Intended Outcome
The level and composition of remuneration of directors and senior management take into account the
company’s desire to attract and retain the right talent in the board and senior management to drive
the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and independent process.
Practice 6.1
The board has in place policies and procedures to determine the remuneration of directors and senior
management, which takes into account the demands, complexities and performance of the company
as well as skills and experience required. The policies and procedures are periodically reviewed and
made available on the company’s website.
Application : Applied
Explanation on : Directors
application of the
practice 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 resource 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 Remuneration Committee (“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 of 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”).
Senior Management
Remuneration Process
The remuneration of senior management and material risk takers are
presented and approved by the Board annually. The annual review
process of management scorecards include formal review by Risk and
Compliance to ensure adequate weightages are placed on risk and
compliance related KPIs. Risk control objectives that are not met and
any non-compliance will have significant consequence to remuneration
decisions.
Role of Board Risk Management Committee (“BRMC”) in remuneration
matters
BRMC is tasked to review management’s implementation of the
remuneration system on whether incentives provided by the
remuneration system take into consideration risks, capital, liquidity and
the likelihood and timing of earnings, without prejudice to the tasks of
the RC.
Deferred Compensation and Clawbacks
Variable bonus awards for individuals in senior management position
and in excess of a certain thresholds will be deferred over a period of
Page 19 of 46
Explanation for time. Deferred compensation is applicable to some of the incentive
departure schemes introduced in the Bank. These are mostly for sales-typed
roles with built-in clawback mechanism. The clawback mechanism is
introduced to ensure excessive risk taking behaviour of staff is
minimised and that the system does not induce excessive risk taking
and sufficient control is in place. Periodic reviews as well as post-
implementation reporting to the BRMC are carried out to examine the
effectiveness of the schemes in driving the right behaviours in
achieving business goals and that there are no adverse risk elements
in the approved schemes. The clawbacks mechanism is triggered when
there are non-compliances to regulations and policies.
:
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 20 of 46
Intended Outcome
The level and composition of remuneration of directors and senior management take into account the
company’s desire to attract and retain the right talent in the board and senior management to drive
the company’s long-term objectives.
Remuneration policies and decisions are made through a transparent and independent process.
Practice 6.2
The board has a Remuneration Committee to implement its policies and procedures on remuneration
including reviewing and recommending matters relating to the remuneration of board and senior
management.
The Committee has written Terms of Reference which deals with its authority and duties and these
Terms are disclosed on the company’s website.
Application : Applied.
Explanation on : The Board has an RC, whose TOR deals with its authority, including
application of the inter alia recommending to the Board the framework and policies
practice governing the remuneration of the Directors, CEO, senior management
officers and other material risk takers.
The TOR of the RC is published on the Bank’s Website.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 21 of 46
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior management is
commensurate with their individual performance, taking into consideration the company’s
performance.
Practice 7.1
There is detailed disclosure on named basis for the remuneration of individual directors. The
remuneration breakdown of individual directors includes fees, salary, bonus, benefits in-kind and
other emoluments.
Application : Applied.
Explanation : The remuneration of Directors (including the remuneration earned as Directors
on of subsidiaries) for the financial year ended 30 June 2019 is as follows:
application
of the Directors The Group Directors’ Estimated Total
practice Salaries, Fees money
Executive Director bonuses, value for
Mr Tan Kong Khoon allowances benefits-
Non-Executive Directors and defined in-kind
YBhg Tan Sri Quek Leng Chan contribution
Mr Kwek Leng Hai retirement RM’000 RM’000 RM’000
Ms Lim Lean See*
Ms Chok Kwee Bee plan - --
YBhg Dato’ Nicholas John RM’000
Lough @ Sharif Lough bin - --
Abdullah - - --
YBhg Datuk Dr Md Hamzah bin 224 - 248
Md Kassim - 251 - 280
Ms Chong Chye Neo ** - 285 - 315
Total 24
29
30
24 328 - 352
3
110 # 53 - 56
1,141 - 1,251
Directors The Bank Directors’ Estimated Total
Salaries, Fees money
Executive Director bonuses, value for
Mr Tan Kong Khoon allowances benefits-
Non-Executive Directors and defined in-kind
YBhg Tan Sri Quek Leng Chan contribution
Mr Kwek Leng Hai retirement RM’000 RM’000 RM’000
Ms Lim Lean See*
Ms Chok Kwee Bee plan - --
YBhg Dato’ Nicholas John RM’000
Lough @ Sharif Lough bin - --
Abdullah - - --
YBhg Datuk Dr Md Hamzah bin 224 - 248
Md Kassim - 251 - 280
Ms Chong Chye Neo ** - 285 - 315
Total 24
29
30
9 160 - 169
3 53 - 56
95 # 973 - 1,068
Page 22 of 46
# Directors’ meeting allowances
* Retired on 5 May 2019
** Appointed on 21 February 2019
During the financial year, Directors and Officers of the Group and the Bank are
covered under the Directors’ & Officers’ Liability Insurance in respect of
liabilities arising from acts committed in their capacity as, inter alia, Directors
and Officers of the Group and the Bank subject to the terms of the policy. The
total amount of Directors' & Officers’ Liability Insurance effected for the
Directors & Officers of the holding company was RM10.0 million. The total
amount of premium paid for the Directors' & Officers' Liability Insurance by the
Group and the Bank were RM58,264 and RM51,462 respectively.
Explanation :
for departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 23 of 46
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior management is
commensurate with their individual performance, taking into consideration the company’s
performance.
Practice 7.2
The board discloses on a named basis the top five senior management’s remuneration component
including salary, bonus, benefits in-kind and other emoluments in bands of RM50,000.
Application : Departure.
Explanation on :
application of the
practice
Explanation for : The Board is of the view that it is not in the interest of the Bank to
departure disclose the detailed remuneration of senior management on a named
basis given the highly competitive market for talents in the industry.
As an alternative, the Company has made qualitative and quantitative
disclosure of the remuneration framework for senior management and
other employees of the Bank as disclosed in the Corporate Governance
(“CG”) Overview Statement in the Annual Report and Section B of this
CG Report.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : The Board will monitor the market practice on such disclosure practice.
Timeframe : The Board may consider in the
future as appropriate taking into
consideration the market
practice and interest of the Bank
in relation to competition for
talents as explained above.
Page 24 of 46
Intended Outcome
Stakeholders are able to assess whether the remuneration of directors and senior management is
commensurate with their individual performance, taking into consideration the company’s
performance.
Practice 7.3 - Step Up
Companies are encouraged to fully disclose the detailed remuneration of each member of senior
management on a named basis.
Application : Not adopted.
The Board may consider in the future as appropriate taking into
consideration the market practice and interest of the Bank in relation to
competition for talents as explained above.
Explanation on :
adoption of the
practice
Page 25 of 46
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and recommendations. The
company’s financial statement is a reliable source of information.
Practice 8.1
The Chairman of the Audit Committee is not the Chairman of the board.
Application : Applied.
Explanation on : The Chairman of the Board Audit Committee (“BAC”), an Independent
application of the Non-Executive Director, is not the Chairman of the Board.
practice
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 26 of 46
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and recommendations. The
company’s financial statement is a reliable source of information.
Practice 8.2
The Audit Committee has a policy that requires a former key audit partner to observe a cooling-off
period of at least two years before being appointed as a member of the Audit Committee.
Application : Applied.
Explanation on : The Bank, being a financial institution, adheres to the CG policy
application of the document of BNM, which provides that the officers or partners of the
practice firm of external auditors of the Bank must not serve or be appointed as
a Director of the Bank until at least 2 years after cessation as an officer
or partner of that firm or the firm last served as an external auditor of
the Bank. This requirement is observed by the Bank in its consideration
for potential candidates of the Board and BAC.
In this regard, none of the BAC members were officers or partners of
the external auditors.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 27 of 46
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and recommendations. The
company’s financial statement is a reliable source of information.
