INSPIRING ASEAN ANNUAL REPORT 2018 FINANCIAL STATEMENTS % CET1 Capital Ratio One of the strongest in the region

Transcription

1 ANNUAL REPORT FINANCIAL STATEMENTS INSPIRING ASEAN RM8.11 billion Net Profit Exceeds RM8 billion mark % CET1 Capital Ratio One of the strongest in the region RM billion in Assets Strong total assets base

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3 Inside this report OUR PERFORMANCE Highlights of 03 How We Distribute Value Created 04 Financial Performance 04 Five-Year Financial Summary 06 Simplified Statements of Financial Position 06 Quarterly Financial Performance 07 Key Interest Bearing Assets and Liabilities 07 Statement of Value Added 07 Distribution of Value Added 08 Segmental Information THE FINANCIALS Statement of Directors' Responsibility 11 Analysis of Financial Statements 16 Financial Statements

4 02 Highlights of RM8.11 billion Record Net Profit Singapore Limited Locally Incorporated 57sen Total Dividend per Share First in Malaysia to Roll- Out a Digital Upskilling Programme for Staff The broke the RM8 billion mark by achieving a record high net profit for FY, driven by growth in net operating income and disciplined cost management. We cemented our foothold in Singapore by locally incorporating Singapore Limited, which now houses our Singapore Community Financial Services business effective 5 November. This translates to a dividend payout ratio of 77.3% and a 6.0% dividend yield one of the highest among banking stocks in the region. We introduced our FutureReady Digital Upskilling Programme to increase employees digital literacy in line with the s aspiration to be The Digital of Choice. is a Top 500 Most Valuable Global Brand Constantly Creating New Digital Firsts We are the first Malaysian bank to break into the Global 500 Brands list by Brand Finance, with a brand value of USD4.2 billion. We are the first bank in Malaysia to introduce a cashless payment solution via QRPay. Meanwhile, the refreshed and optimised 2u website also includes a first-of-its-kind digital financial planner. FINANCIAL HIGHLIGHTS Net Profit* (RM billion) Return on Equity (%) RM8.11 billion % FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY Earnings per Share (sen) CET1 Capital Ratio (%) 74.2 sen % FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY * Net profit is equivalent to profit attributable to equity holders of the. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

5 03 How We Distribute Value Created In fulfilling our promise to our stakeholders, distributes the value created in relevant and meaningful ways and for some stakeholder groups, beyond financial means. Stakeholders receive intangible benefits ranging from employee upskilling programmes to diverse community initiatives, in our effort to enable a more sustainable future. Value created in was distributed as follows: 36% RM6.45 billion Salaries and rewards to ers amounted to RM4.94 billion. 14% RM2.55 billion A total of RM2.55 billion in tax and zakat paid to governments, contributing to the development of ASEAN economies. For the Economy For our Employees RM17.99 billion* For our Shareholders 10% RM1.84 billion reinvested RM1.84 billion via retained profits to fund future growth across our diversified franchise. For the 's sustainability 35% RM6.27 billion We rewarded our shareholders with a full year dividend of 57 sen per share, translating to a dividend yield of 6.0%, among the sector s highest. * Includes non-controlling interests, as well as depreciation and amortisation which represent the combined 5% not illustrated above.

6 04 Financial Performance FIVE-YEAR GROUP FINANCIAL SUMMARY FY 31 Dec FY 31 Dec OPERATING RESULT (RM million) Operating revenue 35,712 40,556 44,658 45,580 47,320 24,841 26,681 Pre-provisioning operating profit ( PPOP ) 1 9,419 10,953 11,686 11,911 12,416 8,514 9,491 Operating profit 8,948 8,940 8,671 9,883 10,803 7,353 8,748 Profit before taxation and zakat 9,112 9,152 8,844 10,098 10,901 7,353 8,748 Profit attributable to equity holders of the 6,716 6,836 6,743 7,521 8,113 6,123 7,308 KEY STATEMENTS OF FINANCIAL POSITION DATA (RM million) Total assets 640, , , , , , ,613 Financial investments portfolio 2 115, , , , , , ,354 Loans, advances and financing 403, , , , , , ,367 Total liabilities 585, , , , , , ,024 Deposits from customers 439, , , , , , ,160 Investment accounts of customers 17,658 31,545 24,555 23,565 Commitments and contingencies 551, , , , , , ,161 Paid-up capital/share capital 3 9,319 9,762 10,193 44,250 46,747 44,250 46,747 Share premium 3 22,748 25,900 28,879 Shareholders equity 52,975 61,695 68,516 72,989 75,330 62,253 65,589 SHARE INFORMATION Per share (sen) Basic earnings Diluted earnings Gross dividend Net assets (sen) Share price as at 31 Dec (RM) Market capitalisation (RM million) 85,455 81,999 83, , ,972 FINANCIAL RATIOS (%) Profitability Ratios/Market Share Net interest margin on average interest-earning assets Net interest on average risk-weighted assets Net return on average shareholders funds Net return on average assets Net return on average risk-weighted assets Cost to income ratio Domestic market share in: Loans, advances and financing Deposits from customers Savings Account Deposits from customers Current Account CAPITAL ADEQUACY RATIOS (%) CET1 Capital Ratio Tier 1 Capital Ratio Total Capital Ratio ASSET QUALITY RATIOS Net impaired loans (%) Loan loss coverage (%) Loan-to-deposit ratio (%) Deposits to shareholders fund (times) VALUATIONS ON SHARE Gross dividend yield (%) Dividend payout ratio (%) Price to earnings multiple (times) Price to book multiple (times) PPOP is equivalent to operating profit before impairment losses as stated in the income statements of the financial statements. 2 Financial investments portfolio consists of financial assets designated upon initial recognition at fair value through profit or loss, financial investments at fair value through profit or loss, financial investments held-for-trading, financial investments at fair value through other comprehensive income, financial investments available-for-sale, financial investments at amortised cost and financial investments held-to-maturity. 3 Pursuant to Companies Act 2016, the share capital will cease to have par or nominal value, and share premium become part of the share capital. 4 Cost to income ratio is computed using total cost over the net operating income. The total cost of the is the total overhead expenses, excluding amortisation of intangible assets for PT Indonesia Tbk and Kim Eng Holdings Limited. 5 Loan-to-deposit ratio for December, December, December 2016 and December 2015 is computed using gross loans, advances and financing over deposits from customers and investment accounts of customers. 6 Deposits to shareholders fund for December, December, December 2016 and December 2015 is including investment accounts of customers. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

7 05 Financial Performance PROFIT BEFORE TAXATION AND ZAKAT RM10.90 billion PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK RM8.11 billion TOTAL ASSETS RM807.0 billion FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY TOTAL LIABILITIES RM729.3 billion LOANS, ADVANCES AND FINANCING RM507.1 billion DEPOSITS FROM CUSTOMERS RM532.7 billion FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY SHAREHOLDERS EQUITY RM75.3 billion SHARE CAPITAL 1 RM46.7 billion FY2014 FY2015 FY2016 FY FY FY2014 FY2015 FY2016 FY FY 1 Share capital for FY2016, FY2015 and FY2014 is inclusive of share premium.

