CIMB GROUP HOLDINGS BERHAD (Company No W)

Transcription

1 CIMB GROUP HOLDINGS BERHAD (Company No W) Minutes of the Fifty-Ninth (59 th ) Annual General Meeting of CIMB Group Holdings Berhad ( CIMB or the Company ) held at the Grand Ballroom, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur on Monday, 18 April 2016 at 9.30 a.m. Present : Dato Sri Nazir Razak- Chairman Tengku Dato Zafrul bin Tengku Abdul Aziz Dato Zainal Abidin Putih Mr. Glenn Muhammad Surya Yusuf Mrs. Watanan Petersik Mr. Robert Neil Coombe Mr. Joseph Dominic Silva Ms. Teoh Su Yin Datuk Mohd Nasir Ahmad Dato Lee Kok Kwan Mr. Hiroaki Demizu And 2,365 Shareholders attending in person or by proxy as per Attendance List In Attendance : Datin Rossaya Mohd Nashir Group Company Secretary Dato Mohammad Faiz Azmi Mr. Sridharan Nair Mr. Ong Chin Chuan Mr. William Mah Mr. Kelvin Lee Mr. Zharif Agil Ms. Ng Sue Zen Mr. Lee Shee Yan Representatives from Messrs PricewaterhouseCoopers 1. CHAIRMAN OF THE MEETING Dato Sri Nazir Razak took the Chair. 2. QUORUM The Group Company Secretary confirmed that there was sufficient quorum in accordance with Article 58 of the Company s Articles of Association, and the Fifty- Ninth (59 th ) Annual General Meeting (AGM) was duly convened. 3. NOTICE OF MEETING The Notice convening the Meeting was tabled by the Chairman and Shareholders present agreed unanimously that it be taken as read.

2 2 4. CHAIRMAN S OPENING REMARKS The Chairman welcomed the Shareholders to the AGM and proceeded to introduce the Members of the Board, and the Group Company Secretary, who was in attendance, to the Shareholders. The Chairman informed the meeting that representatives from the External Auditors, Messrs. PricewaterhouseCoopers, were also present, led by Dato Mohd Faiz Azmi. Others in attendance included the Members of the Group Management Committee and Board Members from the Group s subsidiaries. The Chairman briefed the Members, Corporate Representatives and Proxies present of their right to speak and vote on the Resolutions set out in the Notice of the 59 th AGM dated 21 March The Chairman informed that pursuant to Article 62 of the Company s Articles of Association, a resolution put to vote of the meeting shall be decided on a show of hands unless a poll is demanded. A poll may be demanded by: (a) (b) (c) (d) the Chairman of the meeting; or by at least five (5) Members present in person or by proxy; or by any Member or Members present in person or by proxy and representing not less than one twenty (1/20) of the total voting rights of all Members having the right to vote at the meeting; or by a Member or Members holding shares in the Company conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid up equal to not less than one twenty (1/20) of the total sum paid up on all the shares conferring that right. In line with the recent amendments to Bursa Malaysia s Listing Requirements and best practice, the voting at this AGM would be conducted on a poll rather than a show of hands. For expediency of the process, the Chairman exercised his rights as Chairman of the meeting to demand for a poll in accordance to Article 62 of the Company s Articles of Association in respect of all resolutions, Resolution 1 to Resolution 13, which would be put to vote at this Meeting. The Chairman believed that this would result in a fair and accurate reflection of the views of the Shareholders consistent with the principle of one share one vote. This practice would enforce greater Shareholders right and also allowed all votes to be taken into account including those who were unable to attend the Meeting but had appointed the Chairman of the Meeting as their proxy, to vote on their behalf. The Chairman informed that the Share Registrar, Symphony Share Registrars Sdn Bhd, would act as a Poll Administrator to conduct the polling process and Messrs KPMG as Scrutineers to verify the poll results. The polling process would be conducted upon the completion of the deliberation of all items, Resolution 1 to Resolution 13, in the Notice of AGM. The Chairman further informed that the Company had sent to the Shareholders a copy of the Annual Report and Financial Statement for 2015, which was dispatched together with the Notice of AGM. The Notice of AGM, was dispatched to the Shareholders, published in the Press and announced through Bursa Malaysia on 21 March 2016.

3 3 The Chairman proceeded with summarising the achievements of the Group and several initiatives undertaken by the Group in the financial year ended 2015 (FYE 2015). The Chairman informed that CIMB themed 2015 as a year of recalibration where CIMB prioritised leadership rejuvenation, operating costs and efficiencies and long-term strategies. There were many positives in the 2015 performance and CIMB managed to post record revenue of RM15.4 billion and net profit of RM2.8 billion or RM3.4 billion on a BAU basis. The primary negative in CIMB s performance in 2015 was the high level of loan loss provisioning in PT Bank CIMB Niaga Tbk (CIMB Niaga) and primarily in relation to borrowers who were severely affected by the sharp drop in commodity prices. The Chairman further informed that CIMB had entered 2016 on a stronger footing because of the initiatives CIMB had undertaken last year. CIMB s high growth engine had been recalibrated for the anticipated slower environment across the region tough decisions had been taken. Nevertheless, CIMB s revenue engine remained strong and CIMB made sure that Management and staffs felt recharged post recalibration. The Chairman added that CIMB remained on the well-established course of building a leading ASEAN franchise and looked forward to commencing CIMB s banking operations in Vietnam, following the receipt of a new licence last year. The Group was also focused on optimising technology both in operations following the completion of CIMB s 7 year 1Platform core banking project and customer engagement with the Group s investments in digital banking. The Chairman then extended his thanks to the Members of the Board for their contributions and guidance to the Group in The Chairman also took the opportunity to welcome Datuk Mohd Nasir Ahmad and Dato Lee Kok Kwan who were appointed in July 2015, and Mr. Hiroaki Demizu, a representative of Bank of Tokyo-Mitsubishi UFJ Japan, who came on Board in March this year, succeeding Mr. Kenji Kobayashi. The Chairman further thanked the stakeholders, including regulators, policy makers and non-governmental organisations that had shown long-term confidence in the Group. The Chairman expressed his thanks to the Shareholders who had invested in the Group for several decades and that without their support, the expansion and success of CIMB would not have been possible. The Chairman then ended his speech by calling on the Group CEO, Tengku Dato Sri Zafrul Tengku Abdul Aziz, to give his presentation on the 2015 CIMB Group Overview and 2016 Plans. 5. GROUP CEO S PRESENTATION Tengku Dato Sri Zafrul thanked the Shareholders for their presence and presented the Group s key financial performance which included CIMB today, 2015 Key Highlights, 2015 Performance and Other Highlights, Corporate Responsibility and T18 Updates. Tengku Dato Sri Zafrul highlighted the vision of the Group to be the leading ASEAN Company and the mission to provide universal banking services as highperformance, institutionalised and integrated company located in ASEAN and key

