ASEAN ANNUAL REPORT 2018 CATALYST RECORD PROFITS FIRMER FOOTING DIGITAL TRANSFORMATION Grew stronger in terms of performance, Well-positioned to embark on our next Wider spectrum of solutions to improve value propositions and competitiveness. mid-term growth strategy plan. employee and customer experience. PG 29 PG 11 PG 45 VIETNAM LAOS MYANMAR PHILIPPINES THAILAND CAMBODIA MALAYSIA BRUNEI SINGAPORE INDONESIA The cover depicts our operating footprint across ASEAN and reinforces our commitment to connect our customers, our people and partners to seamless financial solutions, new markets, and opportunities for growth. View our Annual Report, Accounts and other information about CIMB Group Holdings Berhad at www.cimb.com b 1 ABOUT OUR REPORT OUR REPORTS At CIMB Group Holdings Berhad, we produce a range of corporate reports for the benefit of our multiple stakeholders, mainly to equip them with critical information on the many areas of our business operations and performance. ANNUAL REPORT This is the primary source of information about our Group and gives a simple and comprehensive overview of our financial and non-financial milestones and achievements for each year. By studying the report, our stakeholders can learn about our strategy; businesses and performance; approach to governance and risk as well as our future goals. The report demonstrates our accountability and strengthens the trust AR/15 AR/16 AR/17 of our stakeholders. AR/18 ANNUAL FINANCIAL STATEMENTS During the year, we publish a range of financial statements, including quarterly financial statements and the audited annual financial results. These statements present to our stakeholders a clear and full analysis of our financial affairs at the end of each financial year. They are documented by external auditors in accordance with international financial reporting standards. FS/15 FS/16 FS/17 FS/18 SUSTAINABILITY REPORT Our Sustainability Report shares information that is specific to our economic, social, environmental and governance performance. It also showcases various programmes and initiatives implemented to create shared value and for positive impact in the community, workplace, marketplace and the environment. The report is prepared in accordance with the Global Reporting Initiative (GRI) Standards. CR/15 CR/16 CR/17 SR/18 2 ASEAN CATALYST ABOUT THIS REPORT “As a leading financial services provider, with presence in all the 10 ASEAN markets, one of the key determinants of our continuing success is our accountability and commitment towards our multiple stakeholders. At CIMB Group, our emphasis is on forging partnerships of trust and strengthening our relationships by creating and delivering value. Our Annual Report is a credible medium to not just disseminate information critical to our business and growth, but to communicate with our stakeholders with integrity and transparency. It is our sincere effort to present the growth story of CIMB Group and its people.” REPORTING SCOPE AND BOUNDARIES MATERIALITY DETERMINATION STATEMENT This Annual Report covers our financial and All our Annual Reports present a balanced and OF THE BOARD non-financial performance during the period accessible assessment of our strategy, OF DIRECTORS OF CIMB GROUP 1 January 2018 to 31 December 2018. performance, governance and prospects. HOLDINGS BERHAD The Board acknowledges its Through this report, it is our sincere effort to The various issues and developments included responsibility to ensure the integrity of keep our stakeholders abreast of key in the 2018 edition were determined by a the Annual Report. In the Board’s developments; programmes and initiatives; range of considerations, such as quantitative opinion, the report addresses all material market challenges and business solutions; our and qualitative criteria; issues likely to impact issues and matters and fairly presents achievements; mid- to long-term direction; our ability to achieve strategic objectives and the Group’s performance for the year and the overall health of operations in 2018 in remain sustainable; matters covered in reports 2018. various geographical markets where we presented to our Board of Directors; the risks operate. identified by our risk management team; and Approved by the Board of Directors and the interests of our key stakeholders. We also signed on behalf of the Board: The report also presents rich insights and consider factors that affect the economic and forward-looking statements on financial social environment in various countries and position and performance in the year ahead. regions where we conduct business. Our report is particularly relevant for our stakeholders in the ASEAN markets of Malaysia, Indonesia, Singapore, Thailand, Brunei, Cambodia, Myanmar, Vietnam and Datuk Mohd