HL 2019

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Notice of
Annual General Meeting

FURTHER NOTICE IS HEREBY GIVEN that a depositor shall qualify for entitlement to the final dividend only in respect of:

(a) shares transferred into the depositor’s securities account before 4:00 p.m. on 4 November 2019 in respect of ordinary transfers; and

(b) shares bought on Bursa Securities on a cum entitlement basis according to the Rules of the Bursa Securities.

By Order of the Board

JACK LEE TIONG JIE (MAICSA 7060133)
Company Secretary

Kuala Lumpur
30 September 2019

NOTES:

1. For the purpose of determining members’ eligibility to attend this meeting, only members whose names appear in the Record of
Depositors as at 18 October 2019 shall be entitled to attend this meeting or appoint proxy(ies) to attend and vote on their behalf.

2. Save for a member who is an exempt authorised nominee, a member entitled to attend and vote at the meeting is entitled to
appoint not more than two (2) proxies to attend, participate, speak and vote in his stead. A proxy may but need not be a member
of the Bank. A member who is an authorised nominee may appoint not more than two (2) proxies in respect of each securities
account it holds. A member who is an exempt authorised nominee for multiple beneficial owners in one securities account
(“Omnibus Account”) may appoint any number of proxies in respect of the Omnibus Account.

3. Where two (2) or more proxies are appointed, the proportion of shareholdings to be represented by each proxy must be specified
in the instrument appointing the proxies, failing which the appointments shall be invalid.

4. The Form of Proxy must be deposited at the Registered Office of the Bank at Level 30, Menara Hong Leong, No. 6, Jalan Damanlela,
Bukit Damansara, 50490 Kuala Lumpur not less than 48 hours before the time and date of the meeting or adjourned meeting.

5. Pursuant to Paragraph 8.29 A (1) of the Main Market Listing Requirements of Bursa Securities, all the resolutions set out in this
Notice will be put to vote by way of a poll.

Annual Report 2019 99

Notice of
Annual General Meeting

EXPLANATORY NOTES

1. Resolution 2 on Directors’ Fees and Directors’ Other Benefits

• Directors’ Fees of RM1,067,931 are inclusive of Board Committee Fees of RM342,931 and Meeting Allowances of RM95,000.
• Directors’ Other Benefits refer to Directors’ & Officers’ Liability Insurance coverage based on premium paid/payable and

Directors’ training benefits of up to RM270,000.

2. Resolution 8 on Authority to Directors to Allot Shares

The proposed Ordinary Resolution, if passed, will renew the general mandate given to the Directors of the Bank to issue ordinary
shares of the Bank from time to time and expand the mandate to grant rights to subscribe for shares in the Bank, convert any
security into shares in the Bank, or allot shares under an agreement or option or offer, provided that the aggregate number of
shares allotted, to be subscribed under any rights granted, to be issued from conversion of any security, or to be allotted under
an agreement or option or offer, pursuant to this resolution does not exceed 10% of the total number of issued shares (excluding
treasury shares) of the Bank for the time being (“Renewed General Mandate”). In computing the aforesaid 10% limit, shares
issued or agreed to be issued or subscribed pursuant to the approval of shareholders in a general meeting where precise terms
and conditions are approved shall not be counted. The Renewed General Mandate, unless revoked or varied at a general meeting,
will expire at the conclusion of the next AGM of the Bank.

As at the date of this Notice, no new shares in the Bank were issued and allotted pursuant to the general mandate given to
the Directors at the last AGM held on 29 October 2018 and which will lapse at the conclusion of the Seventy-Eighth AGM. The
Renewed General Mandate will enable the Directors to take swift action in case of, inter alia, a need for corporate exercises or
in the event business opportunities or other circumstances arise which involve the issuance and allotment of new shares, grant
of rights to subscribe for shares, conversion of any security into shares, or allotment of shares under an agreement or option or
offer, and to avoid delay and cost in convening general meetings to approve the same.

3. Resolution 9 on Recurrent Related Party Transactions of a Revenue or Trading Nature

The proposed Ordinary Resolution, if passed, will empower the Bank and its subsidiaries (“HLB Group”) to enter into recurrent
related party transactions of a revenue or trading nature which are necessary for HLB Group’s day-to-day operations, subject to
the transactions being in the ordinary course of business and on terms which are not more favourable to the Hong Leong Group
than those generally available to the public and are not, in the Bank’s opinion, detrimental to the minority shareholders of the
Bank (“Proposed Renewal of Shareholders’ Mandate”).

4. Resolution 10 on Proposed Adoption of New Constitution

The proposed Special Resolution, if passed, will bring the Bank’s Constitution in line with the provisions of the Companies
Act 2016 and the Main Market Listing Requirements of Bursa Securities as well as to enhance administrative efficiency
(“Proposed Adoption of New Constitution”).

The proposed new Constitution of the Bank is set out in Appendix IV of the Circular to Shareholders dated 30 September 2019
which is dispatched together with the Bank’s 2019 Annual Report.

Detailed information on the Proposed Renewal of Shareholders’ Mandate and the Proposed Adoption of New Constitution is set out in
the Circular to Shareholders dated 30 September 2019 which is dispatched together with the Bank’s 2019 Annual Report.

100 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Statement Accompanying Notice of
Annual General Meeting

(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Securities)

• Details of individuals who are standing for election as Directors

No individual is seeking election as a Director at the forthcoming Seventy-Eighth Annual General Meeting of the Bank.

• Statement relating to general mandate for issue of securities in accordance with Paragraph 6.03(3) of the Main Market
Listing Requirements of Bursa Securities

Details of the general mandate to issue securities in the Bank pursuant to Sections 75 and 76 of the Companies Act 2016 are set
out in Explanatory Note 2 of the Notice of Seventy-Eighth Annual General Meeting.

Annual Report 2019 101

Board of
Directors’ Profile

YBHG TAN SRI QUEK LENG CHAN MR TAN KONG KHOON

Position Position

Chairman/Non-Executive/Non-Independent Executive Director/Non-Independent

Nationality / Age / Gender Nationality / Age / Gender

Malaysian / 76 / Male Singaporean / 62 / Male

YBhg Tan Sri Quek Leng Chan is qualified as a Mr Tan Kong Khoon holds a Bachelor of Business
Barrister-at-Law from Middle Temple, United Kingdom. Administration degree from Bishop’s University, Canada
He has extensive business experience in various business and is an alumnus of the Harvard Business School
sectors, including financial services, manufacturing and Advance Management Program. He is a Chartered Banker
real estate. of the Asian Institute of Chartered Bankers.
YBhg Tan Sri Quek is the Chairman of Hong Leong Bank
Berhad (“HLB”) and was appointed to the Board of Mr Tan was appointed to the Board of HLB on 1 July 2013
Directors (“Board”) of HLB on 3 January 1994. He is the and is a member of the CSC, Executive Committee and
Chairman of the Credit Supervisory Committee (“CSC”) Nomination Committee (“NC”) of HLB.
and a member of the Remuneration Committee (“RC”)
of HLB. Mr Tan is the President & Chief Executive Officer of HLFG.
He is the Chairman & Chief Executive Officer of Hong He was the Group Managing Director/Chief Executive
Leong Company (Malaysia) Berhad (“HLCM”), a public Officer of HLB from 1 July 2013 to 4 February 2016.
company; Chairman of Hong Leong Financial Group Prior to joining HLB, Mr Tan was the Group Executive,
Berhad (“HLFG”), a company listed on the Main Market Consumer Banking Group of the DBS Bank Ltd (“DBS”)
of Bursa Malaysia Securities Berhad (“Bursa Securities”); from 1 December 2010 to 15 April 2013 where he led
and Chairman of Hong Leong Assurance Berhad (“HLA”) and managed strategy formulation and execution for
and Hong Leong Foundation, both public companies. He consumer banking globally across the DBS Group.
is also the Chairman of the Council of Members of Hong
Leong Bank Vietnam Limited (“HLBVN”). Mr Tan began his banking career with DBS in 1981.
Since then, he has successfully built consumer banking
102 HONG LEONG BANK BERHAD franchises across multiple markets in Asia for Citibank,
Standard Chartered Bank and ANZ Bank.

From March 2007 to December 2009, Mr Tan was
President and Chief Executive Officer of Bank of Ayudhya,
the fifth largest financial group in Thailand listed on the
Thailand Stock Exchange. The group businesses included
commercial and investment banking, life and non-life
insurance, stock broking, asset management and
consumer finance subsidiaries.

Mr Tan is the Chairman of Hong Leong Capital Berhad
and a Director of HLFG, both companies listed on the
Main Market of Bursa Securities; and a Director of HLA
and Hong Leong Investment Bank Berhad, both public
companies. He is also the Chairman of Hong Leong Bank
(Cambodia) PLC and Chief Controller on the Board of
Controllers of HLBVN.

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Board of
Directors’ Profile

MR KWEK LENG HAI MS CHOK KWEE BEE

Position Position

Non-Executive Director/Non-Independent Non-Executive Director/Independent

Nationality / Age / Gender Nationality / Age / Gender

Singaporean / 66 / Male Malaysian / 67 / Female

Mr Kwek Leng Hai is qualified as a Chartered Accountant Ms Chok Kwee Bee holds a Bachelor of Arts (Honours)
and has extensive experience in financial services, degree in Business Studies from Kingston University,
manufacturing and property investment. United Kingdom and is also a member of the Associate
of the Chartered Institute of Bankers, United Kingdom.
Mr Kwek was appointed to the Board of HLB on 3 January
1994. He is also a Director of Hong Leong Islamic Bank Ms Chok is presently the Managing Director of Teak
Berhad (“HLISB”) and HLCM, both public companies. Capital Sdn Bhd, a venture capital management company
and a Principal of Intres Capital Partners Sdn Bhd. Prior to
Mr Kwek is the Executive Chairman of Guoco Group that, she was with Walden International, a Silicon Valley
Limited (“GGL”). He was appointed as a Director of GGL based venture capital firm, overseeing the operations
in 1990 and assumed the position of President, Chief and investments of Walden International and BI Walden
Executive Officer from 1995 to 1 September 2016. He is in Malaysia. Ms Chok was also previously Head of the
also the Chairman of Lam Soon (Hong Kong) Limited Corporate Finance at AmInvestment Bank Berhad. She
(“LSHK”). Both GGL and LSHK are listed on the Hong Kong previously held posts as a member of the Securities
Stock Exchange. Mr Kwek is also a Director of GGL’s key Commission Capital Market Advisory Council, the
subsidiaries, including his positions as the Non-Executive Chairman of the Malaysian Venture Capital and Private
Chairman of GL Limited and a Director of GuocoLand Equity Association, a Non-Executive Board Member of
Limited, both public listed companies in Singapore. He the Audit Oversight Board and also a member of the
is also a Director of Bank of Chengdu Co., Ltd., a public Malaysian Venture Capital Development Council of the
company listed on the Shanghai Stock Exchange. Securities Commission.

Ms Chok is currently the Chairman of Aemulus Holdings
Berhad, a public company. She also sits on the board of
several private companies.

Ms Chok was appointed to the Board of HLB on
2 December 2013 and is the Chairman of the NC and
Board Audit Committee (“BAC”), and a member of the
Board Risk Management Committee (“BRMC”) of HLB.

Annual Report 2019 103

Board of
Directors’ Profile

YBHG DATO’ NICHOLAS YBHG DATUK DR MD HAMZAH BIN
JOHN LOUGH @ SHARIF MD KASSIM
LOUGH BIN ABDULLAH
Position
Position
Non-Executive Director/Independent
Non-Executive Director/Independent
Nationality / Age / Gender
Nationality / Age / Gender
Malaysian / 70 / Male
British and Malaysian Permanent Resident /
67 / Male YBhg Datuk Dr Md Hamzah bin Md Kassim holds a PhD in Business
YBhg Dato’ Nicholas John Lough @ Sharif Lough bin from Aston University, United Kingdom and a Master in Business
Abdullah holds a Gemmology Diploma from The Administration. He was inducted in 2012 into the Alumni Hall of
National Association of Goldsmiths, London, Great Achievement of Monmouth College in Illinois, USA where he did his
Britain and is a Fellow member of The Gemmological undergraduate education.
Association of Great Britain. YBhg Datuk Dr Md Hamzah had over 20 years of experience as strategy
YBhg Dato’ Nicholas Lough has extensive experience and management consultant in global firms specialising in large scale
in the corporate sector, serving in various capacities, technology and business transformation, working across several sectors
including Group Executive Director of The Melewar with established organisations, ranging from banks to telecommunication
Corporation Berhad from 1987 to 1995. companies, public institutions and foreign governments. He is the Co-
YBhg Dato’ Nicholas Lough is currently a Director of Founder of The iA Group, where he currently serves as an Advisor. The iA
GLM REIT Management Sdn Bhd, the Manager of Tower Group, which was established in 2002, specialises in business and public
Real Estate Investment Trust and Scicom (MSC) Berhad, sector transformation, technology and human capital.
both listed on the Main Market of Bursa Securities. Prior to The iA Group, he was the Executive Director/Partner of international
YBhg Dato’ Nicholas Lough was appointed to the Board firm of Ernst & Young, Vice President and Country Head of the global
of HLB on 23 June 2014 and is the Chairman of the consulting firm of Cap Gemini and member of the global management
BRMC and RC, and a member of the BAC and NC of HLB. team and Country Head of PA Consulting Group.
Before joining the consulting industry in 1995, YBhg Datuk Dr Md Hamzah
104 HONG LEONG BANK BERHAD held various senior positions in government for over 18 years related to
industrial R&D management and public policy on technology development
and innovation. He also served as a member of expert/advisory groups
in various national and international organisations such as United Nations
Conference on Trade and Development and Islamic Development Bank,
Jeddah. He was the Project Director for the Industrial Technology Master
Plan for Malaysia in the Institute of Strategic and International Studies and
subsequently took up the position as Director of Science and Technology,
Ministry of Science, Technology and Environment to spearhead the
implementation of the plan as part of the national strategies to accelerate
economic growth and technology development.
In 2006, YBhg Datuk Dr Md Hamzah was appointed as the Consulting Advisor
to the National Implementation Task Force chaired by the Prime Minister to
oversee the 9th Malaysia Development Plan and in 2009, he was appointed
as member of the National Economic Advisory Council (NEAC). YBhg Datuk
Dr Md Hamzah was a member of the Review and Operational Panel to
the Malaysian Anti-Corruption Commission from 2013 to February 2015. In
2015, he was appointed as member of the Anti-Corruption Advisory Board
by the DYMM Yang Di Pertuan Agong and completed his term in 2018.
YBhg Datuk Dr Md Hamzah was appointed to the Board of HLB on 19 May
2016 and is a member of the RC of HLB.
YBhg Datuk Dr Md Hamzah is also the Board Chairman of HLISB, a public
company.