4 4 markets beyond, and to champion the acceleration of ASEAN integration and the region s links to the rest of the world. The Shareholders were briefed on the Scale Transformation from 2005 to 2015 which included the market capitalisation, markets, Shareholders funds, assets and staff strength. The Shareholders were then updated on the current position of the Group in the markets, as (i) (ii) (iii) (iv) (v) Market presence in 17 countries; 992 branches across ASEAN and other markets; Over 40,000 staffs; Over 12 million customers; and 1,100 stocks covered. Tengku Dato Sri Zafrul then presented the 2015 Key Highlights which included the growth of the Record Operating Income in 2016, Key Profit and Loss Line Items this beingoperating Income, Overhead Expenses, Loan Impairment, Net Profit and Return on Equity (ROE) and also the Targets for 2015 on ROE, Dividend Payout Ratio, Total Loans Growth, Loan Loss Charge, CET1 and Cost to Income. For the 2015 Performance, he informed that the Growth Domestic Product (GDP) growth generally was slower by countries. He then proceeded to explain on the volatile commodities and currencies in Malaysia, Indonesia, Thailand and Singapore where the Capital Markets remained week and the Primary Bonds issuances were still slow. Tengku Dato Sri Zafrul informed on the Pre-Provision Operation Profit (PPOP) and Profit Before Tax (PBT) by segments including Consumer, Commercial, Wholesale and Group Asset Management and Investments (GAMI) whereby the banking business contributed 72% of PBT. For Year-on-Year (Y-o-Y), Consumer Banking operating income grew by 11% and had a good traction in Malaysia, Indonesia and Singapore. In Commercial Banking, the operating income grew by 18% and PBT was impacted by a high provision from Indonesia and Thailand for Y-o-Y. Wholesale Banking Y-o-Y operating income grew by 8% from Corporate Banking and there was an increased Investment banking activity. A high provision in Corporate Banking still persisted and the operating expenses were well managed. There was absence of large gains from 2014 in GAMI Y-o-Y. He then explained to the Shareholders on the PPOP and PBT by country, whereby Indonesia s contribution to the Group declined to 8% due to provisions. Y-o-Y changes by countries were as (i) (ii) (iii) (iv) Malaysia - Improved Net Interest Income and fee income from Treasury and improved PBT from absence of large provision in Indonesia Impacted by higher provisions. Thailand Income was growing well and provisions higher from corporate and commercial. Singapore PBT impacted by one off commercial Non-Performing Loan. Tengku Dato Sri Zafrul highlighted the 2015 gross loan growth by country whereby the contribution by Malaysia was 53%, Indonesia at 19%, Singapore at 12%, Thailand at 8% and Others including Labuan, London, Cambodia, Hong Kong and Shanghai at 8%. Tengku Dato Sri Zafrul further highlighted the 2015 gross loans

5 5 growth by segments including Consumer Banking, Commercial Banking and Wholesale Banking. On the 2015 Deposits by country, Malaysia contributed 58%, Indonesia 17%, Singapore 13%, Thailand 6% and Others including Labuan, London, Cambodia, Hong Kong and Shanghai at 6%. The Shareholders were also informed on the 2015 deposits growth by segments for Consumer Banking, Commercial Banking and Wholesale Banking. Tengku Dato Sri Zafrul then proceeded to introduce the Senior Management who was internally promoted, new to CIMB and the original portfolio. The Shareholders were then briefed on the initiatives taken by CIMB in lowering Operating Cost base. Some of the initiatives were as (i) Investment Banking platform rationalisation closure of Australia operations and streamline of operations across the region; (ii) Mutual Separation Scheme in Malaysia and Indonesia (accepted by 3,614 staff, total staff headcount fell by 8.6% to 40,545); (iii) Introduced various spending disciplines; and (iv) Creation of a centralised procurement team. The Shareholders were also highlighted on the CET1 capital drivers as (i) (ii) (iii) (iv) Capital accumulation via profit generation. Risk-Weighted Assets reduction and optimisation via portfolio rebalancing and Risk enhancements. Active Available-For-Sale management and Foreign Exchange hedges to reduce capital volatility. Capital preservation via Dividend Reinvestment Scheme Tengku Dato Sri Zafrul informed the Shareholders on Other Highlights of CIMB such as Market Share in Consumer Banking, New Campaigns by CIMB, CIMB Market Position which was maintained and being No.1 in Global Sukuk, the Growing Presence in ASEAN, Notable Awards, Key Events, Share Price Performance and Maintained Dividend Payout at 40% for the FYE In terms of Corporate Responsibility, the Group disbursed RM6.66 million through CIMB Foundation and RM7.35 million through initiatives in CIMB Islamic Bank Berhad, Group Marketing and Communications Division, Corporate Responsibility Department, Indonesia, Singapore, Thailand and Cambodia. Tengku Dato Sri Zafrul then explained T18 as the Group s long-term target and strategic approach in achieving the Group s ambition to be the leader in the home market, and to achieve deep presence in ASEAN with strategic links to Asia Pacific and beyond, details of which were duly noted by shareholders. In conclusion, Tengku Dato Sri Zafrul informed on CIMB s targets for 2016 to achieve ROE of 10%, Dividend Payout Ratio of 40%, Total Loans Growth of 10%, Loan Loss Charge of bps, CET1 of 11% and Cost to Income of <53%. Further, regional economies were expected to remain lackluster with volatile capital markets and uncertain commodity outlook in CIMB was better prepared to enter 2016 with a strengthened capital position with CET1 of 10.3% and a lower cost structure.

