an 18% stake in the company. Bank of include provision of retail loans, deposit Chengdu is a leading city commercial SINGAPORE OPERATIONS products, wealth management, and bank in Western and Central China HL Bank Singapore, the Singapore branch priority banking services to individuals. based in Chengdu, the capital of Sichuan of HLB operates under a full banking Whereas business banking solutions Province which is listed on the Shanghai license. We offer a comprehensive range include working capital and term loans, Stock Exchange. HLB also holds a 12% of financial services to business, retail deposit and liability management equity investment in Sichuan JinCheng and high net worth customers through products and trade finance services as Consumer Finance Company, a licensed our 4 core business segments – business well as foreign exchange (“forex”) and consumer finance firm established in & corporate banking, personal financial money market services. To date HLBVN Chengdu in March 2010. Global Markets Islamic Financial Services Principal activities include supporting our customers on their Islamic Financial Services are offered by Hong Leong Islamic Bank, investment and hedging needs through key treasury products a wholly-owned subsidiary of HLB which is focused on providing of Foreign Exchange, Fixed Income, Derivatives and Structured Shariah-compliant Personal Financial Services, Business and Products. Global Markets also prudently manages the Bank’s excess Corporate Banking and Global Markets products and services. liquidity and manages risks arising from customer transactions and payment flows. Annual Report 2020 3 HONG LEONG BANK BERHAD The Asset Triple A Digital Awards Euromoney Awards for Excellence Asiamoney Best