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MohdTarmidziAhmadNordin

TanSriHajiAmbrinBuang

Tan Sri Ismail Adam

NorainiCheDan

NikMohdHasyudeenYusoff

Accountability80 Integrated Annual Report 2018

BOARD OFDIRECTORS

BIMB HOLDINGSBERHAD

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TAN SRI HAjI AMBRIN BUANGChairman/Independent Non-Executive Director

70 years old – MaleMalaysian

Date of Appointment:2 February 2018

Qualifications:• MasterinInternationalBusiness,UniversityofSouthCarolina(USA)

• DegreeinEconomics,UniversityofMalaya

Areas of Expertise: Auditor,PublicSector

Working Experience:Present:

Chairman,LingkaranTransKotaHoldingsBerhad

Previous:

• AuditorGeneralofMalaysia

• SecretaryGeneral,MinistryofEducation

• StateSecretary,SelangorStateGovernment

• SeniorGeneralManager,KLInternationalAirportBerhad

• MinisterofEconomicsAffairs,MalaysianEmbassyinTokyo,Japan

• DeputyDirector,NationalInstituteofPublicAdministration

• DeputyDirector,MalaysianTimberIndustryBoard

• DeputyDirector,SmallScaleIndustry,MinistryofInternationalTradeandIndustry

• DeputyDirector,IndustriesDivision,MinistryofInternationalTradeandIndustry

• PrivateSecretary,MinistryofInternationalTradeandIndustry

Directorship of Other Public Companies: • LingkaranTransKotaHoldingsBerhad

• GamudaBerhad

Membership of Board Committees in BIMB Holdings Berhad: None

Meeting Attendance: 8of8BoardMeetingsheldintheFinancialYearEnded 31December2018

Declaration of Interest:He has no conviction for offences within the past 5 years. He has no familyrelationshipwithanydirectorand/ormajorshareholderofBHB, and has no conflict of interest in BHB.

BOARD OF DIRECTORS’PROFILES

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TAN SRI ISMAIL ADAMSenior Independent Non-Executive Director


Date of Appointment: 3 January 2011

Qualifications:• MasterofArts(Economics),VanderbiltUniversity(USA)

• BachelorofArts(Hons),UniversityofMalaya

• DiplomainPublicAdministration(Post-BaccalaureateDiploma), UniversityofMalaya

• AdvancedManagementProgram,HarvardBusinessSchool

Areas of Expertise: • PublicAdministration&Management,HumanResourcesManagement

• OrganisationalTransformation


CompanyDirector

Previous:

• GroupChairman,PrasaranaMalaysiaBerhad

• DirectorGeneral,PublicService,Malaysia

• SecretaryGeneral,MinistryofHealth

• DirectorGeneral,NationalProductivityCorporation

• ChiefAdministrationOfficer,DepartmentofStatistics

• SeniorProjectOfficer,NationalInstituteofPublicAdministration(“INTAN”)

• AssistantDirectorofTrade,MinistryofTradeandIndustry

Directorship of Other Public Companies: WestportsHoldingsBerhad

Membership of Board Committees in BIMB Holdings Berhad: • Chairman,NominationandRemunerationCommittee

• Member,AuditandExaminationCommittee

• Member,BoardRiskCommittee

Meeting Attendance: 10of10BoardMeetingsheldintheFinancialYearEnded31December2018

Declaration of Interest:He has no conviction for offences within the past 5 years. He has no family relationshipwithanydirectorand/ormajorshareholderofBHB,andhasnoconflict of interest in BHB.


MOHD TARMIDzI AHMAD NORDINIndependent Non-Executive Director


Date of Appointment:29 June 2015

Qualifications:• Associate,CharteredInsuranceInstitute(UK)(“ACII”)

• Fellow,MalaysianInsuranceInstitute(“FMII”)

• MBAinIslamicFinance,InternationalIslamicUniversityMalaysia(“IIUM”)

Areas of Expertise: Insurance, Takaful and Islamic Finance


CompanyDirector

Previous:

• ChiefExecutiveOfficer,EtiqaTakafulBerhad

• AssociateLecture,MalaysiaInsuranceInstitute

• Director,GrahamMiller(M)SdnBhd

• Head,GeneralTakafulDivision,SyarikatTakafulMalaysiaKeluargaBerhad(formerlyknownasSyarikatTakafulMalaysiaBerhad)

Directorship of Other Public Companies: Syarikat Takaful Malaysia Keluarga Berhad (formerly known as Syarikat Takaful MalaysiaBerhad)

Membership of Board Committees in BIMB Holdings Berhad: • Chairman,BoardRiskCommittee

• Member,AuditandExaminationCommittee

• Member,NominationandRemunerationCommittee


Declaration of Interest:He has no conviction for offences within the past 5 years. Hehasnofamilyrelationshipwithanydirectorand/ormajor shareholder of BHB, and has no conflict of interest in BHB.


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NORAINI CHE DANIndependent Non-Executive Director

63 years old – FemaleMalaysian

Date of Appointment: 1 April 2016

Qualifications:• Member,MalaysianInstituteofAccountants(“MIA”)

• Member,MalaysianInstituteofCertifiedPublicAccountants(“MICPA”)

• BachelorofEcons(Hons),UniversityofManchester,UnitedKingdom

Areas of Expertise: Accounting and Finance

Work Experience & Positions:Present:

CompanyDirector

Previous:

• VicePresident,FinanceofMISCBerhad

• Served15yearswithPerbadananNasionalBerhad(“PERNAS”)invarioussenior positions including that of Group General Manager, Finance

• AuditSenioratHanafiah,Raslan&Mohamed

Directorship of Other Public Companies: • SPSetiaBerhad

• TenagaNasionalBerhad

• BankIslamMalaysiaBerhad

Membership of Board Committees in BIMB Holdings Berhad: • Chairman,AuditandExaminationCommittee




Declaration of Interest:She has no conviction for offences within the past 5 years. She has no family relationshipwithanydirectorand/ormajorshareholderofBHB,andhasnoconflict of interest in BHB.


Date of Appointment:1 June 2018

Qualifications:• Member,MalaysianInstituteofAccountants(“MIA”)

• Fellow,CPAAustralia

• AdvancedBusinessManagementProgram,IMDInternational,Switzerland

• BachelorofBusiness,CurtinUniversityofTechnology,Australia

Areas of Expertise: Accounting

Work Experience & Positions:Present:

Director,InovastraCapitalSdnBhd

Previous:

• ExecutiveDirector,MarketandCorporateSupervision, Securities Commission Malaysia

• ExecutiveChairman,AuditOversightBoard,SecuritiesCommissionMalaysia

• Chairman,Khairuddin,Hasyudeen&Razi,CharteredAccountants

Directorship of Other Public Companies: • BankIslamMalaysiaBerhad

• BIMBInvestmentManagementBerhad

• AlHijrahMediaCorporation

• CagamasHoldingsBerhad

• MalaysiaProfessionalAccountancyCenter(“MyPAC”)

• FederationofInvestmentManagersMalaysia(“FIMM”)

• THPlantationsBerhad

Membership of Board Committees in BIMB Holdings Berhad: • Member,AuditandExaminationCommittee




Declaration of Interest:He has no conviction for offences within the past 5 years. He has no family relationshipwithanydirectorand/ormajorshareholderofBHB,andhasnoconflict of interest in BHB.

NIK MOHD HASyUDEEN yUSOFFIndependent Non-Executive Director



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CHAIRMEN OFSHARIAH COMMITTEES

PROFESSOR DATO’ DR AHMAD HIDAyAT BUANGChairman of the Shariah Supervisory Council of Bank Islam Malaysia Berhad

Date of Appointment:• Chairmansince1April2015

• Membersince1April2011

Qualifications:• BachelorofShariah,UniversityofMalaya

• MasterofLaw(SchoolofOrientalandAfricanStudies), UniversityofLondon

• DoctorofPhilosophy(SchoolofOrientalandAfricanStudies),UniversityofLondon

Areas of Expertise:IslamicCommercialLaws(FiqhAl-Muamalat)


• Chairman,ShariahSupervisoryCouncil, Bank Islam Malaysia Berhad

• Chairman,ShariahCommittee, Takaful Ikhlas Berhad

• Professor,DepartmentofShariahandLaw,AcademyofIslamicStudies,UniversityofMalaya

Previous:

• Director,AcademyofIslamicStudies, UniversityofMalaya

• ShariahAdvisor,CIMBBankBerhad

• ShariahAdvisor,OCBCBank

• ShariahAdvisor,CommerceTijariBank

• ShariahAdvisor,AmanahRayaUnitTrustManagement Sdn Bhd

• ShariahAdvisor,ASMMARAUnitTrustManagement Berhad

• ShariahAdvisor,I-FreeCapitalPteLtd(Singapore)

• ShariahAdvisor,Bumiputra-CommerceTrustee Sdn Bhd

• ShariahAdvisor,PerbadananUsahawan NasionalBerhad

• Member,ShariahWorkingCommitteeforIslamicBankingandTakaful,BankNegaraMalaysia

• Member,IslamicEducationCoordinationAdvisoryCouncil, Council of Rulers Malaysia

• DeputyDirector,ResearchandDevelopment,AcademyofIslamicStudies,UniversityofMalaya

• Head,DepartmentofShariahandLaw, AcademyofIslamicStudies,UniversityofMalaya

Directorship of Public Companies: Nil

Membership of Committees in subsidiaries: Nil

Meeting Attendance:8/8

Declaration of Interest:He has no conviction for offences within the past 5 years. He also has no family relationship with any directorsand/ormajorshareholdersofBHB,andhasno conflict of interest in BHB.


CHAIRMEN OFSHARIAH COMMITTEES


• Chairman,ShariahAdvisoryBody,SyarikatTakafulMalaysia Keluarga Berhad

• Dean,AcademyofContemporaryIslamicStudies(“ACIS”),UniversitiTeknologiMARA(“UiTM”),ShahAlam

• Member,CurriculumReviewCommitteeforMuamalat, Takaful, Islamic Banking and Finance of the Ministry of Higher Education, Malaysia

• Member,DeanCouncilofIslamicStudies, HigherLearningInstitutionsofMalaysia

• Member,ShariahCommittee,AmanahSaham DarulIman(“ASDI”)

Previous:

• Member,ShariahCommittee,HongLeongIslamic Bank Berhad

• Member,ShariahCommittee,HongLeongTokyo MarineTakaful(“HLTMT”)

• Director,ZakatResearchInstituteofMalaysia(“IKaZ”),UniversitiTeknologiMARA

• DeputyDirector,CentreforIslamicThoughtandUnderstanding(“CITU”),UniversitiTeknologiMARA

• CoordinatorofIslamicSocialScience, UniversitiTeknologiMARA,ShahAlam

• HeadofZakatUnit,UniversitiTeknologiMARA, Shah Alam

Directorship in Public Companies: Nil


Meeting Attendance: 5/5

Declaration of Interest:He has no conviction for offences within the past 5 years. He also has no family relationship with any directorsand/ormajorshareholdersofBHB,andhasnoconflict of interest in BHB.

PROFESSOR DR MUHAMAD RAHIMI OSMANChairman, Shariah Advisory Body, Syarikat Takaful Malaysia Keluarga Berhad

Date of Appointment:• Chairmansince1January2017• Membersince12January2010Qualifications:• BachelorofShariah(Hons),UniversityofMalaya• MasterinIslamicEconomics,UniversityofYarmouk,Jordan• DoctorofPhilosophy(PhD)inIslamicBanking,International

IslamicUniversityMalaysiaAreas of Expertise:• IslamicCommercialLaws(FiqhAl-Muamalat)• IslamicEconomics• IslamicBankingandTakaful• HalalManagement

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Present:

• EmeritusProfessor,AcademyofIslamicStudies, UniversityofMalaya

• Chairman,ShariahAdvisoryCommittee, BIMB Securities Sdn Bhd

• Chairman,ShariahCommittee,PublicIslamicBank Berhad(“PIBB”)

• Chairman,ShariahCommittee,AIAPublicTakafulBerhad• Chairman,MajlisDakwahNegara(“MDN”)• DeputyChairman,LembagaPenasihatPenyelarasanPelajaran

danPendidikanAgamaIslam(“LEPAI”)• Member,MalaysianInstituteofIntegrity• Member(NonIndependentNon-ExecutiveDirector),

BoardofDirectors,PIBB• Member,BoardofTrustees,YayasanDakwahIslamiah

Malaysia(“YADIM”)• Member,ShariahAdvisoryBoardofas-SalihinTrustee• ResearchFellow,InternationalShari’ahResearchAcademy

forIslamicFinance(“ISRA”)• ConsultantofForeignAffairs,Al-MadinahInternational

University(“MEDIU”)• ApprovedIndividualShariahAdvisor(bytheSecurities

CommissionMalaysia)• Member,ShariahAdvisoryPanel,AmanahSaham

NasionalBerhad• Member,ShariahCommittee,AmanahMutualBerhad

Previous:

• Dean,FacultyofShariah,UniversityofMalaya• Director,AcademyofIslamicStudies,UniversityofMalaya• Professor,DepartmentofFiqhandUsul,UniversityofMalaya• ProfessorandDean,KuliyyahofIslamicRevealedKnowledge

andHumanSciences,InternationalIslamicUniversityMalaysia• Dean,InternationalInstituteofIslamicThoughtand

Civilization(“ISTAC”),InternationalIslamicUniversityMalaysia• Commissioner,TheHumanRightsCommissionofMalaysia

(“SUHAKAM”)• Member,JemaahUlamaNegeriKelantan,MajlisAgama

Islam dan Adat Istiadat Melayu Kelantan• Panelmember,ShariahCourtofAppealKelantan• BoardmemberofDewanBahasaandPustaka• BoardmemberofPemegangAmanahYayasan

PembangunanEkonomiIslamMalaysia(“YaPEIM”)

Directorship in Public Companies: Nil


Meeting Attendance: 4/4

Declaration of Interest:He has no conviction for offences within the past 5 years. He also has no family relationship with any directors and/or majorshareholdersofBHB,andhasnoconflictofinterest in BHB.