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Board of
Directors’ Profile

MS CHONG CHYE NEO MS LAU SOUK HUAN

Position Position

Non-Executive Director/Independent Non-Executive Director/Independent

Nationality / Age / Gender Nationality / Age / Gender

Malaysian / 56 / Female Malaysian / 55 / Female

Ms Chong Chye Neo holds a Bachelor of Science (Honours) in Ms Lau Souk Huan holds a Bachelor Degree in Accounting
Computer Science from Universiti Sains Malaysia. (Honours) from the University of Malaya and she is a Certified
Ms Chong has been part of the information technology industry Public Accountant from the Malaysian Institute of Certified Public
for more than 30 years, having been with IBM Malaysia Accountants. Ms Lau is also a member of the Malaysian Institute
Sdn Bhd (“IBM Malaysia”) since 1989 until her retirement of Accountants.
in December 2018. In IBM, she held senior leadership roles Ms Lau has more than 30 years of experience in accounting
that spanned across multiple disciplines of technical, sales, garnered from the accounting profession and the working
intellectual property development, business and strategy experience with a global international financial institution and
development; and roles which gave her in-depth experience an accounting standard setter. Ms Lau is presently a Project
working in multiple countries across ASEAN and Asia Pacific. Director with the Malaysian Accounting Standards Board
She was appointed to the role of Managing Director/Chief (MASB), an independent authority which develops and sets
Executive Officer (“MD/CEO”) of IBM Malaysia in 2015, the first accounting standards in Malaysia. Prior to joining MASB in 2010,
woman to helm the company in its 57-year history in Malaysia. Ms Lau was with J.P. Morgan Chase Bank Berhad (“JP Morgan”)
As MD/CEO, she was responsible for the overall management primarily as the Chief Financial Officer for a period of 14 years. In
of IBM Malaysia and Brunei, and was a Director of IBM Global addition, Ms Lau was also co-Country Operating Officer, Director
Delivery Centre (M) Sdn Bhd and Kenexa Techologies Sdn Bhd. of subsidiary entities, trustee of JP Morgan’s retirement fund,
In 2016, Ms Chong was recognised with the “CEO Champion country coordinator for philanthropy and company secretary for
Award” by Talentcorp. In November 2017, she was appointed JP Morgan. Ms Lau was appointed to the Board of JP Morgan in
to Talent Compact 4.0, a national advisory panel in response 2002 and served as the Executive Director from 2006 until June
to the impact of Industry Revolution 4.0 and its implication 2009. She left JP Morgan in June 2009 but continued to serve as
to the future of work. In April 2018, she was recognised by a Non-Executive Director and later Independent Director of JP
the Malaysian Business publication as one of Malaysia’s 25 Morgan until September 2017.
Women of Influence. She was also appointed to the Board Prior to joining JP Morgan, Ms Lau was with Price Waterhouse
of Governors of American Malaysian Chamber of Commerce (now known as PricewaterhouseCoopers PLT) and assumed
and served until her retirement. Ms Chong speaks regularly various positions over 7 years from December 1987 to June 1995;
at national and international forums on topics ranging from the last being Senior Manager, Audit and Business Advisory.
Women in Leadership to Digital Disruptions and Impact of Ms Lau was appointed to the Board of HLB on 6 September 2019
Industry Revolution 4.0. and is a member of the BRMC and BAC of HLB.
Ms Chong currently also serves as an Independent
Non-Executive Director of Bursa Malaysia Berhad.
Ms Chong was appointed to the Board of HLB on 21 February
2019.

Notes: 3. Conviction of Offences
1. Family Relationship with Director and/or Major Shareholder None of the Directors has been convicted of any offences (excluding traffic
YBhg Tan Sri Quek Leng Chan and Mr Kwek Leng Hai are brothers. Save as
offences) in the past 5 years and there were no public sanctions or penalties
disclosed herein, none of the Directors has any family relationship with any imposed by the relevant regulatory bodies during the financial year ended
other Director and/or major shareholder of HLB. 30 June 2019.
2. Conflict of Interest 4. Attendance of Directors
None of the Directors has any conflict of interest with HLB. Details of Board meeting attendance of each Director are disclosed in the
Statement on Corporate Governance Overview, Risk Management and Internal
Control in the Annual Report.

Annual Report 2019 105

Key Senior
Management

MR DOMENIC FUDA MR CHARLES SIK WAN KING

Position Position

Group Managing Director/Chief Executive Officer Managing Director, Personal Financial Services

Nationality / Age / Gender Nationality / Age / Gender

Australian / 52 / Male Malaysian / 57 / Male

Mr Domenic Fuda holds a Bachelor of Economics from Mr Charles Sik Wan King holds a Bachelor of Commerce
Macquarie University, Sydney, as well as a Master of (Hons) from University of Ottawa, Canada. In addition, he
Business (Banking & Finance) and a Master of Business has completed management programmes at the Procter
Administration (M.B.A.), both from University of & Gamble School of Management, the INSEAD Graduate
Technology, Sydney. Mr Domenic Fuda is a Chartered School and the Columbia Senior Executive Programme at
Banker of the Asian Institute of Chartered Bankers (“AICB”). the Columbia Business School.

Mr Domenic Fuda was appointed as the Group Managing Mr Charles Sik joined HLB on 4 February 2015 as Chief
Director/Chief Executive Officer of Hong Leong Bank Berhad Operating Officer, Personal Financial Services. He leads and
(“HLB”) on 5 February 2016. Mr Domenic Fuda is a member manages the HLB Retail Banking portfolio. He assumed his
of the Executive Committee and Credit Supervisory current position on 1 September 2016.
Committee of HLB. He is also a Director of Hong Leong
Islamic Bank Berhad (“HLISB”) and Hong Leong Bank Prior to HLB, Mr Charles Sik led the retail banking
(Cambodia) PLC (“HLBCAM”) and a Council Member of franchises for RHB Group and earlier OCBC Bank (M) Bhd.
Hong Leong Bank Vietnam Limited (“HLBVN”), all wholly- His career in banking started at Citibank and was the
owned subsidiaries of HLB. He is also a Council Member of Wealth Management Director when he left.
AICB and The Association of Banks in Malaysia.
Prior to banking, Mr Charles Sik spent his formative years
Prior to HLB, Mr Domenic Fuda was the Managing Director in FMCG (fast moving consumer goods) companies in
and Deputy Group Head, Consumer Banking & Wealth various sales and marketing positions across Asia and
Management of DBS Bank Ltd (“DBS”), Singapore. He joined United States.
DBS in March 2010 as Chief Financial Officer of Regional
Consumer Banking & Wealth Management. During his
tenure with DBS, Mr Domenic Fuda was responsible for
the formulation and execution of a multi-year growth
strategy for the 6 Asian markets in which DBS operates its
consumer and wealth management businesses.

Prior to his position in DBS, he spent 16 years at Citigroup
where he served in various senior management roles
across Asia, the latest being Chief Operating Officer for
South East Asia Pacific, Australia and New Zealand, where
he helped to drive execution of Citi’s strategy across 10
countries, launched Citi’s Consumer Banking business in
Vietnam and helped to manage the banking operations
during the 2008/2009 financial crises.

106 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Key Senior
Management

MR YOW KUAN TUCK ENCIK JASANI BIN ABDULLAH

Position Position

Managing Director, Business and Corporate Banking Chief Executive Officer, HLISB, a wholly-owned
subsidiary of HLB
Nationality / Age / Gender
Nationality / Age / Gender
Malaysian / 48 / Male
Malaysian / 59 / Male
Mr Yow Kuan Tuck holds a Bachelor of Laws and Letters
degree from University of Leicester, United Kingdom Encik Jasani bin Abdullah is a Chartered Professional in
as well as a Certificate of Legal Practice from the Legal Islamic Finance (CPIF) of the Chartered Institute of Islamic
Qualifying Board, Malaysia. Finance Professional (CIIF) and holds a Post Graduate
Diploma in Islamic Banking & Finance from International
Mr Yow joined HLB on 2 May 2017 as Managing Director, Islamic University, Malaysia; a Bachelor degree in Business
Business and Corporate Banking. Administration from Ohio University, USA; and a Diploma in
Public Administration from MARA Institute of Technology.
Mr Yow has over 20 years of experience in the financial
services sector having built a successful track record in Encik Jasani joined HLISB in June 2007 as Assistant General
growing corporate and financial institutions businesses, Manager and was promoted to Chief Operating Officer of
managing portfolios such as financial institutions, public HLISB in June 2010. He was appointed the Chief Executive
sector and other industry groups. Officer of HLISB on 17 July 2017.

Prior to HLB, Mr Yow was with Standard Chartered Encik Jasani has more than 30 years of working experience
Bank Malaysia as Managing Director, Head of Financial in the banking industry with the last 19 years in Islamic
Institutions between 2013 and 2017. He commenced finance.
his banking career with Citibank Malaysia in Country
Compliance for a number of years before a career change Prior to HLISB, Encik Jasani spent more than 20 years in
into institutional banking where over the next 15 years, he various senior positions in RHB Bank Berhad and RHB
held various senior positions including Head of Financial Islamic Bank Berhad, his last position being the Vice
Institutions & Public Sector Group in Citibank Malaysia’s President, Head-Product Development Division.
Corporate Bank.

Annual Report 2019 107

Key Senior
Management

MR HOR KWOK WAI MR MALKIT SINGH MAAN

Position Position

Managing Director, Global Markets Chief Financial Officer

Nationality / Age / Gender Nationality / Age / Gender

Malaysian / 45 / Male Malaysian / 53 / Male

Mr Hor Kwok Wai holds a Bachelor of Science in Actuarial Mr Malkit Singh Maan is a Chartered Accountant with the
Mathematics and Statistics from Heriot-Watt University, Malaysian Institute of Accountants and a fellow member
United Kingdom. of the Australian Society of Certified Public Accountant. He
graduated with a Bachelor of Business in Accounting from
He joined HLB in January 2011 as Chief Operating Officer Curtin University of Technology, Perth, Western Australia
of Global Markets. He assumed his current position on and a Master of Business Administration from Victoria
1 September 2016. University, Melbourne.

Prior to HLB, Mr Hor was Head of Global Markets for The Mr Malkit joined HLB on 22 July 2019 as Chief Financial
Royal Bank of Scotland Malaysia where he spent seven Officer (“CFO”) of HLB.
years developing their sales and trading business across
foreign exchange, fixed income, derivatives and structured Mr Malkit has over 28 years of banking, corporate and
products. Prior to that, he had worked for several major finance experience. Prior to joining HLB, he was with BIMB
foreign banks in Malaysia such as JP Morgan Chase Bank, Holdings Berhad as the Group CFO. Being responsible
Standard Chartered Bank and OCBC Bank in various roles. for the financial management of the Group, he assisted
to steer, BIMB Holdings Berhad to achieve the highest
return on equity (ROE) for the last 4 years (FYE 2015-2018),
amongst listed banking groups, being the top pick of
most research houses and analysts. He talks to analyst
and fund managers locally and abroad attracting interest
from Singapore, Hong Kong, Japan and London. Mr Malkit
had also previously served as the CFO of Bank Islam Bank
Berhad. He contributed considerably in the turnaround plan
of Bank Islam and thereafter set the path for sustainable
growth and value based business for Bank Islam. Prior to
Bank Islam, Mr Malkit was the CFO of ABN AMRO Bank
Berhad and Vice President-Finance at RHB Bank Berhad.

108 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Key Senior
Management

MR JASON WONG HON LURN MR AARON HO WAI CHOONG

Position Position

Managing Director & Chief Executive, HLB Singapore Managing Director, China Operations
Branch
Nationality / Age / Gender
Nationality / Age / Gender
Malaysian / 64 / Male
Singaporean / 56 / Male
Mr Aaron Ho Wai Choong holds a Bachelor of Engineering
Mr Jason Wong Hon Lurn holds an Executive Master of (Hons) from University of Malaya and a Master of Business
Business Administration from Helsinki School of Economics Administration from University of Rochester, USA.
and Business Administration and possesses graduate
diplomas in Techno-Entrepreneurship and Electronic Mr Aaron Ho joined HLB on 7 April 2008 as Chief Operating
Business programmes. Officer of International Banking of HLB China. He assumed
his current position on 1 September 2016. He was
Mr Jason Wong joined HLB on 1 November 2016 as Chief appointed Vice Chairman of Bank of Chengdu Co., Ltd
Executive, HLB Singapore Branch. (“BOCD”) since July 2008 and a member of the Board of
Directors of JinCheng Consumer Finance Company (“JCCFC”)
Prior to HLB, Mr Jason Wong was the former Chief since February 2010. Both BOCD and JCCFC are associate
Executive of RHB Bank Singapore for the past 7 years. He companies of HLB.
has more than 28 years of hands-on banking experience in
running key business operations in treasury, corporate and Mr Aaron Ho has more than 35 years’ experience in the
commercial banking and consumer banking businesses in banking and financial services industry. Prior to HLB, he
Singapore. He has very good knowledge of both Malaysia had held various managerial positions such as Manager of
and Singapore banking markets, having spent his first Operations/Credit of American Express (Malaysia), General
12 years working with different financial institutions Manager of MBf Card Services (Malaysia), Senior Manager/
in Malaysia and subsequently 16 years with RHB Bank Head of RHB Bank Card Center (Malaysia), Vice President,
Singapore. Operations and Technology of MasterCard International
(Singapore), Vice President/Senior Country Operations
Officer, Citibank Malaysia and Citibank Taiwan as well
as General Manager/Director of Citicorp Software and
Technology Services (Shanghai) Ltd under CitiGroup China.

Annual Report 2019 109

Key Senior
Management

MR JOSEPH FARRUGIA MR DUONG DUC HUNG

Position Position

Managing Director & Chief Executive Officer, HLBCAM, Managing Director & General Director, HLBVN, a
a wholly-owned subsidiary of HLB wholly-owned subsidiary of HLB

Nationality / Age / Gender Nationality / Age / Gender

Australian / 56 / Male Vietnamese / 43 / Male

Mr Joseph Farrugia undertook and completed a course Mr Duong Duc Hung holds a Master of Business
in Marketing Strategy at Melbourne Business School, Administration from Katholieke Universiteit Leuven,
Australia. Belgium and a Bachelor of Arts in International Economics
at Foreign Trade University.
Mr Joseph Farrugia joined HLB on 30 July 2012 as Chief
Executive Officer of HLBCAM. Mr Duong joined HLBVN on 2 January 2018 as Managing
Director & General Director of HLBVN.
Prior to HLB, he was the Head of Retail Banking and Wealth
Management, ANZ Bank Vietnam & Greater Mekong Prior to HLBVN, Mr Duong brings more than 20 years of
Region, which incorporates Cambodia and Laos. banking and financial services experience, with his most
recent role as a member of Techcombank’s Management
Committee as Transformation Director. Prior to that,
he has been with ANZ Vietnam for more than 10 years,
holding various key portfolios in product, performance
management, wealth management, sales & services
before he was appointed to head the entire retail banking
and operations.

He is well versed in regional and international business
practices, having served in world class organisations such
as JP Morgan Chase as the Head of Financial Institutions
segment for Vietnam and Cambodia. He was also with
HSBC heading the cash management division and the
Financial Controller in Baxter Healthcare and Auditor in
KPMG, both in Vietnam and abroad.

110 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Key Senior
Management

MR PHILIP LUK KAI MAN Notes:
1. Family Relationship with
Position
Director and/or Major
General Manager, HLB, Hong Kong Branch Shareholder
None of the Key Senior
Nationality / Age / Gender Management has any
family relationship with
Hong Kong Citizen / 49 / Male any Director and/or major
shareholder of HLB.
Mr Philip Luk Kai Man graduated from the University 2. Conflict of Interest
of Sydney, Australia with a Master of Economics with a None of the Key Senior
double major in Economics and Econometrics. Management has any
conflict of interest with
Mr Philip Luk joined HLB on 1 May 2019 as General Manager, HLB.
HLB, Hong Kong Branch. 3. Conviction of Offences
None of the Key Senior
Prior to HLB, Mr Philip Luk was Head of Transactional Management has been
Banking, North East Asia with National Australia Bank, convicted of any offences
Hong Kong. In this role, he was part of the EXCO & ALCO (excluding traffic offences)
of the bank. in the past 5 years and
there were no public
He began his career in banking with the Bank of East Asia sanctions or penalties
as an Executive Trainee and then moved into the Credit imposed by the relevant
& Marketing division. He spent 12 years with Standard regulatory bodies during
Chartered Bank, where he started his tenure as Relationship the financial year ended
Manager for the Public Sector and steadily grew his career 30 June 2019.
to eventually take on the Director, Head of Public Sector &
Korean Corporates role. Subsequently, he took on several
senior roles to gain more exposure with another foreign
bank as Head of Payment and Cash Management North
Asia, Head of Business Banking Greater China and Head
of Liabilities Business Asia, Commercial Banking after he
joined Australia New Zealand Banking Group.

Mr Philip Luk is a seasoned, all-rounded banking professional
specialising in end-to-end business setup. He is well-versed
with the local banking regulations and has covered Hong
Kong as well as North Asia.