8 06 Financial Performance SIMPLIFIED GROUP STATEMENTS OF FINANCIAL POSITION Total Assets RM807.0 billion As at 4.7% 2.0% 6.8% 1.6% 22.1% 5.6% 2.0% 6.6% 2.2% 20.2% RM765.3 billion As at 31 December 62.8% 63.4% Cash and short-term fund Deposits and placements with financial institutions Financial investments portfolio Loans, advances and financing Other assets Statutory deposits with central banks Total Liabilities & Shareholder s Equity 9.6% 9.8% RM807.0 billion As at 5.7% 10.3% 8.9% 6.9% RM765.3 billion As at 31 December 5.5% 66.0% 5.6% 65.6% 2.9% 3.2% Deposits from customers Investment accounts of customers Deposits and placements from financial institutions Other liabilities Borrowings, subordinated obligations and capital securities Shareholders' equity GROUP QUARTERLY FINANCIAL PERFORMANCE FY 31 Dec RM million Q1 Q2 Q3 Q4 YEAR Operating revenue 11,515 11,509 12,062 12,234 47,320 Net interest income (including income from Islamic ing Scheme operations) 4,368 4,320 4,388 4,608 17,684 Net earned insurance premiums 1,511 1,490 1,430 1,502 5,933 Other operating income 1,302 1,008 1,448 1,161 4,919 Total operating income 7,181 6,818 7,267 7,271 28,537 Operating profit 2,548 2,577 2,608 3,070 10,803 Profit before taxation and zakat 2,557 2,609 2,639 3,096 10,901 Profit attributable to equity holders of the 1,871 1,959 1,957 2,326 8,113 Earnings per share (sen) Dividend per share (sen) FY 31 Dec RM million Q1 Q2 Q3 Q4 YEAR Operating revenue 11,278 10,922 11,594 11,786 45,580 Net interest income (including income from Islamic ing Scheme operations) 4,249 4,231 4,309 4,258 17,047 Net earned insurance premiums 1,254 1,256 1,307 1,434 5,251 Other operating income 1,405 1,527 1,497 1,598 6,027 Total operating income 6,908 7,014 7,113 7,290 28,325 Operating profit 2,208 2,179 2,602 2,894 9,883 Profit before taxation and zakat 2,249 2,245 2,678 2,926 10,098 Profit attributable to equity holders of the 1,703 1,659 2,027 2,132 7,521 Earnings per share (sen) Dividend per share (sen) Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

9 07 Financial Performance KEY INTEREST BEARING ASSETS AND LIABILITIES FY 31 Dec FY 31 Dec As at 31 December RM million Effective Interest Rate % Interest Income/ Expense RM million As at 31 December RM million Effective Interest Rate % Interest Income/ Expense RM million Interest earning assets Loans, advances and financing 485, , , ,493 Cash and short-term funds & deposits and placements with 67, ,265 67, ,314 financial institutions Financial assets at fair value through profit or loss 25, , ,092 Financial investments available-for-sale 109, ,372 Financial investments held-to-maturity 20, Financial investments at fair value through other 120, ,647 comprehensive income Financial investments at amortised cost 27, ,007 Interest bearing liabilities Customers funding: Deposits from customers 502, , , ,300 Investment accounts of customers 24, , Deposits and placements from financial institutions 42, ,644 43, ,125 Borrowings 34, ,097 31, ,061 Subordinated obligations 11, , Capital securities 6, , STATEMENT OF VALUE ADDED FY 31 Dec FY 31 Dec Net interest income 12,147,041 12,072,906 Income from Islamic ing Scheme operations 4,900,251 5,611,704 Net earned insurance premiums 5,250,890 5,933,563 Other operating income 6,027,304 4,918,997 Net insurance benefits and claims incurred, net fee and commission expenses, change in expense liabilities and (5,087,342) (4,907,529) taxation of life and takaful fund Overhead expenses excluding personnel expenses, depreciation and amortisation (4,506,244) (4,127,081) Allowances for impairment losses on loans, advances and financing and other debts, net (1,959,060) (1,591,256) Allowances for impairment losses on financial investments, net (68,762) (47,685) Writeback of impairment losses on other financial assets, net 26,028 Share of profits in associates and joint ventures 214,620 98,285 Value added available for distribution 16,918,698 17,987,932 DISTRIBUTION OF VALUE ADDED FY 31 Dec FY 31 Dec To employees: Personnel expenses 6,128,012 6,449,524 To the Government: Taxation 2,301,222 2,545,410 To providers of capital: Dividends to shareholders 5,887,471 6,272,198 Non-controlling interests 276, ,676 To reinvest to the : Depreciation and amortisation 692, ,062 Retained profits 1,633,071 1,841,062 Value added available for distribution 16,918,698 17,987,932