PROFESSOR EMERITUS DATO’ PADUKA DR MAHMOOD zUHDI HAjI ABDUL MAjIDChairman, Shariah Advisory Committee, BIMB Securities Sdn Bhd

Date of Appointment:• Chairmansince1September2016• MembersinceJune2008Qualifications:• PhD(Shariah)UniversityofMalaya• MPhil(SoutheastAsianStudies)UniversityofKent,England• MAShariah,UniversityAl-Azhar,Cairo• DipEdUniversityAinShams,Cairo• BachelorDegreeinShariah&Law,IslamicCentreforHigher

StudiesAreas of Expertise:• HistoryofIslamicLaw• PrinciplesofIslamicJurisprudence• AdministrationofIslamicCriminalLaw


CEOs OfTHE GROUP

MOHD MUAzzAM MOHAMEDChiefExecutiveOfficer •BIMBHoldingsBerhad •BankIslamMalaysiaBerhad

45 years old – Male Malaysian

Date of Appointment:5December2018

Qualifications:• MemberoftheMalaysianInstituteofAccountants(“MIA”)• MemberoftheMalaysianInstituteofCertifiedPublic

Accountants(“MICPA”)• MemberoftheCertifiedInformationSystemAuditor

(“ISACA”)• MemberoftheCharteredInstituteofPublicFinanceand

Accountancy(“CIPFA”)• BachelorofAccounting,InternationalIslamicUniversity

Malaysia

Areas of Expertise:Finance, Audit and Consulting

Work Experience:

Present:• ChiefExecutiveOfficer,BIMBHoldingsBerhad• ChiefExecutiveOfficer,BankIslamMalaysiaBerhad

Previous:• ChiefFinancialOfficer,BankIslamMalaysiaBerhad• Director,BIMBSecuritiesSdnBhd• Director,BIMBSecurities(Holdings)SdnBhd• AlternateDirector,AmanaBankPLC(SriLanka)• Director,Al-WakalahNominees(Tempatan)SdnBhd• Partner,KPMGMalaysia• ExecutiveDirector,KPMGManagementConsulting

Directorship in Other Public Companies:Nil

Declaration of Interest:He has no conviction for offences within the past 5 years. Hehasnofamilyrelationshipwithanydirectorand/ormajorshareholder of BHB, and has no conflict of interest in BHB.

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DATO’ SRI MOHAMED HASSAN KAMILGroupChiefExecutiveOfficer, Syarikat Takaful Malaysia Keluarga Berhad (formerlyknownasSyarikatTakafulMalaysiaBerhad)


Date of Appointment:• 1April2007astheGroupManagingDirector• 25April2017redesignatedastheGroupChiefExecutiveOfficer

Qualifications:• Fellow,SocietyofActuaries,USA• Fellow,ActuarialSocietyofMalaysia• CharteredLifeUnderwriter,AmericanCollege,UnitedStates• MasterinBusinessAdministration,UniversityofIowa,UnitedStates• BachelorofScienceinActuarialScience,UniversityofIowa,United

States

Areas of Expertise:Actuarial and Insurance/Takaful

Working Experience:

Present:• GroupChiefExecutiveOfficer,SyarikatTakafulMalaysiaKeluarga

Berhad(formerlyknownasSyarikatTakafulMalaysiaBerhad)• ChairmanoftheBoardofCommissioners,PTAsuransiTakaful

KeluargaandPTSyarikatTakafulIndonesia

Previous:• DeputyGeneralManager,PTAIAIndonesia• SeniorVicePresidentandChiefActuary,INGInsuranceBerhad• DeputyGeneralManager,MalaysianNationalInsurance

Directorship in Public Companies:Nil

Declaration of Interest:He has no conviction for offences within the past 5 years. He has no familyrelationshipwithanydirectorsand/ormajorshareholdersofBHB,and has no conflict of interest in BHB.

CEOs OFTHE GROUP


RASHID ISMAILChiefExecutiveOfficer/ExecutiveDirector,BIMBSecuritiesSdnBhd


Date of Appointment:10 January 2011

Qualifications:• CertifiedPractisingAccountants,CPAAustralia• CharteredAccountant,MalaysianInstituteofAccountants(“MIA”)• BachelorofBusiness(majorinAccounting),EdithCowanUniversity,Australia• DiplomainAccountancy,UniversitiTeknologiMARA(“UiTM”)

Areas of Expertise:• Stockbroking(IslamicandConventional)• Accounting• IndustrialProperty• StrategicPlanning

Working Experience:Present:• ChiefExecutiveOfficer/ExecutiveDirector,BIMBSecuritiesSdnBhd• Director,BIMSECNominees(Tempatan)SdnBhd• Director,BIMSECNominees(Asing)SdnBhd• Member,BoardofTrusteeforBumiputeraDealer’sRepresentative

EducationFund(“BDREF”),SecuritiesIndustryDevelopmentCorporation(“SIDC”)• Member,BoardofTrusteeforBumiputeraTradingFund(“BTF”),

SecuritiesIndustryDevelopmentCorporation(“SIDC”)Previous:• Chairman,AssociationofStockbrokingCompaniesinMalaysia(“ASCM”)• Member,Bursa’sSecuritiesMarketOperationsCommittee(“SMOC”),

Bursa Malaysia Securities• Member,Bursa’sMarketParticipantBoardCommittee(“MPC”),

Bursa Malaysia Berhad• ChiefExecutiveOfficer,MIDFPropertyBerhad• Director,AmanahAscottProperties&AmanahScottsSdnBhd• Head,StrategicPlanning,MIDFBerhad• Director,MIDFConsultancyandCorporateServices,AmanahVentures

SdnBhdandAmanahPropertyTrustManagerSdnBhd• ChiefExecutiveOfficer&ExecutiveDirectorOperations,

MIDFSismaSecuritiesSdnBhd• GeneralManager&CompanySecretary,PBSecuritiesSdnBhd• GeneralManager,Seagroatt&Campbell• Head,ComputerSection,TreasuryDepartment,

UnitedMalayanBankingCorporation• Head,MoneyMarketProcessing,UnitedMalayanBankingCorporation


Declaration of Interest:He has no conviction for offences within the past 5 years. He has nofamilyrelationshipwithanydirectorsand/ormajorshareholdersof BHB, and has no conflict of interest in BHB.

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1. mohd muazzam mohamed ChiefExecutiveOfficer

2. mohamad azlan mohamad alam ChiefOperationsOfficer

3. malkit Singh maan GroupChiefFinancialOfficer

4. maria mat Said Group Company Secretary & Regulatory Compliance

5. Razman Ismail Head, Group Human Capital

6. mohd Nazri chik GroupChiefShariahOfficer

7. wan Norkhairi wan Samad Head, Group Corporate Communications


MALKIT SINGH MAANGroupChiefFinancialOfficer


Date of Appointment:11 May 2015

Qualifications:• BachelorofBusiness(Accounting)from

CurtinUniversityofTechnology,Perth,Australia

• MasterofBusinessAdministration(“MBA”)fromVictoriaUniversity,Melbourne, Australia

• FellowMember(FCPA)ofAustralianSocietyofCPAs

• CharteredAccountant,MalaysianInstitute of Accountants

Working Experience:Present:• GroupChiefFinancialOfficer,

BIMB Holdings Berhad

Previous:• ChiefFinancialOfficer,

Bank Islam Malaysia Berhad• ChiefFinancialOfficer,

ABNAMROBank(M)Berhad• VicePresident,FinanceDivision,

RHB Bank Berhad• AssistantVicePresident,

ThePacificBankBerhad

Directorship in Public Companies:BIMB Investment Management Berhad

Declaration of Interest: He has no conviction for offences within the past 5 years. He has no family relationship with any directors and/or majorshareholdersofBHB,andhasnoconflict of interest in BHB.

MARIA MAT SAIDGroup Company Secretary & Regulatory Compliance


Date of Appointment:31December2009

Qualifications:• BachelorofLaw,UniversityofMalaya

• LicensedCompanySecretary,Companies Commission of Malaysia


• GroupCompanySecretary&RegulatoryCompliance, BIMB Holdings Berhad

• Head,LegalandSecretarialDivision,Bank Islam Malaysia Berhad

Previous:

• SeniorVicePresident,TahanInsuranceMalaysia Berhad

• SeniorManager,LOFSA

• CompanySecretary/LegalManager,DanamodalNasionalBerhad

• LegalOfficer,LegalDepartmentofBankNegaraMalaysia


Declaration of Interest: She has no conviction for offences within the past 5 years. She has no family relationship with any directors and/or majorshareholdersofBHB,andhasnoconflict of interest in BHB.

MOHAMAD AzLAN MOHAMAD ALAMChiefOperationsOfficer


Date of Appointment:27 April 2015

Qualifications:• Member,CharteredAssociationsof

CertifiedAccountants(“ACCA”)• CharteredAccountantsofMalaysian

InstituteofAccountants(“MIA”)• Member,InstituteofChartered

SecretariesandAdministration(“ICSA”)• AdvancedDiplomainAccountancy,

MARAInstituteofTechnology(“ITM”)

Working Experience:Present:• ChiefOperationsOfficer,

BIMB Holdings Berhad

Previous:• ChiefFinancialOfficer,

BIMB Holdings Berhad• ChiefRiskOfficer,RHBIslamicBank

Berhad• ChiefFinancialOfficer,RHBIslamic

Bank Berhad• VicePresident,Finance&

AdministrationIslamicBankingDivision,RHB Bank Berhad

• FinancialControllercumCompanySecretary, Malaysian Issuing House Sdn Bhd

• AssistantManager,BusinessAssurance,Coopers&LybrandMalaysia


Declaration of Interest: He has no conviction for offences within the past 5 years. He has no family relationship with any directors and/or majorshareholdersofBHB,andhasnoconflict of interest in BHB.

MANAGEMENTPROFILES

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MOHD NAzRI CHIKGroupChiefShariahOfficer



Qualifications:• Master’sDegree,Shariah(IslamicJurisprudence),

UniversityofMalaya• Bachelor’sDegreeinShariah(IslamicJurisprudence),

UniversityofMalaya• CertifiedShariahAdviserandAuditor(CSAA-AAOIFI)• CertificationinInternalAuditingforFinancial

Institutions(CIAFIN-AICB)PasswithDistinction

Working Experience:Present:• GroupChiefShariahOfficer,BIMBHoldingsBerhad• ChiefShariahOfficer,BankIslamMalaysiaBerhad• RegisteredShariahAdviser(withtheSecurities

CommissionofMalaysia)• DeputyChairman,ShariahSupervisoryCouncil,Amana

BankLimited,SriLanka• Member,BoardofDirectors,TerengganuIncorporated

Sdn Bhd• Member,ShariahAdvisoryCommittee,BIMBSecurities

Sdn Bhd• ShariahAdviser,MalaysiaProfessionalAccountancy

Centre(“MyPAC”)• Member,WaqfandRahnuCommittees,MajlisAgama

Islam dan Adat Istiadat Melayu Terengganu• Member,BaitulmalCommittee,MajlisAgamaIslam

Selangor• AccreditationPaneloftheFinanceAccreditation

Agency• Member,ProfessionalDevelopmentCommittee,

Association of Shariah Advisors Malaysia• DistinguishedTrainerforIslamicBankingandFinance

Institute of Malaysia

Previous:• ExternalShariahAdvisor,GhazanfarBank,Afghanistan• ShariahAuditManager,NoorInvestmentGroup,

Dubai,UAE


Declaration of Interest:He has no conviction for offences within the past 5 years. He has no family relationship with any directors and/or majorshareholdersofBHB,andhasnoconflictofinterestin BHB.

wAN NORKHAIRI wAN SAMADHead, Group Corporate Communications



Qualifications:• DegreeinMassCommunications

(PublicRelations),UniversitiTeknologi MARA


• Head,GroupCorporateCommunications, BIMB Holdings Berhad and Bank Islam Malaysia Berhad

Previous:

• Morethan18yearsofworkingexperience in Corporate Communications at Maybank


Declaration of Interest: She has no conviction for offences within the past 5 years. She has no family relationship with any directors and/ormajorshareholdersofBHB,and has no conflict of interest in BHB.