Annual Report 2019 111

Board Audit
Committee Report

CONSTITUTION MEETINGS

The Board Audit Committee of HLB has been established since The BAC meets at least eight (8) times a year and additional
18 August 1994 and was re-designated as the Board Audit & meetings may be called at any time as and when necessary. All
Risk Management Committee (“BARMC”) on 10 January 2002. meetings to review the quarterly reports and annual financial
Subsequently, on 2 October 2006, the Board of Directors decided statements are held prior to such quarterly reports and annual
to reconstitute the Board Audit Committee (“BAC”) separately financial statements being presented to the Board for approval.
from the Board Risk Management Committee (“BRMC”).
The Group Managing Director/Chief Executive Officer, Chief
COMPOSITION Financial Officer, Chief Risk Officer, Chief Internal Auditor, Chief
Compliance Officer, other senior management and external
MS CHOK KWEE BEE auditors may be invited to attend the BAC meetings whenever
(Chairman, Independent Non-Executive Director) required. At least twice a year, the BAC will have separate
(Appointed as BAC Chairman with effect from 5 May 2019) sessions with the external auditors without the presence of
Executive Directors and management.
YBHG DATO’ NICHOLAS JOHN LOUGH @ SHARIF LOUGH
BIN ABDULLAH The BAC will also engage privately with the Chief Internal Auditor
(Independent Non-Executive Director) on a regular basis to provide the opportunity for the Chief Internal
Auditor to discuss issues faced by the internal audit function.
MS LAU SOUK HUAN
(Independent Non-Executive Director) Issues raised, discussions, deliberations, decisions and
(Appointed as BAC member with effect from 6 September 2019) conclusions made at the BAC meetings are recorded in the
minutes of the BAC meetings. A BAC member who has, directly
MS LIM LEAN SEE or indirectly, an interest in a material transaction or material
(Chairman, Independent Non-Executive Director) arrangement shall not be present at the BAC meeting where
(Retired as BAC Chairman on 5 May 2019) the material transaction or material arrangement is being
deliberated by the BAC.
SECRETARY
Two (2) members of the BAC, who shall be independent, shall
The Secretary(ies) to the BAC is/are the Company Secretary(ies) constitute a quorum and the majority of members present must
of the Bank. be independent directors.

TERMS OF REFERENCE After each meeting, the BAC shall report and update the
Board on significant issues and concerns discussed during the
The terms of reference of the BAC are published on the Bank’s BAC meetings and where appropriate, make the necessary
website (‘www.hlb.com.my’) recommendations to the Board.

AUTHORITY ACTIVITIES

The BAC is authorised by the Board to review any activity of The BAC carried out its duties in accordance with its Terms of
the Group within its Terms of Reference. It is authorised to seek Reference.
any information it requires from any Director or member of
management and all employees are directed to co-operate with During the financial year ended 30 June 2019, nine (9) BAC
any request made by the BAC. meetings were held and the attendance of the BAC members
was as follows:
The BAC is authorised by the Board to obtain independent legal
or other professional advice if it considers necessary. Members Attendance

Ms Chok Kwee Bee (1) 8/8

Ybhg Dato’ Nicholas John Lough @ Sharif Lough 8/9
bin Abdullah

Ms Lim Lean See (2) 8/8

112 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Board Audit
Committee Report

Ms Lau Souk Huan was appointed as BAC member with effect also had two (2) separate sessions with the external auditors
from 6 September 2019, after the close of the FYE 2019, and as without the presence of Executive Directors and management
such, did not attend any of the BAC meetings held during the whereby matters discussed include key reservations noted by
FYE 2019. the external auditors during the course of their audit; whilst
the BAC Chairman maintained regular contact with the audit
Notes: partner throughout the year.
(1) Appointed as BAC member with effect from 14 August 2018 and BAC Chairman
The BAC reviewed the external auditors’ fees and their scope
with effect from 5 May 2019. of services. The approved and incurred fees for the financial
(2) Retired as BAC Chairman on 5 May 2019. year ended 30 June 2019 amounted to RM3,732,300 of which
RM62,500 was payable in respect of non-audit services.
HOW THE BAC DISCHARGES ITS RESPONSIBILITIES Non-audit services accounted for 2% of the total audit fees
payable. The BAC assessed the objectivity and independence of
FINANCIAL REPORTING the external auditors prior to the appointment of the external
The BAC reviewed the quarterly reports and financial statements auditors for ad-hoc non-audit services.
of the Company and of the Group focusing particularly on:
The BAC also evaluated the performance of PwC PLT in the
(i) any changes in accounting policies and practices; following areas in relation to its re-appointment as auditors for
(ii) significant adjustments arising from the audit; the financial year ended 30 June 2019 and considered PwC PLT to
(iii) the going concern assumptions; and be independent:
(iv) compliance with accounting standards and other legal
(a) level of knowledge, capabilities, experience and quality of
requirements. previous work;

BAC also reviewed with Management the progress update reports, (b) level of engagement with BAC;
MFRS 9 Model validation report performed by an independent
party and MFRS Day 1 audit performed by the external auditors in (c) ability to provide constructive observations, implications
relation to the Group’s adoption of MFRS 9 in FY 2019. and recommendations in areas which require
improvements;
The legal and regulatory environment was monitored and
consideration given to changes in law, regulation, accounting (d) adequacy in audit coverage, effectiveness in planning and
policies and practices including financial reporting standards conduct of audit;
in the pipeline as well as the revised disclosure requirements
pursuant to the amendments to the Main Market Listing (e) ability to perform the audit work within the agreed
Requirements of Bursa Malaysia Securities Berhad. timeframe;

EXTERNAL AUDIT (f) non-audit services rendered by PwC PLT does not impede
The external auditors of the Group for the financial year ended independence;
30 June 2019 is PricewaterhouseCoopers PLT (“PwC PLT”). The
BAC discussed and reviewed with the external auditors, before (g) ability to demonstrate unbiased stance when interpreting
the audit commences for the financial year: the standards/policies adopted by HLB; and

(i) the audit plan and timetable for the financial audit of (h) risk of familiarity in respect of PwC PLT’s appointment as
the Group including the focus areas and approach to the external auditors.
current financial year’s audit and any significant issues
that can be foreseen, either as a result of the past year’s PwC PLT, in accordance with professional ethical standards, has
experience or due to new accounting standards or other provided the BAC with confirmation of their independence for
changes in statutory or listing requirements; and the duration of the financial year ended 30 June 2019 and the
measures used to control the quality of their work.
(ii) the methodology and timetable of the Statement on
Internal Control and Risk Management. The BAC has therefore recommended to the Board that PwC
PLT be re-appointed as the auditors. Resolution concerning the
The BAC reviewed the report and audit findings of the external reappointment of PwC PLT will be proposed to shareholders at
auditors and considered management’s responses to the the 2019 Annual General Meeting.
external auditors’ audit findings and investigations. The BAC

Annual Report 2019 113

Board Audit
Committee Report

RELATED PARTIES TRANSACTIONS The BAC has reviewed the audit findings and recommendations
of the GIAD, including any findings of internal investigations,
The BAC conducted quarterly review of the recurrent related and has ensured that management has taken the necessary
party transactions (“RRPT”) entered into by the Group to ensure corrective actions in a timely manner to address control
that such transactions are undertaken on commercial terms and weaknesses, non-compliance with laws, regulatory requirements
on terms not more favourable to the related parties than those and policies. The BAC also reviewed at every BAC meeting the
generally available to and/or from the public. status update of management’s corrective action plans for the
resolution of internal audit’s findings and recommendations.
The Group had put in place the procedures and processes to Recommendations were made by BAC to ensure that the root
the RRPT are conducted on commercial terms consistent with causes raised by GIAD in their audit reports were effectively
the Group’s usual business practices and policies and on terms resolved and that any outstanding audit findings be tracked for
not more favourable to the related parties than those generally timely resolution.
available to and/or from the public, where applicable.
GROUP INTERNAL AUDIT DIVISION (“GIAD”)
The BAC reviewed the said procedures and processes on an
annual basis and as and when required, to ensure that the said The GIAD of HLB assists the BAC in the discharge of its duties and
procedures are adequate to monitor, track and identify RRPT in a responsibilities. GIAD employs a risk-based assessment approach
timely and orderly manner, and are sufficient to ensure that the in auditing the Bank’s Group business and operational activities.
RRPT will be carried out on commercial terms consistent with The high risk activities are given due attention and audited on a
the Group’s usual business practices and policies and on terms more regular basis while the rest are prioritised to potential risk
not more favourable to the related parties than those generally exposure and impact.
available to and/or from the public.
During the financial year ended 30 June 2019, GIAD carried out
CREDIT TRANSACTIONS AND EXPOSURE WITH CONNECTED its duties covering audits on branches, and risk-based audits
PARTIES on Personal Financial Services, Business Corporate Banking and
Global Markets businesses, Group Operations and Technology,
The Group is guided by the Guidelines on Credit Transactions Group Functions, investigation and other assignments as directed.
and Exposures with Connected Parties to ensure that credit These audits are performed in line with the BNM Guidelines on
transactions with connected parties are carried out on an arm’s Internal Audit Function.
length basis on terms and conditions not more favourable
than those entered into with other counterparties with similar Besides performing internal audit functions to the Bank Group,
circumstances and creditworthiness. it also through a service agreement, provides internal audit
services to Hong Leong Capital Berhad, Hong Leong Assurance
The BAC had conducted quarterly review of credit transactions of Berhad, and Hong Leong MSIG Takaful Berhad. The cost incurred
the Group with connected parties to ensure compliance with the for the Internal Audit function of the Bank in respect of the
said Guidelines. financial year ended 30 June 2019 was RM13.986 million.

INTERNAL AUDIT This BAC Report is made in accordance with the resolution of the
Board of Directors.
The BAC reviewed the adequacy of internal audit scope, internal
audit plan and resources of the various internal audit functions
within Group Internal Audit Division (“GIAD”).

During the financial year, BAC noted that GIAD had effectively
carried out internal audits to all business entities of the Group,
and reviewed the GIAD’s reports on the audits performed on the
Group as set out in the Internal Audit Function section below.

114 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Board Risk Management
Committee (BRMC) Report

CONSTITUTION 2. To review management’s reporting to the Board on
measures taken to:
The Board Risk Management Committee (“BRMC”) is established
to support the Board in discharging the following responsibilities: (a) Identify and examine principal risks faced by the
Company.
1. Oversee management’s implementation of the Company’s
governance framework and internal control framework/ (b) Implement appropriate systems and internal controls
policies. to manage these risks.

2. Ensure management meets the expectations on risk 3. To review management’s major risk management
management as set out in the policy document on Risk strategies, policies and risk tolerance for Board’s approval.
Governance.
4. To review management’s overall framework on the
3. Oversee management’s implementation of compliance Internal Capital Adequacy Assessment Process (“ICAAP”),
risk management. annual risk appetite and Capital Management Plan for
Board’s approval.
4. Promote the adoption of sound corporate governance
principles as set out in the Policy Document on Corporate 5. To review management’s development and effective
Governance within the Bank and its subsidiaries (“the implementation of the ICAAP.
Group”).
6. To review management’s stress testing governance
COMPOSITION including the evaluation on the capital stress test scenarios,
The BRMC must: parameters, key assumptions and results.

(a) have at least three directors; 7. To review management’s periodic reports on risk appetite,
risk exposure, risk portfolio composition, stress testing and
(b) comprise only non-executive directors, with a majority of risk management activities.
them being independent directors;
8. To review the adequacy and effectiveness of management’s
(c) be chaired by an independent director; and internal controls and risk management process.

(d) comprise directors who have the skills, knowledge and 9. To review the adequacy of risk management policies and
experience relevant to the responsibilities of the board frameworks in identifying, measuring, monitoring and
committee. controlling risk and the extent to which these are operating
effectively.
SECRETARY
10. To review risk management function’s infrastructure,
The Secretariat to the BRMC is the Group Risk Management resources and systems and to ensure the staff responsible
(“GRM”) of the Bank. for implementing risk management systems perform those
duties independently of the Group’s risk-taking activities.
TERMS OF REFERENCE
11. To review the adequacy and effectiveness of IT risk
RISK MANAGEMENT management and security controls on e-banking services.
1. To review management’s activities in managing principal
12. To receive and review reports from pertinent management
risks such as credit, market, liquidity, interest rate risk in committees.
the banking book, operational, compliance, IT risks, cyber
risk and the risk management process. 13. To review management’s implementation of risk
management as set out in BNM’s policy documents on Risk
Governance, Approaches to Regulating and Supervising
Financial Group and Corporate Governance.

Annual Report 2019 115

Board Risk Management
Committee (BRMC) Report

14. To review and advise on the appointment, remuneration, (b) ensuring that the Chief Compliance Officer has
removal and redeployment of the Chief Risk Officer. sufficient stature to allow for effective engagement
with the CEO and other members of senior
15. To engage privately with the Chief Risk Officer on a regular management;
basis (and in any case at least twice annually) to provide
opportunity for the Chief Risk Officer to discuss issues faced (c) engaging privately with the Chief Compliance Officer
by the risk management function. on a regular basis (and in any case at least twice
annually) to provide the opportunity for the Chief
16. To review management’s implementation of the Compliance Officer to discuss issues faced by the
remuneration system and incentives provided by the compliance function;
remuneration system which take into consideration risks,
capital, liquidity and the likelihood and timing of earnings, (d) ensuring that the Chief Compliance Officer is
without prejudice to the tasks of the Board Remuneration supported with sufficient resources to perform
Committee. duties effectively;

17. Other risk management functions as may be agreed by the (e) where the Chief Compliance Officer also carries out
BRMC and the Board. responsibilities in respect of other control functions,
the BRMC shall be satisfied that a sound overall
COMPLIANCE control environment will not be compromised by
1. To assist the Board in the oversight of the management of the combination of responsibilities performed by the
Chief Compliance Officer.
compliance risk by:
3. Other compliance functions as may be agreed to by the
(a) reviewing compliance policies and overseeing BRMC and the Board.
management’s implementation of the same;
GROUP GOVERNANCE
(b) reviewing the establishment of the compliance 1. Noted that:
function and the position of the Chief Compliance
Officer to ensure the compliance function and (a) The Bank, as a company with licensed subsidiary
Chief Compliance Officer has appropriate standing, companies has overall responsibility for ensuring the
authority and independence; establishment and operation of a clear governance
structure within its subsidiaries (“Bank Group”).
(c) discussing and deliberating compliance issues
regularly and ensuring such issues are resolved (b) The Board’s responsibility is to promote the adoption
effectively and expeditiously; of sound corporate governance principles throughout
the Bank Group.
(d) reviewing annually the effectiveness of the
Company’s overall management of compliance (c) The Bank’s risk and compliance functions may propose
risk, having regard to the assessments of senior objectives, strategies, plans, governance framework
management and internal audit and interactions and policies for adoption and implementation within
with the Chief Compliance Officer; the Bank Group.

(e) updating the Board on all compliance matters, (d) The respective subsidiaries’ board and senior
including providing its views on (a) to (d) above. management must validate that the objectives,
strategies, plans, governance framework and
2. In relation to the role of the Chief Compliance Officer, policies set at the Bank level are fully consistent
support the Board in meeting the expectations on with the regulatory obligations and the prudential
compliance management as set out in BNM’s policy management of the subsidiary and ensure that
document on Compliance by: entity specific risks are adequately addressed in the
implementation of Bank Group policies.
(a) reviewing and advising on the appointment,
remuneration, removal and redeployment of the
Chief Compliance Officer;

116 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Board Risk Management
Committee (BRMC) Report

AUTHORITY ACTIVITIES
The BRMC carried out its duties in accordance with its Terms of
The BRMC is authorised by the Board to review any activities Reference supported by the Group Risk Management and Group
of the Group within its terms of reference. It is authorised to Compliance functions.
seek any information it requires from any Director or member of
management and all employees are directed to co-operate with For the financial year ended 30 June 2019, eight (8) BRMC
any request made by the BRMC. meetings and three (3) special BRMC meetings were held and
the attendance of the BRMC members is recorded as follows:
The BRMC is authorised by the Board to obtain independent legal
or other professional advice if it considers necessary. Member Attendance

MEETINGS YBhg Dato’ Nicholas John Lough @ Sharif Lough 11/11
bin Abdullah
The BRMC meets at least eight (8) times a year and additional
meetings may be called at any time as and when necessary. Ms Lim Lean See 9/9

The Group Managing Director/Chief Executive Officer, Chief Ms Chok Kwee Bee 11/11
Financial Officer, Chief Risk Officer, Chief Internal Audit, Chief
Compliance Officer, other senior management and external Ms Lim Lean See did not attend two BRMC meetings as she
auditors may be invited to attend the BRMC meetings, whenever officially retired on 5 May 2019.
required.
Ms Lau Souk Huan was appointed as BRMC member with
Issues raised, discussions, deliberations, decisions and effect from 6 September 2019, after the close of the FYE 2019.
conclusions made at the BRMC meetings are recorded in the Consequently, she did not attend any of the BRMC meetings held
minutes of the BRMC meetings. Where the BRMC is considering a during the FYE 2019.
matter in which a BRMC member has an interest, such member
shall abstain from reviewing and deliberating on the subject The BRMC also reviewed major risk management strategies,
matter. policies and risk tolerance levels for Board’s approval. Where
the significant risk policies and frameworks relate to the Group’s
Two (2) members of the BRMC, who shall be independent and majority owned subsidiaries, the BRMC ensures alignment to the
non-executive, shall constitute a quorum. Group’s risk management appetite, and policies.