10 08 Financial Performance SEGMENTAL INFORMATION ANALYSIS BY GEOGRAPHICAL LOCATIONS Net Operating Income (RM million) +1.7% +1.3% +0.3% -14.8% -4.5% 23,630 23,238 18,087 18,321 4,232 4,244 3,354 2,857 1,829 1,746 Note: Total net operating income includes intersegment which are eliminated on consolidation of RM3,538 million for FY and RM4,264 million for FY 31 December. Total Malaysia Singapore Indonesia Other Locations Profit Before Taxation and Zakat (RM million) +7.9% -2.9% +39.6% -13.1% +8.8% 10,901 10,663 10,359 10,098 1, ,081 1, Note: Total profit before taxation and zakat includes inter-segment which are eliminated on consolidation of RM2,721 million for FY and RM3,469 million for FY 31 December. Total Malaysia Singapore Indonesia Other Locations ANALYSIS BY BUSINESS SEGMENTS Net Operating Income (RM million) Global ing +1.0% +1.7% +0.3% 23,630 23,238 Total 13,497 13,542 Community Financial Services +4.7% -8.5% -61.1% 7,658 8,016 Corporate ing & Global Markets 1,337 1,224 Investment ing Asset Management -15.2% 1,861 1,578 Insurance and Takaful Note: Total net operating income includes expenditure of Head Office & others and inter-segment which are eliminated on consolidation of RM826 million for FY and RM1,362 million for FY 31 December. Profit Before Taxation and Zakat (RM million) Global ing +4.3% +7.9% +4.9% 10,901 10,098 Total 5,311 5,569 Community Financial Services +6.8% +25.7% >100.0% 4,888 5,223 Corporate ing & Global Markets Investment ing 73 (86) Asset Management -21.1% 1, Insurance and Takaful Note: Total profit before taxation and zakat includes expenditure of Head Office & others and inter-segment which are eliminated on consolidation of RM826 million for FY and RM1,362 million for FY 31 December. FY 31 Dec FY 31 Dec Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

11 Financial Statements 10 Statement of Directors Responsibility 11 Analysis of Financial Statements 16 Directors Report 28 Statement by Directors 28 Statutory Declaration 29 Independent Auditors Report 33 Index to the Financial Statements 34 Statements of Financial Position 35 Income Statements 36 Statements of Comprehensive Income 37 Consolidated Statement of Changes in Equity 39 Statement of Changes in Equity 41 Statements of Cash Flows 43 Notes to the Financial Statements

12 10 Statement of Directors Responsibility in respect of the Audited Financial Statements for the Financial Year Ended The directors are responsible for ensuring that the annual audited financial statements of the and of the are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, the requirements of the Companies Act 2016, Negara Malaysia s Guidelines and the Listing Requirements of Bursa Malaysia Securities Berhad. The directors are also responsible for ensuring that the annual audited financial statements of the and of the are prepared with reasonable accuracy from the accounting records of the and of the so as to give a true and fair view of the financial position of the and of the as at, and of their financial performance and cash flows for the financial year then ended. In preparing the annual audited financial statements, the directors have: considered the applicable approved accounting standards in Malaysia; adopted and consistently applied appropriate accounting policies; made judgments and estimates that are prudent and reasonable; and prepared the financial statements on a going concern basis as the directors have a reasonable expectation, having made enquiries, that the and the have adequate resources to continue in operational existence for the foreseeable future. The directors also have a general responsibility for taking reasonable steps to safeguard the assets of the and the to prevent and detect fraud and other irregularities. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

13 Analysis of Financial Statements 11 REVIEW OF FY FINANCIAL RESULTS continues to deliver value by achieving the highest profit attributable to equity holders of the ( net profit ) to date of RM8,113.3 million, up 7.9% from last year's RM7,520.5 million. This new record is driven by a 14.5% increase in income for Islamic ing Scheme Operations ( IBS ) of RM711.5 million, 13.0% increase in net earned insurance premium of RM682.6 million and further supported by a 20.5% reduction in allowances for net impairment losses of RM414.9 million. NET OPERATING INCOME RM million 23, , % -0.6% +14.5% -18.4% +13.0% +3.5% 12, , , , , , , ,933.5 Net insurance benefits & claims incurred, net fee & commission expenses, change in expense liabilities & taxation of life & Takaful fund Total net operating income Net interest income Income from IBS Other operating income Net earned insurance premiums FY FY (5,087.3) (4,907.5) NET INTEREST INCOME Net interest income ( NII ) contracted slightly by 0.6% as the s interest expense increased higher than the increase in interest income. Interest expense saw a 12.2% increase mainly from interest expense on deposits from customers of RM619.2 million and deposits and placements from financial institution of RM509.5 million and financial liabilities at fair value through profit and loss of RM205.8 million. However, this was mitigated by an increase in interest income from loans, advances and financing of RM437.5 million, financial investments portfolio of RM417.4 million, other interest income of RM209.2 million (mainly due to higher net accretion of discounts of RM209.2 million) and lower interest expense on borrowings, subordinated notes and bonds and capital securities of RM234.6 million. RM million FY FY Variance % Change Interest Income Loans, advances and financing 16, , % Money at call and deposits and placements with financial institutions % Financial assets purchased under resale agreements % Financial investments portfolio 4, , % Other interest income % 22, , , % Interest Expense Deposits and placements from financial institutions , % Deposits from customers 6, , % Borrowings, subordinated notes and bonds and capital securities 2, ,975.1 (234.6) (10.6%) Financial liabilities at fair value through profit and loss % Structured deposits % Other interest expense % 9, , , % Net interest income 12, ,072.9 (74.1) (0.6%)

14 12 Analysis of Financial Statements INCOME FOR ISLAMIC BANKING SCHEME OPERATIONS ( IBS ) Income for Islamic ing Scheme Operations ( IBS ) increased by RM711.5 million due to positive growth in fund based income of RM582.3 million and fee based income of RM129.1 million. Year-on-year growth in fund based income was mainly attributable to increase in income from financing and advances of RM1,047.3 million and financial investments portfolio of RM287.9 million. These were offset by increase in profit distributed to depositors and investment account holders of RM752.9 million. The increase in fee based income was mainly due to gain on foreign exchange of RM135.8 million in the current year as compared to loss in a year earlier of RM11.8 million. This was offset by a decrease in fee income of RM23.1 million which attributable to decrease in service charges and fees of RM12.0 million and commission income of RM10.5 million. OTHER OPERATING INCOME Other operating income of the for FY stood at RM4,919.0 million, a decrease of RM1,108.3 million or 18.4% from RM6,027.3 million in FY. The decrease was mainly due to net loss in investment income of RM431.7 million for the FY as compared to net gain in investment income of RM933.4 million in FY, lower fee income of RM206.3 million, lower gain on disposal of property, plant and equipment of RM130.4 million, lower realised gain on derivatives of RM29.5 million and lower gross dividend income of RM9.7 million compared to FY. The decrease was, however, mitigated by higher foreign exchange gain of RM283.4 million and higher unrealised mark-to-market gain on revaluation of financial assets/liabilities at FVTPL, derivatives and loans, advances and financing of RM295.5 million. RM million -18.4% -5.8% >100.0% >100.0% +11.2% 6, , , , , ,659.4 Total other operating income Fee income FY Investments income FY (431.7) Unrealised gain on financial assets/investment/liabilities at FVTPL, derivatives and loans, advances and financing Other income Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