6 6 Tengku Dato Sri Zafrul informed that the focus for 2016 would be the execution of T18 projects, continued vigilance on asset quality, cost management, governance and capital management. He further informed that CIMB benefitted from the wisdom and counsel of its diverse Board. He added that CIMB was represented by proxies from the regional operations and invited them to provide their perspective of what was happening in the region. He then invited Mr. Glenn Muhammad Surya Yusuf and Mrs. Watanan Petersik to present on his review of Indonesia and Thailand, respectively. The Shareholders duly noted the presentation by Mr. Glenn Muhammad Surya and Mrs. Petersik on the review of Indonesia and Thailand, respectively. At this juncture, Dato Zainal Abidin Putih, the Senior Independent Director was invited to give some commentary on the matter that was recently in the public domain which involved the Chairman of the Company. Dato Zainal s Speech Dato Zainal informed the Shareholders that in light of the recent report published by the Wall Street Journal dated 31 March 2016, the Board of CIMB Bank Berhad (CIMB Bank) had convened a Special Meeting on 5 April 2016, to discuss the matter. Dato Zainal further informed that at the Special Meeting, Dato Sri Nazir, was asked to explain on the transactions and he left the meeting thereafter. During his absence, the Group Chief Compliance Officer presented to the CIMB Bank Board with the details of the internal review and preliminary findings. After due deliberaton, the Board of CIMB Bank had approved the appointment of Messrs. Ernst & Young to conduct an independent review to assess the banking activities in terms of fulfilment of reporting obligations, and adherence to group policies and operational procedures. The independent review had commenced on 11 April 2016 and the Board was waiting for the outcome of the review, which was due in several weeks time, after which the Special Meeting would reconvene to deliberate the findings. Chairman s Personal Statement The Chairman informed the Shareholders that he had spent 26 years to build CIMB into a respected Banking Institution in the region. The reputation and well-being of CIMB had always been his utmost priority. The Chairman was thankful to have this opportunity to address the Shareholders on the recent publicity surrounding his role in assisting his brother who was the President of UMNO during the last General Election. Firstly, the Chairman informed that the event had taken place 3 years ago in Secondly, his brother had sought his assistance which he agreed to after assessing that it would not involve anything illegal or misuse of his position in CIMB, or any inappropriate use of CIMB s resources. Thirdly, the Chairman informed that he had acted on what he knew at that time and that given all the controversies currently surrounding 1 Malaysia Development Berhad (1MDB) and sources of political funds since 2014, the Chairman would never put his reputation or CIMB s reputation at risk.

7 7 The Chairman added that since this matter had come to the public domain, it was a cause of concern for Stakeholders and therefore he supported and welcomed the Board s actions which were to receive his full explanation, a report of Internal Compliance and initiate an independent review by an external audit firm. As an additional measure to ensure complete integrity of the internal process by the Board, the Chairman informed that he had decided to take a leave of absence from his position as a Chairman of the Company and as a Director of CIMB Bank with effect from the close of the Meeting today until the completion of the review as determined by the Board. The Chairman informed that the delay in this announcement was because he would like to engage Shareholders personally and to fulfil his obligation to Chair the AGM. The Chairman further informed that unless he was completely absent from the Company during this period, the Institution would not be practising the highest standards of Corporate Governance that CIMB stood for and he would be undermining what he had described as his utmost career priority. Dato Zainal Abidin concluded that as Senior Independent Director of the Company and the Chairman of CIMB Bank, the decision by Dato Sri Nazir had been voluntarily. Dato Zainal Abidin added that after having served alongside Dato Sri Nazir on the Board, the Members had always been convinced that the Dato Sri Nazir uphold the highest standards of Corporate Governance. While this decision was contrary to the Board's wishes, the Board respected and accepted Dato Sri Nazir s decision. 6. AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 AND THE REPORTS OF THE DIRECTORS AND AUDITORS THEREON The Chairman tabled the Audited Financial Statements for the financial year ended 31 December 2015 and the Reports of the Directors and Auditors. The Shareholders were informed that in line with Recommendation 5.1 of the Malaysian Code of Corporate Governance 2012 (MCCG 2012), the Audited Financial Statements for the financial year ended 31 December 2015 complied with the applicable financial reporting standards. The Chairman informed that the Audited Financial Statements for the financial year ended 31 December 2015 were only for discussion, as it did not require Shareholders approval under the provisions of Section 169(1) and (3) of the Companies Act Hence, it would not be put to the vote. Agenda 1 was duly proposed by Mr. K. Mahadevan and seconded by Mr. William Woon Peng Wah. The Chairman informed that letters and questions were received from Shareholders and invited Tengku Dato Sri Zafrul to address them accordingly. Tengku Dato Sri Zafrul informed that CIMB had responded to the issues raised in the letter dated 14 April 2016 from the Minority Shareholder Watchdog Group (MSWG) for the 59 th AGM. He then provided a summary of CIMB s written reply in response