After each BRMC meeting, the BRMC shall report and update In addition, the BRMC has reviewed periodic risk management
the Board on significant issues and concerns discussed during reports, i.e. Risk Management Dashboards covering among
the BRMC meetings and where appropriate, make the necessary others Credit Risk, Market Risk, Interest Rate Risk in the Banking
recommendations to the Board. Book, Liquidity Risk, Operational Risk, and IT Risk. The BRMC
also reviewed periodic group compliance reports, i.e. Regulatory
REVISION OF THE TERMS OF REFERENCE Compliance Highlights and New Regulations Update.
Any revision or amendment to the Terms of Reference, as
proposed by the BRMC, shall first be presented to the Board Bank-wide compliance matters are also deliberated by the BRMC,
for its approval. Upon the Board’s approval, the said revision or and this includes the Bank’s subsidiaries and overseas branches.
amendment shall form part of this Terms of Reference which The BRMC continuously provides oversight of the Group’s
shall be considered duly revised or amended. compliance activities to ensure that the Group is in compliance
to all established policies and external regulations.

Annual Report 2019 117

Corporate Governance Overview,
Risk Management & Internal Control Statement

Corporate Governance is the process and structure used to direct and manage
the business and affairs of the Company towards enhancing business prosperity
and corporate accountability with the ultimate objective of realising long term
shareholder value, whilst taking into account the interest of other stakeholders.

Finance Committee on Corporate Governance

The Board of Directors (“Board”) is pleased to present this The day-to-day business of the Bank is managed by the

statement with an overview of the corporate governance (“CG”) Group Managing Director/Chief Executive Officer (“GMD/

practices of the Group which supports the three key principles CEO”) who is assisted by the management team. The

of the Malaysian Code on Corporate Governance (“MCCG”) GMD/CEO and his management team are accountable to

namely board leadership and effectiveness; effective audit the Board for the performance of the Bank. In addition, the

and risk management; and integrity in corporate reporting and Board has established Board Committees which operate

meaningful relationship with stakeholders. within clearly defined TOR primarily to support the Board

in the execution of its duties and responsibilities.

The CG Report 2019 of the Bank in relation to this statement is

published on the Bank’s website, www.hlb.com.my (“the Bank’s To discharge its oversight roles and responsibilities more

Website”). effectively, the Board has delegated the independent

oversight over, inter alia, internal and external audit

The Board also reviewed the manner in which the Bank Negara functions and internal controls to the Board Audit

Malaysia’s (“BNM”) policy document on Corporate Governance Committee (“BAC”); and risk management to the Board

(“BNM CG Policy”) is applied in the Group, where applicable, as Risk Management Committee (“BRMC”). The Nomination

set out below. Committee (“NC”) is delegated the authority to, inter alia,

assess and review Board, Board Committees and GMD/

A. ROLES AND RESPONSIBILITIES OF THE BOARD CEO appointments and re-appointments and oversee
management succession planning. Although the Board has

The Board assumes responsibility for effective stewardship granted such authority to Board Committees, the ultimate
and control of the Bank and has established terms responsibility and the final decision rest with the Board.
of reference (“TOR”) to assist in the discharge of this The chairmen of Board Committees report to the Board on
responsibility. matters dealt with at their respective Board Committee
meetings. Minutes of Board Committee meetings are also

In discharging its responsibilities, the Board has tabled at Board meetings.

established functions which are reserved for the Board and There is a clear division of responsibilities between the
those which are delegated to management. The key roles Chairman of the Board and the GMD/CEO. This division of
and responsibilities of the Board are set out in the Board responsibilities between the Chairman and the GMD/CEO
Charter, which was reviewed periodically by the Board. ensures an appropriate balance of roles, responsibilities
The Board Charter is published on the Bank’s Website. and accountability.
The key roles and responsibilities of the Board broadly

cover formulation of corporate policies and strategies; The Chairman leads the Board and ensures its smooth and
overseeing and evaluating the conduct of the Group’s effective functioning.
businesses; identifying principal risks and ensuring the

implementation of appropriate systems to manage those The GMD/CEO is responsible for formulating the vision
risks; and reviewing and approving key matters such as and recommending policies and the strategic direction
financial results, investments and divestments, acquisitions of the Bank for approval by the Board, implementing
and disposals, and major capital expenditure and such the decisions of the Board, initiating business ideas and
other responsibilities that are required as specified in the corporate strategies to create competitive edge and
guidelines and circulars issued by BNM from time to time.

118 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

enhancing shareholder wealth, providing management Board. The Board will consider appropriate targets in Board
of the day-to-day operations of the Bank and tracking diversity including gender balance on the Board and will
compliance and business progress. take the necessary measures to meet these targets from
time to time as appropriate. The Board currently has eight
Independent Non-Executive Directors (“INEDs”) are (8) Directors, of whom three (3) are women Directors. The
responsible for providing insights, unbiased and Board will continue to maintain women participation on
independent views, advice and judgment to the Board the Board in line with the MCCG.
and bring impartiality to Board deliberations and decision-
making. They also ensure effective checks and balances on Based on the review of the Board composition in July
the Board. There are no relationships or circumstances that 2019, the Board is of the view that the current size and
could interfere with or are likely to affect the exercise of composition of the Board are appropriate and effective
INEDs’ independent judgment or their ability to act in the for the control and direction of the Group’s strategy and
best interest of the Bank and its shareholders. business. The composition of the Board also fairly reflects
the investment of shareholders in the Bank.
The Group continues to operate in a sustainable manner
and seeks to contribute positively to the well-being of C. BOARD COMMITTEES
stakeholders. The Group takes a progressive approach
in integrating sustainability into its businesses as set Board Committees have been established by the Board to
out in the Sustainability Report which forms part of the assist in the discharge of its duties.
Annual Report.
(A) BAC
The Board observes the Code of Ethics for Company Directors The composition of the BAC and a summary of its
established by the Companies Commission of Malaysia
(“CCM”) and Hong Leong Bank Group (“HLB Group”) Code activities in the discharge of its functions and duties
of Conduct & Ethics, which have been adopted by the Board for the financial year and explanation on how the
and published on the Bank’s Website. Details of the Hong BAC had met its responsibilities are set out in the
Leong Bank Group Code of Conduct & Ethics are set out in BAC Report in this Annual Report.
Section F of this Statement.
The BAC’s functions and responsibilities are set out in
B. BOARD COMPOSITION the TOR which is published on the Bank’s Website.

The Board currently comprises eight (8) Directors. The (B) BRMC
eight (8) Directors are made up of seven (7) Non-Executive The composition of the BRMC and a summary of its
Directors, of whom five (5) are independent. The profiles
of the members of the Board are set out in the Annual activities in the discharge of its functions and duties
Report. for the financial year and explanation on how the
BRMC had met its responsibilities are set out in the
The Bank is guided by BNM CG Policy and the Main Market BRMC Report of this Annual Report.
Listing Requirements (“MMLR”) of Bursa Malaysia Securities
Berhad (“Bursa”) in determining its board composition. The BRMC’s functions and responsibilities are set out
The Board shall determine the appropriate size of the in the TOR which is published on the Bank’s Website.
Board to enable an efficient and effective conduct of Board
deliberation. The Board shall have a balance of skills and (C) NC
experience to commensurate with the complexity, size, The NC was established on 17 June 2003. The
scope and operations of the Bank. Board members should
have the ability to commit time and effort to carry out their composition of the NC is as follows:
duties and responsibilities effectively.
• Ms Chok Kwee Bee (Chairman)
The Bank has in place a Board Diversity Policy. The Board • Mr Tan Kong Khoon
recognises the merits of Board diversity in adding value • YBhg Dato’ Nicholas John Lough @ Sharif Lough
to collective skills, perspectives and strengths to the
bin Abdullah

The NC’s functions and responsibilities are set out in
the TOR which is published on the Bank’s Website.

Annual Report 2019 119

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

(C) NC (CONTINUED)
The Bank has in place Fit and Proper (“F&P”) Policy as a guide for the following process and procedure for assessment of

(i) new appointments and re-appointments of Chairman, Directors and GMD/CEO, (ii) appointment of Board Committee
members, and (iii) annual F&P assessment of Chairman, Directors and GMD/CEO, and the criteria and guidelines used for
such assessments. Upon the approval of the Board, an application on the prescribed forms will be submitted to BNM for
approval in respect of new appointments and re-appointments.

(i) New Appointments
The nomination, assessment and approval process for new appointments is as follows:

Identification of Meeting with • Assessment against Assessment Deliberation by the
candidates candidates Criteria and BNM Guidelines Board and decision

• F&P Declaration by candidates thereof
• Relevant Credit Bureau Checks
• CTOS (Bankruptcy) search
• Recommendation by the NC

In assessing the candidates for Board appointments, the NC will take into account, inter alia, the strategic and
effective fit of the candidates for the Board, the overall desired composition and the mix of expertise and experience
of the Board as a whole and having regard to the candidates’ attributes, qualifications, management, leadership,
business experience and their F&P Declarations in respect of their probity, competence, personal integrity, reputation,
qualifications, skills, experience and financial integrity in line with the standards required under the relevant BNM
Guidelines. The Bank has taken steps to build and maintain a pool of potential Board candidates from internal and
external introductions, recommendations and independent sources with director databases in its search for suitable
Board candidates.

In the case of GMD/CEO, the NC will take into account the candidate’s knowledge and experience in the industry,
market and segment. The NC will also consider the candidate’s F&P Declaration in line with the standards required
under the relevant BNM Guidelines.

(ii) Re-Appointments
The assessment and approval process for re-appointments is as follows:

CTOS (Bankruptcy) • Assessment against Assessment Criteria Deliberation by the Board
search and BNM Guidelines and decision thereof

• F&P Declaration
• Relevant Credit Bureau Checks
• Recommendation by the NC

For re-appointments, the Chairman, Directors and GMD/CEO will be evaluated on their performance in the discharge of
duties and responsibilities effectively, including, inter alia, contribution to Board deliberations, time commitment as
well as the Annual Board Assessment (as defined below) results, contributions during the term of office, attendance
at Board meetings, F&P Declarations in respect of their probity, competence, personal integrity, reputation,
qualifications, skills, experience and financial integrity in line with the standards required under the relevant BNM
Guidelines and for Independent Directors, their continued independence.

120 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

(C) NC (CONTINUED)

(iii) Board Committee Appointments
The nomination, assessment and approval process for appointments to Board Committees (“Board Committee

Appointments”) is as follows:

Identification of Directors • Assessment against Assessment Criteria Deliberation by the Board
for Board Committees and BNM Guidelines and decision thereof
membership
• Recommendation by the NC

The assessment for Board Committee Appointments will be based on the Directors’ potential contributions and value-
add to the Board Committees with regard to Board Committees’ roles and responsibilities.

In addition, a formal evaluation process has been put in place to assess the effectiveness of the Board as a whole,
the Board Committees and the contribution and performance of each individual Director on an annual basis (“Annual
Board Assessment”) in conjunction with the annual F&P assessment of Directors and GMD/CEO per BNM Guidelines.
The NC will deliberate on the results of the Annual Board Assessment and submit its recommendation to the Board
for consideration and approval. For newly appointed Chairman, Directors and GMD/CEO, the Annual Board Assessment
will be conducted at the next annual assessment exercise following the completion of one year service.

Assessment criteria for Board as a whole include, inter alia, the effectiveness of the Board composition in terms of
size and structure vis-à-vis the complexity, size, scope and operations of the Bank; the core skills, competencies and
experience of the Directors; and the Board’s integrity, competency, responsibilities and performance. The assessment
criteria for Board Committees include the effectiveness of the respective Board Committees’ composition in terms
of mix of skills, knowledge and experience to carry out their respective roles and responsibilities per the Board
Committees’ TOR and the contribution of Board Committees members. Each individual Director is assessed on, inter
alia, the effectiveness of his/her competency, expertise and contributions. The skills, experience, soundness of
judgment as well as contributions towards the development of business strategies and direction of the Bank and
analytical skills to the decision-making process are also taken into consideration.

For management succession planning, it has been embedded in the Group’s process over the years to continuously
identify, groom and develop key talents from within the Group. The Group also has a talent development programme
to identify, retain and develop young high potential talents.

The NC meets at least once in each financial year and additional meetings may be called at any time as and when
necessary.

During the financial year ended 30 June 2019 (“FYE 2019”), four (4) NC meetings were held and the attendances of
the NC members were as follows:

Member Attendance
Ms Chok Kwee Bee 4/4
Mr Tan Kong Khoon 4/4
YBhg Dato’ Nicholas John Lough @ Sharif Lough bin Abdullah 4/4

Annual Report 2019 121

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

(C) NC (CONTINUED)
(iii) Board Committee Appointments (continued)
The NC carried out the following activities in the discharge of its duties in accordance with its TOR during the FYE 2019:

• Carried out the Annual Board Assessment and was satisfied that the Board as a whole, Board Committees and
individual Directors have continued to effectively discharge their duties and responsibilities in accordance with
their respective TORs, and that the current Board composition in terms of Board balance, size and mix of skills
is appropriate and effective for the discharge of its functions. The NC took cognisance of the merits of Board
diversity including women participation on the Board, in adding value to the Bank. The NC will continue to
maintain women participation on the Board in line with the MCCG;

• Considered and assessed the position of Independent Directors of the Bank and was satisfied that the
Independent Directors met the regulatory requirements for Independent Directors;

• Reviewed the F&P Declarations by Directors and GMD/CEO in line with the BNM policy document on F&P Criteria
and was satisfied that the Directors and GMD/CEO met the requirements as set out in BNM policy document on
F&P Criteria;

• Reviewed the term of office and performance of the BAC and each of its members in accordance with the TOR
of BAC and was of the view that the BAC and each of its members had carried out their duties in accordance
with the BAC TOR for the period under review;

• Reviewed the appointment and re-appointments of Directors in accordance with the F&P Policy, BNM CG Policy
and MMLR and recommended to the Board for consideration and approval; and

• Reviewed the appointment of Company Secretary in accordance with the BNM CG Policy and recommended to
the Board for consideration and approval;

• Reviewed and recommended to the Board for adoption the revisions to the F&P Policy of the Bank on
assessment criteria and guidelines for appointment and re-appointment of Chairman, Directors and GMD/CEO;
and

• Reviewed the appointment of BAC Chairman in accordance with the F&P Policy, BNM CG Policy and MMLR and
recommended to the Board for consideration and approval.

(D) REMUNERATION COMMITTEE (“RC”)
The RC was established on 17 June 2003. The composition of the RC is as follows:

• YBhg Dato’ Nicholas John Lough @ Sharif Lough bin Abdullah (Chairman)
• YBhg Tan Sri Quek Leng Chan
• YBhg Datuk Dr Md Hamzah bin Md Kassim

The RC’s functions and responsibilities are set out in the TOR which is published on the Bank’s Website.

During the FYE 2019, three (3) RC meetings were held and the attendances of the RC members were as follows:

Member Attendance
YBhg Dato’ Nicholas John Lough @ Sharif Lough bin Abdullah 3/3
YBhg Tan Sri Quek Leng Chan 3/3
YBhg Datuk Dr Md Hamzah bin Md Kassim 3/3

122 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

(D) REMUNERATION COMMITTEE (“RC”) (CONTINUED)
The Group’s remuneration scheme for Executive Directors is linked to performance, service seniority, experience and scope

of responsibility and is periodically benchmarked to market/industry surveys conducted by human resources consultants.
Performance is measured against profits and targets set in the Group’s annual plan and budget.

The level of remuneration of Non-Executive Directors reflects the scope of responsibilities and commitment undertaken
by them.