RAzMAN ISMAILHead, Group Human Capital



Qualifications:• Bachelor’sDegreeinManagement

(majorinHumanResourcesandaminorinCommunications),UniversitiSainsMalaysia.

• INSEAD

Working Experience:Present:• Head,GroupHumanCapital,

BIMB Holdings Berhad• Head,HumanResourcesDivision,

Bank Islam Malaysia Berhad• ChairmanofFarihanCorporation

Sdn Bhd (subsidiary of Bank Islam MalaysiaBerhad)

Previous:• Director,GroupHumanResources

CIMB Bank• Manager,Recruitmentand

Scholarship,BankNegaraMalaysia• PrincipalConsultant,IBMMalaysia• SeniorConsultant,PwCMalaysia


Declaration of Interest: He has no conviction for offences within the past 5 years. He has no family relationship with any directors and/ormajorshareholdersofBHB,and has no conflict of interest in BHB.


AND ‘SALAM SEjAHTERA’IN CARRyING OUT THE ROLES AND RESPONSIBILITIES OF THE SHARIAH COMMITTEES, AS PRESCRIBED IN THE POLICy DOCUMENTS AND GUIDELINES ISSUED By THE REGULATORS NAMELy BANK NEGARA MALAySIA AND THE BURSA MALAySIA SECURITIES BERHAD FOR THE RESPECTIvE FINANCIAL INDUSTRIES AND IN COMPLIANCE wITH OUR LETTERS OF APPOINTMENT, wE ON BEHALF OF THE SHARIAH COMMITTEES OF THE RESPECTIvE COMPANIES wITHIN BIMB HOLDINGS BERHAD GROUP, NAMELy BANK ISLAM MALAySIA BERHAD, SyARIKAT TAKAFUL MALAySIA KELUARGA BERHAD AND BIMB SECURITIES SDN BHD HEREBy SUBMIT THE FOLLOwING CONFIRMATION FOR THE FINANCIAL yEAR ENDED 31 DECEMBER 2018.

SHARIAH-COMPLIANTCONFIRMATION STATEMENT

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The Management of the Companies are responsible to ensure that their conducts and businesses are in accordance with the Shariah rules and principles, and it is our responsibility to form an independent opinion based on our review on the respective Companies and thenceforth produce this Confirmation Statement.

Wehavereviewed,interalia,products,transactions,services, processes and documents of the respective Companies to ensure its compliance with the Shariah. In performing our roles and responsibilities, we had obtained all the information and explanation which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the respective Companies have complied with the Shariah.

At the Management level, the Companies have implemented Shariah governance practices in compliance with guidelines that are relevant to the respective industries, which include Shariah Governance Framework for Islamic Financial Institutions issued by Bank Negara Malaysia andBest Practices in Islamic Stockbroking ServicesUndertaken by Participating Organisation issuedby the Bursa Malaysia Securities Berhad. Such governance practices include the establishment of internal Shariah compliance functions encompassing audit, risk management review and research to facilitate and support new product development activities, Shariah training, management of Shariah non-compliancerisks,Shariahauditandreviewandthe necessary coordination with us on matters that require our decision.

We have assessed the Shariah review and Shariahaudit reports presented to us and have examined, on a test basis, the transactions, relevant documentation

and procedures adopted by the Management of the respective Companies. Our assessments wereplanned and performed in a way that would ensure all the information and explanation considered necessary were obtained in order to provide us with sufficient evidence to give reasonable assurance that the respective Companies have not violated the Shariah.

WealsoconfirmthateveryincidentofShariahnon-compliant event has been brought to our attention and we have subsequently noted that the corrective as well as preventive measures have been taken by the respective Companies in order to avoid the same from occurring in the future. Any Shariah non-compliantincomehasalsobeendisposedoftocharitable causes upon approval by us.

WehadalsoreviewedthecomputationandpaymentofZakatbytherespectiveCompanies.

In relation to the above, based on the information provided and disclosed to us, we, the Chairmen of the Shariah Committees of the said respective Companies within BIMB Holdings Berhad, do hereby confirm that, to the best of our knowledge, the businesses, operations and activities of the respective Companies for the year ended 31 December 2018 had been conducted inconformity with Shariah.

We bear witness only to what we know, and we could not well guard against the unseen! (Surah Yusuf, verse:81)

Allah knows best.

PROFESSOR DATO’ DR AHMAD HIDAyAT BUANGChairman, Shariah Supervisory Council of Bank Islam Malaysia Berhad

PROFESSOR DR MUHAMMAD RAHIMI OSMANChairman, Shariah Advisory Body of Syarikat Takaful Malaysia Keluarga Berhad

PROFESSOR EMERITUS DATO’ DR MAHMOOD zUHDI HAjI ABDUL MAjIDChairman, Shariah Advisory Committee of BIMB Securities Sdn Bhd


OUR CG Is A REfLECTION Of OUR VALUE, sysTEM AND ENCOMPAssEs OUR CULTURE, POLICIEs AND RELATIONsHIP WITH OUR sTAKEHOLDERs. INTEGRITy AND TRANsPARENCy ARE KEy TO OUR CG PRACTICEs TO ENsURE THAT WE GAIN AND RETAIN THE TRUsT Of OUR sTAKEHOLDERs AT ALL TIMEs. BHB Is sUBJECT TO AN ExTENsIVE RANGE Of LEGAL, REGULATORy AND GOVERNANCE REQUIREMENTs AND Is COMMITTED TO OBsERVING THE REQUIREMENTs APPLICABLE TO PUBLICLy LIsTED COMPANIEs IN MALAysIA. THE BOARD Is CONsCIOUs THAT CG BEsT PRACTICE CONTINUE TO EVOLVE AND REMAIN ALERT AND MINDfUL Of REsPONDING TO ALL CG DEVELOPMENTs.THE BOARD Is REsPONsIBLE fOR THE LEADERsHIP, OVERsIGHT, CONTROL, DEVELOPMENT AND LONG-TERM sUCCEss Of BHB AND ITs GROUP AND ALsO fOR INsTILLING THE APPROPRIATE CULTURE, VALUEs AND BEHAVIOUR THROUGHOUT THE ORGANIsATION.

ThisCGOverviewStatementispreparedincompliancewith Bursa Malaysia Securities Berhad Main Market ListingRequirementsand is tobereadtogetherwiththe CG Report 2018 of the Company which is available onBIMBHoldingsBerhad’swebsite:

http://www.bimbholdings.com/about-us/corporate-governance/CG-report 2018

The CG Report 2018 provides the details on how the CompanyhasappliedeachPracticeassetout in theMCCG 2017 during the financial year 2018.

CORPORATE GOvERNANCEOvERvIEw STATEMENT

CORPORATE GOVERNANCE (“CG”) AT BHB

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LEADERsHIP

• BoardCharter

• RolesandResponsibilitiesoftheBoard

• RolesandResponsibilitiesoftheBoardCommittee

• AuthorityandDelegation

• Director’sHandbook

• BoardCodeofConductandEthics

• Whistle-BlowingPolicy

• VotingPolicy

• IndemnificationofDirectorsandOfficers

• AccesstoInformation

• ConflictofInterest

EffECTIVENEss

• BoardEvaluation

• BoardActivities

• BoardMeeting&Attendance

• BoardCompositionandDiversity

• BoardCommitment

• Director’sRemunerationPolicy

AUDIT

• AuditandExaminationCommittee

• InternalAudit

RIsK MANAGEMENT

• BoardRiskCommittee

• RiskManagement

• InternalControlFramework

INTEGRITy

• CorporateDisclosurePolicy

sTAKEHOLDERs

• InvestorRelations

• StakeholdersPolicy

• GeneralMeetings

GOVERNANCE PRINCIPLEs


sHAREHOLDERs

AUDIT & ExAMINATION COMMITTEE

(“AEC”)

MFR

SC

OM

MIT

TEE

SHA

RIA

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SUPE

Rv

ISO

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C

OU

NC

IL

NOMINATION & REMUNERATION

COMMITTEE(“NRC”)

CHIEF ExECUTIvE OFFICER (“CEO”)

BOARD RISK COMMITTEE

(“BRC”)

GR

OU

P R

ISK

M

AN

AG

EMEN

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OM

MIT

TEE

GROUP COMPANY SECRETARY

INTERNAL AND ExTERNAL AUDITORS

SUSTAINABILITY STEERING COMMITTEE

MANAGEMENT

BOARD Of DIRECTORs

BHB’s GOVERNANCE fRAMEWORK

The Board of Directors (“the Board”) iscommitted to upholding high standards of corporate governance to preserve stakeholders’ trust, safeguard their interest and enhance their value in line with BHB Group’s objective to be thepremier Islamic financial services provider. TheBoardofDirectorsacknowledgestheimportance of governance and has given full commitment to ensure the adoption of high standards of practices in both the Group’s businesses and operations.

ThisCGOverviewStatementsummarisesthe main corporate governance practices and policies in place during the 2018 financial year and at the date of this statement, relating to the consolidated entity comprising BHB and its subsidiaries. The Company’s corporate governance

practices are reviewed regularly and will continue to be developed and refined to meet the needs of the Company, taking into account best practices and guidelines.

BHB’s corporate governance framework is consistent and complies with the following requirementsandguidelines:

a) CompaniesAct2016.

b) Bank Negara Malaysia’s CorporateGovernance Policy (“BNm cG Policy”);

c) Malaysian Code on CorporateGovernance 2017 (“mccG 2017”);

d) Bursa Malaysia Securities Berhad(“Bursa Securities”) Main MarketListingRequirements(“mmLR”);

e) Corporate Governance Guide (“cG Guide”): Towards BoardroomExcellence 2nd Edition by Bursa Securities;

f) Green Book on Enhancing BoardEffectiveness (“Green Book”)bythePutrajayaCommitteeonGovernmentLinked-CompaniesHighPerformance;and

g) MSWG’sMalaysia–ASEANCorporateGovernance Scorecard.

The application of the respective principles and best practices on corporate governance are highlighted in the various sectionsofthisCGOverviewStatement.

BHB’s established structures, processes and policies help ensure compliance with laws and regulations and provide clear lines of sight for decision-making andaccountability.


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The Board operates on the basis that each subsidiary is a separate and distinct legal entity, which is required to comply with the local laws and regulations that it operates within.

The Board plays a crucial role of maintaining control and performs oversight through the appointment and removal of the directors on the board of the subsidiaries. The Board may appoint a member of the Board as a director of each majorsubsidiary, which ensures continuous flow of information and promotes alignment totheGroup’sstrategicdirections.Whilelines of reporting are maintained to the Group, the Boards of each entity remain as the final approving authority.

P R I N C I P L E A : B OA R D L E A D E R s H I P A N D EffECTIVENEssBOARD CHARTER

BHB has developed its Board Charter, which sets out the key corporate governance principals adopted by the Company. It clearly defines the roles and responsibilities of the Board, Chairperson, Senior Independent Non-Executive Director and Chief ExecutiveOfficerinstrategiessetting,managementof company, succession planning, risk management, integrity of internal controls and communication plans.

The Board Charter serves as a focal reference on governance and provides guidance to the Board in the assessment of its performance. The Board Charter contains broad principles and requirements on the Board’s governance in accordance with the principles of good corporate governance as set out in the recommendation and guidelines issued by the relevant regulatory authorities.

The Board Charter is provided to each Director and the Board reviews itsCharter periodically, subject to changesin regulations and best practices. In December2018,theBoardhasreviewedthe Board Charter and realigned to recent CG developments. The Board Charter coversthefollowingkeymatters:

BOARD CONDUCT

DUTIEs & REsPONsIBILITIEs

POWERs Of THE BOARD

BOARD EffECTIVENEss

• CodeofConduct• ConflictofInterest• ShareholdersCommunication• DealingsinSecurities• WhistleBlowing

• FiduciaryDuties• Roles&Responsibilitiesofthe

Board, Board Committees, Chairman,ChiefExecutiveOfficer& Management, Independent Director,NomineeDirectorandCompany Secretary

• Authority&Delegation• MattersReservedfortheBoard

• BoardComposition• Appointment/Removal/Succession

Planning• Director’sTraining• Director’sEvaluation• Director’sRemuneration


In addition to the Board Charter, in discharging its duties, the Board is also guided by its Terms of Reference (“TOR”), adocument which specifies the Board’s role, power, duties and functions.

