ANNUAL REPORT 2015 www.rhbgroup.com RHB Capital Berhad (312952-H) Level 9, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur Tel : 603-9285 2233 Fax : 603-9281 9314 The cover for our 2015 Annual Report depicts a diamond shape formed with interlocking wire mesh. The diamond represents RHB’s clarity of focus towards achieving its vision of being a leading multinational financial services group. The wire links further symbolise our commitment to fostering greater ties with our customers and key stakeholders by placing them at the centre of what we do, as described by our revitalised Brand Promise, “Together We Progress”. Our Brand Promise is anchored on being a trusted partner to our customers and stakeholders; delivering simple, fast and seamless experiences; providing solutions that help achieve their goals; and nurturing future generations. These principles will be translated through our daily operations, and drive us in pushing boundaries to create a positive impact for society as a whole, embodying our “Together We Progress” Brand Promise. FACTS AT A GLANCE GROUP BANKING TOTAL INCOME TOTAL RM6,191 ASSETS NET PROFIT MILLION RM1,511 RM230,718 MILLION MILLION >16,000 AS AT DECEMBER EMPLOYEES 2015 WITH PRESENCE MORE THAN ACROSS 590 COUNTRIES BRANCHES & OFFICES REGIONALLY WHAT’S INSIDE OVERVIEW KEY MESSAGES PERFORMANCE OVERVIEW pg 1 – pg 11 pg 12 – pg 25 pg 74 – pg 89 1 Facts at a Glance 14 Chairman’s Statement 74 Performance Review 4 RHB’s Aspirations & Vision 18 Group Managing Director’s 79 Actual vs Target for 2015 Statement 5 Values 80 Capital Management 6 Group Financial Highlights 82 RHB Share Information 7 Summary of Five-Year Group 83 Balance Sheet Management Financial Highlights ABOUT US 84 Investor Relations 8 Five-Year Group Financial pg 26 – pg 55 88 Financial Calendar Summary 9 Simplified Group Statements of Financial Positions 26 Corporate Profile BUSINESS OVERVIEW 10 Segmental Analysis 28 Corporate Information pg 90 – pg 127 11 Group Quarterly Performance 30 Profiles of the Board of Directors 34 Profiles of the Chairmen of the Key 90 Business Overview Operating Companies 92 Group Retail Banking 36 Group Shariah Committee Profiles 100 Group Business & Transaction Banking 39 Strategic Business Entities 104 Group Corporate & Investment Banking 40 Group Corporate Structure 14 112 Group Shariah Business 42 Group Organisation Structure Chairman’s Statement 114 Group Treasury and Global Markets 44 Group Senior Management Profiles 116 Group Insurance 51 Key Highlights 118 International Business 18 122 Economic Review Group Managing OUR STRATEGY GOVERNANCE Director’s Statement pg 56 – pg 73 pg 128 – pg 205 58 Business Model 132 Corporate Governance Statement 60 Our Strategy 158 Compliance with the Malaysian Code on Corporate Governance (MCCG) 2012 68 Driving an Innovative 165 Statement on Risk Management & Internal Control 34 Culture Key Operating 170 Board Nominating & Remuneration Committee Report Companies 177 Group Board Audit Committee Report Profiles of the Chairmen of the 182 Risk Management Statement Key Operating Companies 190 Shariah Committee Report 192 Business Continuity Management 193 Compliance Statement 199 Corporate Integrity 90 204 Code of Ethics and Conduct Business Overview SUSTAINABILITY SHAREHOLDERS’ INFORMATION pg 206 – pg 215 pg 244 – pg 268 208 Sustainability Report 244 Analysis of Shareholdings 246 Classification of Shareholders 247 List of Thirty (30) Largest Shareholders ACHIEVEMENTS 249 Authorised and Issued Share Capital pg 216 – pg 243 253 Key Internal Control Policies and Procedures 256 List of Top Ten (10) Properties 216 Awards and Recognition 257 Group Branch Network 222 Corporate Milestones 265 Notice of Twenty First Annual General Meeting 224 Significant Events 2015 267 Statement Accompanying Notice of 21st Annual 231 Calendar of Events 2015 General Meeting 242 Media Highlights 2015 • Proxy Form st ANNUAL GENERAL MEETING FOR 21 RHB CAPITAL BERHAD Refer to page 265 to 268 for Annual General Meeting Information Taming Sari Grand Ballroom, The Royale Chulan Kuala Lumpur, 5 Jalan Conlay, 50450 Kuala Lumpur, Malaysia 12 May 2016 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] www.rhbgroup.com 4 RHB Capital Berhad Annual Report 2015 RHB’S ASPIRATIONS & VISION TOP 3 BY 2020... IN MALAYSIA/TOP 8 IN TO BE A ASEAN LEADING by performance MULTINATIONAL FINANCIAL SERVICES STRONG MARKET GROUP LEADERSHIP IN MALAYSIA across targeted products and segments REGIONAL POWERHOUSE IN ASEAN+ 20% profit contribution from international operations NEXT GENERATION CUSTOMER CENTRIC BANK delivering innovative and personalised customer offerings PROMINENT EMPLOYER OF CHOICE within the region 5 OUR STRATEGY STATEMENT Our Brand Promise “To be a