The RC, in assessing and reviewing the remuneration packages of Executive Directors, ensures that a strong link is maintained
between their rewards and individual performance, based on the provisions in the Group’s Human Resources Manual, which
are reviewed from time to time to align with market/industry practices. The fees of Directors are recommended and
endorsed by the Board for approval by the shareholders of the Bank at its Annual General Meeting (“AGM”).

The detailed remuneration of each Director during the FYE 2019 is as set out in Note 42 of the Audited Financial Statements
in this Annual Report.

REMUNERATION PHILOSOPHY & FRAMEWORK
The remuneration strategy of HLB Group supports and promotes a high performance culture to deliver the Bank’s Vision to be a

highly digital & innovative ASEAN financial services company. It also forms a key part of our Employer Value Proposition with the
aim to drive the right behaviours, create a workforce of strong values, high integrity, clear sense of responsibility and high ethical
standards.

The remuneration framework provides a balanced approach between fixed and variable components that is measured using
a robust and rigorous performance management process that incorporates meritocracy in performance, HLB values, prudent
risk-taking and key behaviours in accordance to our Code of Conduct and risk and compliance management as part of the key
performance indicators for remuneration decisions.

OVERVIEW OF REMUNERATION POLICY FRAMEWORK

A. Philosophy Remuneration philosophy hinges on:
• Our values and commitment to the employees of the Bank
• High performance culture
• Strong alignment between prudent risk taking and reward

B. Principles Remuneration principles are based on 3 key principles:
C. Practices - Oversight by Remuneration Committee & Board of Directors
- Prudent Risk Taking
- Governance Process for Bonus, Increment and Promotion (BIP)

Remuneration practices:
- Details how the remuneration principles will be achieved in practice
- Includes remuneration structures, design, implementation and

workflow/procedures

Annual Report 2019 123

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

GUIDING PRINCIPLES
Principle 1 - Oversight by Remuneration Committee & Board of Directors
The RC’s responsibilities are to recommend to the Board the framework and policies that govern the remuneration of the directors,
Chief Executive Officer, senior management officers and other material risk takers. The RC ensures that the remuneration system
is in line with the business and risk strategies, corporate values and long-term interests of the Bank and that it has a strong
link between rewards, collective and individual performance and is periodically benchmarked to market/industry. The Board
ensures that the corporate governance disclosures on remuneration are accurate, clear, and presented in a manner that is easily
understood by our shareholders, customers and other relevant stakeholders.

Principle 2 - Prudent Risk Taking
Remuneration for employees within the Bank is aligned with prudent risk-taking. Hence, remuneration outcomes must be

symmetric with risk outcomes. This includes ensuring that remuneration is adjusted to account for all types of risk, and must be
determined by both quantitative measures and qualitative judgement.

Principle 3 - Governance Process for Bonus, Increment and Promotion (“BIP”)
The Bank has established a robust BIP process to ensure proper governance and sufficient controls are in place. Provision

for variable remuneration is tied to the performance of the Bank and the pool is allocated according to the performance of
each business unit and then the individual contribution to that performance. To safeguard the independence and authority
of individuals engaged in control functions, the Bank ensures that the remuneration of such individuals is based principally
on the achievement of control functions objectives and determined in a manner that is independent from the business lines
they oversee.

REMUNERATION PRACTICES
Measurement of Performance
The Bank’s performance is determined in accordance with a balanced scorecard which includes key measures on profitability,
cost, capital, shareholders’ return, medium to long-term strategic initiatives, as well as risk, audit and compliance outcomes.

For each employee, performance is tracked through Key Result Areas (“KRAs”) in a balanced scorecard. It focuses on the
achievement of key objectives which are aligned to value creation for our shareholders and the multiple stakeholders we serve.
At the end of the year, performance of the employee is assessed through the performance management framework which is
based on 70% of KRAs (with mandatory weightage for Compliance and Training) and 30% on demonstrating embodiment of HLB
Values.

Pay Mix Delivery and its Purpose
The overall total compensation for the GMD/CEO, members of the senior management team and material risk takers generally

includes base pay, fixed cash allowances, performance-based variable pay, long term incentives, benefits and other employee
programmes.

1. Fixed Pay (base pay and fixed cash allowances)

Fixed pay is delivered at an appropriate level taking into account skills, experience, responsibilities, competencies and
performance; ensuring its competitiveness vis-à-vis comparable institutions for attraction and retention purposes.

124 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

REMUNERATION PRACTICES (CONTINUED)
Pay Mix Delivery and its Purpose (continued)

2. Performance-based variable pay

Performance-linked variable pay in the form of bonuses is paid out at the end of the financial year subject to the Bank’s
performance and in recognition of individual performance and key achievements during the year. It focuses on the
achievement of key objectives which are aligned to value creation for shareholders and our multiple stakeholders. A robust
key performance indicator (“KPIs”) setting process that incorporates risk management as part of the scorecards are also
in place to ensure excessive risk taking behaviours by staff is minimised and sufficient control mechanism are in place.
Variable bonus awards for individuals in senior management position and in excess of a certain amount of threshold will
be deferred over a period of time, to ensure that outcomes are sustainable and any risks associated with the generation of
the income in a particular year have sufficient time to emerge and manifest themselves before employees have access to
the full amount of the variable portion.

3. Long term incentives

In addition, the Bank also recognises and rewards individuals for their contributions towards the Bank’s long-term business
achievements (both in qualitative and quantitative measures) through a combination of cash and non-cash (i.e. shares or
share-linked instruments) elements that are subject to partial deferment over a period of time (typically over a few years)
with built-in clawback mechanism.

The clawback mechanism can be triggered when there are non-compliances to regulations and policies and where
Management deemed necessary due to achievements of performance targets that are not sustainable. Clawbacks are
typically (and not limited to) applied in the case of Gross Misconduct, Financial Misstatements, Material Risks and/or
Malfeasance of Fraud.

The variable portion of remuneration (both Performance-based variable pay and Long term incentives) increases along
with the individual’s level of accountability. By subjecting an adequate portion of the variable remuneration package to
forfeiture, it takes into account potential financial risks that may crystallize over a period of time, and reinforces HLB’s
corporate and risk culture in promoting prudent risk taking behaviours.

4. Employee Benefits and Programmes

Employee benefits (e.g. screening, health and medical, leave passage) are used to foster employee value proposition and
wellness to ensure the overall well-being of our employees. These are being reviewed annually to ensure HLB remains
competitive in the industry and that the employees are well taken care of.

Annual Report 2019 125

Corporate Governance Overview,
Risk Management & Internal Control Statement

C. BOARD COMMITTEES (CONTINUED)

REMUNERATION PRACTICES (CONTINUED)

Remuneration Disclosure
The following depicts the total value of remuneration awarded to the GMD/CEO, Senior Management team and Material Risk

Takers for the FYE 2019:

GMD/CEO, Senior No. of officers Unrestricted Deferred Total amount Total amount
Management and received (RM) (RM) of outstanding of outstanding
Material Risk Takers
- deferred deferred
remuneration remuneration paid
- as at 30.6.2019
- out (vested)
(RM) in FYE 2019
-
(RM)
5,499,986
Fixed Remuneration 34 31,204,209 - - -

Cash-based - - - -
- - - -
Shares and share-linked
instruments 31 26,717,976 - -

Other 6 - 5,499,986 6,133,703
- - - -
Variable Remuneration

Cash-based

Shares and share-linked
instruments

Other

Note: The value of share is based on the valuation used for MFRS2 Accounting.

D. INDEPENDENCE

The Board takes cognisance of the provisions of the MCCG, which states that the tenure of an Independent Director should not
exceed a cumulative term of 9 years and upon completion of the 9 years, an Independent Director may continue to serve on
the Board subject to the Director’s re-designation as a Non-Independent Director. It further states that in the event the Board
wishes to retain an Independent Director who has served a cumulative term of 9 years and above, shareholders’ approval shall be
annually sought with justification. In the event the Board wishes to retain an Independent Director who has served a cumulative
term of 12 years and above, shareholders’ approval shall be annually sought through a two-tier voting process.

The tenure of all the Independent Directors on the Board of the Bank does not exceed 9 years. The Independent Directors
have declared their independence, and the NC and the Board have determined, at the annual assessment carried out, that the
Independent Directors have continued to bring independent and objective judgment to Board deliberations and decision making.

The Bank has in place a policy in relation to the tenure for Independent Directors of the Bank (“Tenure Policy”) under the F&P
Policy of the Bank. Pursuant to the Tenure Policy, an Independent Director who has served on the Board of the Bank for a period
of 9 years cumulatively shall submit a Letter of Intent to the NC informing of his intention to continue in office or to retire from
the Board as an Independent Director, upon:

(a) the expiry of his term of office approved by BNM; or
(b) the due date for his retirement by rotation pursuant to the Constitution of the Bank.

126 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

D. INDEPENDENCE (CONTINUED) All Directors have access to the advice and services of a
qualified and competent Company Secretary to facilitate the
If the intention is to continue in office, the NC shall discharge of their duties effectively. The Company Secretary
consider based on the assessment criteria and guidelines is qualified to act under Section 235 of the Companies
set out in the F&P Policy and make the appropriate Act 2016. The Company Secretary supports the effective
recommendation to the Board. If the intention is to retire functioning of the Board, provides advice and guidance
from office, an application shall be made to BNM to seek to the Board on policies and procedures, relevant rules,
approval in accordance with BNM CG Policy. For public regulations and laws in relation to corporate secretarial and
listed bank/companies under the Hong Leong Financial governance functions and facilitates effective information
Group, shareholders’ approval at AGMs shall be sought flow amongst the Board, Board Committees and senior
in accordance with the relevant requirements under the management. All Directors also have access to the advice
MCCG and the MMLR subject to favourable assessment of and services of the internal auditors and in addition, to
the NC and the Board. independent professional advice, where necessary, at the
Bank’s expense, in consultation with the Chairman or the
The Board seeks to strike an appropriate balance between GMD/CEO of the Bank.
tenure of service, continuity of experience and refreshment
of the Board. Although a longer tenure of directorship At Board meetings, active deliberations of issues by
may be perceived as relevant to the determination of a Board members are encouraged and such deliberations,
Director’s independence, the Board recognises that an decisions and conclusions are recorded by the Company
individual’s independence should not be determined solely Secretary accordingly. Any Director who has, directly or
based on tenure of service. Further, the continued tenure indirectly, an interest in a material transaction or material
of directorship brings considerable stability to the Board, arrangement shall not be present of the Board meeting
and the Bank benefits from Directors who have, over time, where the material transaction or material arrangement is
gained valuable insight into the Group, its market and the being deliberated by the Board.
industry.
The Board met eight (8) times for the FYE 2019 with timely
E. COMMITMENT notices of issues to be discussed. Details of attendance of
each Director are as follows:
The Directors are aware of their responsibilities and devote
sufficient time to carry out such responsibilities. In line Director Attendance
with the MMLR, Directors are required to comply with the YBhg Tan Sri Quek Leng Chan 8/8
restrictions on the number of directorships in public listed 8/8
companies. Directors provide notifications to the Board for Mr Tan Kong Khoon 8/8
acceptance of any new Board appointments. This ensures 8/8
that their commitment, resources and time are focused Mr Kwek Leng Hai 7/8
on the affairs of the Bank to enable them to discharge
their duties effectively. Board meetings are scheduled a Ms Chok Kwee Bee 8/8
year ahead in order to enable full attendance at Board
meetings. Additional meetings may be convened on an YBhg Dato’ Nicholas John Lough @ 3/3
ad-hoc basis as and when necessary. Where appropriate, Sharif Lough bin Abdullah 7/7
decisions are also taken by way of Directors’ Circular
Resolutions. Directors are required to attend at least 75% YBhg Datuk Dr Md Hamzah bin
of Board meetings held in each financial year pursuant to Md Kassim
the BNM CG Policy.
Ms Chong Chye Neo (1)
All Board members are supplied with information in a
timely manner. The Bank has moved towards electronic Ms Lim Lean See (2)
Board reports. Board reports are circulated electronically
prior to Board and Board Committee meetings and the (1) Appointed as Director with effect from 21 February 2019
reports provide, amongst others, financial and corporate (2) Retired as Director on 5 May 2019
information, significant operational, financial and corporate
issues, updates on the performance of the Bank and of Ms Lau Souk Huan was appointed to the Board after the
the Group and management’s proposals which require the close of the FYE 2019 and as such, did not attend any of the
approval of the Board. Board meetings held during the FYE 2019.

The Bank recognises the importance of continuous
professional development and training for its Directors.

Annual Report 2019 127

Corporate Governance Overview,
Risk Management & Internal Control Statement

E. COMMITMENT (CONTINUED) During the FYE 2019, the Directors of the Bank, collectively

The Bank is guided by a Directors’ Training Policy, or on their own, attended various training programmes,
which covers an Induction Programme and Continuing seminars, briefings and/or workshops including:

Professional Development (“CPD”) for Directors of the • Anti-Corruption Summit 2018
Bank. The Induction Programme is organised for newly • AMLATFPUAA 2001 (Anti-Money Laundering, Anti-
appointed Directors to assist them to familiarise and to get
acquainted with the Bank’s business, governance process, Terrorism Financing and Proceeds of Unlawful
roles and responsibilities as Director of the Bank. The CPD Activities Act 2001) – Managing Challenges in Risk
encompasses areas related to the industry or business of Based Approach & Politically Exposed Person
the Bank, governance, risk management and regulations • Bursa Malaysia – Sustainability Engagement Series
through a combination of courses and conferences. for Directors / Chief Executive Officers 2018
A training budget is allocated for Directors’ training • Bursa Malaysia – Independent Directors’ Programme:
programmes. The Essence of Independence
• Briefing on Cyber Risk Awareness

Ms Lau Souk Huan was appointed to the Board on • BNM – MyFintech Week 2019
6 September 2019 and will be registered to attend the • FIDE Forum – Masterclass on Cybersecurity: Unseen
Mandatory Accreditation Programme (“MAP”). All the
other Directors of the Bank have completed the MAP. Threats
• FIDE Forum – Blockchain in Financial Services Industry

by IBM Experts

The Bank regularly organises in-house programmes, • FIDE Forum – IBM THINK Malaysia
briefings and updates by its in-house professionals. The • FIDE Forum – Dialogue with the Deputy Governor on
Directors are also encouraged to attend seminars and
briefings in order to keep themselves abreast with the the draft Risk Management in Technology Policy
latest developments in the business environment and to • FIDE Forum – Rethinking Strategy
enhance their skills and knowledge. Directors are kept • FIDE Forum – 1st PIDM–FIDE Forum Annual Dialogue
informed of available training programmes on a regular • FIDE Forum – Dinner Talk: “The Director as Coach”: An
basis.
exclusive dialogue with Dr Marshall Goldsmith and
Launch of FIDE Forum’s “DNA of a Board Leader”
• FIDE Forum – Dinner Talk: “Digital Assets: Global

The Bank has prepared for the use of its Directors, a Director Trends Legal Requirements and Opportunities for
Manual which highlights, amongst others, the major duties Financial Institutions”
and responsibilities of a Director vis-a-vis various laws, • FIDE Forum – Board Conversations: Dialogue with
regulations and guidelines governing the same. Senior Officials of BNM
• FIDE Forum – Focus Group Discussion (for the 6th

In assessing the training needs of Directors, the Board BNM-FIDE FORUM Annual Dialogue with the Senior
has determined that appropriate training programmes Management of BNM)
covering matters on corporate governance, finance, legal, • Directors’ Duties & Powers – Recent Developments in
risk management, information technology, cyber security, the Law and How It Affects You
internal control and/or statutory/regulatory compliance, be • AMLATFPUAA 2001: Risk, Challenges & Vulnerabilities
recommended and arranged for the Directors to enhance Towards Risk Based Approach
their contributions to the Board. • Insight on Value-Based Intermediation
• ICLIF – Anti-Money Laundering/Counter Financing of

During the FYE 2019, the Directors received regular Terrorism – Banking Sector
briefings and updates on the Bank’s businesses, strategies, • ICLIF – Emerging Risks, the Future Board and Return
operations, risk management and compliance, internal
controls, corporate governance, finance and any changes on Compliance
to relevant legislation, rules and regulations from in- • ICLIF – CG Watch: How Does Malaysia Rank?
house professionals. The Bank also organised an in-house • ICLIF – Credit Risk Management – Banking Sector
programme for its Directors and senior management. • ICLIF – Breakfast Series: Non-Financials – Does It

Matter?
• ICLIF – Understanding the Evolving Cybersecurity

The Directors of the Bank have also attended various Landscape
programmes and forums facilitated by external • ICDM – ‘Revisiting the Misconception of Board
professionals in accordance with their respective needs in
discharging their duties as Directors. Remuneration by Mark Reid’
• ICDM – ‘Would A Business Judgement Rule Help

Directors Sleep Better At Night’?