15 13 Analysis of Financial Statements OVERHEAD EXPENSES The s overhead expenses decreased by RM113.2 million which resulted in cost to income ratio of 47.4%, below the 's guidance of 48%. The decrease in overhead expenses was mainly attributable to decrease in administration and general expenses of RM294.6 million and establishments costs of RM167.8 million. However, these were offset by increase in personnel expenses of RM321.5 million and marketing expenses of RM27.7 million. RM million -1.0% +5.2% -8.5% +5.4% -10.9% 11, , , , , , , , Total overhead expenses Personnel expenses Establishment cost Marketing expenses Administration and general expenses FY FY Personnel expenses increased by RM321.5 million mainly due to the increase in salaries, allowances and bonuses of RM253.2 million, pension costs of RM64.0 million and other staff incentives of RM20.6 million. Establishment costs decreased by RM167.8 million mainly due to lower fair value adjustments on investment properties of RM92.2 million, rental of leasehold land and premises of RM27.1 million and amortisation of computer software of RM24.5 million. However, information technology expenses increased by RM15.4 million as the continues adapting to new technological advances. Administration and general expenses decreased by RM294.6 million mainly due to lower general expenses of RM165.9 million, other expenses of RM129.0 million and adminstrative expenses of RM16.5 million. However, these were offset by an increase in fees and brokerage of RM16.8 million. ALLOWANCES FOR IMPAIRMENT LOSSES ON LOANS, ADVANCES, FINANCING AND OTHER DEBTS, NET The s allowances for impairment losses on loans, advances, financing and other debts decreased by RM367.8 million to RM1,591.3 million for FY. The decrease was mainly due to lower allowance made in FY.

16 14 Analysis of Financial Statements TOTAL ASSETS Total assets increased to RM807.0 billion as at from RM765.3 billion as at 31 December. The continued growth is mainly spurred by a 15.3% increase in financial investments portfolio of RM23.6 billion and a 4.4% increase in loans, advances and financing of RM21.5 billion. These were offset by decrease in other assets of RM3.6 billion and mainly arising from decrease in financial assets purchased under resale agreements. RM billion +5.4% +4.4% +15.3% +0.3% -6.2% Total assets Loans, advances and financing FY Financial investments portfolio FY Cash and short-term funds & Deposits and placements with financial institutions Other assets LOANS, ADVANCES AND FINANCING The 's loans, advances and financing increased by 4.4% or RM21.5 billion to RM507.1 billion as at, due to healthy growth recorded accross home markets. FINANCIAL INVESTMENTS PORTFOLIO The 's financial investments portfolio grew by 15.3% or RM23.6 billion to RM178.0 billion as at, supported by growth in financial investments at fair value through other comprehensive income of RM11.8 billion, financial investments at amortised cost of RM6.9 billion, financial assets designated upon initial recognition at fair value through profit or loss of RM2.5 billion and financial investments at fair value through profit or loss of RM2.3 billion. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

17 15 Analysis of Financial Statements TOTAL LIABILITIES The s total liabilities increased to RM729.3 billion as at from RM690.1 billion as at 31 December. The change was attributed growth in deposits from customers and investment accounts of customers of RM29.7 billion and other liabilities of RM15.2 billion. RM billion +5.7% +5.6% +3.0% -13.3% +22.3% Total liabilities Deposits from customers and investment accounts of customers Deposits and placements from financial institutions Borrowings, subordinated obligations and capital securities Other liabilities FY FY DEPOSITS FROM CUSTOMERS AND INVESTMENT ACCOUNTS OF CUSTOMERS The s deposits from customers and investment accounts of customers increased by 5.6% or RM29.7 billion to RM556.3 billion mainly from Malaysia operations of RM26.0 billion. BORROWINGS, SUBORDINATED OBLIGATIONS AND CAPITAL SECURITIES The s borrowings, subordinated obligations and capital securities decreased by 13.3% or RM7.0 billion to RM45.8 billion as at.

18 16 Directors Report The Board of Directors have pleasure in presenting their report together with the audited financial statements of the and of the for the financial year ended. PRINCIPAL ACTIVITIES The is principally engaged in all aspects of commercial banking and related financial services. The subsidiaries of the are principally engaged in the businesses of banking and finance, Islamic banking, investment banking including stockbroking, underwriting of general and life insurance, general and family takaful, trustee and nominee services and asset management. Further details of the subsidiaries are described in Note 68(a) to the financial statements. There were no significant changes in these principal activities during the financial year. RESULTS Profit before taxation and zakat 10,901,346 8,748,426 Taxation and zakat (2,545,410) (1,440,615) Profit for the financial year 8,355,936 7,307,811 Attributable to: Equity holders of the 8,113,260 7,307,811 Non-controlling interests 242,676 8,355,936 7,307,811 There were no material transfers to or from reserves, allowances or provisions during the financial year other than those as disclosed in Notes 5, 6, 7, 11, 12, 13, 14, 15, 17, 18, 20, 29, 48, 49 and 50 and the statements of changes in equity to the financial statements. In the opinion of the Board of Directors, the results of the operations of the and of the during the current financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS The amount of dividends paid by the since 31 December (as disclosed in Note 55(c) to the financial statements) were as follows: In respect of the financial year ended 31 December as reported in the directors report of that year: Final dividend of 32 sen single-tier dividend consists of cash portion of 18 sen single-tier dividend per ordinary share and an electable portion of 14 sen per ordinary share, on 10,943,266,994 ordinary shares, approved on 12 April. 3,501,845 On 2 July, announced that Board of Directors has resolved to exercise its rights not to proceed with the implementation of the 16th DRP in view of the softer equities market which has also affected its share price and paid the dividend on 6 July. In respect of the financial year ended : A single-tier interim dividend of 25 sen consists of cash portion of 15 sen per ordinary share and an electable portion of 10 sen per ordinary share, on 10,945,196,194 ordinary shares, declared on 30 August and paid on 30 October. 2,736,299 6,238,144 At the forthcoming Annual General Meeting, a final single-tier dividend in respect of the current financial year ended of 32 sen single-tier dividend per ordinary share amounting to a net dividend payable of RM3,535,898,553 (based on 11,049,682,979 ordinary shares issued as at ) will be proposed for the shareholders approval. The proposed final single-tier dividend consists of cash portion of 15 sen per ordinary share to be paid in cash amounting to RM1,657,452,447 and an electable portion of 17 sen per ordinary share amounting to RM1,878,446,106. The electable portion can be elected to be reinvested in new ordinary shares in accordance with the Dividend Reinvestment Plan ( DRP ) as disclosed in Note 36(b) to the financial statements and subject to the relevant regulatory approvals as well as shareholders approval at the forthcoming Annual General Meeting. The financial statements for the current financial year ended do not reflect this proposed final dividend. Such dividend, if approved by the shareholders, will be accounted for in the statements of changes in equity as an appropriation of retained profits in the next financial year ending 31 December Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

