Annual Report 2016
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ANNUAL REPORT 2016 RHB Bank Berhad TOGETHER WE PROGRESS 51st ANNUAL GENERAL MEETING FOR RHB BANK BERHAD Refer to pages 306 to 314 for Annual General Meeting Information Ballroom 1 & 2, Level 2 InterContinental Kuala Lumpur 165 Jalan Ampang, 50450 Kuala Lumpur 26 April 2017 at 10.30 a.m. Feedback We need your feedback to make sure we are covering the things that matter to you. Email us at [email protected] With a strong presence in the ASEAN region, our focus is on driving performance as we look to improve revenue and productivity by identifying new opportunities and implementing strategies that create measurable improvements in sustainability and business performance. As we progress on our journey to becoming a Leading Multinational Financial Services Group, we will continue to invest for the future, particularly in our people, technology and digital capabilities. Investments in our digital environment are aimed at delivering customer-centric innovations that supports a fast, simple and seamless banking experience as well as fuels business growth for the organisation. Working with our customers, business partners and shareholders, we are committed to a sustainable future as we drive RHB Banking Group towards being a regional powerhouse in ASEAN. Together, we progress. DRIVING SUSTAINABLE PERFORMANCE Leadership What’s Inside 28 Board of Directors 30 Board Balance and Composition 31 Profile of the Board of Directors 36 Profile of the Chairmen of the Key Operating Companies 38 Profile of the Shariah Committee 40 Group Senior Management 42 Profile of the Group Senior Management RHB Banking Group Overview Management Discussion & Analysis 04 RHB Banking Group Overview 06 Aspirations, Vision & Values STRATEGIC REVIEW 08 2016 Key Highlights 12 Chairman’s Statement 14 Group 50 Economic Review and Outlook 54 Business Model 56 Our Managing Director’s Statement Strategy 68 Customer Experience 69 Productivity Improvement 70 Integrating Digital Technology 74 Corporate Integrity 78 Code of Ethics and Conduct 80 Ensuring Sustainable Value Creation About Us 20 Corporate Information 22 Group Corporate Structure 24 Strategic Business Entities 26 Group Organisation Structure Governance PERFORMANCE REVIEW 214 Statement on Corporate Governance 244 Compliance with the 82 Performance Review by Group Chief Financial Officer 91 Group Malaysian Code on Corporate Governance (MCCG) 2012 250 Statement Financial Highlights 92 Summary of Five Year Group Financial on Risk Management & Internal Control 257 Board Nominating & Highlights 93 Five Year Group Financial Summary 94 Simplified Remuneration Committee Report 264 Board Audit Committee Group Statements of Financial Positions 95 Segmental Analysis Report 269 Statement on Internal Audit 271 Risk Management 96 Group Quarterly Performance 97 Key Interest Bearing Assets Report 281 Shariah Committee Report 284 Business Continuity and Liabilities 98 Statement of Value Added 98 Distribution of Management 285 Compliance Statement Value Added 99 Capital Management 101 Balance Sheet Management 102 Investor Relations 110 Financial Calendar BUSINESS REVIEW 112 Group Retail Banking 120 Group Business & Transaction Stakeholder Information Banking 124 Group Wholesale Banking 138 Group Shariah Business 141 Group Insurance 144 RHB Singapore 148 Group 290 Analysis of Shareholdings 291 Classification of Shareholders International Business 292 List of Thirty (30) Largest Shareholders 294 Number of Issued Shares 295 Key Internal Control Policies and Procedures 298 List of Top Ten (10) Properties 299 Group Branch Network 306 Notice of Fifty First Annual General Meeting 310 Statement Accompanying Notice of 51st Annual General Meeting • Proxy Form Achievements 152 Significant Events 2016 156 Corporate Milestones 158 RHB in the Newa 160 Calendar of Events 2016 168 Awards and Recognition Our Social, Governance and Environmental Journey SUSTAINABILITY REPORT 176 Committed to Creating Sustainable Value 182 Upholding Good Economic Practices 186 Upholding Good Environmental Practices 190 Upholding Good Social Practices 192 Upholding Good Diversity RHB BANKING GROUP OVERVIEW H ong Manmar L PDR T C Vietnam M B S I Our Presence, Operations & Performance MALAYSIA SINGAPORE LAO PDR HONG KONG/CHINA CAMBODIA 278 Branches/Offices 9 Branches/Offices 2 Branches/Offices 3 Branches/Offices 13 Branches/Offices 11,651 employees 708 employees 45 employees 123 employees 245 employees Total Income Total Income Total Income Total Income Total Income RM5.2 billion SGD201.6 million LAK29.2 billion HKD112.2 million USD21.3 million INDONESIA THAILAND BRUNEI VIETNAM MYANMAR 13 Branches/Offices 13 Branches/Offices 1 Branch Representative Office Representative Office 361 employees 441 employees 22 employees