128 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

E. COMMITMENT (CONTINUED) of their business, professional activities and personal lives,

• ISRA Consultancy – Islamic Finance for Board of which might otherwise reflect poorly on the reputation of
Directors Programme the HLB Group.

• Khazanah National – Khazanah Megatrends Forum Principles
2018 There are six key pillars to the HLB Group Code of Conduct
& Ethics:
• MAP for Directors of Public Listed Companies
• Malaysian Institute of Corporate Governance:

‘Enterprise Risk Management – The Essential Building PRINCIPLE 1: COMPETENCE
Blocks For A Holistic & Robust ERM Framework’ The HLB Group is committed to ensuring that its employees
• Malaysian Alliance of Corporate Directors – The develop and maintain the relevant knowledge, skills and
Human Firewall: Five Critical Concepts for Cultivating behaviour to ensure that our activities are conducted
a Cyber Security Culture professionally and proficiently.
• South China Morning Post China Conference

• SCxSC Fintech Conference 2018 PRINCIPLE 2: INTEGRITY
• Security Industry Development Corporation – IMD The HLB Group’s Vision, Mission and Values identifies a
strong values-based culture to guide decisions, actions
Global Business Insight and interactions with stakeholders as a key enabler for the
• Update on regulations in relation to the increase in success of the HLB Group.

additional buyer stamp duty rates and tightening
loan-to-value limits

• Update on Code of Corporate Governance 2018 PRINCIPLE 3: FAIRNESS
• Update on Singapore Stock Exchange Listing Rules A core mission of the HLB Group is to help our clients
• Briefing on Developers (Anti-Money Laundering and succeed through simple, relevant, personal and fair
banking. We must act responsibly and be fair and
Terrorism Financing) Bill transparent in our business practices, including treating our
• Update on Guidelines on Use, Collection and colleagues, customers and business partners with respect.
We must consider the impact of our decisions and actions
Disclosure of NRIC numbers and Changes to the
Employment Act

on all stakeholders.

F. STRENGTHENING CORPORATE GOVERNANCE PRINCIPLE 4: CONFIDENTIALITY
CULTURE The HLB Group is committed to providing a safe, reliable

HONG LEONG BANK GROUP CODE OF CONDUCT & ETHICS and secured banking environment and experience for our

A fundamental value of HLB Group is that we are ‘Here customers.

for the Long Term’. In upholding this value, the HLB Group PRINCIPLE 5: OBJECTIVITY
commits to a high standard of professionalism and ethics
Employees must not allow any conflict of interest, bias or
in the conduct of our business and professional activities undue influence of others to override their business and
as set out in this Code of Conduct & Ethics (“Code”). professional judgment. Employees must not be influenced

The Code is applicable to: by friendships or association in performing their role.
• All employees who work in the HLB Group across Decisions must be made on a strictly arms-length business
the jurisdictions in which we operate – including but basis.

not limited to permanent, part-time and temporary PRINCIPLE 6: ENVIRONMENT
employees; The HLB Group is committed to reduce the effect of our
• Board of Directors of the HLB Group; and
operations on the environment so that we are able to build
• Any other persons permitted to perform duties or our franchise in a safe and healthy environment. We aim to
functions within the HLB Group – including but not do this by managing the resources we use across the HLB
limited to contractors, secondees, interns, industrial
Group and raising staff awareness about the importance of
attachment and agency staff. caring for the environment. The HLB Group will be mindful

As the Code forms part of the terms and conditions of of its activities with employees, business partners and the
employment, our employees are required to adhere to a community we operate within to ensure human rights are
high standard of professionalism and ethics in the conduct safeguarded. Where there are adverse impacts, we are
committed to addressing these.

Annual Report 2019 129

Corporate Governance Overview,
Risk Management & Internal Control Statement

F. STRENGTHENING CORPORATE GOVERNANCE The BRMC is delegated with the responsibility to
CULTURE (CONTINUED) provide oversight of the Bank’s management of
critical risks that the Group faces while the BAC is
Whistleblowing Policy delegated with the responsibility to review the
The Bank has also established a Whistleblowing Policy and effectiveness of internal controls implemented in
the Bank.
it provides a structured channel for all employees of the
HLB Group and any other persons providing services to, The Statement on Risk Management and Internal
or having a business relationship with the HLB Group, to Control as detailed under Section J of this Statement
report any concerns about any improper conducts, wrongful provides an overview of the system of internal
acts or malpractice committed within the HLB Group. The controls and risk management framework of the
Whistleblowing Policy is published on the Bank’s Website. Group.

Other Policies and Codes of the HLB Group III. RELATIONSHIP WITH AUDITORS
For good governance, the HLB Group has various other
The appointment of external auditors is recommended
policies such as Group Compliance Policy, Group Financial by the BAC, which determines the remuneration of
Crime Compliance Policy, Code of Conduct For Wholesale the external auditors. The BAC reviews the suitability
Financial Markets, Group Whistleblowing Policy, Group and independence of the external auditors annually.
IT Security Policy, Privacy Policy, Group Media and Public In this regard, an annual assessment is conducted by
Relations Policy and Procurement Policy. the BAC to evaluate the performance, independence
and objectivity of the external auditors prior to
Continuous Training & Awareness making any recommendation to the Board on the
Multiple training channels, such as mandatory e-Learning reappointment of the external auditors.

modules on SmartUp, the Bank’s mobile-first bite-sized The Bank also has a Policy on the Use of External
learning app, are in place to enable easy access for Auditors for Non-Audit Services to govern the
employees to be upskilled. Attestation to the Code is professional relationship with the external auditors
conducted at time of joining the HLB Group and on an in relation to non-audit services. Assessment will
annual basis. be conducted by the BAC for non-audit services
to ensure that the provision of non-audit services
G. ACCOUNTABILITY AND AUDIT does not interfere with the exercise of independent
judgment of the external auditors.
The Bank has put in place a framework of processes
whereby Board committees provide oversight on critical During the financial year under review, the external
processes of the Bank’s reporting of financial statements, auditors met with the BAC to:
in order to ensure that accountability and audit are integral
components of the said processes. • present the scope of the audit before the
commencement of audit; and
I. FINANCIAL REPORTING
• review the results of the audit as well as the
The Board has a fiduciary responsibility to ensure management letter after the conclusion of the
the proper maintenance of accounting records of the audit.
Group. The Board receives the recommendation to
adopt the financial statements from the BAC, which The external auditors meet with the BAC members at
assesses the integrity of financial statements with least twice a year without the presence of Executive
the assistance of the external auditors. Directors and management.

II. RISK MANAGEMENT AND INTERNAL CONTROL

The Board has overall responsibility for maintaining
a system of internal controls which covers financial
and operational controls and risk management.
This system provides reasonable but not absolute
assurance against material misstatements, losses
and fraud.

130 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

H. DISCLOSURE In addition, shareholders and investors can have
a channel of communication with the following
The Bank has in place a Corporate Disclosure Policy for persons to direct queries and provide feedback to
compliance with the disclosure requirements set out in the Group:
the MMLR, and to raise awareness and provide guidance
to the Board and management on the Group’s disclosure GENERAL MANAGER, COMMUNICATION & CSR
requirements and practices.
Tel No. : 03-2081 8888 ext. 61914
All timely disclosure and material information documents
will be posted on the Bank’s Website after release to Bursa. Fax No. : 03-2081 7801

I. SHAREHOLDERS e-mail address : [email protected]

I. DIALOGUE BETWEEN COMPANIES AND INVESTORS HEAD, CORPORATE FINANCE & INVESTOR RELATIONS
The Board acknowledges the importance of regular
Tel No. : 03-2081 2972
communication with shareholders and investors
via the annual reports, circulars to shareholders Fax No. : 03-2081 8924
and quarterly financial reports and the various
announcements made during the year, through e-mail address : [email protected]
which shareholders and investors can have an
overview of the Group’s performance and operation. II. AGM

Notices of general meetings and the accompanying The AGM provides an opportunity for the
explanatory notes are provided within the prescribed shareholders to seek and clarify any issues and
notice period on the Bank’s Website, Bursa’s website, to have a better understanding of the Group’s
in the media and by post to shareholders. This allows performance. Shareholders are encouraged to meet
shareholders to make the necessary arrangements and communicate with the Board at the AGM and
to attend and participate in general meetings either to vote on all resolutions. Senior management and
in person, by corporate representative, by proxy or the external auditors are also available to respond to
by attorney. shareholders’ queries during the AGM. All Directors
and the GMD/CEO attended the last AGM held on
The Bank has a website at www.hlb.com.my which 29 October 2018.
the shareholders can access for information which
includes the Board Charter, TORs of Board Committees, Pursuant to Paragraph 8.29A(1) of the MMLR, all
corporate information, announcements/press resolutions tabled at general meetings will be put to
releases/briefings, financial information, products a vote by way of a poll and the voting results will be
information and investor relations. A summary of announced at the meetings and through Bursa.
the key matters discussed at the AGM is published
on the Bank’s Website. J. STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL
The Board has identified Ms Chok Kwee Bee,
the Chairman of the BAC, as the Independent I. INTRODUCTION
Non-Executive Director of the Board to whom
concerns may be conveyed, and who would bring The Board recognises that practice of good governance
the same to the attention of the Board. is an important process and has established the BAC
and BRMC to ensure maintenance of a sound system
of internal controls and good risk management
practices. The processes for risks and controls
assessments and improvements are on-going
and are regularly reviewed in accordance with the
guidelines on the ‘Statement on Risk Management
and Internal Control: Guidelines for Directors of
Listed Issuers’.

Annual Report 2019 131

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

II. BOARD RESPONSIBILITIES
The Board acknowledges its overall responsibility for the risk management and internal control environment and its

effectiveness in safeguarding shareholders’ interests and the Group’s assets. The risk management and internal control
framework is designed to manage rather than to eliminate the risk of failure in the achievement of goals and objectives
of the Group, and therefore only provide reasonable assurance and not absolute assurance, against material misstatement
or loss.

The system of risk management and internal control instituted throughout the Group is updated from time to time to align
with the dynamic changes in the business environment as well as any process improvement initiatives undertaken. The
Board confirms that its Management team responsibly implements the Board policies, Management policies and standard
operating procedures (“SOP”) on risk management and internal control.

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK
The organisational structure of the Group clearly defines the lines of accountability and responsibility. Risk assessment

and evaluation are integral part of the Group’s strategic planning cycle and are responsive to business environment and
opportunities. Management committees are appropriately set up to ensure proper utilisation and investment of the Group’s
assets for effective risk return rewards or to limit losses. The Group Risk Management (“GRM”) and Group Compliance (“GC”)
divisions have implemented an enterprise-wide risk management framework to inculcate continuous risk and regulatory
compliance awareness, understanding of procedures and controls thus improving the overall control environment.

Operationally, the Group operates multiple lines of defence to effect a robust control framework. At the first level, the
operating business and support units are responsible for the day-to-day management of risks inherent in the various
business activities. Regulatory and operational compliance units are set up in the various lines of business and support
departments. They oversee the day-to-day compliance to all regulatory requirements, business and process controls. At
the second level, GRM is responsible for setting the risk management framework and developing tools and methodologies
for the identification, measurement, monitoring, and control of risks; whereas GC is responsible for ensuring that controls
to manage compliance risks are adequate and operating as intended. At the third level, the Group Internal Audit division
complements GRM and GC by monitoring and evaluating significant exposures to risk and contributing to the improvement
of risk management and internal control systems. It also provides an independent perspective and assessment on the
adequacy and effectiveness of the risk management framework governance systems and processes, including those
instituted by the compliance function.

The above is depicted in the following diagram:

First Line of Defence Second Line of Defence Third Line of Defence

Business and Support Group Risk Management Group Internal Audit
Regulatory and Operational Group Compliance

Manage inherent risks and ensure Sets policies, reviews portfolio risks and Independent assessment of adequacy
compliance to policies and SOPs in provides oversight of risk management and effectiveness of policies and
processes.
day-to-day activities. and compliance matters.

132 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
a) Risk Management
Managing risks is an integral part of the Group’s overall business strategy. It involves a process of identifying,
assessing and managing risks and uncertainties that could inhibit the Group’s ability to achieve its strategy and
strategic objectives.

Risk governance oversight is underpinned by the core pillars of risk culture, appetite, policies, surveillance, escalation
and capacity. Above all, the approaches need to be relevant, forward looking and sustainable.

The Group’s risk management framework incorporates the components depicted in the diagram below:

RISK GOVERNANCE OVERSIGHT

Board and management to exercise oversight and set tone from the top

Culture of risk Defined risk Clear Rigorous risk Robust Functional
ownership appetite framework, surveillance escalation capabilities
policies and structure and capacity
and capital
strategy process

PILLARS Risk Clear articulation Provide clear Facilitates early Cultivation of The right
Critical management of Board’s risk direction. Defined identification proactive risk talent pool and
components to is part of the of emerging communication infrastructure are
put in place day-to-day job of appetite in pursuit business rules to support timely key to effectively
all employees, of its business and operating risks and and informed carry out risk
driven through objectives, parameters. opportunities.
daily application supported by Gives clarity to decisions. surveillance
of management ICAAP, and various parties’ activities.
accountabilities.
decisions. ensuring strategy-
risk-capital
alignment.

APPROACH Relevant
How we Focus on things that matter.

implement Forward looking
Be proactive, anticipate emerging risks and opportunities.

Sustainable
Strive to build for the long term.

Figure 1: Risk Management Framework

Annual Report 2019 133

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)

a) Risk Management (continued)
In addition, the risk management framework is effected through an organisational construct and escalation structure

as depicted below:

Top Down Board of Directors Monitoring and
Reporting
Set Risk Appetite & Effective stewardship and control
Tolerance Limit Bottom Up
Board Risk Management Committee
Set Policies and Capital Present single view of risks and to ensure adequate
Allocation
policies and controls within the Group
Group Risk Management & Group Compliance

Credit Market Operational Liquidity IT & Cyber Regulatory Environmental
Risk Risk Risk Risk Risk
Compliance Risk

Daily management of risk, limits, policies, procedures and reports

Business Distribution & Service Credit Management Operations & Shared
Divisions Channels Functions Services Functions

Figure 2: Risk Management Structure

The Board has the overall responsibility to ensure there is proper oversight of the management of risks in the Group.
The Board sets the risk appetite and tolerance level, and allocates the Group’s capital that is consistent with the
Group’s overall business objectives and desired risk profile. GRM monitors and reports the Group’s Credit, Market,
Liquidity, Operational and IT Risks. GC identifies, assesses, monitors and reports compliance issues in addition to
advising, providing guidance and training on regulatory requirements. These risks are presented to BRMC regularly.

The BRMC deliberates and evaluates the reports prepared by GRM and GC, and provides updates to the Board, and
where appropriate, make necessary recommendations to the Board.

134 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
a) Risk Management (continued)

HONG LEONG BANKING GROUP’S KEY RISKS

Type of Risk Mitigating Actions Taken / Strategy

CREDIT RISK • The Group has established a credit risk management framework (via the

Credit Risk is the risk of loss if Credit Risk Governance Board Policy) to ensure that exposure to credit risk
a borrower or counterparty in is kept within the Group’s financial capacity to withstand potential future
a transaction fails to meet its losses. Financing activities are also guided by internal credit policies. The
obligations. above policies are subject to reviews and enhancements, at least on an
annual basis.

• Credit portfolio strategies are developed to achieve a desired portfolio risk
tolerance level and sector concentration distribution.

• To assess the credit risk of retail customers, the Group employs risk scoring
models and lending templates that are designed to assess the credit
worthiness and the likelihood of the obligors to repay their debts.

• To assess the credit risk of SME, commercial and corporate customers,
they are evaluated based on the assessment of relevant factors such as
the customer’s financial position, industry outlook, types of facilities and
collaterals offered; and are assigned with a credit rating.