Practice 8.3
The Audit Committee has policies and procedures to assess the suitability, objectivity and
independence of the external auditor.
Application : Applied.
Explanation on : The role of the BAC in relation to the external auditors is guided by its
application of the TOR. BAC is responsible for assessing the capabilities and
practice independence of the external auditors and to make subsequent
recommendations to the Board on the appointment, reappointment,
remuneration or termination of the external auditors.
In accordance with BNM’s Guidelines on External Auditor, the
assessment on suitability, objectivity and independence of the external
auditors, is being conducted annually, covering the following areas:
(i) Level of knowledge, capabilities, experience and quality of
previous work;
(ii) Level of engagement with BAC;
(iii) Ability to provide constructive observations, implications and
recommendations in areas which require improvements;
(iv) Adequacy in audit coverage, effectiveness in planning and
conduct of audit;
(v) Ability to perform the audit work within the agreed timeframe;
(vi) Non-audit services rendered by external auditors does not
impede independence; and
(vii) External auditors demonstrates unbiased stance when
interpreting the standards/policies adopted by the Bank.
In addition, the Bank had established the Policy on the Use of External
Auditors for Non-Audit Services as one of the measures to safeguard
the independence and objectivity of external auditors. BAC reviews the
non-audit services rendered by the external auditors and their related
fees prior to the approval of the services. The review also takes into
account the non-audit fees threshold established under the Policy to
ensure their independence and objectivity are not compromised.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 28 of 46
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and recommendations. The
company’s financial statement is a reliable source of information.
Practice 8.4 - Step Up
The Audit Committee should comprise solely of Independent Directors.
Application : Adopted.
Explanation on : All the BAC members of the Bank are Independent Non-Executive
adoption of the Directors.
practice
Page 29 of 46
Intended Outcome
There is an effective and independent Audit Committee.
The board is able to objectively review the Audit Committee’s findings and recommendations. The
company’s financial statement is a reliable source of information.
Practice 8.5
Collectively, the Audit Committee should possess a wide range of necessary skills to discharge its
duties. All members should be financially literate and are able to understand matters under the
purview of the Audit Committee including the financial reporting process.
All members of the Audit Committee should undertake continuous professional development to keep
themselves abreast of relevant developments in accounting and auditing standards, practices and
rules.
Application : Applied.
Explanation on : The BAC members collectively possess the necessary skills and
application of the knowledge to discharge their duties and are financially literate. The
practice profile of each BAC member is set out in the Annual Report 2019.
To keep abreast of latest changes and developments in the business
environment and to enhance their skills and knowledge, the BAC
members attended various briefings, updates and training programmes
as set out in the Annual Report 2019 of the Bank.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 30 of 46
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a foreseeable
future event or situation on the company’s objectives is mitigated and managed.
Practice 9.1
The board should establish an effective risk management and internal control framework.
Application : Applied.
Explanation on : The Board recognises its overall responsibility in identifying principal
application of the
practice risks and ensuring the implementation of appropriate systems to
manage those risks. To discharge its oversight responsibilities more
effectively, the Board has delegated the independent oversight over
risk management to the BRMC and BAC. Although the Board has
granted such authority to BRMC and BAC, the ultimate responsibility
and the final decision rest with the Board.
The Board has established and maintained a Risk Management
Framework appropriate to the operations of the Group, including
systems for compliance with applicable laws, regulations, rules,
directives and guidelines. The controls built into the Risk Management
Framework of the Group are designed to ensure that all relevant and
significant risks are identified and managed as part of the risk
management process and are not intended to eliminate all risks of
failure to achieve business objectives. Therefore, the system provides a
reasonable and not absolute assurance against material
misstatements, losses or frauds that may affect the Group’s financial
position or its operations.
The Statement on Risk Management and Internal Control in the Bank’s
Annual Report 2019 provides further details on the state of system of
internal controls and risk management framework of the Group in
financial year 2019.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 31 of 46
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a foreseeable
future event or situation on the company’s objectives is mitigated and managed.
Practice 9.2
The board should disclose the features of its risk management and internal control framework, and
the adequacy and effectiveness of this framework.
Application : Applied.
Explanation on : The Board has disclosed features of its risk management and internal
application of the control framework, and the adequacy and effectiveness of this
practice framework in the Statement on Risk Management and Internal Control
in the Bank’s Annual Report 2019.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 32 of 46
Intended Outcome
Companies make informed decisions about the level of risk they want to take and implement
necessary controls to pursue their objectives.
The board is provided with reasonable assurance that adverse impact arising from a foreseeable
future event or situation on the company’s objectives is mitigated and managed.
Practice 9.3 - Step Up
The board establishes a Risk Management Committee, which comprises a majority of independent
directors, to oversee the company’s risk management framework and policies.
Application : Applied.
Explanation on : The Board has established a BRMC, which comprises three (3)
adoption of the members, all of whom are Independent Non-Executive Directors. The
practice Chairman of BRMC is appointed by the Board of Directors, and is not
the Chairman of the Board of Directors. BRMC supports the Board in
providing oversight over risk management activities of the Group to
ensure that the risk management function is effective.
The composition of BRMC, profile of each member and TOR are set out
on the Bank’s Website.
Page 33 of 46
Intended Outcome
Companies have an effective governance, risk management and internal control framework and
stakeholders are able to assess the effectiveness of such a framework.
Practice 10.1
The Audit Committee should ensure that the internal audit function is effective and able to function
independently.
Application : Applied.
Explanation on : The Bank’s Group Internal Audit Division (“GIAD”) performs the internal
application of the auditing function for the various entities in the HLB Group. GIAD
practice 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 GIAD is an independent function where the Chief Internal Auditor
(“CIA”), reports directly to the BAC. The BAC had engaged privately
with the CIA twice within the financial year, without the presence of
Management, to provide the opportunity for the CIA to discuss issues
faced by the internal audit department. The BAC had evaluated the
performance of the CIA, including providing feedback on the internal
audit department.
BAC had endorsed the GIAD’s Audit Charter, which was approved by
the Board. The Audit Charter defines the mission, authority, scope of
work, organisational status, accountability, independence and
objectivity, responsibilities, and the professional proficiency and ethics
of the GIAD.
All audit reports issued by GIAD are tabled to every BAC meeting,
highlighting key audit issues and corrective action plans taken and its
status at reporting date, and root cause analysis of findings raised.
Follow-up actions and the review of the status of corrective action plans
are carried out by Management via the Risk and Compliance
Governance Committee (“RCGC”) chaired by the CEO, whose
members comprise senior management. The minutes of meetings of
RCGC are tabled to the BRMC and BAC for notation.
For further information, please refer to Pages 112 to 114 of the BAC
Report.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 34 of 46
Intended Outcome
Companies have an effective governance, risk management and internal control framework and
stakeholders are able to assess the effectiveness of such a framework.
Practice 10.2
The board should disclose–
whether internal audit personnel are free from any relationships or conflicts of interest, which
could impair their objectivity and independence;
the number of resources in the internal audit department;
name and qualification of the person responsible for internal audit; and
whether the internal audit function is carried out in accordance with a recognised framework.
Application : Applied.
Explanation on : a) Independence and Objectivity
application of the The Bank’s GIAD reports directly and functionally to the BAC. In
practice performing its internal audit functions, GIAD has no direct
responsibility or authority over any of the functions it reviews and
audits.
The GIAD is guided by its Audit Charter which defines the
organisational status, accountability, independence and objectivity,
responsibilities, the professional proficiency and ethics.
The BAC is responsible for deciding on the appointment,
remuneration, appraisal, transfer and dismissal of GIAD’s CIA, and
to provide oversight on the adequacy of resources.