19 17 Directors Report MAYBANK GROUP EMPLOYEES SHARE GRANT PLAN ( ESGP ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE GRANT PLAN ( CESGP ) The and the have implemented a new employee s share scheme named as the Employees Share Grant Plan ( ESGP ) and the scheme was awarded to the participating who fulfill the eligibility criteria. The ESGP is governed by the ESGP By-Laws approved by the shareholders at an Extraordinary General Meeting held on 6 April. The ESGP was implemented on 14 December for a period of seven (7) years from the effective date and is administered by the ESGP Committee. The ESGP consists of two (2) types of performance-based awards: Employees Share Grant Plan ( ESGP Shares ) and Cash-settled Performance-based Employees' Share Grant Plan ( CESGP ). The ESGP Shares may be settled by way of issuance and transfer of new shares or by cash at the absolute discretion of ESGP Committee. The ESGP Shares is a form of Restricted Share Units ( RSU ) and the ESGP Committee may, from time to time during the ESGP period, make further ESGP grants designated as Supplemental ESGP to a selected group of eligible employees to participate in Supplemental ESGP. This selected group may consist of selected key executives, selected key retentions and selected senior external recruits, and such grants may contain terms and conditions which may vary from earlier ESGP grants made available to selected senior management. The CESGP is a form of Cash-settled Performance-based Restricted Share Unit Scheme ( CRSU ) and the ESGP Committee may, from time to time during the ESGP period, make further CESGP grants designated as Supplemental CESGP to a selected group of eligible employees to participate in the ESGP. This selected group may consist of senior management, selected key retentions and selected senior external recruits, and such Supplemental CESGP grants may contain terms and conditions which may vary from earlier CESGP grants made available to selected employees. Details on the key features of the ESGP and CESGP are disclosed in Note 36(c) to the financial statements. Details of shares awarded under the ESGP Shares and CESGP are as follows: (a) ESGP Shares Award date Number of ESGP Shares awarded Vesting date First Grant 12,392 # Based on 3-year cliff vesting from grant date and performance metrics # Total shares awarded to eligible employees at award date are based on assumptions that the and eligible employees have met average performance targets. The eligible employees were given thirty (30) days from award date to accept the ESGP grant. As at, a total of 10,018,000 units of ESGP Shares were accepted by the eligible employees. (b) CESGP Award date Number of CESGP awarded Vesting date First Grant 3,324 # Based on 3-year cliff vesting from grant date and CESGP vesting conditions # The number of shares awarded are based on the assumptions that the and eligible employees have met average performance targets. The maximum number of ordinary shares in the available under the ESGP should not exceed 3.5% of the total number of issued and paid-up capital of the at any point of time during the duration of the scheme.

20 18 Directors Report MAYBANK GROUP EMPLOYEES SHARE GRANT PLAN ( ESGP ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE GRANT PLAN ( CESGP ) (CONT D.) The has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of employees who have been awarded the ESGP Shares and CESGP for less than 104,000 shares during the financial year ended. The names of employees who have been awarded with the ESGP Shares and CESGP of 104,000 shares and above during the financial year ended are as follows: Name Award date Number of ESGP Shares awarded Number of CESGP awarded Datuk Abdul Farid bin Alias Dato Amirul Feisal bin Wan Zahir Dato John Chong Eng Chuan Dato Muzaffar bin Hisham Dato Mohamed Rafique Merican bin Mohd Wahiduddin Merican Datuk Hamirullah bin Boorhan Dr John Lee Hin Hock Hon Kah Cho Normala binti A. Manaf Kamaludin bin Ahmad Mohd Suhail Amar Suresh bin Abdullah Gilbert August Alfred Kohnke Foong Seong Yew MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) ESS has expired on 23 June. The ESS was governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 13 June The ESS was implemented on 23 June It was in force for a maximum period of seven (7) years from the effective date and was administered by the ESS Committee. The ESS consisted of two (2) types of performance-based awards in the form of Employee Share Option Scheme ( ESOS ) and Restricted Share Unit ( RSU ). The ESS Committee may, from time to time, during the ESS period, make further RSU grants designated as Supplemental RSU ( SRSU ) to a selected group of eligible employees to participate in the RSU award. This selected group may consist of senior management, selected key retentions and selected senior external recruits, and such SRSU grants may contain terms and conditions which may vary from earlier RSU grants made available to selected senior management. The CESS was governed by the guidelines approved by the members of the ESS Committee on 15 June The CESS comprised of Cash-settled Performance-based Option Scheme ( CESOS ) and Cash-settled Performance-based Restricted Share Unit Scheme ( CRSU ) and were made available at the appropriate time to the eligible employees of overseas branches and subsidiaries of the which include PT Indonesia Tbk, PT Syariah Indonesia and Philippines Incorporated, subject to achievement of performance criteria set out by the Board of Directors and prevailing market practices in the respective countries. The aggregate maximum allocation of share options under ESS to Chief Executive Officer and senior management of the and of the shall not exceed 50% of the Maximum Allowable Scheme Shares. The actual allocation of share options to Chief Executive Officer and senior management is 19.3% as at (: 19.4%). Details on the key features of the ESS and CESS are disclosed in Note 36(d) to the financial statements. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