• The Group has a comprehensive credit approving process. While the business
units are responsible for credit origination, the credit decisioning function
rests mainly with the Credit Evaluation Departments, the MCC and the CSC.
The Board delegates the approving and discretionary authority to the MCC
and various personnel based on job function and designation.

• For any new products, credit risk assessment also forms part of the new
product sign-off process to ensure that the new product complies with the
appropriate policies and guidelines, prior to their introduction.

• Credit risk reports are presented to the relevant management and board level
committees. Such reports identify adverse credit trends and asset quality to
enable the Group to take prompt corrective actions and/or take appropriate
risk-adjusted decisions.

• In addition, the Bank also conducts periodic stress testing of its credit
portfolios to ascertain the credit risk impact to capital under the relevant
stress scenarios.

Annual Report 2019 135

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
a) Risk Management (continued)

HONG LEONG BANKING GROUP’S KEY RISKS

Type of Risk Mitigating Actions Taken / Strategy

OPERATIONAL RISK • Management oversight on operational risk management (“ORM”) matters
are effected through the Risk and Compliance Governance Committee
Operational Risk is the risk of (“RCGC”) whilst Board oversight is effected through the BRMC.
loss resulting from inadequate
or failed internal processes, • The Group’s ORM strategy is based on a framework of continuous
people and systems or from improvements, good governance structure, policies and procedures as well
external events which also as the employment of risk mitigation strategies. The objective is to create
include outsourcing and a strong risk and internal control culture by ensuring awareness of the
business continuity risks. significance of operational risk, its methodology of identification, analysis,
assessment, control and monitoring.

• The Group adopts ORM tools such as loss event reporting, risk and control
self assessment and key risk indicators to manage operational risks and are
used to assess risk by taking into consideration key business conditions,
strategies and internal controls.

MARKET RISK • Market risk is primarily managed through various risk limits and controls

Market Risk is the risk of loss following an in-depth risk assessment and review. The types and level
in financial instruments or the of market risk that the Group is able and willing to take in pursuit of
balance sheet due to adverse its business objectives and risk-taking strategies are used as a basis for
movements in market setting market risk appetite for the Group.

factors such as interest • Market risk limits, the monitoring and escalation processes, delegation of
and exchange rates, prices, authority, model validation and valuation methodologies are built into the
spreads, volatilities, and/or Group’s market risk policies, which are reviewed and concurred by the Group
correlations. Asset and Liability Management Committee (“Group ALCO”), endorsed by

the BRMC and approved by the Board.

• Regular market risk stress tests are conducted on the trading book to
measure the loss vulnerability under stressed market conditions.

136 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
a) Risk Management (continued)

HONG LEONG BANKING GROUP’S KEY RISKS

Type of Risk Mitigating Actions Taken / Strategy

LIQUIDITY RISK • The Group adopts a prudent liquidity management that includes
establishing comprehensive policies and procedures, risk controls, reviews
Liquidity Risk is the risk and monitoring. The liquidity risk policies and governance are reviewed by
Group ALCO, endorsed by the BRMC and approved by the Board.
of loss resulting from the
• The key elements of liquidity risk management includes proactive
unavailability of sufficient monitoring and management of cashflow, maintenance of high quality
liquid assets, diversification of funding sources and maintaining a liquidity
funds to fulfill financial compliance buffer to meet any unexpected cash outflow.

commitments, including • The Group also designs and conducts regular stress test programmes in
accordance with the board-approved risk appetite and risk management
customers’ liquidity needs, as policies. The appropriate management action plans would be developed
and recommended to the Board if there is any potential vulnerabilities
they fall due. Liquidity Risk identified during the stress test exercise.

also includes the risk of not

being able to liquidate assets

in a timely manner.

IT & CYBER RISK • New technology initiatives are subjected to a rigorous evaluation process
which assesses the potential risks and readiness of the initiative prior to its
Information Technology Risk implementation.
is the risk of technological
failure which may disrupt • The Group performs continuous monitoring on system performance to
business operations such as ensure minimal system disruption, while ensuring that redundancies in IT
system defects or service infrastructure and Disaster Recovery Plans are regularly tested.
outages. This also includes
cyber security risk, which is • In addition to continuously improving the Group’s cyber resilience by
the risk of possible threat that upgrading technology capabilities to mitigate cyber threats, cyber risks
might exploit a vulnerability are also managed by closely monitoring key risk metrics and progressively
to breach system security enhancing its cyber threat intelligence gathering capabilities to improve the
and therefore cause possible Group’s situational awareness.
harm.
• Management oversight on IT and cyber risk management matters are
effected through the IT Steering Committee (“ITSC”) and Information Security
Governance Council (“ISGC”) whilst Board oversight is effected through the
BRMC.

Annual Report 2019 137

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
a) Risk Management (continued)

HONG LEONG BANKING GROUP’S KEY RISKS

Type of Risk Mitigating Actions Taken / Strategy

REGULATORY COMPLIANCE • The Group undertakes robust monitoring of developments in laws and

RISK regulations and assesses its impact to its processes, where applicable. The

Regulatory Compliance Risk is assessments are undertaken to identify gaps in existing processes so that
the risk of legal or regulatory actions are taken within defined timeframes to ensure that the Group is in
sanctions, material financial compliance.

loss or loss to reputation as

a result of failure to comply

with laws and regulations.

ENVIRONMENTAL RISK • The Group has policies, principles and codes of conduct to ensure the

Environmental risk is actual interests of the Bank are aligned with the interests of stakeholders on
or potential threat of adverse responsible lending/ financing. These include assessments to screen for and
effects on living organisms review environmental and social risks, financial evaluation of existing and
and environment by effluents, potential customers, and the provision of basic banking products to those
emissions, wastes, resource who cannot afford to pay for fees so that they can participate in the financial
depletion, etc., arising out of system.

an organization’s activities. • We have credit policies that require sales and credit staff to review the
In our particular case, given borrowers’ compliance with applicable environmental and social laws and
our role in the economy, in review of the same at annual reviews of loan/financing facilities to ensure
addition to our own activities, ongoing compliance.

we are cognisant of the fact

that people and companies we • The Group manages environmental footprint through reduction of waste
do business with also have an
(such as paper and water) and efficient usage of energy.
impact on the environment,

and hence, ensure that our • The Group has an Independent Tender Review Committee that assesses
lending and procurement
diligence reviews of suppliers’ across a number of risks, not just financial
policies, for example, take this
strength and operational performance. We take into account considerations

risk into account. on environment and social track record and policies, business continuity

plans and cyber security capabilities. Suppliers have to satisfy our zero

tolerance for corruption and unfair practices.

138 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

III. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK (CONTINUED)
b) Basel II and III
The Group places great importance on Basel II and III and views Basel II and III as a bank-wide initiative that will
ensure that the Group continues to meet international best practices for the Group’s credit, market, operational and
liquidity risk management practices. By adopting Basel II and III, the Group is able and will continue to enhance
and embed sound risk management practices within the Group and be equipped with the right risk management
discipline, practices, processes and systems.

For Basel II Pillar 1, the Group is in compliance with the regulatory standards and is progressively employing advance
risk measurement in the respective businesses. For Basel II Pillar 2, the Group has established an Internal Capital
Adequacy Assessment Process (“ICAAP”) Board Policy that forms an integrated approach to manage the Group’s risk,
capital and business strategy. For Basel II Pillar 3, which is related to market discipline and disclosure requirements,
the Group has provided the disclosures under a separate Pillar 3 section in this Annual Report.

For Basel III, the Group has put in place plans to continuously strengthen its capital and liquidity positions well ahead
of the Basel Committee’s time schedule and in advance anticipation of any local jurisdiction guidelines in all the
countries that the Bank operates in.

c) Internal Audit
The Bank’s Group Internal Audit Division (“GIAD”) performs the internal auditing function for the various entities in

the financial services group. GIAD regularly reviews the critical operations (as defined in BNM Guidelines on Internal
Audit Function of Licensed Institutions) and critical controls in the Information Technology environment (as outlined
in BNM GPIS) of the Group to ensure that the internal controls are in place and working effectively.

The results of the audits conducted by GIAD are reported to the BAC. Follow-up actions and the review of the status
of corrective action plans are carried out by Management via the RCGC chaired by the Group Managing Director / Chief
Executive Officer, whose members comprise senior management. The minutes of meetings of RCGC are tabled to the
BRMC and BAC for notation.

Implementation of corrective action plans are followed up on a monthly basis and reported to the BAC. Highlights of
the BAC meetings are submitted to the Board for review and further deliberation.

In addition, internal controls are also effected through the following processes:

• The Board receives and reviews regular reports from Management on the key operating statistics, business
dynamics, legal matters and regulatory issues that would have implications on internal control measures.

• The BAC regularly reviews and holds discussions with Management on the actions taken on internal control
issues identified in reports prepared by GIAD, external auditors and regulatory authorities.

• Policies on delegation and authority limits are strictly implemented to ensure a culture that respects integrity
and honesty, and thereby reinforce internal controls.

• Policies and procedures are set out in operation manuals and disseminated throughout the organisation in
support of a learning culture, so as to reinforce an environment of internal controls discipline.

• Policies for recruitment, promotion and termination of staff are in place to ensure the Group’s human resources
comply with internal controls.

Annual Report 2019 139

Corporate Governance Overview,
Risk Management & Internal Control Statement

J. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONTINUED)

IV. ASSESSMENT OF RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
The Board has received assurances from the Group Managing Director/Chief Executive Officer, Chief Financial Officer, Chief

Risk Officer, Chief Internal Auditor and Chief Compliance Officer that the Group’s risk management and internal control
system are operating adequately and effectively.
Based on the assurances it has received from Management, the Board is of the view that the Group’s risk management and
internal control system are operating adequately and effectively for the financial year under review and up to the date of
approval of this report.
V. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external
auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was
performed in accordance with Audit and Assurance Practice Guide (“AAPG”) 3 issued by the Malaysian Institute of
Accountants. AAPG 3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the
risk management and internal control systems of the Group.

K. DIRECTORS’ RESPONSIBILITY IN FINANCIAL REPORTING

The MMLR require the Directors to prepare financial statements for each financial year which give a true and fair view of the state
of affairs of the Group and of the Bank as at the end of the financial year and of its financial results and cash flows of the Group
and of the Bank for the financial year.

The Directors are satisfied that in preparing the financial statements of the Group and of the Bank for the FYE 2019, the Group has
used the appropriate accounting policies and applied them consistently. The Directors are also of the view that relevant approved
accounting standards have been followed in the preparation of these financial statements.

This Statement on Corporate Governance Overview, Risk Management and Internal Control is made in accordance with the
resolution of the Board.

140 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Directors’ Report

for the financial year ended 30 June 2019

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Bank for
the financial year ended 30 June 2019.

PRINCIPAL ACTIVITIES

The Bank is principally engaged in all aspects of commercial banking business and in the provision of related services. The principal
activity of the significant subsidiary consists of Islamic Banking services. Other subsidiary companies are primarily engaged in property
investment and management, investment holding and nominee services. The details of the subsidiary companies are disclosed in
Note 16 to the financial statements.

BUSINESS STRATEGY FOR THE CURRENT FINANCIAL YEAR

The Malaysian economy is expected to expand at a slightly softer pace in 2019, tracking softer growth momentum in the world
economy as protracted trade tension takes a toll on global growth prospects. Domestic demand will remain the key growth pillar despite
challenges of slower investment activities. The private sector, notably private consumption, is expected to register continued moderate
growth underpinned by a steady labour market. The financial markets are expected to be characterized by continued volatility primarily
under the influence of external newsflows but overall financial and banking system strength will enable the Malaysian economy to
weather any undesirable shocks.

Executing our digital strategy remains a key priority in enhancing our digital offerings and transforming our products and services to
better fit customer needs. We will continue to grow our domestic franchise and regional business by leveraging on our branch footprint
and improved digital capabilities. We strive to continue leading the digital and innovation space by providing best-in-class experience
and re-imagine banking through different customer journeys.

OUTLOOK AND BUSINESS PLAN FOR NEW FINANCIAL YEAR

The world economy is expected to regain some ground in 2020, driven by improving prospects in emerging economies as the major
economies are expected to see further moderation, potentially still struggling to recover from the slowdown experienced in 2019.

On the back of a still fragile macro backdrop, the Malaysian economy is expected to maintain a reasonable growth path in 2020,
supported by domestic demand and domestic investments. A steady labour market, and accommodative monetary policy are expected
to support private consumption as well as promote business investments, hence, supporting overall economic growth.

Despite the challenging operating environment ahead, we remain steadfast in our vision to build a highly digital and innovative ASEAN
financial services institution. In order to deliver on the vision, we have put plans in place, and will continue to do so, to ensure that we
attain our aspiration to be digital at the core. We thrive when our clients succeed, and being customer centric in all that we do is central to
our strategy. We want to provide existing and new clients with simple and relevant products, personal and fair banking while providing our
people with the best opportunities to realize their full potential. Our digital transformation journey will give us new growth opportunities
while transforming our cost structure, enabling us to achieve continuous growth and sustainable returns to our stakeholders.

PERFORMANCE REVIEW AND MANAGEMENT REPORTS

The Board receives and reviews regular reports from the Management on key financial and operating statistics as well as legal and
regulatory matters. The performance of each business unit is assessed against the approved budgets and business objectives whilst
explanation is provided for significant variances.

Annual Report 2019 141

Directors’ Report

for the financial year ended 30 June 2019

CREDIT INFORMATION RATING

On 10 December 2018, Rating Agency Malaysia Berhad has reaffirmed the Bank's long-term rating to AAA and short-term rating at P1,
with a stable outlook.

The ratings indicate that in the long-term, the Bank is adjudged to offer high safety for timely payment of financial obligations while
in the short-term, the Bank is adjudged to have superior capacities for timely payment of obligations.

Details of the rating of the Bank and its debt securities are as follows:

Rating Agency Date Accorded Rating Classification
Rating Agency Malaysia Berhad 10 December 2018
Long-Term Rating: AAA
Moody’s Investors Services Ltd 25 January 2019 Short-Term Rating: P1
Fitch Ratings Ltd 22 July 2019 Subordinated Notes: AA1
Tier 1 Capital Securities: AA2

Long-Term Rating: A3
Short-Term Rating: P2

Long-Term Rating: A-
Short-Term Rating: F2

FINANCIAL RESULTS The Group The Bank
RM’000 RM’000
Profit before taxation
Taxation 3,186,020 2,385,907
Net profit for the financial year (521,513) (458,996)
2,664,507 1,926,911

DIVIDENDS

Since the last financial year ended 30 June 2018, a final single tier dividend of 32.0 sen per share amounting to RM654,665,611 in
respect of the financial year ended 30 June 2018, was paid on 22 November 2018.

An interim single tier dividend for the financial year ended 30 June 2019 of 16.0 sen per share amounting to RM327,390,165 was paid
on 27 March 2019.

The Directors now propose a final single tier dividend of 34.0 sen per share on the Bank’s adjusted total number of issued shares
(excluding 81,101,700 treasury shares held pursuant to Section 127 of the Companies Act 2016 and Executive Share Scheme of
40,182,412 shares) amounting to RM695,787,618 for the financial year ended 30 June 2019.

142 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Directors’ Report

for the financial year ended 30 June 2019

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Significant events during the financial year are disclosed in Note 56 to the financial statements.

SUBSEQUENT EVENTS AFTER THE FINANCIAL YEAR
Subsequent events after the financial year are disclosed in Note 57 to the financial statements.

ISSUE OF SHARES AND DEBENTURES
There were no new ordinary shares or debentures issued during the financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial
statements.

DIRECTORS

The Directors who have held office during the financial year and during the period from the end of the financial year to the date of this
report are:

YBhg Tan Sri Quek Leng Chan (Chairman, Non-Executive Non-Independent)

Mr Tan Kong Khoon (Non-Independent Executive Director)

Mr Kwek Leng Hai (Non-Independent Non-Executive Director)

Ms Lim Lean See (Independent Non-Executive Director)

(Retired on 5 May 2019)

Ms Chok Kwee Bee (Independent Non-Executive Director)

YBhg Dato’ Nicholas John Lough @ Sharif Lough bin Abdullah (Independent Non-Executive Director)

YBhg Datuk Dr Md Hamzah bin Md Kassim (Independent Non-Executive Director)

Ms Chong Chye Neo (Independent Non-Executive Director)

(Appointed with effect from 21 February 2019)

The names of Directors of subsidiaries are set out in the respective subsidiary's statutory accounts and the said information is deemed
incorporated herein by such reference and made a part hereof.