The Board Charter and the TOR are dynamic documentsthat are reviewed and updated from time to time to reflect relevant changes to policies, procedures and processes as well as amendments to rules and regulations. The TOR and BoardCharteraresubjecttoreviewonceeverytwo(2)years,orwhenthere are material changes to the governance structure, process or procedures.

chairmanTan Sri ambrin Buang

TheroleoftheChairman:

• ProvideleadershiptoachievetheoverallperformanceoftheBoardinmeetingthestrategicandcorporateobjectivesofBHB;• SettheagendaforBoardmeetings,ensuringthattheyoperateeffectively,andprovideappropriateopportunityforchallengeand

debatetosupportsounddecision-making;• EnsurethatresponsibilitiesoftheBoard,BoardCommitteeandindividualDirectorsareunderstoodbytheindividualDirectors,thus

facilitating the effective execution of the decisions made;• OverseetheperformanceevaluationoftheBoardanditsCommittees;• Meetwithshareholders,analystsandotherrepresentativesofinstitutionalinvestors;• MeetwithmanagersandemployeesatvariouslocationsthroughouttheGroup;• Ensureappropriatestepsaretakentoprovideeffectivecommunicationwithstakeholdersandthattheirviewsarecommunicatedto

the Board as a whole; • LeadtheBoardinestablishingandmonitoringgoodcorporategovernancepractices;and• DevelopaneffectiveworkingrelationshipwiththeManagement.

Senior Independent Non-Executive DirectorTan Sri Ismail adam

TheroleoftheSeniorIndependentNon-ExecutiveDirector:

• ProvideasoundingboardfortheChairman;• ActasanintermediaryforotherDirectorswhennecessaryandspecificallyservesastheprincipalconduitbetweentheIndependent

Non-ExecutiveDirectorsandChairmanonsensitiveissues;• PromotehighstandardsofcorporategovernanceandensurethattheCompany’sobligationstoshareholdersareunderstoodand

complied with; • EnsurethecompositionoftheBoardwithregardtothenumberofIndependentDirectorsadherestorelevantrequirementsand

regulations; • BeavailableforconfidentialdiscussionswithotherNon-ExecutiveDirectorswhomayhaveconcernswhichtheybelievehavenot

been properly considered by the Board as a whole; and• BeavailabletoshareholdersiftheyhaveanyconcernswhichcannotberesolvedthroughthenormalchannelsoftheChairman,

ChiefExecutiveOfficerandGroupChiefFinancialOfficer,orifcontactthroughthesechannelsaredeemedinappropriate.

Ifnecessary,theSeniorIndependentNon-ExecutiveDirectorcanbeemailedat [email protected]

The TOR and Board Charter are available at the Company’swebsite www.bimbholdings.com.

ROLEs Of THE BOARD AND BOARD COMMITTEE

ROLEs AND REsPONsIBILITy Of THE BOARD

The rolesof theChairmanand theChiefExecutiveOfficerareseparate and clearly defined in the Board Charter.

TherolesandresponsibilitiesoftheChairman,theNon-ExecutiveDirectors,theChiefExecutiveOfficer,theGroupChiefFinancialOfficer and the Group Company Secretary are summarisedbelow:


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Non-Executive DirectorsEncik mohd Tarmidzi ahmad NordinPuan Noraini che DanEncik Nik mohd hasyudeen yusoff

TheroleoftheNon-ExecutiveDirectors:

• Scrutinise,measureandreviewtheperformanceofManagement;• Constructivelychallengeandassistinthedevelopmentofstrategy;• ReviewtheGroupfinancialinformation,ensuringsystemsofinternalcontrolandriskmanagementareappropriateandeffective;and• ReviewthesuccessionplansfortheBoard/TopManagement.

chief Executive OfficerEncik mohd muazzam mohamed

TheChiefExecutiveOfficer’sresponsibilities:

• Providestrong leadershipbasedonethicalvalueswhilstoverseeingtheday-to-dayoperations in implementingthepoliciesandstrategies approved by the Board;

• ServeastheintermediarybetweentheBoardandtheManagementinensuringastronggovernanceculture;• EnsureeffectiverelationshipandcommunicationbetweentheManagement,theBoard,theShareholdersandrelevantstakeholders;• LeadtheManagementCommitteeswhichoverseetheoperationalandfinancialperformance,andissuesfacingtheGroup;• Lead and supporting each of BHB’s business and the functions of Human Resource, Corporate Strategy and Transformation

Management, Finance and Corporate Affairs; • EnsureeffectivecommunicationoftheCompany’smissionandstrategiestotheemployeesofBHB;and• RepresentBHBexternallywhendealingwithstakeholders,shareholders,regulatoryandgovernmentauthoritiesandthecommunity.

Group chief Financial Officermr. malkit Singh maan

TheGroupChiefFinancialOfficer’sresponsibilities:

• ProvidestrategicfinancialleadershipoftheCompanyandday-to-daymanagementofthefinancefunction;• Leadthefinancemanagementteams;and• RepresentBHBexternallywhendealingwithstakeholders,shareholders,customers,suppliers,regulatoryandgovernmentauthorities

and the community.

TheDirectorshavethefiduciarydutiestoexercisetheirauthorityfor a proper purpose, in good faith and in the best interest of theCompany.Indischargingtheirduties,theDirectorsexercisereasonable care, skill and diligence with the knowledge, proficiencyandexperiencewhichisexpectedofaDirector.

The Board has the overall responsibility for promoting the sustainable growth and financial soundness of BHB and ensuring reasonable standards of fair dealing, without undue influence from any party. This includes a consideration of the long term strategy and direction of the Board’s decision on BHB, its stakeholders and the general public.

The Board has the responsibility to periodically review and approve the overall strategies, business and pertinent policies of the Company. The roles and responsibilities of the Board are clearlysetoutbelow:

• OverseetheimplementationoftheCompany’sgovernanceandinternal control framework, and periodically review whether these remain appropriate in light of material changes to the size,natureandcomplexityoftheCompany’soperations;

• Reviewandapproveastrategicplan inwhichtheBoardsetthe strategic direction for the Company;


• MonitorandreviewwhethertheoverallperformanceoftheCompanyandtheGroupagainstthesettargetsandobjectivesare sustained and properly managed;

• Oversee the risk management framework for managingbusiness risks and periodically monitor the conduct of the Company’s business to evaluate whether the business is being properly managed;

• Review and approve all policy matters including businessplans and pertinent operating policies, and monitoring Management’s performance based on Key PerformanceIndicators;

• ReviewriskmanagementpracticeswithinBHBandtheGroup:

(i) toensureadequate internalcontrols, infrastructureandmanagement information systems for compliance with the applicable laws, regulations, directives and guidelines;

(ii) toidentifyprincipalrisks;and

(iii) toensuretheimplementationofappropriatesystemstomanage these risks.

• Review and approve succession plans, including theappointment, training, the remuneration of and where

appropriate, replacement of key Management of the Company;

• Approvepoliciespertainingtostaffsalaryandbenefits;

• ApprovetheappointmentofDirectorsandtheiremolumentsand benefits;

• ApprovetheCompany’sinvestorrelationsprogramme;

• Approvetransactions inaccordancewiththeauthority limit,and ensure that the Company’s business operations are conducted in accordance with Shariah principles;

• Promote timely and effective communication between theCompany and regulatory authorities on matters affecting or that may affect the safety and soundness of the Company;

• PromotetogetherwiththeManagement,asoundcorporateculture within the Company which reinforces ethical, prudent and professional behavior; and

• Ensure the Company’s activities comply with the IslamicFinancial Services Act 2013, MCCG 2017, Companies Act 2016, MMLR, Capital Market and Services Act 2007, BNMGuidelines, the Company’s Constitutions and the regulations or guidelines under the relevant laws.


Group company Secretary

PuanMariaMatSaidwasappointedastheGroupCompanySecretaryon31December2009.SheholdsaBachelorofLawfromUniversityofMalaya.SheisalsoaLicensedSecretarybytheCompaniesCommissionofMalaysia.TheGroupCompanySecretaryhas28 years of experience in the banking industry, mainly performing legal and secretarial functions.

The Group Company Secretary is responsible for advising the Board on issues relating to relevant laws, rules, procedures and regulations affectingtheBoard,aswellasgovernancebestpractices.SheisalsoresponsibleforadvisingtheDirectorsontheirobligationsandduties and facilitates effective dissemination of information to the Board, the Board Committees and the Management.

Apart from assisting the Chairman in preparing the agenda and the meetings, the Group Company Secretary also undertakes amongst others,thefollowingroles:

company

• FacilitatethehigheststandardofgovernancepracticesamongBHBentitiesandidentifyareasforenhancements;• EnsurethatBHBcomplieswithstatutoryobligationsundertherelevantlawsandregulations;• MonitorandensureBHB’sgovernanceframeworkcomplieswiththeIslamicFinancialServicesAct2013,theMCCG2017,BNMCG

Policy,MMLR,CompaniesAct2016,CapitalMarketandServicesAct2007andallothersrelevantlawsandregulations;and• MaintainthesafekeepingofstatutoryrecordsoftheCompanyincompliancewithapplicablelawsandregulations.

Board• ManagemattersrelatingtotheBoardandBoardCommittees’meetings;• Ensureproceduresfortheappointmentandre-appointmentofDirectorsareadheredto;• OrganiseinductionprogrammesfornewDirectors;• OrganiseandassistinDirectors’Training;• UpdatetheBoardofDirectorsonanydevelopmentandchangesinrelevantlaws,regulationsandtheimpactonBHB’sbusiness

operations;

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communicated and carried out; and• ActasthepointofcontacttosourceforinformationandtoassisttheBoardinitsdecision-making.

Shareholders

• AssistinmanagingShareholders’communicationsandresolvingtheirqueries;• OrganiseShareholders’meetingsaswellasprepareallrelevantdocumentsrequiredforthemeetings;and• ManageBHB’srelationshipswithexternalstakeholders.

The Group Company Secretary performs an oversight role in ensuring uniformity in conduct and adoption of governance best practices within BHB and its Group. The Group Company Secretary also serves as an adviser on matters pertaining to governance and facilitates the flow and sharing of information among the Board and Board Committees.

Fortheyearunderreview,theGroupCompanySecretaryundertookthefollowing:

• ReviewoftheTORoftheBoardandBoardCommitteesaswellastheBoardCharter;• ReviewthecompositionoftheBoardofDirectorsandBoardCommittees;• EstablishlinesofreportingandcommunicationbetweensubsidiariesintheGroup;• ParticipateandreviewedontheproductionoftheIntegratedAnnualReport;and• Organisein-housebriefingsforDirectorsandManagementinrelationtonewregulatoryrequirements,i.e.,CompaniesAct2016

–RolesandResponsibilitiesofDirectorsandShareholders’Right,CyberSecurityAwarenessandthenewInternationalFinancialReporting Standard 17.

AllDirectorshavedirectandunlimitedaccesstotheadviceandservicesoftheGroupCompanySecretary.TheBoardissatisfiedwiththe performance and support rendered by the Group Company Secretary.

ROLEs AND REsPONsIBILITIEs Of THE BOARD COMMITTEEs

Three(3)BoardCommitteesareestablishedtoassisttheBoardincarryingouttheirdutiesandresponsibilities.TheBoardremainsfullyaccountable for any authority delegated to the Board Committees. The Board Committees’ specific responsibilities are clearly defined intheirrespectiveTOR.

TheBoardCommitteesandtheirmainresponsibilitiesareasfollows:

Role Key Responsibilities

BOaRD RISK cOmmITTEE (“BRc”)

ChairmanEncik mohd Tarmidzi ahmad NordinIndependent Non-Executive Director

OverseetheGroupactivities inmanagingcreditrisk,marketrisk, liquidityrisk,operational risk, legal risk, Shariah risk and other risks and to ensure that the risk management process is in place and functioning effectively.

aUDIT & ExamINaTION cOmmITTEE (“aEc”)

ChairmanPuan Noraini che DanIndependent Non-Executive Director

Responsible to support the Board in ensuring that there is a reliable and transparent financial reporting process and internal control system within the Company and oversee the effectiveness of the internal auditors and external auditors of the Company.

NOmINaTION & REmUNERaTION cOmmITTEE (“NRc”)

ChairmanTan Sri Ismail adamSenior Independent Non-Executive Director

Establish a formal and transparent procedure for the appointment of directors, ChiefExecutiveOfficer,BoardCommitteemembersandkeyseniormanagementpersonnel. Assess and evaluate the performance and effectiveness of the individual directors, independence of independent directors and members of the Board Committees as a whole. Recommend a framework of remuneration for directors and Board Committees. Ensure the compensation structure is competitiveandconsistentwiththeCompany’sculture,objectivesandstrategy.