21 19 Directors Report MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) (CONT D.) Details of share options granted, vested and exercised under the ESS and CESS are as follows: (a) ESOS Granted Grant date Number of share options Original exercise price RM/option Exercise period ESOS First Grant 405,309 # 8.82* ESOS Second Grant 62,339 # 8.83* ESOS Third Grant 53,594 # 9.61* ESOS Fourth Grant 54,028 # 9.91* ESOS Fifth Grant 48,170 # 9.35* ESOS Special Grant 992 # 8.39* # The number of share options granted are based on the assumptions that the eligible employees met average performance targets. * The ESS Committee approved the reduction of the ESOS exercise prices following the issuances of new ordinary shares pursuant to the implementation of DRP. Following the issuance of new ordinary shares pursuant to the implementation of DRP, the revisions to the exercise prices are as follows: Grant date Exercise price RM/option Exercise period ESOS First Grant ESOS Second Grant ESOS Third Grant ESOS Fourth Grant ESOS Fifth Grant ESOS Special Grant

22 20 Directors Report MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) (CONT D.) (a) ESOS Granted (cont d.) The following table illustrates the number of, and movements in, ESOS during the financial year ended : ESOS First Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Exercised 1 Forfeited Expired Outstanding as at ,760 (10,047) (7) (1,706) ,018 (18,186) (25) (1,807) ,456 (24,036) (35) (2,385) ,346 (11,113) (20) (1,213) 70,580 (63,382) (87) (7,111) 1 Issuance of 57,757,300 new ordinary shares to eligible employees who exercised their share options during the financial year ended and utilisation of 5,624,600 ordinary shares under ESOS Trust Fund Pool. 4,585,200 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended. ESOS Second Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Exercised 2 Forfeited Expired Outstanding as at ,937 (1,759) (178) ,886 (2,694) (18) (174) ,761 (3,490) (11) (260) ,862 (3,636) (13) (213) ,761 (1,660) (4) (97) 14,207 (13,239) (46) (922) 2 Issuance of 12,028,100 new ordinary shares to eligible employees who exercised their share options during the financial year ended and utilisation of 1,210,700 ordinary shares under ESOS Trust Fund Pool. 772,300 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended. ESOS Third Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Exercised 3 Forfeited Expired Outstanding as at ,948 (3,619) (35) (294) ,330 (4,953) (53) (324) ,734 (5,409) (63) (262) ,513 (5,144) (63) (306) ,768 (5,284) (56) (428) 26,293 (24,409) (270) (1,614) 3 Issuance of 23,255,900 new ordinary shares to eligible employees who exercised their share options during the financial year ended and utilisation of 1,152,900 ordinary shares under ESOS Trust Fund Pool. 751,900 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

23 21 Directors Report MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) (CONT D.) (a) ESOS Granted (cont d.) The following table illustrates the number of, and movements in, ESOS during the financial year ended (cont d.): ESOS Fourth Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Vested Exercised 4 Forfeited Expired Outstanding as at ,307 (6,573) (88) (646) ,690 (7,734) (131) (825) ,008 (7,272) (94) (642) ,163 (7,105) (105) (953) ,177 (6,596) (10) (1,571) 32,168 8,177 (35,280) (428) (4,637) 4 Issuance of 33,021,300 new ordinary shares to eligible employees who exercised their share options during the financial year ended and utilisation of 2,258,200 ordinary shares under ESOS Trust Fund Pool. 18,800 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended. ESOS Fifth Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Vested Exercised 5 Forfeited Expired Outstanding as at ,309 (5,674) (127) (508) ,935 (6,179) (188) (568) ,750 (6,732) (212) (806) ,746 (8,164) (19) (1,563) 20,994 9,746 (26,749) (546) (3,445) 5 Issuance of 25,028,300 new ordinary shares to eligible employees who exercised their share options during the financial year ended and utilisation of 1,720,800 ordinary shares under ESOS Trust Fund Pool. 721,600 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended. ESOS Special Grant (Vested) Vesting date Outstanding as at 1.1. Movements during the financial year Exercised 6 Forfeited Expired Outstanding as at (28) (5) (42) (6) (53) (5) 139 (123) (16) 6 Issuance of 116,400 new ordinary share to eligible employees who exercised their share options during the financial year ended and utilisation of 6,700 ordinary shares under ESOS Trust Fund Pool. 6,000 of the share options exercised in the previous financial year ended 31 December were issued and quoted in the Main Market of Bursa Malaysia Securities Berhad in the current financial year ended.

24 22 Directors Report MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) (CONT D.) (b) RSU Granted The following table illustrates the number of, and movements in, RSU during the financial year ended : Grant date Outstanding as at 1.1. Movements during the financial year Adjustment Vested and awarded Forfeited Outstanding as at Vesting date RSU First Grant 4 (4) 1 Based on 3-year cliff RSU Fifth Grant 5, (4,414) 3 (1,446) vesting from the grant date and 5, (4,418) (1,446) performance metrics 1 RSU shares which belonged to a deceased employee have been vested and disposed during the financial year ended. All proceeds were transferred to deceased employee s next-of-kin. 2 Adjustment pursuant to DRP which was vested during the financial year ended. 3 Issuance of 4,387,816 new ordinary shares to eligible employees during the financial year ended and utilisation of 26,680 ordinary shares under ESOS Trust Fund Pool. (c) SRSU Granted The following table illustrates the number of, and movements in, SRSU during the financial year ended : Grant date Outstanding as at 1.1. Movements during the financial year Granted Vested Outstanding as at (34) 1 1 Utilisation of 34,000 ordinary shares ESOS Trust Fund Pool. (d) CESOS Granted The following tables illustrate the numbers of, and movements in, CESOS during the financial year ended : CESOS First Grant Grant date Outstanding as at 1.1. Movements during the financial year Vested and awarded Forfeited Outstanding as at (437) (15) (224) (8) 684 (661) (23) CESOS Second Grant Grant date Outstanding as at 1.1. Movements during the financial year Vested and awarded Forfeited Outstanding as at (602) (1) (63) (1) 667 (665) (2) Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

25 23 Directors Report MAYBANK GROUP EMPLOYEES SHARE SCHEME ( ESS ) AND CASH-SETTLED PERFORMANCE-BASED EMPLOYEES SHARE SCHEME ( CESS ) (CONT D.) (d) CESOS Granted (cont'd.) The following tables illustrate the numbers of, and movements in, CESOS during the financial year ended (cont'd.): CESOS Third Grant Grant date Outstanding as at 1.1. Movements during the financial year Vested and awarded Forfeited Outstanding as at (317) (15) - CESOS Fourth Grant Grant date Outstanding as at 1.1. Movements during the financial year Vested and awarded Forfeited Outstanding as at (244) (1) CESOS Fifth Grant Grant date Outstanding as at 1.1. Movements during the financial year Vested and awarded Forfeited Outstanding as at (452) (100) (e) CRSU Granted The following tables illustrate the numbers of, and movements in, CRSU during the financial year ended : Grant date Outstanding as at 1.1. Movements during the financial year Adjustment Vested and awarded Forfeited Outstanding as at Vesting date CRSU Fifth Grant (105) (68) Based on 3-year cliff vesting from the grant date and performance metrics 1 Adjustment pursuant to DRP which was vested during the financial year ended.