DIRECTORS' REMUNERATION
Details of Directors’ remuneration are set out in Note 42 to the financial statements.

Annual Report 2019 143

Directors’ Report

for the financial year ended 30 June 2019

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings kept by the Bank under Section 59 of the Companies Act 2016, the Directors
holding office at the end of the financial year who had beneficial interests in the ordinary shares and/or preference shares and/or loan
stocks and/or options over ordinary shares of the Bank and/or its related corporations during the financial year are as follows:

Directors’ direct interests

Number of ordinary shares/preference shares/ordinary shares issued or to be issued or

acquired arising from the exercise of options*/conversion of redeemable convertible

unsecured loan stocks**/ nominal value in Ringgit Malaysia of Additional Tier 1 capital

securities/perpetual subordinated sukuk wakalah***/nominal value in Ringgit Malaysia

of Tier 2 subordinated notes /subordinated sukuk murabahah****

Nominal value As at As at

per share 01.07.2018 Acquired Sold 30.06.2019

Interests of YBhg Tan Sri Quek Leng Chan in: RM (unless indicated) 390,000 - - 390,000
Hong Leong Company (Malaysia) Berhad 5,438,664 - - 5,438,664
Hong Leong Financial Group Berhad (1) 1,056,325 - - 1,056,325
Guoco Group Limited (1) 13,333,333 - - 13,333,333
GuocoLand Limited 19,506,780 - - 19,506,780
GuocoLand (Malaysia) Berhad USD0.50 - - 735,000
GL Limited 735,000 - - 285,207
The Rank Group Plc (2) 285,207
(1)

USD0.20
GBP138/9p

Interests of Tan Kong Khoon in: 8,000,000* - - 8,000,000*
Hong Leong Financial Group Berhad

Interests of Mr Kwek Leng Hai in: (1) 420,500 - - 420,500
Hong Leong Company (Malaysia) Berhad (1) 190,000 - - 190,000
Hong Leong Industries Berhad (1) 2,526,000 - - 2,526,000
Hong Leong Financial Group Berhad (1) 5,510,000 - - 5,510,000
Hong Leong Bank Berhad (1) 205,200 - - 205,200
Hume Industries Berhad 3,800,775 - - 3,800,775
Guoco Group Limited USD0.50 35,290,914 - - 35,290,914
GuocoLand Limited 2,300,000 - - 2,300,000
Lam Soon (Hong Kong) Limited (2) 226,800 - - 226,800
GuocoLand (Malaysia) Berhad (5) - - 71,250
Malaysian Pacific Industries Berhad (1) 71,250 - - 1,026,209
The Rank Group Plc (1) 1,026,209 300,000 - 300,000
GL Limited
GBP138/9p -
USD0.20

Interests of YBhg Dato' Nicholas John Lough @ (1) 10,000 - (10,000) -
Sharif Lough bin Abdullah in: 250,000***

Hong Leong Financial Group Berhad

- - 250,000***

144 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Directors’ Report

for the financial year ended 30 June 2019

DIRECTORS’ INTERESTS (CONTINUED)

Directors’ deemed interests

Number of ordinary shares/preference shares/ordinary shares issued or to be issued or

acquired arising from the exercise of options*/conversion of redeemable convertible

unsecured loan stocks**/ nominal value in Ringgit Malaysia of Additional Tier 1 capital

securities/perpetual subordinated sukuk wakalah***/nominal value in Ringgit Malaysia of

Tier 2 subordinated notes /subordinated sukuk murabahah****

Nominal value As at As at

per share 01.07.2018 Acquired Sold 30.06.2019

RM (unless indicated)

Interests of YBhg Tan Sri Quek Leng Chan in:

Hong Leong Company (Malaysia) Berhad (1) 7,651,455(6) - - 7,651,455(6)
- (1,440,000)(6) 894,718,726(6)
Hong Leong Financial Group Berhad (1) 896,158,726(6) - 200,805,058
- - 1,346,237,169
Hong Leong Capital Berhad (1) 200,805,058 400,000,000*** - 800,000,000***
1,000,000,000**** - 1,500,000,000****
Hong Leong Bank Berhad (1) 1,346,237,169 65,000,000 - 130,000,000
- - 140,000,000
400,000,000*** - - 400,000,000***
400,000,000**** - 400,000,000****
500,000,000**** 17,000 - 242,700,470(6)
- (17,000)
Hong Leong MSIG Takaful Berhad (1) 65,000,000 - - 17,352,872
- - 19,600,000
Hong Leong Assurance Berhad (1) 140,000,000 (6,545,001)(8)
- -
Hong Leong Islamic Bank Berhad 400,000,000***
138,200
- -
-
Hong Leong Industries Berhad (1) 242,700,470(6) -
-
Hong Leong Yamaha Motor Sdn Bhd (1) 17,352,872
195,510,374**(6)
Guocera Tile Industries (Meru) Sdn Bhd (1) 19,600,000 3,800,000
-
Century Touch Sdn Bhd (1) 6,545,001 147,000*(6)(10)
-
(In members’ voluntary liquidation) -
-
Varinet Sdn Bhd (1) 10,560,627 - (10,560,627)(8) -
-
(In members’ voluntary liquidation) -
-
Malaysian Pacific Industries Berhad (1) 108,715,257 - - 108,853,457
- 5,640,607
Carter Resources Sdn Bhd (1) 5,640,607 -
- 84,000,000
Carsem (M) Sdn Bhd (1) 84,000,000 - 22,400(7)
-
(1) 22,400(7) (70,000)*(6)(9) 350,231,658(6)
- 195,510,374**(6)
Hume Industries Berhad (1) 350,231,658(6) -
(147,000)*(6)(10) 3,830,000*(6)
- - 237,124,930
- 818,093,030(6)
100,000*(6) -
- 238,000*(6)
Guoco Group Limited USD0.50 237,124,930 - 292,169,709
- 140,076,337**
GuocoLand Limited (2) 817,946,030(6) - 124,964,153
189,600,000
385,000*(6)
62,400,000
Southern Steel Berhad (1) 292,169,709 24,000,000

(1) 140,076,337** 10

Southern Pipe Industry (Malaysia) Sdn Bhd (1) 124,964,153

TPC Commercial Pte. Ltd. (2) 189,600,000

TPC Hotel Pte. Ltd. (2) 62,400,000

Wallich Residence Pte. Ltd. (2) 24,000,000

GLL A Pte. Ltd. (2) 10

Annual Report 2019 145

Directors’ Report

for the financial year ended 30 June 2019

DIRECTORS’ INTERESTS (CONTINUED)

Directors’ deemed interests

Number of ordinary shares/preference shares/ordinary shares issued or to be issued or

acquired arising from the exercise of options*/conversion of redeemable convertible

unsecured loan stocks**/ nominal value in Ringgit Malaysia of Additional Tier 1 capital

securities/perpetual subordinated sukuk wakalah***/nominal value in Ringgit Malaysia of

Tier 2 subordinated notes /subordinated sukuk murabahah****

Nominal value As at As at

per share 01.07.2018 Acquired Sold 30.06.2019

RM (unless indicated)

Interests of YBhg Tan Sri Quek Leng Chan in: (2) 149,597,307 - - 149,597,307
(continued)
(2) 184,000,000 - - 184,000,000
GLL Chongqing 18 Steps Pte. Ltd. (formerly
known as GLL Chengdu Pte Ltd) (2) 32,000,000 - - 32,000,000

Guoco Midtown Pte. Ltd. (formerly known as (2) 1,700,000 - - 1,700,000
GLL Prosper Pte Ltd) -
700 - 700
Midtown Bay Pte. Ltd. (formerly known as GLL (3) 150,000,000
Thrive Pte Ltd) (3) 3,150,000,000 - (146,250,000)(11) 3,750,000

GGL Asset Management (Singapore) Pte Ltd - (2,835,000,000)(11) 315,000,000
Hillcrest Hives Limited
Beijing Ming Hua Property Co., Ltd (3) 490,000 - - 490,000
Shanghai Xinhaojia Property Development (1) 28,000,000 - - 28,000,000
(1) 97,390,000(7) - - 97,390,000(7)
Co., Ltd (5) 140,008,659 - - 140,008,659
Shanghai Xinhaozhong Holding Co., Ltd (4) - -
JB Parade Sdn Bhd (1) 6,570,000 - - 6,570,000
(1) 455,574,796 - - 455,574,796
Lam Soon (Hong Kong) Limited (1) 277,000,000 - - 277,000,000
Guangzhou Lam Soon Food Products Limited (1) - -
GuocoLand (Malaysia) Berhad 34,408,000 29,258,200(6) - 34,408,000
Guoman Hotel & Resort Holdings Sdn Bhd USD0.20 123,502,605(7) 900,000*(6) (70,000)*(6)(9) 123,502,605(7)
GLM Emerald Industrial Park ( Jasin) Sdn Bhd 925,753,134 - - 955,011,334(6)
GBP138/9p
GL Limited 100,000*(6) 930,000*(6)
219,282,221 219,282,221
The Rank Group Plc

Interests of YBhg Dato’ Nicholas John Lough (1) 10,000 - (10,000) -
@ Sharif Lough bin Abdullah in:

Hong Leong Financial Group Berhad

Notes:
(1) Concept of par value was abolished with effect from 31 January 2017 pursuant to the Companies Act, 2016
(2) Concept of par value was abolished with effect from 30 January 2006 pursuant to the Singapore Companies (Amendment) Act, 2005
(3) Capital contribution in RMB
(4) Capital contribution in HKD
(5) Concept of par value was abolished with effect from 3 March 2014 pursuant to the New Companies Ordinance (Chapter 622), Hong Kong
(6) Inclusive of interest pursuant to Section 59(11)(c) of the Companies Act, 2016 in shares held by family member
(7) Redeemable Preference Shares/Cumulative Redeemable Preference Shares
(8) Dissolved during the financial year
(9) Share options lapsed
(10) Exercise of share options
(11) Share reduction

146 HONG LEONG BANK BERHAD

CORPORATE FINANCIALS ADDITIONAL INFORMATION

Directors’ Report

for the financial year ended 30 June 2019

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Bank received or became entitled to receive any benefit (other than a
benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in the financial
statements or as fixed salary of a full-time employee of the Bank or of related corporations) by reason of a contract made by the Bank
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:

YBhg Tan Sri Quek Leng Chan, who may be deemed to derive a benefit by virtue of those transactions, contracts and agreements
for the acquisitions and/or disposal of stocks and shares, stocks-in-trade, products, parts, accessories, plants, chattels, fixtures,
buildings, land and other properties or any interest in any properties; and/or for the provision of services including but not limited
to project and sales management and any other management and consultancy services; and/or for construction, development,
leases, tenancy, licensing, dealership and distributorship; and/or for the provision of treasury functions, advances in the conduct
of normal trading, banking, insurance, investment, stockbroking and/or other businesses between the Bank or its related
corporations and corporations in which YBhg Tan Sri Quek Leng Chan is deemed to have interests.

Neither at the end of the financial year, nor at any time during the financial year, did there subsist any other arrangements to which
the Bank is a party, with the object or objects of enabling the Directors of the Bank to acquire benefits by means of the acquisition
of shares in, or debentures of, the Bank or any other body corporate, other than the share options granted pursuant to the Executive
Share Scheme.

RESPONSIBILITY STATEMENT BY THE BOARD OF DIRECTORS

In the course of preparing the annual financial statements of the Group and of the Bank, the Directors are collectively responsible in
ensuring that these financial statements are drawn up in accordance with the Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

It is the responsibility of the Directors to ensure that the financial reporting of the Group and the Bank present a true and fair view of
the state of affairs of the Group and the Bank as at 30 June 2019 and of the financial results and cash flows of the Group and of the
Bank for the financial year ended 30 June 2019.

The financial statements are prepared on the going concern basis and the Directors have ensured that proper accounting records are
kept, applied the appropriate accounting policies on a consistent basis and made accounting estimates that are reasonable and fair so
as to enable the preparation of the financial statements of the Group and of the Bank with reasonable accuracy.

EXECUTIVE SHARE SCHEME

The Bank has established and implemented an Executive Share Scheme (“ESS”).

The ESS of up to ten percent (10%) of the total number of issued shares (excluding treasury shares) of the Bank comprises the Executive
Share Option Scheme (“ESOS”) and the Executive Share Grant Scheme (“ESGS”).

(i) ESOS

The ESOS which was approved by the shareholders of the Bank on 25 October 2012, was established on 12 March 2013 and would
be in force for a period of ten (10) years.

On 18 September 2012, the Bank announced that Bursa Malaysia Securities Berhad had resolved to approve the listing of new
ordinary shares of the Bank to be issued pursuant to the exercise of options under the ESOS.

The ESOS would provide an opportunity for eligible executives who had contributed to the growth and development of the HLB
Group to participate in the equity of the Bank.

Annual Report 2019 147

Directors’ Report

for the financial year ended 30 June 2019

EXECUTIVE SHARE SCHEME (CONTINUED)

(ii) ESGS

The ESGS which was approved by the shareholders of the Bank on 23 October 2013, was established on 28 February 2014 and
would end on 11 March 2023.

On 10 September 2013, the Bank announced that Bursa Malaysia Securities Berhad had resolved to approve the listing of new
ordinary shares of the Bank to be issued pursuant to the ESGS.

The ESGS would provide the Bank with the flexibility to reward the eligible executives of the HLB Group for their contribution with
awards of the Bank’s shares without any consideration payable by the eligible executives.

At any point of time during the existence of the ESS, the aggregate number of shares comprised in the options and grants under the
ESS established by the Bank which are still subsisting shall not exceed 10% of the total number of issued shares (excluding treasury
shares) of the Bank at any one time (“Schemes Aggregate Maximum Allocation”).

(i) ESOS

There were 37,550,000 share options granted at an exercise price of RM14.24 under the ESOS 2013/2023 of the Bank on 2 April 2015.

Arising from the completion of the Bank's Rights Issue on 28 December 2015, the exercise price for the share options granted on
2 April 2015 under the ESOS was adjusted from RM14.24 to RM13.77 and additional share options of 782,657 were allotted to
the option holders, in accordance with the provisions of the bye-laws governing the ESOS.

On 15 December 2017, the Bank has granted up to 22,750,000 share options at on exercise price of RM16.46.

There were no options granted under the ESOS of the Bank during the financial year ended 30 June 2019.

As at the financial year ended 30 June 2019, a total of 40,495,153 share options lapsed primarily arising from the resignation of
some option holders.

As at 30 June 2019, a total of 61,082,657 share options had been granted under the ESOS, out of which 20,325,861 share options
(adjusted following the completion of the Bank's Rights Issue) remain outstanding. 261,643 share options were exercised during
the financial year ended 30 June 2019. The aggregate share options granted to Directors and chief executives of the HLB Group
under the ESOS amounted to 19,326,399, out of which 8,000,000 share options remain outstanding.

Since the commencement of the ESOS, the maximum allocation applicable to Directors and senior management of the HLB Group
is 50% of the Schemes Aggregate Maximum Allocation.

As at 30 June 2019, the actual percentage of options granted to Directors and senior management of the HLB Group under the
ESOS was 2.33% of the total number of issued shares (excluding treasury shares) of the Bank. During the financial year ended 30
June 2019, there is no option granted to the directors and senior management of the HLB Group.

(ii) ESGS

The Bank had granted 267,379 ordinary shares under the ESGS amounting to 0.01% of the total number of issued shares
(excluding treasury shares) of the Bank to the chief executive of the Bank during the financial year ended 30 June 2019.

As at 30 June 2019, a total of 1,286,905 ordinary shares had been granted under the ESGS amounting to 0.06% of the total
number of issued shares (excluding treasury shares) to the chief executive of the Bank, out of which 718,845 ordinary shares had
been vested, with 568,060 ordinary shares remain outstanding.

Save for the above, there were no other shares granted under the ESGS.

148 HONG LEONG BANK BERHAD