The BAC had engaged privately with the CIA twice within the
financial year, without the presence of Management, to provide the
opportunity for the CIA to discuss issues faced by the internal audit
department.
b) Internal Audit Resources
As at 30 June 2019, GIAD has a head count of 59 staff.
c) CIA
The CIA, Mr Chua Yew Lim has more than 15 years’ experience of
internal audit in the financial industry. He has a Bachelor of
Commerce Degree (Accounting & Information Systems) and is a
Certified Information Systems Auditor (CISA). He also obtained a
Certificate in Islamic Law.
d) Internal Audit Framework
GIAD is guided by the requirements as stipulated in the BNM
guidelines on Internal Audit Function of Licenced Institutions (“BNM
GL13-4”) and the International Professional Practices Framework
of IIA.
Explanation for For further information, please refer to Pages 112 to 114 of the
departure BAC Report.
:
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Page 35 of 46
Measure :
Timeframe :
Page 36 of 46
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate mutual
understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the company, its
policies on governance, the environment and social responsibility.
Practice 11.1
The board ensures there is effective, transparent and regular communication with its stakeholders.
Application : Applied.
Explanation on : The Board acknowledges the importance of having effective
application of the communication with its stakeholders. In addition to the filings and
practice announcements with Bursa Malaysia Securities Berhad (“Bursa”), the
Bank also uses various communication channels to update
shareholders and general public:
I) Corporate Website
Our corporate website at www.hlb.com.my is a major channel and it
provides easy access of relevant information to our shareholders
and other stakeholders which include corporate information, board
charter, capital & debt instruments, credit rating, press releases,
quarterly financial statements, analyst briefings/presentations and
Annual Reports.
II) Analyst Briefings
The Bank holds separate quarterly briefings for fund managers,
institutional investors and investment analysts after the
announcement of each quarterly results to Bursa. The quarterly
briefings are intended not only to promote the dissemination of the
financial results of the Bank to fund managers, investors and
shareholders but to also keep the investing public community
updated on the progress and development of the Bank’s initiatives.
III) Media Releases
In addition to analyst briefings, the Bank also holds press
conferences for the half year ended December and full year ended
June results as well as issuing press releases for the September
and March results to capture a wider scope of stakeholders, which
include shareholders and the general public. Members of the media
are also invited during the year to provide coverage on various
banking activities and initiatives launched by the Bank.
IV) Annual General Meeting (“AGM”)
The AGM provides an opportunity for the shareholders to seek and
clarify any issues and to have a better understanding of the
Group’s performance. Shareholders are encouraged to meet and
communicate with the Board at the AGMand to vote on all
resolutions. Senior management and the external auditors are also
available to respond to shareholders’ queries during the AGM.
Page 37 of 46
Explanation for V) Dedicated Person to Handle Shareholders’ and Investors’
departure Queries
Shareholders and investors have a channel of communication with
the following persons to direct queries and provide feedback to the
Group.
GENERAL MANAGER, COMMUNICATION & CSR
Tel No. : 03-2081 8888 ext. 61914
Fax No. : 03-2081 7801
e-mail address : [email protected]
HEAD, CORPORATE FINANCE & INVESTOR RELATIONS
Tel No. : 03-2081 2972
Fax No. : 03-2081 8924
e-mail address : [email protected]
:
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 38 of 46
Intended Outcome
There is continuous communication between the company and stakeholders to facilitate mutual
understanding of each other’s objectives and expectations.
Stakeholders are able to make informed decisions with respect to the business of the company, its
policies on governance, the environment and social responsibility.
Practice 11.2
Large companies are encouraged to adopt integrated reporting based on a globally recognised
framework.
Application : Departure.
Explanation on :
application of the
practice
Explanation for : The Bank continuously enhances its Annual Report in order to improve
departure its communication with its stakeholders with regards to the Bank’s
financial results, business performance and operations of the HLB
Group.
The information disclosed in the Annual Report is in line with current
regulatory and statutory guidelines and the principles which underpin
integrated reporting that include the Bank’s strategy, governance,
performance and prospects.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : The Bank will continually enhance the content of the Annual Report to
improve our communication to our stakeholders.
Timeframe : The Bank will monitor the
market practice and any
developments in respect of
integrated reporting for future
consideration.
Page 39 of 46
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively and make
informed voting decisions at General Meetings.
Practice 12.1
Notice for an Annual General Meeting should be given to the shareholders at least 28 days prior to
the meeting.
Application : Applied.
Explanation on : The Bank gives 28 days’ notice to its shareholders for AGMs.
application of the
practice
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 40 of 46
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively and make
informed voting decisions at General Meetings.
Practice 12.2
All directors attend General Meetings. The Chair of the Audit, Nominating, Risk Management and
other committees provide meaningful response to questions addressed to them.
Application : Applied.
Explanation on : All Directors are committed to attend General Meetings of the Bank,
application of the which are scheduled in advance, save for unforeseeable
practice circumstances.
The Chair of Board Committees are aware of their respective scope of
responsibilities and will respond to questions addressed to them at
General Meetings.
Explanation for :
departure
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure :
Timeframe :
Page 41 of 46
Intended Outcome
Shareholders are able to participate, engage the board and senior management effectively and make
informed voting decisions at General Meetings.
Practice 12.3
Listed companies with a large number of shareholders or which have meetings in remote locations
should leverage technology to facilitate–
including voting in absentia; and
remote shareholders’ participation at General Meetings.
Application : Departure.
Explanation on :
application of the
practice
Explanation for : General Meetings of the Bank are held in accessible locations within
departure the Klang Valley.
Shareholders who are unable to attend General Meetings of the Bank
may, in accordance with the Constitution of the Bank, appoint their
respective proxies or the Chairman of the meeting to vote on their
behalf.
Large companies are required to complete the columns below. Non-large companies are
encouraged to complete the columns below.
Measure : The Bank will monitor the development of technology and market
practice.
Timeframe : Will be considered with the
development of technology to
avail remote shareholders’
participation at General
Meetings.
Page 42 of 46
SECTION B – DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PURSUANT TO
CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA
Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the
Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable
for financial institutions or any other institutions that are listed on the Exchange that are required to
comply with the above Guidelines.
The following disclosure requirements under Appendix 4 of the Corporate Governance
policy document of Bank Negara Malaysia are set out in the Annual Report 2019 of the Bank
and/or Board Charter, which is published on the Bank’s Website:
Board of Directors – Composition
• Name and designation of each Director;
• Key personal details and background of each Director including relevant experience, any
shareholding in the Bank and external professional commitments;
• Chairman and members of each Board Committee;
• Changes to the Board composition of HLB during the financial year;
• Training and education provided to the Board;
• Number of meetings convened by the Board and each Board Committee.
Board of Directors – Function and Conduct
• Roles and responsibilities of the Board and Board Committees;
• Attendance of each Director at Board and Board Committee meetings during the financial year.
Internal Control Framework – Overview
The Internal Control Framework is set out in the Statement on Risk Management and Internal
Control in the Annual Report 2019.
Remuneration – Qualitative Disclosures
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.
Page 43 of 46
Overview of Remuneration Policy Framework
Guiding Principles
Principle 1 — Oversight by Remuneration Committee & Board of Directors
The Remuneration Committee’s (“RC") 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.
Page 44 of 46
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 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.
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 thresholds 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 crystalize 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.
Page 45 of 46
Remuneration – Quantitative Disclosures
The following depicts the total value of remuneration awarded to the CEO, senior management
team and material risk takers for the financial year ended 30 June 2019 (“FYE 2019”)
CEO, Senior No. of Unrestricted Deferred Total amount of Total amount of
Management and officers (RM) (RM) outstanding outstanding
received deferred deferred
Material Risk 31,204,209 remuneration
Takers - remuneration as
at 30.6.2019 paid out (vested)
- (RM) in FYE 2019
(RM)
26,717,976
Fixed 34 - -- -
Remuneration - -- -
-
Cash-based - -- -
Shares and
share-linked 31 - - -
instruments 6 5,499,986 5,499,986 6,133,703
Other - -- -
Variable
Remuneration
Cash-based
Shares and
share-linked
instruments
Other
Note: The value of share is based on the valuation used for MFRS 2 Accounting.