Each Committee’s TOR sets out its role, responsibilities,composition and structure. Although the Board has granted such discretionary authority to these Board Committees to deliberate and decide on certain key and operational matters, the ultimate responsibility and the final decision on specific matters lies with the Board. The AEC, the BRC and the NRCare chaired by Independent Directors. The Chairman of therespective Committees is responsible for the effective operations of that Committee and the fulfilment of their duties which are clearlyoutlinedintheTORapprovedbytheBoard.TheTORofthe Board Committees are regularly reviewed to ensure that they remain relevant and aligned with BHB’s corporate mission and vision and is available at www.bimbholdings.com.

The Board Committee members are appointed by the Board on therecommendationoftheNRC.TheCommitteemembershipsare structured to spread responsibility and make best use of the range of skills across the Board. Membership of the various Committees is reviewed regularly and is structured to provide the appropriate overlap of membership to ensure cohesive information flow between the Committees. The Committee members are expected to attend each Committee meeting, unless there are exceptional circumstances that prevent them from doing so. Each Board Committee is entitled to seek information from any employee of the Company and to obtain

professional advice as the Board Committee deems appropriate in its discretion.

During each Board meeting, the Chairman of each BoardCommittee shall then present to the Board its recommendations for the Board’s approval accordingly. This permits the Board to raise any comments/views on all deliberations. All deliberations and recommendations must be minuted and approved by each Board Committee and confirmed by the Chairman of each Board Committee at their respective Board Committee meetings.

The Chairman of the Committees reports on matters dealt with at their respective Committee Meetings to the Board, with the exception of the Shariah Supervisory Council, whose Chairman reports to the Board of BHB. Minutes of the AEC, BRC and NRCmeetingsarealsopresentedatBoardmeetingsforfurtherdiscussion and direction, if any.

Based on the annual evaluation of each standing Board Committee for this Financial Year under review, the Boardunanimously resolved that each Board Committee has discharged its roles and responsibilities effectively as guided by itsrespectiveTOR.

The Board Committees activities for the year under review are asfollows:


Board committee main areas of oversight Number of meetings in 2018

aEccomprises four (4) members, all of whom are Independent Directors

• Financialreporting• Internalcontrols• Internalauditreport• Internalauditfunction• Externalaudit• Relatedpartytransactions• Compliancereporting

Nine(9)meetingswereheldtodiscussthefollowing:• MattersrelatingtoBHB• Mattersrelatingtoquarterlyfinancialperformance• MattersrelatingtoInternalAuditreportofsubsidiaries• AnnualperformancereviewforInternalAudit• Mattersrelatingtocomplianceandinternalguidelines• Two(2)meetingswiththeExternalAuditorswithoutthe

presence of Senior Management

NRccomprises four (4) members, all of whom are Independent Directors

• MembershipandperformanceofBoard and Board Committee

• IndependenceofDirectors• SuccessionplanningofCEOand

Senior Management• RemunerationofDirectorsandSenior

Management • Appointmentandre-appointmentof

Directors

Seven(7)meetingswereheldtodiscussthefollowing:• BoardComposition• BoardNominationatGrouplevel• BoardEffectivenessAssessment• BoardandBoardCommitteesRemuneration• CEOandSeniorManagementRemuneration• MaterialRiskTaker

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Board committee main areas of oversight Number of meetings in 2018

BRccomprises four (4) members, all of whom are Independent Directors

• Riskappetite• Riskgovernance• Riskframework• Riskmanagementpracticesand

policies• Compliancerisk• Riskstrategy

Six(6)meetingswereheldtodiscussthefollowing:• RiskManagementPolicies• RiskAppetite• RiskProfile• RiskStrategy• RiskManagementObjectives• EconomicsPositionandupdates• CompliancetoRiskPosture

Notes:(i) ThemembersoftheCommitteescanbefoundwithinthetablethatdetailstheBoardCommitteeattendanceatmeetingonpages

117 and 118 of this Integrated Annual Report; and(ii) DetailsofactivitiesduringBoardCommitteemeetingsaresetoutwithintherelevantCommitteereportsfrompages127to152

of this Integrated Annual Report.

AUTHORITy AND DELEGATION

TheBoardhasdelegatedtotheManagementwithcertainauthoritiesontheday-to-dayoperationsoftheCompany,whichincluderunning the Company in line with the Board’s direction. The said authorisation is stipulated in the Authority Matrix document which isreviewedatleastonceeverytwo(2)yearsorasandwhennecessary.ThesaiddelegationandauthorisationdoesnotabsolvetheBoard’s responsibility as the Board will remain responsible for the exercise of authority by the Management.

Nevertheless,therearecertainkeymatterswhicharenotdelegatedandreservedfortheBoard’sultimatedecision:

KEy maTTERS RESERVED FOR ThE BOaRD

• Strategicpolicymatterswhichincludebusinessplan, budget and corporate structure;

• Financialresultsanddeclarationofdividends;• Anysignificantoperatingandcreditpolicies;• Riskappetitesetting;• Capitalmanagementplan;• Authoritylimitsincludingdiscretionaryauthority;• Anynewoutsourcingproposals;• SuccessionPlanning;• Declarationofdividends;

• Anycorporateexercisewhichincludeacquisitionordivestment of strategic interest;

• Majoracquisitionordisposalofcapitalexpenditure;• Appointmentandremunerationofdirectors,theCEOand

key Senior Management officers;• Entryintoanyrelatedpartytransaction;• ReviewontheadequacyandintegrityoftheCompany’s

internal control system; and• Overseeandevaluatetheconductandperformanceofthe

Company.

Otherthantheabove,theBoardalsorepresentstheinterestsoftheShareholders.Therefore,theDirectorsarerequiredtoexhibithigh standards of integrity, commitment and independence of thoughtandjudgement.TheBoard’sdecisionsarefreefromanyundue influence and interference from any specific group or interest.

DIRECTOR’s HANDBOOK

BHBalsohas inplacetheDirector’sHandbookwhichactsasaguidance to the Board in discharging its duties effectively. The Director’sHandbookhighlightstheguidingprinciplesandmattersrelating to Board organisation, responsibilities, relevant policies

and procedures which are applicable to the Board including those mentioned in the Board Charter.

BOARD CODE Of CONDUCT AND ETHICs

BHBadoptstheCodeofEthicsinaccordancewiththefollowing:

• BNM/GP7-Part1CodeofEthics:GuidelinesontheCodeofConductforDirectors,Officers,andEmployeesintheBanking Industry;

• CompanyDirectors’CodeofEthicsestablishedbytheCompanies Commission of Malaysia; and

• CodeofEthicsfortheFinancialServicesIndustryissuedbyFinancialServicesProfessionalBoard.


The Code of Ethics provides guidance for proper standards of conduct with sound and prudent business practices as well as standards of ethical behaviour for the Board, based on the principles of integrity, responsibility, sincerity and corporate social responsibility.

TheBoard’sCodeofConductandEthicsencompassesthree(3)majorareas,namely:

• CorporateGovernance;• Relationshipwithshareholders,employees,creditorsand

customers; and • Socialresponsibilityandtheenvironment.

Basedontheaforesaid,BHB’sDirectorsarerequiredtodischargetheir duties and deal with various stakeholders with utmost integrity. This is in line with the Company’s core values which place emphasis on ethical dealings with third parties and employees.

WHIsTLE-BLOWING POLICy

BHB is committed to the values of transparency, integrity, impartiality and accountability in the conduct of its business and affairs. Wrongdoing such as fraud, corruption, financialimpropriety and gross mismanagement should be reported and dealt with in accordance with the Company’s established due process.Awhistle-blowingpolicyreflectsBHB’scommitmenttobe vigilant at all times. It also assists BHB to manage its risks and contingencies as well as to avoid recurring acts of wrongdoing.

BHB promotes an open communication and transparent work culture by setting up internal procedures to address concerns

regarding any likely wrongdoing. The policy complements the normal channels of communication and reporting lines within BHB. It also provides an alternative route for employees to raise concerns if the usual lines of communication are not available when the complaint relates to his or her immediate supervisor or head of department.

BHB encourages its employees to aspire to the highest possible standards of compliance and ethics. Whistle-blowing policieshave therefore been integrated into BHB’s practices and culture to help to deter fraud, corruption and mismanagement. Through the effective implementation of this policy, BHB is able to preserve its integrity and transparency.

The Whistle blower can address the concerns to the Senior Independent Non-Executive Director at [email protected]

VOTING POLICy

BHB takes cognizance of the important of Practice 4.2 ofMCCG 2017 that the tenure of an independent director should notexceedacumulativetermofnine(9)yearsunlesswiththeshareholders’ approval. In any event, no independent director would continue to serve the Board more than 12 years.

The voting policy was introduced to ensure good governance practiceinBHBanditsGrouponthere-electionofdirectorsatthe general meeting. The voting policy provides transparency andconsistencyinimplementingthePractice4.2ofMCCG2017on re-election of independent directors and non-independentdirectors within the BHB and its Group.

Thevotingpolicystatesthefollowing:-

action Rationale

Re-electionofIndependentDirectorswhohave served the Board for more than 12 years

BHB does not support and would vote against the resolution to re-electindependent director who has reached thetenureoftwelve(12)years.

An individual who has served the Board for a period of more than 12 years may not be perceived to be independent in his/her conduct and judgement. Thiswould be in line with the Board decision in relation to Practice4.2of theMCCG2017, i.e., no independent director would serve for more than 9 years unless with the shareholders’ approval. In any event, no independent director would continue to serve the Board more than 12 years.


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INDEMNIfICATION Of DIRECTORs AND OffICERs

TheDirectorsandOfficersare indemnifiedunderDirectorsandOfficersLiabilityInsuranceagainstanyliabilityincurredbytheminthedischargeoftheirdutieswhileholdingofficeasDirectorsandOfficersoftheCompany.TheDirectorsandOfficersshallnotbe indemnified where there is any negligence, fraud, breach of duty or breach of trust proven against them.

The existing policy period of insurance is from 31 August 2018 to 30 August 2019 with worldwide coverage of up to RM50.0 million for each and every claim. It protects the Directors andOfficers from loss resulting from claims made against themalleging a wrongful act in the discharge of their duties on behalf of BHB. This insurance does not, however, provide coverage in the event of any negligence, fraud, breach of duty, breach of trust or fine upon conviction.

Based on the analysis of the risk factors and previous trends, the Board agreed that the existing coverage is adequate to cover theDirectorsandOfficersagainstclaims.Duringtheyearunderreview,theDirectorsjointlycontributedaportionofthepremiumfor this policy.

ACCEss TO INfORMATION

The Board of Directors has full and unrestricted access to allinformation pertaining to BHB’s affairs including, inter alia, the Group’s financial results, annual budgets, reviews against business plans and progress reports on corporate developments to enable them to discharge their duties effectively.

The schedule of Board meetings is circulated in advance to the Board members. The Agenda and Board meeting papers are disseminated to theDirectorsat leastfive (5)daysprior to theBoardmeetingtoallowsufficienttimefortheDirectorstostudyand review the issues and, where necessary, to obtain further information and explanation to facilitate an informed decision. AttheBoardmeeting,theDirectorsdeliberateatlengthontheagenda prior to making decisions.

The Management and the external advisers may be invited to attend the Board meetings when necessary, to furnish the Board with explanations on items tabled or to provide clarification on issue(s)thatmayberaisedbyanyDirector(s).

The deliberations and resolutions passed by the Board are recorded properly, and minutes of the meeting are confirmed at the next Board meeting.

The Group Company Secretary also regularly updates the Board and/or Management on any changes to regulations and guidelines as issued by BNM, Bursa Securities, SecuritiesCommission, Companies Commission of Malaysia or other regulatory authorities.

action Rationale

Re-electionofNon-IndependentDirectorswho do not represent any shareholder

BHB does not support and would vote against the resolutionon the re-electionof Non-Independent Director who doesnot represent any shareholder unless justifiedonthefollowingbasis:

i) he/she possesses the relevantexperience and skill that are crucial to support the business operation of the subsidiaries and such experience and skill are not available within the current composition of the Board; and

ii) such experience and skill are scarceor hard to find within the industry.

This could be a situation where a director has served the Board between nine (9)years to less than 12 years but has been re-designated to be a non-independentdirector. Again, in line with BHB’s stand onPractice4.2oftheMCCG2017, i.e.,no independent director would serve for more than 9 years unless with the shareholders’ approval. BHB would vote against such resolution unless proper justification as highlighted in the aboveis provided prior the annual general meeting or in the notice of meeting.