Nasir Ahmad Laos. A range of other stakeholders across the Chairman globe will also find our report informative. Our financial statements are independently audited and provide in-depth and transparent disclosure of our financial performance. Unless we indicate otherwise, all the data presented relates to the Group, which includes Tengku Zafrul Aziz our banking operations and our subsidiaries. Group Chief Executive Officer/ Executive Director In preparing our report, we were guided by the requirements of local and international statutory and reporting frameworks, including those of Bursa Malaysia. CIMB GROUP HOLDINGS BERHAD / ANNUAL REPORT 2018 3 CIMB GROUP HOLDINGS BERHAD ANNUAL REPORT 2018 contents ANNUAL GENERAL MEETING ANNUAL Annual General Meeting of GENERAL nd CIMB Group Holdings Berhad MEETING 62 Grand Ballroom First Floor Sime Darby Convention Centre WHERE 1A Jalan Bukit Kiara 1 60000 Kuala Lumpur Malaysia Monday, WHEN April 22 2019 TIME 10.00 a.m. View our Annual Report, Accounts and other information WEBSITE about CIMB Group Holdings Berhad at www.cimb.com 4 ASEAN CATALYST CIMB_AR/18 2 About Our Report BUSINESS REVIEW SUSTAINABILITY STATEMENT 6 Message from the Chairman 72 Group Consumer Banking 152 Sustainability Statement 74 Group Commercial Banking OVERVIEW OF CIMB GROUP 76 Group Wholesale Banking HIGHLIGHTS AND ACHIEVEMENTS 78 Group Transaction Banking 14 CIMB Overview 80 Group Asset Management & Investments 174 Regional Notable Deals 15 CIMB Profile & Presence 82 Group Islamic Banking 178 Notable Achievements 16 Key Highlights of 2018 16 Business Highlights 179 Corporate Event Highlights 17 Financial Highlights 182 STRUCTURE & LEADERSHIP Media Highlights 18 Corporate Milestones and Our Rich Heritage 20 A Fond Farewell 86 Board of Directors STAKEHOLDER INFORMATION 88 Board of Directors’ Profiles MANAGEMENT DISCUSSION 92 Group Company Secretary’s Profile 184 Shareholders’ Statistics AND ANALYSIS 93 Corporate Structure 187 Internal Policies, Procedures and Guidelines 191 Top 10 Properties of CIMB Group STRATEGIC REVIEW 94 Boards of Major Subsidiaries 96 Group Shariah Committee 192 Corporate Information 26 Group Chief Executive Officer’s Overview 97 Group Shariah Committee Profiles 194 Group Corporate Directory 2018 36 Economic and Banking Review & Outlook 98 Group Executive Committee 38 Our T18 Journey 100 Group Executive Committee Profiles 42 The Group’s Strategy – Forward23 AGM INFORMATION 45 CIMB Fintech 103 International Advisory Panel (IAP) 196 Notice of Annual General Meeting 46 Material Matters Impacting Our Strategy 104 Human Capital Growth 200 Statement Accompanying Notice of Annual 108 CIMB Group Organisation Structure 47 Key Risks and Mitigation General Meeting 205 Administrative Details for the 62nd Annual PERFORMANCE REVIEW CORPORATE GOVERNANCE General Meeting (AGM) 50 Group Financial Review by Group Chief Financial Officer 110 Chairman’s Statement on Corporate Governance • Proxy Form 54 Five-Year Group Financial Summary 111 Corporate Governance Overview Statement 55 Five-Year Group Financial Highlights 126 Additional Disclosures 56 Simplified Group Statements of Financial Position 127 Statement on Risk Management and Internal 57 Quarterly Financial Performance Control 58 Key Interest Bearing Assets and Liabilities 135 Risk Management 59 Value Added Statement 142 Audit Committee Report 60 Capital Management 146 Shariah Committee Report 61 Credit Ratings 63 Balance Sheet Management 64 Investor Relations 69 Financial Calendar CIMB GROUP HOLDINGS BERHAD / ANNUAL REPORT 2018 5 Message from the Chairman “2018 marked a decade into the collapse of the Lehman Brothers and the Global Financial Crisis. The banking sector continued to demonstrate resilience, with emphasis on foundational aspects such as transparency, risk governance, trust and integrity. With digitalisation, the emergence of Industry 4.0, and sustainability, the traditional role as well as the business model of banks seemed to require a paradigm shift – from serving short and mid-term business and stakeholder interests to generating long-term economic, environmental and social equity or value. During the year, CIMB successfully completed the last mid-term T18 strategy, leaving the Group stronger and well-equipped to future- proof its people and business.” 6 ASEAN CATALYST Datuk Mohd Nasir Ahmad Chairman Dear Stakeholders, It is an honour and a privilege to deliver my first statement as Chairman of CIMB. I am fortunate to have inherited an engine of growth, which has already built a strong foundation to emerge as a leading ASEAN bank. The year 2018 was the grand finale year for the last mid-term “Target 2018 (T18)” project, which was introduced in 2015. While I am the bearer of the good news, I take pride in the former leadership as