Page 46 of 46
Sustainability Report 2019
Sustainability Report 2019 1
Overview Fit-For-Future Workforce
02 About This Report 41 Workforce Development
03 Sustainability Themes 42 Recruiting Talent
04 Chairman and Group Managing Director/Chief Executive 44 Employee Skill Development
46 Digital Training
Officer’s Sustainability Review 48 Talent Retention and Career Development
06 About Hong Leong Bank 49 Our Workplace Culture
06 Our Group Values 49 Nurturing a Culture of High Performance
07 Our Business 50 Caring for Our Team
08 Regional Footprint 50 Employee Engagement
10 Partnerships and Collaborations 51 Remuneration Philosophy and Framework
12 How Sustainability is Governed 52 Employee Benefits
13 Our Sustainability Approach 52 Safety and Well-being
13 Materiality
16 Sustainability Risk Management Environmentally and Socially Responsible
18 Stakeholder Engagement 60 Managing Our Environmental Footprint
60 Energy and Emissions
Good Business Conduct 61 Reducing Paper Consumption
62 Water Consumption
22 Corporate Governance 62 Waste Management
23 Ethics and Integrity 62 Sustainable Procurement Practices
24 Responsible Banking 62 Responsible Lending and Financing
24 Promoting a Culture of Compliance 62 Responsible Lending and Financing
25 Whistleblowing Policy 64 Green Financing
65 Fair Banking
Digital at the Core 65 Responsible Marketing
67 Financial Inclusion and Social Responsibility
27 Digital Transformation 67 HLB JumpStart
31 Customers 68 Enhancing financial literacy
31 Digital Branches 68 Serving the underserved
32 Hong Leong Connect Retail 68 Hong Leong Foundation
33 HL ConnectFirst for Business 73 Community Initiatives at the Division Level
34 Digitisation in Cyber Security and Data Privacy
35 Digitisation of Customer Experiences SME Growth
37 Society
38 Towards a Cashless Society 76 Empowering SMEs on the Financial Front
38 Digitisation in Shariah Knowledge Sharing 77 Supporting Financing for SMEs
39 Internal - Digitising Our Operations 78 Expanding Islamic Banking opportunities in the
39 Digitisation of Bank Operations
39 Digitisation in Human Resources Operation SME Market
79 Innovative and Digital Solutions for SMEs
80 GRI Standard Content Index for “In
Accordance” – Core
89 SIRIM Assurance Statement
Certification
OVERVIEW
About This Report
This Sustainability Report 2019 marks our third year of annual reporting on
the topics that are most material to our stakeholders and to our business. The
report covers our financial year from 1 July 2018 – 30 June 2019 (“FY2019”),
describing the progress we have made to integrate sustainability into our
business practices, products and services and createvalue forourstakeholders.
The report should be read along with our 2019 Annual Report, which provides more comprehensive disclosure on our financial and
operational performance.
This report has been prepared in accordance with the Global This report has been reviewed and approved by HLB’s senior
Reporting Initiative Standards (“GRI Standards”) Core option and management and its Board of Directors. The contents of this
Bursa Malaysia Sustainability Reporting Guide (2nd Edition). It Sustainability Report are governed by a Sustainability Committee
has been further guided by the Recommendations of the Task that reviewed all material topics to ensure they aligned with the
Force on Climate-related Disclosures (“TCFD”) and the United organisation’s strategies. The report was recommended to, and
Nations Sustainable Development Goals (“UN SDGs”). Through endorsed by, the Board Risk Management Committee (“BRMC”)
these frameworks we have sought to communicate the impact of the Board of Directors.
of our economic, environmental and social (“EES”) performance
of metrics and targets we believe to be relevant for our industry This report’s content has been externally assured by an
of financial services. References to specific topics covered by the independent body, Malaysia’s leading certification, inspection
report are available in the GRI Standards Content Index on pages and testing body, SIRIM QAS International Sdn Bhd. In preparing
80-85. this report, we have adhered to best practice disclosure
standards of our assurers and of the reporting field.
The contents of this report present an overview of our
sustainability approach, describing how we identify and manage For more information on this report, or to provide your feedback,
risks and opportunities as part of our business activities. The please contact:
report has been written for a range of audiences, providing
balanced and relevant content with a narrative that embodies Head, Sustainability, Hong Leong Bank Berhad
stakeholder inclusiveness. The data provided in this report 03-2081-8888
relates to issues determined as important to both the Bank and
our stakeholders via a materiality analysis. All data in this report [email protected]
relates to the operations of Hong Leong Bank (“HLB” or “the
Bank”) and Hong Leong Islamic Bank (“HLISB”) in Malaysia, as
they represent our most material businesses.
2 HONG LEONG BANK BERHAD
OVERVIEW
Sustainability Themes
HLB Corporate Vision “Highly digital and innovative
HLB Mission financial services company”
To help clients succeed through simple, relevant, personal and fair banking;
To provide our people with the best opportunities to realise their potential;
To create stakeholder value
HLB Environmentally and
Sustainability Socially Responsible
Themes • Responsible Lending/
Financing
Digital at the Core Fit-For-Future • Managing our SME Growth
Workforce Environmental • Community Banking
Our Material • Digital Innovation Footprint
Topics • Customer Experience • Employee Experience • Supplier Assessment
• Cyber Security and • Ethics, Integrity and
Data Privacy Compliance
• Fair Banking
HLB Sustainability Themes Sustainability Risk Management
Description
Digital at the Core
Embracing digital transformation and building internal capability to enhance customer and
employee experience, accessibility and efficiency.
Fit-For-Future Acquiring strategic skills to enhance critical and core capabilities. Hiring and retaining a
Workforce high performing inclusive workforce fit for the digital era.
Environmentally and Managing the environmental footprint of our operations. Advocating for social and
Socially Responsible environmental responsibility through our products and services, and through business
SME Growth partners, suppliers and associates that we do business with.
Supporting the growth and capability development of SMEs through the provision of
relevant tools, knowledge and banking products and services. Facilitating access to
financing for underserved SMEs. Supporting the entrepreneurial spirit of start-ups and
FinTechs to build a vibrant future business community.
Sustainability Report 2019 3
Chairman and Group Managing Director/
Chief Executive Officer’s Sustainability Review
Dear Stakeholders,
Building on our tradition of meaningful solutions and better ways of banking,
HLB is moving towards a digitally enabled future in which we provide real and
sustainable outcomes for each of our stakeholders. For us, sustainability is
about authenticity. In order to make a meaningful and positive impact on the
world around us, it is essential that we ‘walk the talk’ by backing our promises
with concrete actions. Today, the proliferation of technology offers even greater
opportunities to do so.
In FY2019, we are proud to report
that we continued to see solid
growth across our businesses.
Moving forward, we will continue to
leverage technological advancements,
collaborative engagements and keep
an innovation-driven mindset for
the sustainable advancement of our
business.
To achieve this, an integrated approach to sustainability is needed. Consideration of the EMBRACING INNOVATION
economic, environmental and social footprints of our policies, practices and products is
crucial if we are to achieve our goals. Central to this approach is the need to establish Our innovative spirit is reflected in HLB’s
deep and inclusive connections with those impacted by our actions. This will not only adoption of the latest technological
transform how we, as a bank, interact with society but enable us to create products and developments to drive business success in
services that are economically, socially and environmentally sustainable. line with our ‘Digital at the Core’ strategy.
This year, we were proud to pioneer the
use of Artificial Intelligence (“AI”) during
our recruiting process and introduce
our second Digital Branch in Malaysia.
Additionally, our LaunchPad Programme
continues to drive collaboration with
high-potential technology startups,
helping HLB to maintain our position as a
leader in the provision of digital banking
products.