In addition, the Board has direct and unlimited access to the advice and services of the Management and has the right to seek independent advice on specific matters that in their opinion requires unbiased evaluation, at the expense of BHB. A procedure is in place to facilitate the Board in seeking independent professionaladviceasfollows:

(a) ADirectormayrequestforindependentprofessionaladvisebyprovidingthefollowingdetails:

• Thenatureoftheindependentadvicesought;• Thelikelycostofseekingtheindependentadvice;• Detailsoftheindependentadviserproposed;

(b) The Chairman will consult the Group Company Secretarywhether the request should go directly to the Board or whether it warrants a thorough feasibility study in accordance with relevant BHB policies;

(c) Depending on the complexity of the request, the GroupCompany Secretary will initiate the process to engage the required advisors;

(d) A copyof the report or independent advicewill bemadeavailable to the Board for deliberation; and

(e) All documentation seeking the independent advice mustclearly state that advice is sought for the benefit of BHB and must not concern matters of a personal or private nature to theDirectororanyotherindividual.

CONfLICT Of INTEREsT

PursuanttoBNMCGPolicy,theMMLRandtheCompaniesAct2016,theDirectorsarerequiredtodeclaretheirinterest,includingwhether such interest arises through close family members.

The Board is attentive to the possibility of potential conflict of interest situations involving theDirectorsandtheCompanyandaffirms its commitment to ensure that such situation of conflict is avoided. The Board Charter accentuates that in the event where theremaybe a conflict of interest, the interestedDirector shalldeclare at the beginning of the Board meeting the facts and nature of the conflict and to abstain from participating in discussions and decisionsonthematterswhichdirectlyinvolvesthesaidDirector.IncircumstanceswhereaDirectorisunsureastowhetherornota conflict of interest exists or is material, he/she would discuss the matter with the Chairman prior to the meeting.

Where a conflict of interest exists and the Director does notdeclare his or her interest and/or offer to withdraw, the Chairman should, if he is aware, take appropriate action to highlight the conflict.

In the event of any non-compliance with any requirement onconflict of interest, the Board may impose actions as it considers appropriate in the best interest of the Company.

TheManagementseekstheDirectorstoprovidedeclarationonconnected party on quarterly basis to manage potential conflict of interest.

DIRECTORs TRADING DURING CLOsED PERIOD

Directors of BHB are prohibited from trading in any affectedsecurities based on price sensitive information and/or knowledge which have not been publicly announced. In accordance with Paragraph14.04oftheMMLR,theDirectorsoftheCompanyarereminded that they must not engage in dealings of the Company’s sharesorofother listed issuersas longas theDirectorsare inpossessionofprice-sensitive information relating to such listedissuers.

However,Directorswhoarenot inpossessionofprice-sensitiveinformation relating to the Company may engage in dealings withsuchlistedsecuritiesduringa‘closedperiod’(i.e.theperiodcommencing 30 calendar days before the targeted date of announcement to the Bursa Securities of the quarterly results, up to one full market day after the announcement of the Company’s results for the financial quarter) provided that the DirectorscomplywithParagraph14.08oftheMMLR.

TheBoardofDirectorsareremindedonquarterlybasistorefrainfromdealingintheCompany’ssharesone(1)monthpriortotherelease of BHB’s quarterly financial results.

BHB has in place a process that must be complied with if any of theDirectorswishestodealintheCompany’ssharesasfollows:

a) Priortotheproposeddealing,theDirectormustgivewrittennotice to BHB of his/her intention to deal;

b) Uponreceiptofsuchnotice,BHBwillmakean immediateannouncementtoBursaSecuritiesstatingthefollowing:-

i) the Director’s current shareholdings in the Company;and

ii) the Director’s intention to deal in the shares of theCompany during a closed period;

c) Theproposeddealcanonlybeeffectedafteronefullmarketday of the announcement being made to Bursa Securities;


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ion d) Subsequently, the Director must give notice of the deal in

writing to the Group Company Secretary within one full market day after the deal has occurred. BHB will immediately announce suchnoticetoBursaSecuritiesstatingthefollowing:

i) thedateonwhichthedealoccurred;ii) theconsiderationforthedeal;andiii) the number of shares involved in the deal, both in

absolute terms and as a percentage of all issued shares of that class in the Company;

e) The Group Company Secretary will then table at theforthcomingmeetingoftheBoardofDirectors,asummaryofdealingsnotifiedbytheDirectorfornotificationpurposes.

In the event where a Director deals in the Company’s sharesoutsidetheclosedperiod,theDirectormustgivewrittennoticeof the said deal to the Group Company Secretary within 3 market days after the deal has occurred. BHB will then immediately announce the notice to Bursa Securities.

Duringtheyearunderreview,therewerenotransactionsbyanyoftheDirectorsinthesharesoftheCompany.

BOARD EVALUATION

An annual performance evaluation process for the Board is implemented to assess the effectiveness of the Board as a whole, the Board Committees and the contribution of each individual director.

The Board Evaluation comprises a detailed set of questionnaires coveringthefollowingareas:

(a) BoardComposition/Structure;(b) BoardProcess;(c) BoardGovernance;(d) MajorResponsibilitiesoftheBoard;and(e) BoardCommitteeFunction.

A peer assessment by each individual director is also performed to evaluate the effectiveness of the individual directors, the independent directors and the nominee directors.

The results of the evaluation are tabulated and reviewed by the NRC prior to deliberation at the Board. Details process of theevaluation can be found on pages 147 and 148 of this Integrated Annual Report.

BOARD ACTIVITIEs AND MEETINGs

BOARD ACTIVITIEs

Someoftheactivitiesin2018/2019consideredbytheBoardinrelationtostrategicprioritiesaresetoutbelow:

Strategic and business plan

matters considered by the BoardAt the beginning of the year, the Company discusses and review the Group strategy and business plan. The discussion includes capital managementandplan,budgetaswellasreviewontheKeyPerformanceIndicators(“KPIs”).TheBoardensuredthattheKPIisinlinewith the proposed strategy and business plan. The Board reviews and deliberates on the Management’s views/assumptions in ensuring the best decisions are reached after considering all relevant aspects.

In 2018, the Board has approved and endorsed the Group’s strategy and business plan for financial year 2018 and its business projection for theperiodof2019–2021.During theperiodunder review, theBoardendorsed thequarterlyfinancial results forannouncementtoBursaSecurities.ThiskeepstheshareholdersinformedandupdatedontheperformanceoftheCompany.DuringthefinancialyearunderreviewtheBoardhasalsoapprovedthefollowing:

1. quarterlyreportonRelatedPartyTransactionandRelatedPartyBalancesforBHBanditsGroup;2. ZakatcomputationforBHBanditsGroup;3. BumiputeraEmpowermentAgendaKeyPerformanceIndicatorsforBHBanditsGrouppursuanttotheGovernment-LinkedCompanies;4. Declarationofinterimsingle-tierdividendandProposedDividendInvestmentPlanbyBHB;5. RenewalofDirectorsandOfficers’LiabilityInsurance;6. RenewalofGroupTermFamilyTakafulandGroupPersonalAccidentTakafulforDirectors;and7. AcquisitionofPropertybyawholly-ownedsubsidiaryofBHB.

Based on the annual evaluation for the financial year under review, the Board collectively concurs that it has reviewed the Company’s strategicandfinancialplanaswellasmonitoreditsimplementation,includingthesettingofsuitableKPIsinachievingtheCompany’sobjectives.


Operations and Business Performance

matters considered by the BoardTheChiefExecutiveOfficerisresponsibleformanagingtheday-to-dayoperationsoftheCompanyandimplementingtheCompanystrategies and policies as agreed by the Board. In doing so, he is well supported by the Management.

The performance of the Management is measured through the Company’s and Group’s quarterly financial reports. Based on the saidquarterlyfinancialreports,theBoardreviewstheperformanceoftheChiefExecutiveOfficerandtheManagementagainsttheapprovedKPIs.

The Board, on a continuous basis, is well informed of the progress of the Company’s strategic initiatives and critical operational issues as well as of the Group’s performance.

Risk management and compliance

matters considered by the BoardThe Board Risk Committee (“BRc”)assiststheBoardinoverseeingtheestablishment,implementationandeffectivenessoftheriskmanagement system of BHB and Group. The BRC also reviews periodic reports on risk management and makes relevant recommendations totheBoardforitsapproval.DetailsoftheBRCandtheriskmanagementdashboardaresetoutintheBRCReportandStatementofRisk Management and Internal Control of this Integrated Annual Report.

The Board is also responsible in overseeing the effectiveness of the regulatory compliance function. The BRC and the Audit & Examination Committee (“aEc”)assisttheBoardindischargingthisfunction.Periodicreportsonregulatorycomplianceactivitiesarepresentedat every AEC meeting for review and deliberation and any significant compliance issues are escalated to the Board from time to time.

Based on the annual evaluation for the financial year under review, the Board collectively agrees that it has discharged its roles in identifying principal risks and in ensuring that the Group has put in place an adequate risk management framework to effectively monitor and manage the risk of its operational business.

Succession Planning

matters considered by the BoardTheBoard,throughtheNomination&RemunerationCommittee(“NRc”)isrequiredtoreviewpotentialcandidatesforManagementpositionsandestablishtheirremuneration.TheCompany’snomination,selectionandsuccessionpoliciesareformulatedbytheNRC.

Duringthefinancialyearunderreview,theBoard/NRChasreviewedandconsideredtheappointmentEncikMohdMuazzamMohamedasthenewChiefExecutiveOfficeron5December2018replacingtheformerChiefExecutiveOfficer,i.e.,EncikKhairulKamaruddinwhoresignedon20July2018.DuringthefinancialyearunderreviewtheBoardhasalsoapprovedthefollowing:

1. AppointmentofTanSriAmbrinBuangasthenewChairman/IndependentNon-ExecutiveDirector;2. Re-appointmentofEncikMohdTarmidziAhmadNordinasanIndependentNon-ExecutiveDirector;3. AppointmentofEncikNikMohdHasyudeenYusoffasnewIndependentNon-ExecutiveDirector;4. Proposed Appointment of BHB’s Nominee Director in Syarikat Takaful Malaysia Keluarga Berhad (formely known as Syarikat

TakafulMalaysiaBerhad);5. ProposedAppointmentofBHB’sNomineeDirectorinSyarikatTakafulMalaysiaAmBerhad;6. ProposedAppointmentofBHB’sNomineeDirectorinBIMBSecuritiesSdnBhd;and7. Re-appointmentofPuanNorainiCheDanasanIndependentNon-ExecutiveDirector.


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The mix of skills, experience, expertise and qualification were analysed prior to their respective appointments.

FollowingtheappointmentofEncikNikMohdHasyudeenYusofftotheBoard,therewerechangesinthecompositionoftheBoardCommittees.EncikNikMohdHasyudeenYusoffwasappointedasanewmemberoftheAEC,BRCandNRC.

TheBoardissatisfiedthattheNRChaseffectivelydischargeditsdutiespertainingtothenomination,remunerationandsuccessionmanagementfunctionsassetsoutinitsTOR.

Based on the annual evaluation for the financial year under review, the Board collectively concurs that the succession plan for the Chief ExecutiveOfficerandtheManagementaswellasfortheCompany’sfutureleadershasbeenappropriatelydeveloped.

Shareholder communication Policy

matters considered by the BoardBHB continuously maintains its commitment to pursue the highest standards of corporate disclosure by disseminating accurate, consistent, transparent and timely information to its stakeholders. BHB’s Investor Relations (“IR”)PolicyactsastheguidingprincipleforIRfunctions,assistingeffectivecommunicationbetweentheManagementandthefinancialcommunity,locallyandabroad.Duringtheperiodunderreview,three(3)analystsbriefingsessionswereheld.

Based on the annual evaluation for the financial year under review, the Board collectively agrees that the Management has successfully conducted the IR programmes.

Information and Internal control System

matters considered by the BoardThe Board is responsible for ensuring a sound reporting framework of internal controls and regulatory compliance is in place throughout the Company. Based on the annual evaluation for the financial year under review, the Board collectively concurs that it has discharged its roles through the BRC/AEC whereby regular meetings were held in reviewing the effectiveness of the Company’s internal control system.DuringthefinancialyearunderreviewtheBoardhasalsoapprovedthefollowing:

1. ShariahCompliancePolicyofBHB;2. VotingPolicyontheRe-electionofDirectorsatAnnualGeneralMeetingofSubsidiaries;3. ReviewtotheAuthorityLimitPolicy;and4. ReviewtotheBoardCharterandTermsofReferenceofBoardofDirectorsandBoardCommittees.

DetailsoftheCompany’sinternalcontrolsystemanditseffectivenessareprovidedintheStatementofRiskManagementandInternalControl in this Integrated Annual Report.

During theperiodunder review, theManagementhasorganisedanoff-siteBoardmeeting.Theoff-sitemeeting includedbranchvisitation programme, friendly golf tournament with corporate clients and networking dinner.


BOARD MEETING

BHB has a highly engaged Board with diverse perspectives. The Board and Board Committee meetings are held regularly to discuss key matters such as strategic, governance and operational issues.