Total Income Total Income Total Income IDR270.2 billion THB866.6 million BND3.6 million PAGE:004 DRIVING SUSTAINABLE PERFORMANCE • TOGETHER WE PROGRESS WHO WE ARE GROUP OVERVIEW RHB BANKING RHB BANK is the 4th largest, fully integrated financial services group in Malaysia, listed on the Main Board of Bursa Malaysia. RHB Bank assumed the listing status of RHB Capital TOTAL ASSETS Berhad on 28 June 2016. H ong Manmar L PDR RM236.7 T C billion Vietnam ABOUT US MARKET CAPITALISATION M B as at 31 December 2016 WHAT WE DO S RM18.9 WE provide a comprehensive range of financial services under our core business pillars. I billion • Group Retail Banking • Group Business & Transaction Banking LEADERSHIP • Group Wholesale Banking LISTED • Group Shariah Business on BURSA MALAYSIA • Group Insurance on 28 June 2016 • Group International Business WHERE WE OPERATE • Malaysia • Cambodia • Singapore • Vietnam • Indonesia • Myanmar • Thailand • Lao PDR • Brunei • Hong Kong/China RHB BANK BERHAD AR / 2016 PAGE:005 ASPIRATIONS, VISION & VALUES PROFESSIONAL • Committed • High level of proficiency, competency and reliability RESPECT • Courteous • Humble DYNAMIC • Proactive • Responsive • Forward thinking INTEGRITY • Honest • Ethical • Uphold a high standard of governance EXCELLENCE • Continuously achieve high standards of performance and service deliverables PAGE:006 VALUESDRIVING SUSTAINABLE PERFORMANCE • TOGETHER WE PROGRESS Our Vision by 2020... RHB BANKING GROUP OVERVIEW RHB BANKING TO BE A LEADING RHB’S ASPIRATIONS MULTINATIONAL • Top 3 in Malaysia/Top 8 in ASEAN FINANCIAL SERVICES by performance • Strong Market Leadership in Malaysia GROUP across targeted products and segments • Regional Powerhouse in ASEAN ABOUT US +20% profit contribution from International Operations • Next Generation Customer Centric Bank delivering innovative and personalised customer offerings • Prominent Employer of Choice within the region LEADERSHIP OUR STRATEGY STATEMENT To be a multinational regional financial services provider that is committed to deliver complete solutions to our clients through differentiated segment offerings and an ecosystem that supports a simple, fast and seamless customer experience, underpinned by our cohesive and inspired workforce and relationships built with our stakeholders OUR BRAND PROMISE Together We Progress • Being your trusted partner • Delivering simple, fast and seamless experiences • Providing solutions that help achieve your goals • Nurturing future generations VALUESRHB BANK BERHAD AR / 2016 PAGE:007 2016 KEY HIGHLIGHTS TOTAL INCOME PROFIT BEFORE TAX RM6.2 RM2.2 billion billion 2015 2016 GROSS LOANS PROFIT AFTER TAX RM154.5 RM1.7 billion billion TOTAL ASSETS COMMON EQUITY TIER 1 (CET1) RATIO RM236.7 billion 13.1% PAGE:008 DRIVING SUSTAINABLE PERFORMANCE • TOGETHER WE PROGRESS RHB BANKING GROUP OVERVIEW RHB BANKING RHB Foundation OVER established 330 branches/ in 2015 offices IN 10 COUNTRIES ABOUT US MORE THAN 2,126 13,500 Self-Service LEADERSHIP employees Terminals ACROSS 10 COUNTRIES in Malaysia TH PRESENCE IN 4 LARGEST 10 COUNTRIES BANK IN MALAYSIA RHB BANK BERHAD AR / 2016 PAGE:009 BUILDING RELATIONSHIPS We are committed to building and maintaining long-term relationships with our customers and the community at large through sound banking practices, innovative products and service, and excellent service delivery. CHAIRMAN’S STATEMENT “ THE CORPORATE RESTRUCTURING EXERCISE TO TRANSFER THE GROUP’S LISTING STATUS FROM RHB CAPITAL BERHAD TO RHB BANK BERHAD (“RHB BANK” OR “THE GROUP”), WHICH BECAME OUR NEW HOLDING COMPANY, WAS SUCCESSFULLY COMPLETED ON 28 JUNE 2016.” Dear Shareholders, 2016 was a year of progress for the Group against a somewhat challenging economic backdrop. The Group registered a strong performance, while continuing to deliver profits and long-term organic growth in key business segments. The Malaysian economy was somewhat subdued due to uncertainty surrounding the US elections and concerns over the slower than anticipated growth from the larger emerging markets. On a high note, the corporate restructuring exercise to transfer the Group’s listing status from RHB Capital Berhad to RHB Bank Berhad (“RHB Bank” or “the Group”), which became our new holding company, was successfully completed on 28 June 2016. The listing gave RHB Bank direct access to the capital markets to raise funds for continued growth, whilst enhancing our corporate reputation, expanding our customer base and delivering long-term value to our shareholders. PAGE:012 DRIVING SUSTAINABLE PERFORMANCE • TOGETHER WE PROGRESS TOTAL DIVIDEND DIVIDEND PAYOUT RATIO 12.0 SEN PER SHARE 28.6% CREATING SHAREHOLDER VALUE RHB BANKING GROUP OVERVIEW RHB BANKING In line with our commitment to consistently deliver value to our shareholders, a final NET PROFIT ATTRIBUTABLE