4 HONG LEONG BANK BERHAD
Chairman and Group Managing Director/
Chief Executive Officer’s Sustainability Review
In FY2019, HLB held two hackathons for We recorded a 15% increase in the the ability of our employees to meet
the public in October 2018 and April 2019, number of retail customers using these head-on by leveraging their skills,
followed by an employee hackathon digital products in FY2019, with the knowledge and abilities to achieve our
in June 2019. During these exciting total number of retail digital users now corporate goals. Our comprehensive
24-hour events, which were held for both amounting to nearly 50% of the total talent development and acquisition
employees and the public, participating retail customer base. At the same time, programmes, for which HLB received
teams raced to identify, develop and we are cognisant that certain subsets six distinct awards in FY2019, will help
prototype digital solutions to real of the population will always be best ensure that we are recruiting and
business challenges faced by HLB and the served by physical transactions and thus retaining talent who can make this
industry. The public hackathons involved maintain a comprehensive network of future a reality.
over 460 participants and generated branches and offices.
more than 90 ideas while the employee The advent of Industry 4.0 brings
hackathon saw 171 teams submit 222 This year, our efforts to eliminate exciting new business directions for HLB
ideas. The sessions not only provided barriers culminated in the launch of our which we look forward to exploring.
an opportunity to identify new talent flagship Corporate Social Responsibility As always, the safety and privacy of
and develop new business solutions, programme, JumpStart, which provides our customers will be paramount as
but also served as an example of the promising social enterprises with the we move towards increasingly digital
innovative spirit that drives HLB. We knowledge, skills and tools needed operations. So too will be the need to
want to incubate creativity and agility as to succeed. With two successful preserve our environment in the face
we pioneer new solutions. partnerships under its belt, JumpStart of the current climate challenges, a
is already making waves in the social direction in which HLB is already moving
Also serving as a symbol of our enterprise sphere. We will continue through various measures to reduce
commitment to embracing innovation to support more high-impact social resource consumption and promote
is HLB’s and the Group’s new corporate enterprises through JumpStart. green financing.
office building, Menara Hong Leong. This
building was awarded a Green Building Our targeted products, services and We are also enhancing our responsible
Index Silver rating in FY2019. It was financing for small and medium lending practices with relevant policies
developed using the latest construction enterprises (“SMEs”) is a key aspect and guidelines which encompass
and green building technology to of supporting economic growth. To stringent evaluation of risks posed to the
minimise environmental impact and promote the accessibility of our financial physical environment as well as social
embed sustainability within the building’s products and services among SMEs, we risks related to people and communities.
operations. Moving forward, Menara deployed over 170 Community Business Our focus is on ensuring that employees
Hong Leong will serve as a sustainable Managers (“CBM”) throughout the are informed on best industry practices,
business hub for the Group, from which country. The CBMs are based at branches and we will continue to build internal
we will continue to embrace new ways across local communities nationwide capabilities, such as renewable energy
of thinking, technological advancements where they will support uptake of our financing and energy efficiency.
and industry change. SME products and services. In FY2019,
we also enhanced our focus to support We are putting in measures which are
ELIMINATING BARRIERS the Islamic SME sector, as reflected by essential building blocks of HLB’s broad-
the growing strength of our presence in reaching sustainability strategy, to meet
As a responsible corporate citizen, HLB is the Halal business community. current and future business needs. We
committed to provide inclusive banking will continue to invest in our people,
services and accessible financial support LOOKING TO THE FUTURE products and services for the delivery
for all. Our transition towards digital of ever evolving sustainable solutions.
financial services and efforts to inculcate The road ahead will provide promising While there remains much to be done,
digital financial literacy will promote opportunities and complex challenges. we firmly believe that, as highlighted
greater access to financial services. The success of our business will rely on by the achievements outlined in this
Sustainability Report, we are well on our
way to a better and more resilient future.
Sustainability Report 2019 5
About
Hong Leong Bank
Quality Entrepreneurship Innovation Honour
To consistently provide goods To pursue management’s vision To nurture and be committed to To conduct business
and services of the highest and foster entrepreneurship innovation with honour
quality at competitive prices
Hong Leong Bank Berhad is a leading financial services company forming
part of the Hong Leong Group (“the Group”). Headquartered in Kuala Lumpur,
Malaysia, we are a community and customer-centred bank with a focus on
providing innovative digital solutions for the financial services industry.
Our extensive business network includes 254 branches in Malaysia, 1 branch each in Labuan Offshore, Singapore and Hong Kong,
4 branches and outlets in Vietnam, 6 branches in Cambodia and a representative office in Nanjing, China. We also operate over
1,100 Self-Service Terminals and a full-service call centre. Our brick-and-mortar operations are supplemented by Hong Leong Connect
(“HL Connect”) and Hong Leong ConnectFirst (“HL ConnectFirst”), our popular online and mobile banking services.
In addition to the conventional banking services we offer across the region, we have provided Islamic financial services to our Malaysian
home market since 2005 via our wholly owned subsidiary HLISB.
Guided by our ‘Digital at the Core’ ethos, our business strategy focuses on harnessing cutting-edge technologies to enhance the
customer’s banking experience. By integrating digital capabilities and processes into the traditional financial landscape, we have
developed a comprehensive range of conventional and Islamic financial products and services to become a leading provider of financial
services in Malaysia.
OUR GROUP VALUES
From humble beginnings as a building materials trading company founded in 1963, the Hong Leong Group has grown to become one
of the largest conglomerates in Southeast Asia. Guiding this growth has been a strong heritage of responsible business practices,
embodied today by our core values.
Our values anchor all actions as the Group seeks to navigate a rapidly changing business environment while balancing environmental,
economic and social considerations. We are confident that our progressive approach to integrate sustainability into our business
practices will allow the Group to continue to grow while creating positive impacts for stakeholders and contributing to our communities.
6 HONG LEONG BANK BERHAD
About
Hong Leong Bank
Human Resources Unity Progress Social Responsibility
To enhance quality of human To ensure oneness in purpose, To continuously improve To create wealth for the
resources – as the essence of harmony and friendship in the existing operations and betterment of society
position for expansion and new
management excellence pursuit of prosperity for all
opportunities
OUR BUSINESS
Personal Business and Global Markets Islamic Financial
Financial Corporate Services
Services Banking
Islamic Financial Services
Principal business Principal business Principal activities include are offered by
activities include providing activities include the assisting customers to Hong Leong Islamic Bank,
banking services and provision of banking meet their investment and a wholly owned subsidiary
financial products which solutions, such as deposit hedging needs through of HLB which is focused
include property, auto, and loan services covering various treasury products, on providing Shariah-
personal loans, payment business current account, ranging from foreign compliant Personal
products, share financing, interest-bearing auto- exchange, money market, Financial Services,
investment and insurance, sweep and fixed deposit, derivatives including Business and Corporate
as well as deposits and as well as financing interest rate swaps and Banking, and Global
remittance to individuals options ranging from interest rate swap options, Markets products and
and small businesses. asset acquisition, working to structured investment services.
capital, and debt capital products.
market structures, for our
corporate, commercial
and SME client base. HLB
also specialises in the
provision of transaction
banking solutions via cash
management solutions,
trade financing and cash
services.
For more information on HLB’s Key Business Pillars, refer to our 2019 Annual Report, under Our Business.
Sustainability Report 2019 7
About
Hong Leong Bank
REGIONAL FOOTPRINT
Our strong entrepreneurial roots and firm foundational values have helped
us to expand and embed ourselves within the ASEAN region and beyond.
MALAYSIA
254
branches (249 Conventional Branches and 5 HLISB Branches) as well as one branch in
Labuan Offshore.