TheBoardandBoardCommittees’proceduresareasfollows:

Before meeting at Every meetingFrequent and Effective

Engagement with the Board

• AllBoardandBoardCommitteemeetings are planned and scheduled in advance in consultation with the directors to facilitate their participation and commitment for the meetings.

• TheChairman,inconsultationwiththeCEOandtheGroupCompanySecretary, reviews the setting of the agenda of the Board meetings to ensure that there is sufficient information and time to address all agenda items.

• TheagendaoftheBoardmeetingsis carefully thought out and managed.

• AcomprehensiveBoardpapercomprisingtheobjectives,background, purposes, implications, risk, appropriate analysis/statistic, recommendations and other relevant information is prepared to enable the Board to make informed decisions.

• AllmaterialsforBoardandBoardCommittee meetings are circulated to the Board and uploaded onto a secure portal which can be assessed on tablet devices provided to the Board members.

• Intheeventadirectorisunableto attend the Board or Board Committee meeting in person, he/she can participate by telephone or video-conference.

• Directorshavethediscretiontoengage external advisers.

• TheChairmanpromotesopenandconstructivedebatesby all directors at the Board meetings.

• TheBoardmembersattendthemeetingwellpreparedand engage in robust deliberation on key matters discussed.

• Whenthereisaconflictofinterest,theinteresteddirectorwill excuse himself/herself from the discussion and will abstain from participating in the Board decision.

• TheChairpersonofeachBoardCommitteewillprovideathorough update on key matters discussed at the Board Committee meetings, which are typically scheduled before the Board meeting.

• TheCEOgivesacompleteandcomprehensiveupdateonthe Group’s business and operations as well as a macro perspective on industry trends and developments.

• TheGroupChiefFinancialOfficer(“GCFO”)presentsthefinancial performance and significant financial highlights.

• TherespectiveKeySeniorManagementandexternaladvisors may be invited to attend the Board meetings to advise the Board on matters within their purview to enableinformeddecision-making.Directorswillhavethe opportunity to discuss specific areas with them and where relevant, challenge the ideas presented.

• Externalprofessionalsorin-housesubjectmatterexpertsmay also be invited to present key topics identified by the Board as well as updates on latest regulations or industry practices, which may have an impact on BHB’s affairs.

• DecisionsoftheBoardandBoardCommitteesaremadeon unanimous basis. The proceeding of the meeting and the decisions are recorded in the Board’s minutes. The minutes shall also record any key concerns or dissenting viewsraisedbytheDirectorsduringthemeeting.

• MinutesofthemeetingsarecirculatedearliertoallDirectorsfortheirperusalpriortothemeetings.TheDirectorsmayrequestforclarificationorraisecommentson the minutes prior to their confirmation. After the minutes have been confirmed, the Chairman of the meeting signs the minutes as a correct record of the proceedings. The meeting minutes are kept for safe custody and record by the Group Company Secretary.

• TheBoardisregularlyupdatedonthe performance of BHB and its subsidiaries.

• Asandwhenrequired,forstraightforward and less complex matters, the Board approvals can be obtainedthroughDirectors’CircularResolutions.

• Asandwhenrequired,ad-hocmeetings are held to facilitate the request for urgent decisions. There werefour(4)ad-hocBoardmeetingsheld in 2018.

• TheGCFOprovidestheBoardwithdetailed financial performance reportseverytwo(2)months.

• DirectorshavedirectaccesstoSeniorManagement and may request from the Management, any additional information to make informed and timely decisions.

• SomedirectorsalsositontheBoardof the subsidiaries. This arrangement provides the Board with access to the operation and activities of the subsidiaries.

• DirectorshaveaccesstotheGroupCompany Secretary at all times. The Group Company Secretary attends all Board meetings and generally assists the directors in the discharge of their duties. The Group Company Secretary facilitates communication between the Board, Board Committees and Management. The Group Company Secretary also helps withtheinductionofnewDirectors.The appointment and removal of the Group Company Secretary requires the approval of the Board.


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ion BOARD ATTENDANCE

TheDirectorshavebeen informedof theexpectationof timecommitmentduring theirappointment to theBoard.This takes theformoftheminimumnumberofBoardandBoardCommitteemeetingstobeheldinafinancialyear.AllDirectorsareawareoftheirresponsibilities and have devoted sufficient time to discharge their duties and responsibilities. This is evidenced by their satisfactory attendanceoftheBoardmeetings.Inthisregard,theBoardissatisfiedwiththeleveloftimecommitmentbyeachoftheDirectorstowardsfulfillingtheir roles intheBoardandBoardCommittees. Inthefinancialyearended31December2018,all theDirectorsattendedatleast75%oftheBoardmeetingsheld,incompliancewithBNMCGPolicyandtheMMLR.

ThebreakdownofBoard,BoardCommitteesandGeneralMeetingsheldandDirectors’attendancesaresetoutbelow.

Director Independence Status

meetings attendance record (1 Jan to 31 Dec 2018)

BOD aEc NRc BRc aGm

No. of meetings held in 2018

10 9 7 6 1

current Directors

Tan Sri ambrin Buang,70IndependentNon-ExecutiveDirector/Chairman• Chairmansince2February2018• Boardmembersince2February2018• Lastre-electedon15May2018

8/8 – – – 1/1

Tan Sri Ismail adam, 68SeniorIndependentNon-ExecutiveDirector• Boardmembersince3January2011• Lastre-electedon1June2016• Lastre-appointmenton3January2017

10/10 9/9 7/7 6/6 1/1

mohd Tarmidzi ahmad Nordin, 64IndependentNon-ExecutiveDirector• Boardmembersince29June2015• Lastre-electedon15May2018• Lastre-appointmenton29June2018

10/10 9/9 7/7 6/6 1/1

Nik mohd hasyudeen yusoff, 54IndependentNon-ExecutiveDirector• Boardmembersince1June2018

5/6 3/3 3/3 3/3 –

Noraini che Dan, 63IndependentNon-ExecutiveDirector• Boardmembersince1April2016• Lastre-electedon15May2018• Lastre-appointmenton1April2019

10/10 9/9 6/6 6/6 1/1


Director Independence Status

meetings attendance record (1 Jan to 31 Dec 2018)

BOD aEc NRc BRc aGm

No. of meetings held in 2018

10 9 7 6 1

Former Directors

Tan Sri Samsudin Osman, 72IndependentNon-ExecutiveDirector/Chairman• Retiredw.e.f.31January2018

2/2 – – – –

Datuk Zaiton mohd hassan, 63IndependentNon-ExecutiveDirector• Retiredw.e.f.1February2018

1/2 1/1 1/1 – –

Datuk Rozaida Omar, 56Non-IndependentNon-ExecutiveDirector• Retiredw.e.f.6September2018

7/7 – – – 1/1

Rifina md ariff, 52Non-IndependentNon-ExecutiveDirector• Retiredw.e.f.6September2018

5/7 – – – 1/1

WithintheBoardthereisdiversityandawealthofknowledge,experience and skills in the area of accountancy, banking, takaful, public administration and fund management, human resources management, corporate finance and risk management. A brief profile of each member of the Board is provided on pages 82 to 86 of this Integrated Annual Report.

The Board is committed to ensuring diversity and inclusiveness in its composition and deliberations and the Company embraces the proposition that having a diverse Board would have a positive,


AVERAGENUMBEROFHOURSSPENTONEACHBOARDOFDIRECTORS’MEETINGWAS

3 hOURS 45 mINUTES

TOTALHOURSOFBOARDANDBOARDCOMMITTEEMEETINGSWAS

51 hOURS 50 mINUTES

OVERALLPERCENTAGEOFTHEBOARDMEETINGS

ATTENDEDBYTHEMEMBERS

100%

ALLMEMBERSHAVECOMPLIEDWITHTHEMINIMUMATTENDANCEAS

STIPULATEDINTHEMAINMARKETLISTINGREqUIREMENTSOFNOTLESSTHAN50%ANDBNMCGPOLICYOF

NOTLESSTHAN75%

TOTALBOARDMEETINGSHOURS

18 hOURS 45 mINUTES

BOARD DIVERsITy AND COMPOsITION

BOARD COMPOsITION AND DIVERsITy

The Board of BHB currently consists of five (5) Non-ExecutiveDirectors. All are Independent Non-Executive Directors ofwhichone(1)isawomanIndependentNon-ExecutiveDirector.Currently, the Board comply with the requirement of majorityIndependent Directors under the MMLR as well as BNM CGPolicy.

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ion value-relevant impactontheCompany. In this regard, theBoardconsidersdiversity fromanumberofdifferentaspects, including

gender, age, educational background, professional experience, skills, knowledge and length of service.

ThefollowingdiagramgivesabriefoverviewoftheBoardofDirectors’diversityintermsofindependent,skill/experienceandgendercomposition.

composition

age Diversity Board Tenure

Directorship in Public/Listed company (Including BhB) Board Skills/area of Expertise

Gender Diversity

Independent5

Male4

60-69years3

1ListedCompany

1

Banking2

Takaful1

Accounting & Audit

3

Management, Leadership&

Strategy5

Governance & Integrity

2

Economic & Finance

3

3ListedCompany

1

2ListedCompany

3

0-2years2

3-6years2

7+years1

50-59years1

Female1

70-79years1

Non-Independent0



INDEPENDENT NON-ExECUTIVE DIRECTOR

The BNM CG Policy, MCCG 2017 and MMLR stipulate therequirementformajorityIndependentDirectors.

ThepresenceofmajorityIndependentNon-ExecutivesDirectorswithin the current Board facilitates an effective and independent oversight over the Management providing the necessary checks and balances in ensuring the Company operates in a safe and sound manner.

The Company has adopted a set of criteria to assess the independenceofitsIndependentDirectors.ThecriteriaarebasedontheDirector’sskills,experience,contributionsandeconomicand family relationships. The criteria adopted are in line with theMMLR,MCCG2017andBNMCGPolicy.Hence,thetenureof the Director is also taken into account when assessing theindependence of the Independent Director. Additional criteriathatareassessedtodeterminesuch individualDirectors’abilitytoexerciseindependentjudgementare:

• The Director is free from any business or other relationshipwhich can materially pose any conflict of interest or interfere with the exercise of the Director’s judgement or will bedisadvantageous to BHB or BHB’s interest;

• The Director’s ability to provide objective challenges andconstructive feedback to Management, focusing on root cause of issues and potential actions required to rectify the issues discussed;

• The Director’s readiness to challenge other Directors’assumptions, believes or viewpoints for the good of BHB;

• Theabilitytochallengetheassumptions,beliefsorviewpointsofotherswith theobjectiveofquestioningandchallengingconstructively in the interest of the Company;

• Willingnesstostandupanddefendhis/herviews,beliefsandopinions for the ultimate good of the Company; and

• HasagoodunderstandingoftheCompany’sbusinessactivitiesin order to provide appropriate responses on the various strategic and technical issues put forth and deliberated by the Board.

AllIndependentNon-ExecutiveDirectorsarerequiredtodeclaretheir independence on a monthly basis.

In this regard, the Board is satisfied with the level of independence demonstratedbyallofitsIndependentDirectorsandthattheyarefree from business relationship or other circumstances that could materially interfere with their exercise of objective, unfetteredandindependentjudgement.

The effective participation of Independent Non-ExecutiveDirectorsenhancesaccountabilityintheBoard’sdecisionmakingprocess.TheresponsibilitiesofanIndependentDirectorincludebutnotlimitedtothefollowing:

• Provide and enhance the necessary independence andobjectivitytotheBoard;

• EnsureeffectivechecksandbalancesontheBoard;

• Mitigateanypossibleconflictof interestbetweenthepolicymaking process and the day-to-day management of theCompany;

• Constructivelychallengeandcontributetothedevelopmentof business strategy and direction of the Company; and

• Ensurethatadequatesystemsandcontrolstosafeguardtheinterests of the Company are in place.

TheBoardtakescognizanceoftheMCCG2017thatthetenureofanIndependentDirectorshouldnotexceedacumulativetermof nine (9) years. In line with the said recommendation, theCompanyhas apolicy that limit an IndependentDirector to amaximumtenureofnine(9)years.AnIndependentDirectorwhohasservedfornine (9)years,may,subject to theshareholder’sand BNM’s approval, continue to serve the Company as anIndependentDirector.Inanyevent,noIndependentDirectorwillcontinue to serve the Board for more than 12 years.

BOARD COMMITMENT

EachDirectorhasdevotedhis/hertimesufficientlytocarryingouthis/herresponsibilities.TheBoardCharterstatesthataDirector,upon acceptance of his/her appointment, must commit sufficient time to carry out his duties and declare to the Board details of all other significant business and interests, indicating broadly the time spent on such commitments. Prior to accepting anynewdirectorship, the Director should notify the Chairman on thenew directorship. The Director must advise the Board and theGroup Company Secretary of any subsequent changes to these commitments and the Group Company Secretary is to monitor the number of directorships and the changes, if any, of each DirectorontheBoard.