8 8 to the 9 questions raised by MSWG and a snapshot of the questions and responses was also projected for the benefit of Shareholders present. Amongst the questions raised by MSWG which had been addressed in the Group CEO s presentation included cost structure for the Group and expected optimum cost to income ratio (CIR) for FY 2016 and forward. MSWG also queried on the measures to address cost structure and the measurement against productivity indicators in the Group. Tengku Dato Sri Zafrul responded that the Group s BAU CIR improved from 59.1% in 2014 to 55.6% in The Group was targeting to achieve a CIR of 53% for Currently, the Group was looking into a number of targeted areas to improve productivity and achieve sustainable cost savings such as the following: Established a strategic procurement function along with a system to automate the end-to-end procurement processes. All countries and divisions would continue to review opportunities for cost savings in Established a stricter cost control mechanism in order to control spending through an effective process. Divisions to continue implementing the Regional Operating Model Coupled with other revenue generating initiatives under T18, the objective was to lower the Group s CIR to below 50% by end MSWG also queried on the Group s measures to address the declining net interest margin over the last 3 financial years and pressures on the Group s income. Tengku Dato Sri Zafrul explained that across the banking industry, there was a structural compression in net interest margins (NIM), for example lower mortgage yields coming onto the books compared to the higher yielding loans rolling off in Malaysia. Similarly, CIMB Niaga s NIMs were also compressing in line with the Indonesian banking industry. CIMB continued to focus on Current Account Saving Account (CASA) strategy to decelerate the NIM compression. For 2015, CASA grew by 3.9% and 6.6% for MYR and IDR respectively. Funding diversification was achieved by expanding into alternative funding sources like securitised portfolios of loans, to lower the Group s funding cost. Addressing NIM compression was also achieved by improving asset profitability across all loan products within all business segments. On MSWG s query on where the Group aspired to be in the area of Islamic financing and the benchmarks/targets/timeline going forward, Tengku Dato Sri Zafrul informed that the Group s Islamic banking operation aspired to leverage on its dual banking model to expand product offerings and propositions in Malaysia, Indonesia and Singapore. Growth prospects were greatest in Indonesia, where CIMB would increase focus on developing fee-based income, such as treasury, trade finance and transaction banking, while CIMB would expand consumer Islamic services and products via electronic banking. CIMB was concurrently exploring new frontier markets for Islamic finance such as China, Sri Lanka and India. CIMB s regional growth strategies included reasserting profitability from CIMB s core businesses, developing product innovation and new fee income segments, deepening customer relationships, growing CIMB s ancillary business and increasing CIMB s deposit franchise. Going forward, Group Islamic Banking was expected to see a steady increase in income contributions from Indonesia and Singapore supported by the growth in consumer, commercial and corporate financing and fee-based offerings. In 2015, Malaysia remained the single-largest contributor to the Islamic banking business, generating 87% of Islamic banking revenue with Indonesia and Singapore

9 9 sharing 13%. The Group retained its position as the world's no. 1 sukuk house in CIMB brought in high profile sovereigns and corporates to the global sukuk market, like the Governments of Indonesia and Hong Kong, and Petronas. As stated in the annual report, the higher impairment amount was attributable to the deterioration in its assets quality of its corporate and commercial loans in Indonesia and Thailand. In response to MSWG s query on the sector/industry involved and whether there was a material concentration risk and exposure to a single or group in these countries, Tengku Dato Sri Zafrul informed that the higher impairment charge in 2015 was mainly attributed to commodity-related provisions in Indonesia (coal) and Thailand (steel and rice). CIMB had significantly strengthened the Group s risk management capabilities, tightened risk appetites, refined credit risk models, enhanced processes and consolidated reporting structures, over the past two years. These measures would ensure that lessons were learnt and that CIMB Group emerged as a stronger ASEAN bank. On MSWG s query on whether the Bank had its own Responsibility Lending Policy and to highlight the principles, the Bank s compliance and its effectiveness, Tengku Dato Sri Zafrul responded that in addition to assessing the creditworthiness of customers when granting credits, the Group also took into consideration the type of business activities the customers were involved in and their impact on the social front. The Group was guided by its credit risk policy which sets out certain types of prohibited credit, higher risk credit and special consideration credit that required additional consideration or extra due diligence, Shariah compliance policy in giving Islamic financing as well as Anti-Money Laundering and Counter Financing of Terrorism Act 2009 policy which sets out higher risk businesses that were subject to enhanced customer due diligence. MSWG further queried on the Bank s success in financial technology in particular the Small and Medium Enterprises (SME) in Malaysia and the progress made in collaboration with Startupbootcamp FinTech (SBC). Tengku Dato Sri Zafrul responded that CIMB had long recognised the benefits of technology and continued to invest in digital capabilities across the region. This was evident from the completion of CIMB s regional 1Platform project in early 2016 and culminating in the recent recognition as the Best JomPAY Bank at the Malaysian e-payments Excellence Awards. CIMB had recognised the significance and potential in collaborations with FinTechs and SMEs in Malaysia. CIMB was also in discussions to establish strategic partnership with a number of e-commerce companies in Malaysia, in exploring the potential of seamless integration of banking and business services to SME customers. This would provide SMEs with avenues to integrate with the financial industry with innovative offerings and to raise the standards of their services and accelerate cross-border growth. The Shareholders noted that following CIMB's partnership with SBC Singapore in October 2015, CIMB had attained instant plug-in to the FinTech community leveraging on SBC's network and gained direct access to established startups from other parts of the world as well as emerging startups in Asia. CIMB had hosted SBC in CIMB Niaga and CIMB Bank Thai PCL (CIMB Thai) and obtained direct interaction with rapidly growing FinTech startups with up-close views of new technology and business models evolving in the region, and to explore collaborative opportunities with CIMB. This had broadened the Group's perspective to the fast changing trends