26 24 Directors Report ISSUANCE OF SHARES AND DEBENTURES The following are the changes in debt and equity securities for the and the during the financial year ended : (i) During the financial year ended, the increased its issued and paid-up ordinary shares from 10,782,745,278 units to 11,049,682,979 units via: (ii) (a) (b) (c) Issuance of 158,063,100 new ordinary shares amounting to RM1,532,435,821 to eligible employees who exercised their share options under the ESS, as disclosed in Note 36(e)(i) to the financial statements; Issuance of 4,387,816 new ordinary shares amounting to RM45,940,434 arising from the Restricted Share Unit ( RSU ), as disclosed in Note 36(f)(i) to the financial statements; and Issuance of 104,486,785 new ordinary shares amounting to RM918,685,326 arising from the DRP relating to electable portion of the interim dividend of 10 sen per ordinary share in respect of the financial year ended, as disclosed in Note 55(c)(ii) to the financial statements. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the. During the financial year ended, the and the made various issuances and redemptions of the debt securities, as disclosed in Notes 27, 33, 34 and 35 to the financial statements. The proceeds from the issuances may be utilised to fund the working capital, general banking and other corporate purposes. DIRECTORS The names of the directors of the in office since the beginning of the financial year to the date of this report are: Datuk Mohaiyani binti Shamsudin (Chairman) Datuk Abdul Farid bin Alias ( President & Chief Executive Officer) Datuk R. Karunakaran Mr Cheng Kee Check Mr Edwin Gerungan Mr Nor Hizam bin Hashim Dr Hasnita binti Dato Hashim Mr Anthony Brent Elam Ms Che Zakiah binti Che Din (appointed on 1 March ) Ms Fauziah binti Hisham (appointed on 15 May ) Mr Shariffuddin bin Khalid (appointed on 14 June ) Mr Renato Tinio De Guzman (resigned on 5 March ) Dato Johan bin Ariffin (retired on 12 April ) Datin Paduka Jam iah binti Abdul Hamid (deceased on 19 November ) The names of the directors of the s subsidiaries in office since the beginning of the financial year to the date of this report are disclosed in Note 70 to the financial statements. DIRECTORS BENEFITS Neither at the end of the financial year, nor at any time during that financial year, did there subsist any arrangement to which the or any of its subsidiary was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the or any other body corporate, other than those arising from the ESGP and ESS. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors from the and its related corporations, or the fixed salary of a full-time employee of the as disclosed in Note 47 to the financial statements) by reason of a contract made by the or its related corporations with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for Mr Cheng Kee Check, who is deemed to receive or become entitled to receive a benefit by virtue of fees paid by the or its related corporations to the law firm in which he is a partner in that firm that provides professional legal services to the or its related corporations in the ordinary course of business. DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares, ESOS and RSU of the during the financial year were as follows: Direct interest As at 1.1./ date of appointment Number of ordinary shares Issued pursuant to RSU Issued pursuant to DRP As at Datuk Abdul Farid bin Alias 448, ,871 7, ,406 Ms Fauziah binti Hisham 14, ,483 Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

27 25 Directors Report DIRECTORS INTERESTS (CONT D.) According to the register of directors shareholdings, the interests of directors in office at the end of the financial year in shares, ESOS and RSU of the during the financial year were as follows (cont d.): Number of ESOS of ordinary shares Exercise Price (RM) Granted Outstanding as at 1.1. Vested Exercised Vested as at Datuk Abdul Farid bin Alias 8.82 # 1,000,000^ 416,000 (416,000) 9.91 ## 1,410,000^^ 1,110, ,000 (1,485,000) 2,410,000 1,526, ,000 (1,901,000) # Revised to RM8.71 on 1 November 2016 based on the revision to ESOS First Grant s exercise price. ## Revised to RM9.75 on 1 November 2016 based on the revision to ESOS Fourth Grant s exercise price. ^ Share options from ESOS granted and vested prior to the appointment as President & Chief Executive Officer are 1,000,000 and 575,000 respectively. ^^ Original shares options granted on the grant date. Number of share options from RSU over ordinary shares Grant Date Granted as at 1.1. Adjustment pursuant to DRP Vested during the financial year Not vested during the financial year Outstanding as at Datuk Abdul Farid bin Alias ,000 7,871 (177,871) (30,000) As at, all ESOS and RSU which were granted to the director have been vested and exercisable upon fulfilment of vesting conditions or predetermined performance metrics including service period, performance targets and performance period. During the financial year, the has awarded the ESGP Shares to the following director: Award date Number of ESGP Shares awarded Datuk Abdul Farid bin Alias ,000 None of the other directors in office at the end of the financial year had any interest in shares in the or its related corporations during the financial year. RATING BY EXTERNAL RATING AGENCIES Details of the s ratings are as follows: Rating agency Date Rating classification Rating received Moody s Investors Service 7 February 2019 Outlook Stable Deposits A3/P-2 Baseline Credit Assessment a3 Adjusted Baseline Credit Assessment a3 Counterparty Risk Assessment A2(cr)/P-1(cr) Senior Unsecured A3 Subordinate Baa2 (hybrid) Commercial Paper P-2 Counterparty Risk Ratings A2/P-1 Standard & Poor s ( S&P ) 18 December Issuer Credit Rating A-/Stable/A-2 Junior Subordinated BB+ Senior Unsecured A- Senior Unsecured A-2 Subordinated BBB