CHINA
HONG KONG
CAMBODIA
VIETNAM
MALAYSIA
SINGAPORE
8 HONG LEONG BANK BERHAD
About
Hong Leong Bank
SINGAPORE HL Bank Singapore is a full banking license branch offering wealth management, treasury services, deposit
products and auto loan services. We have embarked on a transformational journey towards an integrated
1 business model, expanding into health banking, corporate banking for commercial clients and expanded
consumer lending propositions.
branch
INVESTMENTS IN CHINA
1 HLB was the first Malaysian bank to enter the Chinese banking sector in 2008 with a strategic investment
in Bank of Chengdu Co., Ltd (“Bank of Chengdu”) and has an 18% stake in the company. Bank of Chengdu
representative is a leading city commercial bank in Western and Central China based in Chengdu, the capital of Sichuan
office Province, which is listed on the Shanghai Stock Exchange. HLB also holds a 12% equity investment in Jin
Cheng Consumer Finance Company, a licensed consumer finance firm established in Chengdu in March
2010. In November 2013, HLB had set up a representative office in Nanjing which commenced operations in
February of the following year.
CAMBODIA In July 2013, Hong Leong Bank (Cambodia) PLC commenced operations as a 100% wholly owned subsidiary
providing comprehensive financial services covering consumer banking, business banking, global markets
6 and transaction banking services. With six full-fledged branches located in Phnom Penh, HLBCAM’s primary
customer focus is towards established SME and Commercial corporate customers, high net worth individuals,
branches affluent and emerging affluent as well as tech savvy young professionals.
VIETNAM Hong Leong Bank Vietnam Limited, a subsidiary of the Bank, commenced operations in October 2009.
HLBVN is a full-fledged commercial bank in Vietnam whose principal activities include provision of retail
4 loans, deposit products, wealth management, and priority banking services to individuals. Business banking
solutions include working capital and term loans, deposit and liability management products and trade
branches finance services as well as foreign exchange (“forex”) and money market services. To date HLBVN has a
branch and transaction office located in Ho Chi Minh City, and a branch each in Binh Duong and Hanoi.
HONG KONG The Bank’s branch in Hong Kong offers Treasury and Wealth Management products and services. It is also the
first bank in Hong Kong to launch an Islamic banking window and is now focused on resuming and building
1 its SME business base.
branch
For more detail on all our local and overseas branches, refer to our 2019 Annual Report, under Local and Overseas Branches.
Sustainability Report 2019 9
About
Hong Leong Bank
PARTNERSHIPS AND COLLABORATIONS
We are a member of a number of organisations and associations that enable us to strengthen our operating principles and help us fulfil
the responsibilities we have set for ourselves in terms of meeting the needs and expectations of our various stakeholders.
Association Benefits to our stakeholders
Federation Through our membership, we support Malaysian manufacturers and the nation’s growth and
of Malaysian modernisation.
Manufacturers
Ombudsman for Provides a channel for our customers to lodge complaints about our products and services
Financial Services and resolve them without incurring costly legal fees.
The Association of Through the association, we are actively involved in initiatives to promote and strengthen the
Banks in Malaysia commercial banking industry.
Asian Institute of AICB is committed to elevate the banking education landscape by enhancing the quality of
Chartered Bankers professionals who work within the industry. Since 2017, 1,071 employees have completed
(“AICB”) courses at AICB with the aim to provide them with extensive critical knowledge of the
banking sector as well as develop skills and abilities to make professional judgements and
informed decisions.
FIDE Forum Through the Forum, we keep abreast of best practices in corporate governance (“CG”), which
serves to strengthen our internal processes and our CG outcomes.
The Community This organisation promotes quality education for all and provides marginalised communities
Chest with funds and programmes that enhance the provision of education to children.
Cagamas Holdings We benefit from Cagamas’ Purchase With Recourse, Purchase Without Recourse, and
Berhad (“Cagamas”) Mortgage Guarantee activities. The company purchases mortgage loans/financings, personal
loans, and hire purchase and leasing debts from primary lenders and issues bonds and notes
to finance the purchases.
Payments Networks Through PayNet, our customers have access to cash at more than 11,000 terminals throughout
Malaysia Sdn Bhd the country.
(“PayNet”)
10 HONG LEONG BANK BERHAD
About
Hong Leong Bank
Association Benefits to our stakeholders
Credit Guarantee Enterprises, and particularly SMEs, without collateral have access to financing through CGC
Corporation (“CGC”) schemes such as BizJamin and the Green Technology Financing Scheme.
RAM Holdings We tap into services offered by RAM such as obtaining business profiles and company details
Berhad from Companies Commission of Malaysia (SSM), three-year financial summaries and other
critical information pertaining to the financial standing of companies and their directors.
ABM Investments We can subscribe to reports from ABM, an investment holdings company, which help us to
Sdn Bhd make investment decisions.
AFC Holdings We obtain important information on companies – including their registration details, banking
(Malaysia) Sdn Bhd payment history, litigation and trade reference – which helps us decide whether to extend
credit or conduct business with them.
Islamic Banking and This association allows us to keep track of Shariah developments, especially regarding finance
Finance Institute and banking. It also enhances the Shariah services we offer our customers.
Malaysia Sdn Bhd
ASEAN Finance ASEAN Finance Corporation engages in the design, build, integration and installation of
Corporation Limited integrated access control and security systems. It enables us to control, monitor and record
the flow of people, vehicles and goods in and out of our premises using access control and
security electronics.
The Association of HLISB is one of 26 member banks comprising 11 domestic banks and 6 development
Islamic Banking financial institutions. HLISB actively supports AIBIM to promote sound Islamic banking
Institutions Malaysia systems and practices in Malaysia, and to seek advice and assistance in the development of
(“AIBIM”) Islamic banking and finance at the local, regional and global levels while promoting public
awareness.
Financial Industry Through HLB’s collaboration with FINCO, one of the largest collective impact initiatives in
Collective Outreach Malaysia, the Bank supports the implementation of programmes for sustainable community
(“FINCO”) outreach through shared funding and resources for children and youth. The initiative
focuses on the enhancement of literacy development in the English language, providing life
aspiration, increasing financial literacy, enhancing education and supporting disaster relief
and preparedness.
Sustainability Report 2019 11
HOW SUSTAINABILITY
IS GOVERNED
Sustainability at Hong Leong Bank is driven by our Board of Directors. Members of the Board, and especially the Board Risk Management
Committee, oversee our sustainability and climate change-related actions and policies, ensuring they are aligned with our corporate
values and supportive of our business goals and vision.
Hong Leong Bank Sustainability Governance Chart FY2019
SUSTAINABILITY SUSTAINABILITY BOARD RISK BOARD OF
WORKING COMMITTEE STEERING COMMITTEE MANAGEMENT DIRECTORS
(Chaired by a member of the
(Chaired by GMD/ COMMITTEE
Steering Committee) CEO HLB)
Working Senior Board Board Guidance
Level Management Committee and Oversight
In FY2019, the Bank embedded Environmental Risk in the Risk Management 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 policies and
Allocation
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
Environmental risk is actual or potential threat of adverse effects on living organisms and environment by effluents, emissions, wastes,
resource depletion and other impacts arising out of an organisation’s activities. In our particular case, given our role in the economy, in
addition to our own activities, we are cognisant of the fact that people and companies we do business with also have an impact on the
environment, and hence, ensure that our lending and procurement policies, for example, take this risk into account.
For other key risks, further information can be found in our 2019 Annual Report, under Corporate Governance Overview, Risk Management & Internal Control Statement.
12 HONG LEONG BANK BERHAD
OUR
SUSTAINABILITY APPROACH
Our sustainability strategy represents HLB’s approach to integrating economic, environmental and social considerations into all that
we do. This encompasses our range of business activities within the sphere of traditional and Islamic banking, as well as our internal
operations and our impact on local communities and the environment at large. One of our guiding principles under this approach is
HLB’s promise to be “here for the long term” and our commitment to delivering long-lasting sustainable solutions and value creation.
Our approach to sustainability is anchored in our ability to build deeper and meaningful relationships with our stakeholders. By analysing
our impacts as a solution provider, we are able to holistically manage the economic, environmental, and social contexts in which we
operate. Beyond that, we are able to support the growth and success of our stakeholders through our products and services.