10 10 and new developments with expanding participation from various functions across the Group and across different geographies. CIMB remained at the early stage of the SBC partnership but was fast gaining momentum as CIMB intensified its interaction with startups and members of the FinTech community. In relation to Corporate Governance, MSWG had requested CIMB to provide clarification to Shareholders on the controversies surrounding political payments received in the Chairman s banking account as reported in the media. Tengku Dato Sri Zafrul responded that as the Chairman had earlier clarified, this incident happened 3 years ago in 2013 before the controversy around the Prime Minister's personal account and 1MDB amongst others. The Chairman was asked by the Prime Minister for assistance and assessed that it was a favour that would not involve anything illegal or misuse of his position or any inappropriate use of the Bank's resources. MSWG also questioned the Bank s Policy on Board Members and Senior Management personnel holding banking accounts in the Banking Group and how did the Group addressed the conflict of interest situation, risks associated and the check and balances involving such accounts and transactions in the Banking Group. Tengku Dato Sri Zafrul explained that CIMB did not have any specific policy restricting Board Members and/or Senior Management personnel from holding any banking accounts in the Banking Group. As with most banking institutions, the Board Members and employees were encouraged to bank with their own banking group as part of the cross selling of the bank's products and services. With regards to conflict of interest situation, risks associated and the check and balances involving such accounts and transactions in the Banking Group, the Shareholders were informed that CIMB Group had implemented amongst others the following policies as part of managing/addressing any potential conflict of interest situations: Conflict Management Policy that required inter alia the identification, disclosure and escalation of any potential conflict of interest situation by the Board members/employees that might arise, so that any potential conflict issues could be appropriately managed. Banking Institutions were also governed by Bank Negara Malaysia (BNM) Guidelines on Code of Ethics and Guidelines on Corporate Governance whereby Board of Directors/Senior Management were subjected to disclosure requirements in respect of their business interests/ transaction, if any. Directors must not participate in any discussion and decision making in respect of matters where there was a conflict or potential conflict situation. Related Party Transactions (RPT) policy and credit policy on credit transactions with connected persons respectively, in ensuring RPT and/or credit transactions entered into were on arm s length basis and/or carry out within the parameters of such requirements. Personal Account Dealing Policy governing personal dealings by employees/directors whereby prior approval from Control Room was required to facilitate appropriate monitoring by CIMB. On MSWG s reference to the Panama Papers and whether there were any improprieties by the persons in the list who were Board and Senior Management, Tengku Dato Sri Zafrul responded that the Group monitored selected adverse media and regional regulatory notices. In this respect, named persons of interest were

11 11 checked for veracity and periodically screened to identify potential matches. Specific to the Panama Papers, the named persons had been screened thus far, and clients if any, might be subject to Suspicious Transaction Reporting as required by BNM. MSWG also referred to Resolution 10 on the Proposed Gratuity Payment of RM3.5 million to Tan Sri Md Nor Md Yusof the former Chairman of the Company in recognition of his long service and contribution to the Company and would like the Board to explain the following which was clarified by Tengku Dato Sri Zafrul, as (a) Rationale of the payment and to provide details of the significant contributions during his tenure as Chairman. The Shareholders were informed that the proposal for adequate benefit to the former Chairman in consideration for his long service to the Group was first raised by Mr. K. Mahadevan at the 58 th AGM in The Board had noted the suggestion and requested Management to proceed with a review. The proposal was recommended for Shareholders approval on the premise of recognising his vast contribution in leading the Group to a respected position to a key financial service provider in ASEAN. During Tan Sri Md Nor s tenure as Chairman, the Group had experienced steady growth both in profits and assets with average growth of 17.1% and 13.1% respectively (from 2006 to 2013). He had played a critical oversight role, remained relevant by keeping abreast with industry developments and engaged fellow Directors actively while contributing to the development of corporate strategy and monitoring the management team. The Shareholders noted that Tan Sri Md Nor was also a former CEO of the then Bank of Commerce (M) Berhad, and had been instrumental to the growth of the Bank then to making it to be Malaysia s second largest commercial bank and one of the leading banks in the region. (b) To provide the total remuneration packages and all benefits received by the former Chairman during his tenure as Non-Executive Chairman from the year 2006 until his retirement on 31 August The Shareholders noted that the total remuneration received by Tan Sri Md Nor over his 8.2 years of service with the Group was RM4.345 million. There were no other discretionary payments of share schemes awarded to him during the period. (c) MSWG enquired whether this would be a precedent and policy set by the Group in future cases involving those holding such positions in the Group of Companies. Tengku Dato Sri Zafrul reiterated that the gratuity payout was on a discretionary basis depending on the timing and situation at the time of payment. Management however, had received feedback from several institutional Shareholders that gratuity payments were no longer within their policies and that best practices had shifted away from gratuity payments. In view of this, CIMB no longer intended to declare any gratuity payments in the future. Tengku Dato Sri Zafrul also informed to the Shareholders that CIMB had received an from the Employees Provident Fund (EPF) on their queries and had responded