multinational regional financial services TOGETHER WE PROGRESS provider that is committed to deliver complete Being your trusted partner solutions to our clients through differentiated Delivering simple, fast and segment offerings and an ecosystem that supports a seamless experiences simple, fast and seamless customer experience, Providing solutions that help underpinned by our cohesive and inspired workforce achieve your goals and relationships built with our stakeholders.” Nurturing future generations VALUES PROFESSIONAL RESPECT INTEGRITY DYNAMIC EXCELLENCE We are committed to We are courteous, We are honest, We are proactive, We will continuously maintain a high level humble and we ethical and we responsive and achieve high of proficiency, show empathy to uphold a high forward thinking. standards of competency and everyone through standard of performance and reliability in all that our actions and governance. service deliverables. we do. interactions. 6 RHB Capital Berhad Annual Report 2015 GROUP FINANCIAL HIGHLIGHTS 2015 2014 PROFITABILITY (RM’million) Revenue 6,191 6,235 Operating profit before allowances 2,398 2,824 Profit before taxation 2,107 2,735 Net profit attributable to equity holders of the Company 1,511 2,038 FINANCIAL POSITION (RM’million) Total assets 230,718 219,354 Financial assets and investments portfolio 47,024 43,003 Gross loans, advances and financing 151,386 142,486 Total liabilities 207,608 200,460 Deposits from customers 158,151 157,134 Shareholders’ equity 23,085 18,794 FINANCIAL RATIOS (%) Net return on average equity 7.3% 11.5% Net return on average total assets 0.7% 1.0% Gross impaired loans ratio 1.9% 2.0% Gross loans to deposits ratio 95.7% 90.7% 7 SUMMARY OF FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS TOTAL ASSETS PROFIT BEFORE TAXATION GROSS LOANS, ADVANCES (RM’million) (RM’million) AND FINANCING (RM’million) 219,354 230,718 191,090 152,304 142,486 2,735 151,386 2,107 121,753 2,471 2,250 97,438 189,112 2,385 111,474 ’11 ’12 ’13 ’14 ’15 ’11 ’12 ’13 ’14 ’15 ’11 ’12 ’13 ’14 ’15 DEPOSITS FROM CUSTOMERS SHAREHOLDERS’ EQUITY NET DIVIDEND (RM’million) (RM’million) (RM’million) 157,134 18,794 154 158,151 23,085 369 137,741 16,739 414 115,861 11,615 450 138,228 15,117 535 ’11 ’12 ’13 ’14 ’15 ’11 ’12 ’13 ’14 ’15 ’11 ’12 ’13 ’14 ’15 8 RHB Capital Berhad Annual Report 2015 FIVE-YEAR GROUP FINANCIAL SUMMARY 2015 2014 2013 2012* 2011** OPERATING RESULTS (RM’million) Operating profit before allowances 2,398 2,824 2,899 2,536 2,473 Profit before taxation 2,107 2,735 2,471 2,385 2,250 Net profit attributable to equity holders of the Company 1,511 2,038 1,831 1,785 1,688 KEY BALANCE SHEET DATA (RM’million) Total assets 230,718 219,354 191,090 189,112 152,304 Gross loans, advances and financing 151,386 142,486 121,753 111,474 97,438 Total liabilities 207,608 200,460 174,147 173,772 140,676 Deposits from customers 158,151 157,134 137,741 138,228 115,861 Paid-up capital 3,075 2,572 2,547 2,494 2,205 Shareholders’ equity 23,085 18,794 16,739 15,117 11,615 Commitments and contingencies 186,762 133,504 100,232 83,160 74,161 SHARE INFORMATION Dividend per share – (sen) 12.00 6.00 16.30 22.09 25.41 Net assets per share – (RM) 7.5 7.3 6.6 6.1 5.3 Net tangible assets per share – (RM) 5.8 5.3 4.5 4.0 3.5 Basic earnings per share – (sen) 58.1 79.7 72.9 79.0 77.5 Share price – (RM) 5.67 7.62 7.90 7.69 7.48 Market capitalisation (RM'million) 17,433 19,602 20,121 19,180 16,492 FINANCIAL RATIOS (%) Profitability Ratios Net return on average equity 7.3 11.5 11.5 13.4 15.7 Net return on average assets 0.7 1.0 1.0 1.0 1.2 Cost to income ratio 61.3 54.7 51.3 47.5 43.5 Asset Quality Gross loans to deposits ratio 95.7 90.7 88.4 80.6 84.1 Gross impaired loans ratio 1.88 2.03 2.81 2.99 3.59 Ordinary Shares Net dividend yield 2.1 0.8 2.1 2.9 2.7 Dividend payout ratio 24.4 7.6 22.6 30.0 30.0 * Restated to reflect the adoption of MFRS 3. ** Restated as a result of retrospective application of MFRS 139 and FRSIC 18. 1% 1% 2% 6% 5% 9 SIMPLIFIED GROUP STATEMENTS OF FINANCIAL POSITIONS 20% TOTAL ASSETS 2015 TOTAL ASSETS 2014 1% 1% 1% 1% 2% 2% 6% 65% 5% 5% 7% 20% 2% 20% 5% 3% 64% 65% 3% Loans, advances and financing Financial assets and investments portfolio Cash and short term funds 9% Statutory deposits Deposits and placements with banks and other financial institutions Loans, advances and financing Loans, advances and financing Financial assets and investments portfolioClients’ and brokers’ balances Financial assets and investments portfolio Cash and short term funds Other assets Cash and short term funds Statutory deposits Statutory deposits Deposits and placements with banks and other financial institutions Deposits and placements with banks and other financial institutions