Materiality
In FY2019, our sustainability approach was guided by the materiality matrix established by the Bank in the previous year. This matrix
maps out the relative importance of ten material business topics according to the Bank’s business priorities and information provided
by customers, employees, suppliers and community development partners. By analysing the interests of both internal and external
stakeholders, our materiality process aims to facilitate the development of a strategy for long-term value creation which aligns with
the needs of each group.
OUR MATERIALITY MATRIX Legend: Most Important Very Important Important
SUSTAINABILITY TOPICS Influence on stakeholder assessments and decisions Most Important Cyber Security and Data Privacy Digital
IDENTIFIED Community Banking Innovation
• Digital Innovation Customer
• Customer Experience Experience
• Employee Experience
• Ethics, Integrity and Compliance Very Important Fair Banking Ethics, Integrity and Compliance
• Community Banking Responsible Lending
• Fair Banking Employee Experience
• Cyber Security and Data Privacy Supplier Assessment
• Responsible Lending
• Managing Our Environmental
Footprint
• Supplier Assessment
Important Managing Our
Environmental
Footprint
Important Very Important Most Important
Significance of EES Impacts
Sustainability Report 2019 13
OUR
SUSTAINABILITY APPROACH
OUR MATERIAL TOPICS
Core Principles Material Topic GRI Topic Topic Boundary Description
-
Digital HLB and HLISB We strive to innovate with digital products and
Innovation - services for greater customer accessibility and
convenience.
Customer
Customer Privacy Customers of HLB We focus on delivering products and services that
Experience and HLISB are relevant to our customers’ needs. We strive
Marketing and to create positive customer experiences in all of
Digital at Labelling our banking operations. This includes meeting our
the Core customers’ dynamic demands for innovative digital
Employment, banking services.
Labour/
Cyber Security Management HLB and HLISB We protect our organisation and customer data from
and Data Relations, unauthorised access or attacks aimed to exploit such
Privacy Training and information. This involves implementing measures
Education, to prevent, identify and address vulnerabilities and
Fair Banking Diversity, Equal threats to personal and confidential customer data.
Opportunity
HLB and HLISB We aim to provide products and services that
Socioeconomic meet our customers’ expectations and take into
Compliance, consideration the interests of both parties in terms
Anti Corruption of fairness in all aspects.
Employee Product Portfolio Employees of HLB We foster a high-performance culture and aim to
Experience and HLISB attract, develop and retain the next generation
of leaders to ensure we are fit for the future. Our
Fit-For-Future Ethics, Integrity HLB and HLISB employees are empowered to deliver and take
Workforce and Compliance ownership of results. We provide relevant learning
and development opportunities, competitive
rewards and recognition programmes and a
conducive work environment that ensures our
people are highly trained and well-equipped to
serve the community.
We are committed to meeting all applicable
regulations and core operational regulations
(e.g. Companies Commission of Malaysia and Bank
Negara Malaysia Regulations, Data Protection Acts,
Anti-Money Laundering Acts). We inculcate and
expect our employees to adhere to our values,
principles, standards and behavioural norms, as
outlined in our Code of Conduct and Ethics. This is
supported by a Whistleblowing Policy.
Responsible HLB, HLISB and We have policies, principles and codes of conduct
Lending/ Customers to ensure the interests of HLB are aligned with
Financing the interests of existing and potential customers.
These include audits to assess and screen for
Environmentally environmental and social risks, financial health
and Socially assessments of existing and potential customers,
Responsible and the provision of basic banking products to those
who cannot afford to pay for fees so that they can
participate in the financial system.
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SUSTAINABILITY APPROACH
Core Principles Material Topic GRI Topic Topic Boundary Description
HLB and HLISB
Managing Our Materials, We endeavour to reduce waste (such as paper and
Environmental Energy, HLB, HLISB and water) and use energy efficiently to reduce our
Footprint Emissions Suppliers greenhouse gas (“GHG”) emissions and carbon
footprint at all levels of our operations.
Supplier - HLB, HLISB and
Assessment Hong Leong We have an Independent Tender Review Committee
Environmentally Foundation that assess diligence reviews of suppliers’ financial
and Socially strength and performance, disaster recovery
Responsible and business continuity plans and cyber security
capabilities. Suppliers have to satisfy our zero
Community Local tolerance for corruption and unfair practices, whilst
Banking Communities also meeting our environmental assessment
requirements before we onboard them as business
SME Growth partners.
We seek to engage and to help local communities
develop their SME ecosystem via programmes
that have been designed to meet their specific
needs.
HLB Material Topics’ relevance to the United Nations Sustainable Development Goals (“UN SDGs”)
At HLB, we are mindful of global sustainability frameworks and agendas and recognise our responsibility to contextualise our material topics
in relation to these frameworks. Of the 17 UN SDGs, we have identified 8 of the goals that we are able to positively contribute to.
Our sustainability framework is aligned with our purpose and business strategy. In
addition to meeting the needs of our customers, our focus includes environmental
sustainability, financial inclusion and responsible lending. Through this, the Bank
supports the aims of the UN SDGs.
Zalman Zainal,
Chief Marketing and Communications Officer
Sustainability Report 2019 15
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SUSTAINABILITY APPROACH
SUSTAINABILITY RISK MANAGEMENT
Sustainability risk is the risk that the Bank is not able to achieve its sustainability goals. Sustainability risk management involves the
design and implementation of a risk management framework to mitigate the risks.
If the Bank is not able to achieve its sustainability goals, the impacts can be classified into three categories:
Impact Categories when Description
Sustainability Goals are
Not Achieved Failure to comply with sustainability regulations could result in sanction(s) imposed on the Bank.
Sanctions Failure of the Bank or the Bank’s customers to comply with sustainability regulations and/or
Financial Performance requirements could result in deteriorated financial performance of the Bank or its customers, which
may adversely impact the asset quality of the Bank’s portfolio.
Investor Preference Research demonstrates that the equity price performance of companies that incorporate sustainability
practices is better than other companies. Increasingly, institutional investors prefer to invest in
companies that embrace sustainability goals. The inability of the Bank to achieve its sustainability
goals could affect the Bank adversely in the equity market as investors choose companies that have
successfully achieved their sustainability goals.
HLB has further categorised the 10 sustainability topics into the matrix below. To support these initiatives, the Group Risk Management
division identified and assessed the impact on sustainability and the gaps in the current infrastructure of the Bank. Improvement plans
have been established and are in varying stages of implementation.
HIGH RISK MANAGEMENT Measure and Monitor
Quadrant indicates topics that have low
Measure and Monitor Immediate Enhancement gaps in current infrastructure and a high
impact on sustainability. These topics would
• Managing Our Environmental • Cyber Security and Data Privacy be continuously measured, monitored and
Footprint (Head Office) • Digital Innovation reported on periodically. Risk thresholds may
• Managing Our Environmental Footprint be applied where appropriate.
• Community Banking
• Responsible Lending (Branch, Head Office, middle and back Immediate Enhancement
• Customer Experience room operations) Quadrant indicates topics that have some gaps
• Ethics, Integrity, and Compliance in current infrastructure and a high impact
IMPACT ON SUSTAINABILITY • Fair Banking on sustainability. Areas of improvement are
required to be identified and immediate
Review As Conditions Evolve Build For Future actions taken.
• Supplier Assessment
• Employee Experience Review as Conditions Evolve
Quadrant indicates topics that have low gaps
LOW GAPS IN CURRENT INFRASTRUCTURE HIGH in current infrastructure and a low impact on
sustainability. This means that the topics will
be reviewed annually or as conditions evolve.
Build for Future
Quadrant indicates topics that have gaps in
current infrastructure and a low impact on
sustainability. Areas of improvement need to
be identified for these topics. It is important
for the Bank to ‘build for the future’.