12 12 to the issues raised in the letter dated 18 April 2016 for the 59 th AGM. He then provided a summary of CIMB s written reply in response to the 4 questions raised by EPF, as presented. Tengku Dato Sri Zafrul also briefed the shareholders on the replies to the questions received earlier from several other Shareholders, namely Mr. Lee Kha Loon, Mr. Pang Ah Kow, Mr. William Woon, Mr. K. Mahadevan and Dato Bhupinder Singh. Puan Lya Rahman from MSWG thanked Tengku Dato Sri Zafrul for the detailed explanation on the issues raised by the Shareholders. Puan Lya commended Dato Sri Nazir who showed a very good moral attitude which was very much linked to governance and integrity of the Board. She also commended the Board s action in appointing an independent review on the issue and for the payment of gratuity to Tan Sri Md Nor in recognising his efforts as previous Chairman. Puan Lya was pleased that with the Board s response that it would not recommend any gratuity payment to Non-Executive Directors in the future as they had been adequately remunerated. Mr. Chong, a Shareholder congratulated CIMB for the tremendous awards received during the year and also thanked the Chairman for his action on the issue. Mr. Chong questioned on the reason the Audited Financial Statements for the financial year ended 31 December 2015 and the Reports of the Directors and Auditors were not put to vote. The Chairman clarified under the provision of Section 169 (1) and (3) of the Companies Act, 1965, the Audited Financial Statements and the Reports of the Directors and Auditors were only for discussion and did not require Shareholders approval. Another Shareholder, Mr. Ming Koh commented that the system integration of the Bank was not harmonised. On Mutual Separation Scheme (MSS) exercise, Mr. Ming was concerned that the exercise did not boost staffs morale and motivation and requested for an explanation from Board on this. In response to Mr. Ming s concerns, Tengku Dato Sri Zafrul explained on the system integration whereby CIMB had recently completed the Integration Platform and would be able to see improvements. On the MSS, the exercise did not affect the staffs morale and motivation as it was not staff retrenchment but was voluntary in nature. In general, a majority of CIMB staffs were happy with CIMB s directions in respect of T18. One of the Shareholders posed 3 questions to the Board on how Corporate Governance could stimulate economic growth, what would the Chairman do if he was appointed as Governor of BNM, and how CIMB differentiated itself with other Banks in terms of the Banks offerings. On the question on economic growth, the Chairman responded that in summary the world had accumulated too much debt and ultimately there had to be restructuring globally. The global debt to GDP in 2008 was 138% and currently the total debt to GDP was almost 240%. For interest cover on servicing, the debt was also unsustainable. The Chairman further informed that globally, there was a need for restructuring and must look for opportunity for growth. CIMB had done the right thing to recalibrate early to bring down the cost and to re-steer the Company with a high growth engine which could accommodate lower growth globally. On the second question, the Chairman stated that he would not be appointed as the Governor of BNM Governor. Tengku Dato Sri Zafrul responded to the third question and informed that the banking landscape was very competitive and products had become more commoditised and CIMB was differentiated based on its service quality to customers. Tengku Dato Sri Zafrul further informed that CIMB had launched Project Jaeger for customers experience initiatives. He reiterated that CIMB would

13 13 ensure that the staffs recognised and understood the importance of servicing the customers in the best way possible. In general, it would be difficult to differentiate banking products, but CIMB was differentiated by its customer service quality. On a query by another Shareholder on the gap between the staffs and Management salary, the Chairman explained that there was a significant compression in the number, but in this current environment, CIMB s priority was to improve the salary for the lower paid staffs on the cycle of compensation. Mr. Jeremie Ting, a Shareholder commended the Board for the excellent performance in Mr. Ting however, questioned the Board on whether CIMB had lost control at the branch level. He commented on the way the AGM was organised where there were several Shareholders who waited for some time to receive their packed food and suggested that alternatively, CIMB could give out food coupons for the following year s AGM. He also questioned on the number of members registered for the 59 th AGM. The Chairman responded that the branch was in proper control and the number of Shareholders and proxies present at the 59 th AGM was about 1,800. The Chairman further informed that CIMB had catered for 2,000 people and the Chairman would look into this matter. Mr. Clement Wong, a Shareholder suggested that the Dividend Reinvestment Scheme (DRS) submission of forms should be simplified for Shareholders and should not trouble the Shareholders to buy Stamp Duty. Mr. Wong advised CIMB s Registrar to provide short message service (SMS) notification on the timeline of DRS submission and when the Registrar received the DRS forms from Shareholders. The Chairman informed that CIMB would re-visit the process and implement a way to make DRS forms submission as easy and friendly as possible. Mr. Ting suggested that the Annual Report of the Company should be received by the Shareholders early and requested the Group Company Secretary to take action on the matter. He further asked for clarification on page 8 of the Financial Statement under growth figures 2015 and 2014, where there was inconsistency on the figures and page 137 on the remuneration of RM574,000 for Dato Zainal Abidin who was a Senior Independent Director. The Chairman responded that it was a typographical error on page 8. On Dato Zainal Abidin s remuneration, the Chairman explained that the amount commensurate with his role as Directors on several other Boards and Committees such as Chairman of the CIMB s Audit Committee, Group Nomination and Remuneration Committee, member of Board Risk Committee, member of Group Compensation Review Committee and Chairman of CIMB. Mr. Ting commented that gratuity payment should not be given to the Non-Executive Directors as the fees were already appropriate. The Chairman responded that the gratuity payment was given lower than the benchmarks for Non-Executive Directors and assured that the payment was only for this AGM. With that, the Chairman concluded the question and answers session for Agenda 1, and proceeded to the next Agenda. 7. RE-ELECTION OF DIRECTORS