28 26 Directors Report RATING BY EXTERNAL RATING AGENCIES (CONT D.) Details of the s ratings are as follows (cont d.): Rating agency Date Rating classification Rating received Fitch Ratings 19 October Long-Term Foreign-Currency Issuer Default Rating A-/Stable Short-Term Foreign-Currency Issuer Default Rating F2 Long-Term Local-Currency Issuer Default Rating A-/Stable Viability Rating a- Support Rating 2 Support Rating Floor BBB Senior Notes and Multicurrency MTN Programme A- RAM Ratings Services Berhad ( RAM ) 21 December Financial Institution Ratings National Scale AAA/Stable/P1 Financial Institution Ratings ASEAN Scale seaaaa/stable/seap1 RM20.0 billion Subordinated Note Programme AA1/Stable RM10.0 billion Additional Tier-1 Capital Securities Programme AA3/Stable RM10.0 billion Senior and Subordinated Sukuk Murabahah Programme Senior AAA/Stable Subordinated AA1/Stable RM10.0 billion Commercial Papers/Medium Term Notes Programme AAA/Stable/P1 Malaysian Rating Corporation Berhad 6 August Financial Institution Rating AAA/MARC-1 Intrinsic Credit Strength Rating A-ND Corporate Debt Rating AAA Outlook Stable Japan Credit Rating Agency 28 November Foreign Currency Long-term Issuer Rating A Outlook Stable Bond A China Chengxin International ( CCXI ) 30 July Issuer s Credit Rating AAA Outlook Stable Renminbi Bond Credit Rating AAA BUSINESS OUTLOOK Global GDP growth is expected to ease in 2019 to +3.6% from +3.8% in on continued normalising of monetary policies globally, which include rising interest rates and reversal of quantitative easing measures by major central banks, coupled with spill over effects from the US-China trade war. Moderating global GDP growth is expected to be led by major advanced economies including the US (2019E: +2.5%; E: +2.9%) and Eurozone (2019E: +1.7%; : +1.9%), as well as selected BRIC markets such as China (2019E: +6.3%; : +6.6%) and Russia (2019E: +1.5%; E: +1.7%). A similar pace of slower growth is likely to be seen in the ASEAN-6 countries (2019E: +4.8%; E: +5.0%) on the back of global macroeconomic headwinds causing uncertainty. Out of s three home markets, Malaysia is expected to chart stable growth at +4.9% in 2019 (: 4.7%) on improved growth in the mining and agriculture sectors, private investment, as well as positive net external demand. Some considerations that could impact Malaysia s economic growth include the outcome of the US-China trade talks and the Government s long term economic growth policy. Singapore s economic growth is forecasted to grow at +2.2% in 2019 (: 3.2%). Impact from trade tensions and tightening global monetary conditions continues to weigh on growth and the negative impact is moreover broadening to services, no longer just exports and manufacturing. Indonesia s economy is expected to grow at +5.1% in 2019 (: +5.2%), supported by consumption that is boosted by a minimum wage increase and low inflation rate, but mitigated by potentially lower domestic and foreign direct investments ahead of the parliamentary and presidential elections in April Against the backdrop of a moderating global growth and uncertainty over trade tensions, will maintain its balance sheet expansion in line with the forecast economic growth of its three home markets and in tandem with the s risk posture. will continue building on its diversified franchise and footprint to expand income streams through cross business collaborations and from focusing on diligent pricing of its assets and liabilities. Indonesia is expected to maintain its GDP growth driven by domestic demand and government infrastructure spending. Indonesia will remain focused on corporate lending growth among top-tier clients while protecting its net interest margin by maintaining pricing discipline across all products. Another area of growth for Indonesia will be the expansion of its fee income streams through strategic partnerships in bancassurance and general insurance as well as e-channel transactions. Annual Report OUR PERFORMANCE PG THE FINANCIALS PG

29 27 Directors Report BUSINESS OUTLOOK (CONT D.) Other key on-going priorities for into 2019 include our emphasis to improve productivity levers, up-skilling of our workforce to be ready for a digital economy, proactively manage asset quality in line with new accounting standards (MFRS 9) and prioritising capital and liquidity strength given increasing capital markets volatility and global macroeconomic headwinds. Barring any unforeseen circumstances, the expects its financial performance for 2019 to be satisfactory in line with the expected growth prospects of its key home markets. The has set its Headline Key Performance Indicator ( KPI ) for Return on Equity ( ROE ) of approximately 11%. OTHER STATUTORY INFORMATION (a) (b) (c) (d) (e) (f) Before the statements of financial position and income statements of the and of the were made out, the directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowances for doubtful debts and satisfied themselves that all known bad debts had been written-off and that adequate allowances had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) the amount written-off for bad debts or the amount of the allowances for doubtful debts in the financial statements of the and of the inadequate to any substantial extent; and the values attributed to current assets in the financial statements of the and of the misleading. At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the and of the misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the and of the which would render any amount stated in the financial statements misleading. As at the date of this report, there does not exist: (i) (ii) any charge on the assets of the and of the which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the or of the which has arisen since the end of the financial year other than those arising in the normal course of business of the and of the. In the opinion of the directors: (i) (ii) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve (12) months after the end of the financial year which will or may affect the ability of the and of the to meet their obligations as and when they fall due; and no item or transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the or of the for the financial year in which this report is made. SIGNIFICANT AND SUBSEQUENT EVENTS The significant and subsequent events are disclosed in Note 65 to the financial statements. There are no significant adjusting events after the statements of financial position date up to the date when the financial statements are authorised for issuance which is within the period from 1 January 2019 to 26 February AUDITORS The auditors, Ernst & Young, have expressed their willingness to continue in office. Auditors remuneration are disclosed in Note 46 to the financial statements. Signed on behalf of the Board of Directors in accordance with a resolution of the directors dated 26 February Datuk Mohaiyani binti Shamsudin Kuala Lumpur, Malaysia Datuk Abdul Farid bin Alias

30 28 Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016 We, Datuk Mohaiyani binti Shamsudin and Datuk Abdul Farid bin Alias, being two of the directors of Malayan ing Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 34 to 318 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the and of the as at and of the results and the cash flows of the and of the for the financial year then ended. Signed on behalf of the Board of Directors in accordance with a resolution of the directors dated 26 February Datuk Mohaiyani binti Shamsudin Datuk Abdul Farid bin Alias Kuala Lumpur, Malaysia Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act 2016 I, Dato Amirul Feisal bin Wan Zahir, being the officer primarily responsible for the financial management of Malayan ing Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 34 to 318 are in my opinion correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed Dato Amirul Feisal bin Wan Zahir at Kuala Lumpur in the Federal Territory on 26 February 2019 Dato Amirul Feisal bin Wan Zahir Before me, Annual Report OUR PERFORMANCE PG THE FINANCIALS PG