16 HONG LEONG BANK BERHAD
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SUSTAINABILITY APPROACH
Measure, monitor and review Actionable Areas
HLB Sustainability Themes Sustainability Topics HLB Sustainability Themes Sustainability Topics
Digital at the core Digital at the core • Digital Innovation
Fit-For-Future workforce • Customer Experience • Cyber Security and
Environmentally and • Ethics, Integrity and
socially responsible Data Privacy
Compliance
SME growth • Ethics, Integrity and Fit-For-Future workforce • Employee Experience
Compliance Environmentally and • Managing Our
• Managing Our socially responsible Environmental Footprint
(Branch)
Environmental Footprint
(Head Office) • Supplier Assessment
• Responsible Lending
• Fair Banking
• Community Banking
• Community Banking
The Bank has allocated resources in these areas and will regularly measure and monitor outcomes.
SUSTAINABILITY INITIATIVES IMPLEMENTATION IN FY2019
The Bank has implemented various initiatives to continuously embed sustainability practices and risk management. Below are some
of the key initiatives:
• Enhanced our policies to embed sustainability risk management. This include the Bank’s credit policy to require sales and credit
staff to review the borrowers’ compliance with applicable environmental and social laws and review of the same at annual reviews
of loan/financing facilities to ensure ongoing compliance;
• Implemented supplier attestation to uphold the Bank’s sustainability values;
• Monitored the energy, emissions and water consumption in our two main corporate towers, Menara Hong Leong and PJ City;
• Monitored all waste generated in Menara Hong Leong and PJ City;
• Reduced bank-wide printing and paper consumption;
• Recruited a renewable energy industry specialist to focus on building internal knowledge to boost our capacity for renewable
energy financing;
• Developed a renewable energy industry handbook for BCB front line staff to equip them with the knowledge to better serve
industry stakeholders; and
• Conducted regular employee education and awareness programmes to promote waste reduction and practice the separation of
recyclable waste streams at Menara Hong Leong.
Sustainability Report 2019 17
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SUSTAINABILITY APPROACH
Stakeholder Engagement
To enhance our growth as an organisation, we need to be open to dialogue and engagement. This is because stakeholder needs are
constantly evolving. We have in place structured channels of engagement at HLB and continue to explore new ways of reaching out to
stakeholders.
Sustainability Topics
Digital Customer Employee Ethics, Integrity and Community
Innovation Experience Experience Compliance Banking
Fair Cyber Security Responsible Managing Our Supplier
Banking and Data Privacy Lending Environmental Footprint Assessment
Communication & Interaction Norms
Employee Customer Investor Incident Contingencies Whistleblowing Community News/
Engagement Advocacy Relations Management Measures Engagement Social Media
Management
Key Stakeholders
Employee Customers Shareholders/ Regulators Suppliers/ Communities Media
Investors Vendors
18 HONG LEONG BANK BERHAD
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SUSTAINABILITY APPROACH
Stakeholder Engagement Method Frequency of Engagement Interests
Employees
Customers Bank-wide Town Hall sessions Minimum twice yearly Our employees want to know that their
concerns are being heard by management
Group Managing Director Ongoing and want to see transparency in our
Bankwide communications business priorities. They also voice interest
in the availability of opportunities for
Social media and career fairs Ongoing upskilling and professional development,
programmes for employee retention,
Performance management Goal setting, mid-year review and final a conducive workplace as well as a
process year appraisal, supported by Individual systematic rewards programme.
Development Plan discussion
Learning and Development Ongoing
initiatives
Scholarship programme Ongoing as per request
Graduate programmes Based on business unit requirements
SmartUp bite-size learning 24/7
HALI helpdesk chatbot 24/7
Employee engagement Annually
survey, themed My Thoughts,
Our Future
Apple e-Touch appreciation Annual Apple-ciation Day
platform Quarterly-basis for Apple e-Touch
programme
HLB Games Ongoing
Whistleblowing channel Contact information published on HLB’s Our customers are interested in the
website as and when channeled by protection of their personal data and the
At our branches whistleblower to the Bank banking principles that are upheld by the
Self-Service Terminals Bank. They also prioritise user-friendly
Internet and mobile banking Daily systems and easily accessible banking
Customer surveys 24/7 products and services.
Telephone and email 24/7
Social media Daily
(e.g. HLB Facebook, Twitter, 24/7
LinkedIn, Youtube) 24/7
Customer events organised
by HLB Multiple engagements a year, including
Whistleblowing channel festive season celebrations
Contact information published on HLB’s
website as and when channeled by
whistleblower to the Bank
Sustainability Report 2019 19
OUR
SUSTAINABILITY APPROACH
Stakeholder Engagement Method Frequency of Engagement Interests
Investors
Regulators Annual General Meetings Annually Our investors want to know about the
(“AGMs”) stability of the Bank and the security
Suppliers At least 2 conferences a year of savings and deposits. They are also
Investor roadshows At least 120 investors and analysts in a interested in the enhancement of
year stakeholders’ value.
Meetings with investors and
analysts
Bank Negara Malaysia As and when required Industry regulators seek to ensure that the
(“BNM”) Bank is fully compliant with relevant laws
As and when required and regulations. This includes meeting the
Bursa Malaysia Yearly engagement expectations and requirements of banking
regulators and compliance with Shariah
Perbadanan Insurans Deposit As and when required requirements where applicable.
Malaysia (“PIDM”)
Securities Commission (“SC”)
Federation of Investment As and when required
Managers Malaysia (“FIMM”)
Personal Data Protection Act As and when required
(“PDPA”) Commissioner
Ombudsman for Financial As and when required
Services (“OFS”)
Supplier engagement rating Minimum once yearly Our suppliers and outsourcing service
process providers seek transparency in HLB’s
Monthly procurement process and want to ensure
e-Bidding (live auction) Monthly that they are fulfilling the Bank’s “service
level agreement”.
Tender process
Proof of Concept Based on project. Ongoing
engagements
Supplier onboarding Ongoing
programme
Supplier due diligence review Annually
Outsourcing Service Provider Ongoing
onboarding programme
Outsourcing Service Provider Annually
due diligence review
Supplier and vendor Contact information published on HLB’s
whistleblowing channel website as and when channeled by
whistleblower to the Bank
20 HONG LEONG BANK BERHAD
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SUSTAINABILITY APPROACH
Stakeholder Engagement Method Frequency of Engagement Interests
Ongoing through various activities, Community members are interested in the
SME segment engagement relationship manager, regional and availability and accessibility of funds and
programmes national managers programmes for those in need.
Monthly
Community Corporate Social Media groups require adequate
Responsibility events Monthly communication platforms and expect to
see proactive media engagement from
Hong Leong Foundationʼs Financial results: 2 times a year the Bank.
programmes Products/Services: As and when
required
Press conferences CSR: Minimum 2 times a year
Minimum 2 engagements a year
Media Ongoing basis
Daily communication
Media get-togethers
Media announcements
Social media
As one of our key communication platforms and a significant In FY2019, we introduced a Public Relations Policy (“PR Policy”)
stakeholder group, the media play a central role in the Bank’s to govern communication with this important stakeholder group.
communication and engagement strategy. We practice an The PR Policy, which is applicable to all HLB employees, provides
open-door approach to relations with local media and maintain essential guidance on matters relating to communication
close ties with key players within the industry to facilitate the and interaction with the media, taking into consideration the
dispersal of information about our business. Through press interests of customers, the company and the public in terms
conferences, media get-togethers, announcements and social of fairness and responsible communication. Guided by the PR
media platforms, we communicate updates regarding different Policy, HLB hopes to ensure the continuation of our strong and
aspects of our business operations, from workplace updates to meaningful relations with the media.
new products and services.
Financial Brand Power 100’s quarterly score publications of the highest scoring banks in relation to the Social Media performance (Facebook
likes, Twitter followers, YouTube views). HLB has not only enhanced its social media presence through an engaging YouTube presence but also
continues to use social media as a platform to educate the community on our products and services.
Sustainability Report 2019 21
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