14 14 Being interested in the Ordinary Resolution 1, the Chairman handed over the Chair to Dato Zainal Abidin, the Senior Independent Director and the Chairman of the Group Nomination and Remuneration Committee. Dato Zainal Abidin informed the Shareholders that in line with Recommendation 3.1 of the Malaysian Code of Corporate Governance (MCCG) 2012, and BNM Fit & proper Guidelines, the Group Nomination and Remuneration Committee had conducted an assessment of Directors retiring at the AGM under Article 76. The criteria for assessment included character, integrity, competence, experience and time towards determination of their ability to effectively discharge their respective roles as Directors. The Board had approved the Group Nomination and Remuneration Committee s recommendations for these Directors to retire by rotation. (i) Dato Zainal Abidin informed that for Agenda 2, Ordinary Resolution 1 was for the re-election of Dato Sri Nazir Razak who retired under Article 76 of the Company s Articles of Association. Agenda 2, Ordinary Resolution 1 was duly proposed by Mr. Woon and seconded by Mr. K. Mahadevan. Mr. Woon commended CIMB s progress which had been successful throughout the year. Mr. Woon thanked the Board of Directors, Management and staffs for their hard work, integrity, transparency, knowledge, experience and honesty. Dato Zainal Abidin informed the Shareholders that the Chairman had called for a poll on all resolutions; the poll voting for Ordinary Resolution 1 would be conducted upon completion of the remaining business of the meeting. At this juncture, Dato Zainal Abidin handed over the Chair to Dato Sri Nazir. (ii) The Chairman proceeded with the Agenda 2, Ordinary Resolution 2 for the reelection of Mr. Glenn Muhammad Surya Yusuf who retired under Article 76 of the Company s Articles of Association. Agenda 2, Ordinary Resolution 2 was duly proposed by Mr. Woon and seconded by Mr. Chew Ket Chee. Mr. Ting questioned the Board on page 6 regarding Mr. Glenn Muhammad Surya s attendance to the Board Meetings which was not full attendance. The Chairman explained that Mr. Glenn Muhammad Surya had met the 75% requirement of attendance to the Board Meetings. The Chairman further explained that Mr. Glenn Muhammad Surya was based in Jakarta and he was also the Vice-President Commisioner of CIMB Niaga where his attendance was 100%. The Chairman reiterated that Mr. Glenn Muhammad Surya was committed and had contributed to the well-being of the Group. The Chairman informed that the poll voting for Ordinary Resolution 2 would be conducted upon completion of the remaining business of the Meeting.

15 15 (iii) The Chairman then proceeded with the Agenda 2, Ordinary Resolution 3 for the re-election of Mrs. Watanan Petersik who retired under Article 76 of the Company s Articles of Association. Agenda 2, Ordinary Resolution 3 was duly proposed by Mr. Soo Thien Ming and seconded by Mr. Tan Ken Tiong. The Chairman informed that the poll voting for Ordinary Resolution 3 would be conducted upon completion of the remaining business of the Meeting. (iv) The Chairman then proceeded with the Agenda 3, Ordinary Resolution 4 for the re-election of Datuk Mohd Nasir Ahmad who retired under Article 83 of the Company s Articles of Association. Agenda 3, Ordinary Resolution 4 was duly proposed by Mr. K. Mahadevan and seconded by Mr. Tan The Chairman informed that the poll voting for Ordinary Resolution 4 would be conducted upon completion of the remaining business of the Meeting. (v) The Chairman then proceeded with the Agenda 3, Ordinary Resolution 5 for the re-election of Dato Lee Kok Kwan who retired under Article 83 of the Company s Articles of Association. Agenda 3, Ordinary Resolution 5 was duly proposed by Mr. Soo and seconded by Mr. Woon. The Chairman informed that the poll voting for Ordinary Resolution 5 would be conducted upon completion of the remaining business of the Meeting. (vi) The Chairman then proceeded with the Ordinary Resolution 6 for the reelection of Mr. Hiroaki Demizu who retired under Article 83 of the Company s Articles of Association. Agenda 3, Ordinary Resolution 6 was duly proposed by Mr. Woon and seconded by Mr. K. Mahadevan. The Chairman informed that the poll voting for Ordinary Resolution 6 would be conducted upon completion of the remaining business of the Meeting. 8. DIRECTORS FEES The Chairman handed the chairmanship of the Meeting to Tengku Dato Sri Zafrul to take over the proceedings as the Chairman declared his interest in the following resolution. Tengku Dato Sri Zafrul informed that Agenda 4, Ordinary Resolution 7 was related to the payment of Directors Fees amounting to RM1,049,000 in respect of the financial year ended 31 December Agenda 4, Ordinary Resolution 7 was duly proposed by Mr. Pang Ah Kow and seconded by Mr. Chong Chin Hok.

16 16 Tengku Dato Sri Zafrul informed the Shareholders that the Chairman had called for a poll on all resolutions, the poll voting for Ordinary Resolution 7 would be conducted upon completion of the remaining business of the meeting. 9. PRE-APPROVAL ON PAYMENT OF DIRECTORS REMUNERATION Tengku Dato Sri Zafrul informed that the Agenda 5, Ordinary Resolution 8 was in relation to the proposed payment of Directors Remuneration from 1 January 2016 until the next AGM of the Company. Tengku Dato Sri Zafrul further informed that this proposal was in line with the recommendation by BNM s Financial Institution Directors Education (FIDE) Forum in its Directors Remuneration Report 2015 that was launched on 7 December The recommendation was for remuneration to Directors to be paid on a timely and periodic basis, and as such this would require CIMB to obtain approval from Shareholders on the remuneration structure, this being total fees and allowances for Board and Board Committee meetings. The proposal, if approved by the Shareholders, would allow CIMB to remunerate Directors timely instead of in arrears. This ensured accountability while recognising the effort and contribution of the Non-Executive Directors by paying them in a timely manner for the time spent to attend meetings without having to wait for the next AGM. The Board was recommending the remuneration which had been provided in the Notice and presented on screen. Tengku Dato Sri Zafrul informed that the Shareholders would note that a premium was recommended for the Chairman and Chairman of each Committee for their leadership, guidance and additional responsibilities on the Board and in each Committee. In the case of the Chairman of the Board, the premium included was to recognise his mentoring role to Management and the organisation. Agenda 5, Ordinary Resolution 8 was duly proposed by Mr. Soo and seconded by Mr. Tan. One of the Shareholders requested for clarification on the monthly allowance for the Chairman of the Board. Tengku Dato Sri Zafrul reiterated that the premium was recommended for the Chairman and Chairman of each Committee for their leadership. For Board of Directors, the premium included the recognition of the Chairman s mentoring role to Management and the organisation. Tengku Dato Sri Zafrul informed the Shareholders that the poll voting for Ordinary Resolution 8 would be conducted upon completion of the remaining business of the meeting. At this juncture, Tengku Dato Sri Zafrul handed over the chairmanship to Dato Sri Nazir for next agenda. 10. RE-APPOINTMENT OF AUDITORS

17 17 The Chairman informed that Agenda 6, Ordinary Resolution 9 was on the proposed re-appointment of Messrs. PricewaterhouseCoopers as Auditors of the Company and to authorise the Board of Directors to fix their remuneration. The Chairman informed the present auditors; Messrs. PricewaterhouseCoopers had expressed their willingness to continue in office. Agenda 6, Ordinary Resolution 9 was duly proposed by Mr. Tan and seconded by Mr. K. Mahadevan. The Chairman informed that the poll voting for Ordinary Resolution 9 would be conducted upon completion of the remaining business of the Meeting. SPECIAL BUSINESS 11. GRATUITY PAYMENT TO TAN SRI MD NOR MD YUSOF The Chairman informed that next item was under Agenda 7, Ordinary Resolution 10 as special business, to authorise the Company to make a gratuity payment of RM3,500,000 to Tan Sri Md. Nor Md. Yusof, the former Chairman/Non-Executive Director of the Company, in recognition and appreciation of his long service and contribution to the Company. This proposal was first put forth by Mr. K. Mahadevan at the Company s AGM last year, where it was proposed that a provision of adequate benefit be made for Tan Sri Md. Nor considering his long service to the Group. The Board noted the suggestion and had requested Management to proceed with a review. The Chairman informed the Shareholders that Tan Sri Md Nor served as Chairman of CIMB from 1 August 2006 to 31 August During his tenure as Chairman, the Group had experienced steady growth both in profits and assets with an average growth of 17.1% and 13.1% respectively (from 2006 to 2013). He had played a critical oversight role, remained relevant by keeping abreast with industry developments and engaged fellow Directors actively while contributing to the development of corporate strategy and monitoring the management team. Agenda 7, Ordinary Resolution 10 was duly proposed by Mr. K. Mahadevan and seconded by Mr. Woon. Mr. K. Mahadevan informed the Meeting that he was pleased to propose the Resolution for the payment of gratuity to Tan Sri Mohd Nor for his tremendous contribution to the Group. The Chairman informed that the poll voting for Ordinary Resolution 10 would be conducted upon completion of the remaining business of the Meeting. 12. DIRECTORS AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965 The Chairman informed the Meeting that the next item on the Agenda was to give the authority to the Directors to issue shares at any time until the conclusion of the next

18 18 AGM, provided the number of shares to be issued did not exceed 10% of the issued share capital of the Company for the time being, subject always to the approval of all relevant governmental and/or regulatory authorities being obtained for such allotment and issue. The Chairman explained that this proposal, which had been approved for the past years, was to give the Directors the authority to issue new shares up to 10% of the capital of CIMB without having to call for an Extraordinary General Meeting (EGM). The proposal was, however, subject to regulatory approvals, namely Bursa Malaysia Securities Berhad and/or BNM, and was only valid up to the next AGM. The Chairman informed that this authority was a strategic tool available to the Company in managing its capital without being unduly dilutive to existing Shareholders. By having this authority in place, the Company was better placed to take advantage of the market movements and allowed the Company the flexibility to issue shares for purposes as the Directors deemed would be in the best interests of the Company and Shareholders. Agenda 8, Ordinary Resolution 11 was duly proposed by Mr. Pang and seconded by Mr. Woon. The Chairman informed that the poll voting for Ordinary Resolution 11 would be conducted upon completion of the remaining business of the Meeting. 13. RENEWAL OF THE AUTHORITY FOR DIRECTORS TO ALLOT AND ISSUE NEW ORDINARY SHARES OF RM1.00 EACH IN THE COMPANY IN RELATION TO THE DIVIDEND REINVESTMENT SCHEME The Chairman proceeded to the next item of the Agenda, which was to consider and if thought fit, to pass the Ordinary Resolution to renew the authority for the Company to allot and issue new ordinary shares of RM1.00 each in the Company in relation to the DRS. The details of the Resolution were as stated in the Notice of AGM. The Shareholders had approved the DRS at the EGM held on 25 February The Shareholders were informed that this proposal would give authority to the Directors to issue ordinary shares in the Company in respect of dividends to be declared, if any, under the DRS, until the conclusion of the next AGM. A renewal of this authority would be sought at the subsequent AGM. Agenda 9, Ordinary Resolution 12 was duly proposed by Mr. Pang and seconded by Mr. Woon. One of the Shareholders suggested that the Stamp Duty of RM10 for the DRS to be exempted and was duly accepted by the Chairman and would be effected next year. The Chairman informed that the poll voting for Ordinary Resolution 12 would be conducted upon completion of the remaining business of the Meeting.