TheBoardalsotooknoteoftheexpectationonDirectors’timecommitment to carry out their responsibilities. In this regard, BHB’s Board Charter stipulates that the maximum number of externalprofessionalcommitmentsofeachDirectormustnotbemorethanten(10)unlesswithpriorapprovaloftheBoard.

To date, all Directors have complied with the MMLR of notholdingmorethanfive(5)directorshipsinlistedcompanies.TheBoard is satisfied that the current number of directorships held by theBoardMembersdoesnotimpairtheirabilityorjudgementindischarging their roles and responsibilities.

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ion PROfEssIONAL DEVELOPMENT AND CONTINUOUs EDUCATION

fOR DIRECTORs

The BHB’s Board Charter incorporates a policy on Director’sTrainingwhich,amongstothers,requires:

a) Newly appointed Director to undergo an inductionprogramme by the Management where the Company’s governance structure, key Management, business and operations and important regulations and laws are highlighted. The induction programme is to be held as soon as practicable, no later than three (3) months upon theappointmentoftheDirector;

b) Newly appointed Director to undergo and complete theDirector’s Mandatory Accreditation Programme by BursaSecuritieswithinfour(4)monthsofhis/herappointment;

c) Newly appointed Director to complete a core trainingprogramme under the Financial Institutions Directors’EducationProgram(FIDE)withinone(1)yearandthesameto be completed within two (2) years upon the Director’sappointment to the Board; and

d) Directors toattendat least two (2) trainings inacalendaryear.

The Board recognises the value of enhancing the skills and knowledge of its members on relevant new laws and regulations,

the changing business environment and risk profile, as well as the latest developments and key challenges in the financial sector.

The Board is mindful of the need for continuous training to keep abreastwithnewdevelopments.TheDirectorsareencouragedtoattend forums and seminars facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. The Board will continue to evaluate anddetermine the training needs of its Directors to enhance theirskills and knowledge.

The Company provides a dedicated training budget for the Directors’ continuingeducation.Relevant trainingprogrammesarearrangedbytheCompanyfortheDirectorsandmembersoftheBoardCommittees.TheDirectorsmayalsorequesttoattendadditional trainings according to their specific requirements as DirectorsormembersoftheBoardCommittees.

Asattodate,allDirectorshaveattendedtheFinancialInstitutionsDirectors’ Education (“FIDE”) programme and MandatoryAccreditation Programme by Bursa Securities. In addition, alltheDirectorshaveattendedatleasttwo(2)trainingsduringtheperiod under review. The Management conducts an induction programmeforallnewlyappointedDirectorswithinamonthoftheir appointment.

The conferences, seminars and training programmes attended by theDirectorsin2018wereasfollows:

Name of Directors Date List of Training/conference/Seminar/workshop attended

Tan Sri Ambrin Buang 9 – 12 July 2018 FIDECoreProgramModuleA(Bank)

5 September 2018 PresentationonArabesqueInvestmentStrategyandProcess

22–25October2018 FIDECoreProgramModuleB(Bank)

30November2018 DirectorsandShareholders’RightsandResponsibilitiesandCaseStudyonPetraPerdanaBerhad

Tan Sri Ismail Adam 21 March 2018 CorporateGovernance,Directors’DutiesandRegulatoryUpdatesSeminar2018 II

16 July 2018 Seminaron“FinancialReportingbyListedIssuers”atSeriPacificHotel,KL


EncikMohdTarmidziAhmadNordin

14 May 2018 WorkshoponTakaful&Retakaful

28 June 2018 DelightingyourCustomersintheDigitalEra

10 – 11 July 2018 InternationalTakafulSummit2018,London

17 July 2018 InsuranceTax101:CorporateTaxBasicsforInsuranceCompanies

3October2018 UnderstandingFinTechandItsImplicationsforInsuranceCompanies




Name of Directors Date List of Training/conference/Seminar/workshop attended

PuanNorainiCheDan 8 January 2018 BriefingonInformationTechnology(IT)RoadmapandDigitalJourney

1 March 2018 FIDEFORUMEVENTEvent1:NavigatingtheVUCAWorldbyProfessorTanSriDato’Dr.Lin See-YanEvent2:FocusGroupDiscussioninPreparationforthe5thBNM-FIDEFORUMAnnualDialoguewiththeGovernor

19 April 2018 5thBNM-FIDEFORUMAnnualDialoguewiththeDeputyGovernorofBNM

1 August 2018 BoardDevelopmentProgramme2018

8 August 2018 BusinessForesightForumDisruptionandCollaborations

3 – 4 September 2018 Credit Risk Management – Banking Sector

18 September 2018 ConferenceoftheElectricPowerSupplyIndustry(CEPSI)

21 September 2018 IT Security Talk by Cybersecurity Malaysia

27 September 2018 BoardDevelopmentProgrammeSaleandServiceTax

8October2018 KhazanahForumonBalanceRecalibratingmarkets,Firms,SocietyandPeople

22October2018 Session on Accounting and Islamic Finance


EncikNikMohd HasyudeenYusoff

8 January 2018 BriefingonInformationTechnology(IT)RoadmapandDigitalJourney

6 – 7 February 2018 WorldCapitalMarketsSymposium2018

1 March 2018 FIDEFORUMEVENT–1stDistinguishedBoardLeadershipSeries& BNM-FIDEFORUMFocusGroupDiscussion

12 – 13 March 2018 CapitalMarketDirectorsProgramme

19 April 2018 5thBNM-FIDEFORUMAnnualDialoguewiththeDeputyGovernorofBNM

10 July 2018 1stPIDM–FIDEFORUMAnnualDialogue

18 July 2018 The(MIS)BehaviorofFinancialMarketsExpertInsight

19 July 2018 EmergingRisk,TheFutureandReturnonComplianceProgramme

3 – 4 September 2018 MandatoryAccreditationProgramme(“maP”)

21 September 2018 IT Security Talk by Cybersecurity Malaysia

30October2018 FIDEFORUMDinnerTalk:“TheDirectorasCoach”:AnexclusivedialoguewithDrMarshallGoldsmithandLaunchofFIDEFORUM’s“DNAofaBoardLeader”

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ion REMUNERATION

The Directors’ remuneration is a means to acknowledge theDirectors’contributions.Itisalsoameanstoattract,motivateandretainDirectorsofcertaincaliberandexpertisewhoarewillingtocontribute their time, efforts and experience towards managing the Company effectively. The reward levels commensurate with the competitive market and business environment in which the Company operates whilst at the same time reflect of the Directors’experienceandlevelofresponsibilities.

The remuneration structure for the Non-Executive Directorstakes into consideration the relevant factors which include the function, responsibilities, expertise, risk involved and time spent for the preparation of the Board and Board Committee meetings. Ahigherrate(premium)isgiventotheChairmanoftheBoardand the Board Committees in view of his/her additional role in guiding and managing the Board and the Board Committee meetings.

DIRECTOR’s REMUNERATION POLICy

ThepolicyontheremunerationforDirectorsisasfollows:

(a) Fees and Other Emoluments

Non-ExecutiveDirectorsareremuneratedbywayofmonthlyfees, a sitting allowance and other emoluments. Fees payable to Non-Executive Directors are subject to shareholders’approval at the Annual General Meeting.

(b) Benefits In Kind

OtherbenefitssuchasDirectors’HealthandMedicalBenefittogether with Directors’ and Officers’ (“D&O”) liabilityinsurance and travelling allowance are also provided.

The remuneration of the Directors is reviewed regularlyto ensure the Directors are reasonably remunerated toreflect their role, responsibilities and efforts in discharging their fiduciary duties. The remuneration as approved by shareholders at the 20th Annual General Meeting on 17 May 2017areasfollows:

chairman Director

Director’s allowance• MonthlyFees• CarAllowance• SeniorIndependentAllowance

10,00010,000

4,000

2,000

Board committee allowance• BRC• AEC• NRC

3,0003,0002,000

2,0002,0001,000

meeting allowance 5,000 3,000

Benefits in kind• Medicalbenefit• LeavePassage

18,00040,000

18,00030,000

Directors’ Liability Insurance 221,515.74 221,515.74


ThedetailsontheaggregateremunerationofDirectorsoftheCompany(comprisingremunerationreceivedand/orreceivablefromtheCompanyanditssubsidiariesduring2018)areasfollows:

Director

Total Directors’ remuneration for 2018 (RM)

Directors’ fees

salary Bonus Benefits in-kind

Other Emoluments

Tan Sri ambrin BuangIndependentNon-ExecutiveDirector/Chairman

Total: 375,000

110,000 – – 5,000 260,000

Tan Sri Ismail adamSeniorIndependentNon-ExecutiveDirector• Chairman,NRC• Member,AECandBRC

Total: 375,000

120,000 – – 5,000 220,000

mohd Tarmidzi ahmad NordinIndependentNon-ExecutiveDirector• Chairman,BRC• Member,AECandNRC• Director,SyarikatTakafulMalaysiaKeluargaBerhad

(formerly known as Syarikat Takaful Malaysia Berhad)

Total: 489,000

192,000 – – 37,000 260,000

Noraini che DanIndependentNon-ExecutiveDirector• Chairman,AEC• Member,BRCandNRC• Director,BankIslamMalaysiaBerhad

Total: 768,000

331,000 – – 55,000 382,000

Nik mohd hasyudeen IndependentNon-ExecutiveDirector• Member,BRC,AECandNRC• Director,BankIslamMalaysiaBerhad• Director,BIMBInvestmentBerhad

Total: 619,000

305,000 – – 55,000 382,000

former Director

Tan Sri Samsudin Osman, 72IndependentNon-ExecutiveDirector/Chairman• Retiredw.e.f.31January2018

Total: 153,000

152,000 – – 1,000 –

Datuk Zaiton mohd hassan, 63IndependentNon-ExecutiveDirector• Retiredw.e.f.1February2018

Total: 497,000

112,000 – – 1,000 384,000

Datuk Rozaida Omar, 56Non-IndependentNon-ExecutiveDirector• Retiredw.e.f.6September2018• Director,SyarikatTakafulMalaysiaKeluargaBerhad

(formerly known as Syarikat Takaful Malaysia Berhad) Retiredw.e.f.15May2018

Total: 176,000

116,000 – – 3,000 57,000

Rifina md ariff, 52Non-IndependentNon-ExecutiveDirector• Retiredw.e.f.6September2018

Total: 113,000

110,000 – – 3,000 –

The detail of each Director’s remuneration during the financial year is disclosed in the Financial Statement section on page 274 (Note39)ofthisIntegratedAnnualReport.


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ion The remuneration bands of the Senior Management and CEO

areasfollows:

Total Remuneration (Basic salary, fixed allowances and bonus) (Rm)

Number of Senior

management

<750,000 1

750,000 up to 1,000,000 2

1,000,001 up to 1,250,000 1

1,250,001 up to 1,500,000 –

1,500,001 and above 1

Total 5

PRINCIPLE B : EffECTIVE AUDIT AND RIsK MANAGEMENT

AUDIT AND ExAMINATION COMMITTEE

The Audit and Examination Committee (“aEc”)ofBHBcomprisesfour(4)IndependentNon-ExecutiveDirectors.TheAECischairedby an Independent Non-Executive Director, Puan Noraini CheDan,whoisamemberoftheMalaysianInstituteofAccountant(“mIa”) as well as the Malaysian Institute of Certified PublicAccountants(MICPA).Thisisinlinewiththerequirementsunderparagraph15.09(1)(c)oftheMMLRandBNMCGPolicythatatleast one member of the Committee must be a member of the MIA or with equivalent expertise or experience in the field of finance.

The composition of the AEC is reviewed by the NRC andrecommended to theBoard for its approval.With the view tomaintain an independent and effective AEC, the NRC ensuresthat only an Independent Non-Executive Director who possessthe appropriate level of expertise and experience, and has the strong understanding of the Company’s business would be considered for membership on AEC.

The AEC also separately assessed KPMG as BHB’s ExternalAuditors. The AEC is guided by the factors as prescribed under Paragraph15.21oftheMMLRaswellastheAuditorIndependenceguided by BNM CG Policy, in the annual assessment on thesuitability,objectivityandindependenceoftheExternalAuditors.

The composition of the AEC, its duties and responsibilities as well as details of meetings attended by each member can be found in page 117 and from pages 127 to 137 of this Integrated Annual Report.

RIsK MANAGEMENT AND INTERNAL CONTROL fRAMEWORK

The Board has established an organisation structure and charter with clear defined lines of responsibility, authority limits and accountability in association with BHB Group’s business and operational requirements in order to maintain a sound control environment.

The effectiveness of risk management and internal controls is ensured by the establishment of the Board Risk Committee (“BRc”)andtheGroupRiskManagementCommittee(“GRmc”).The BRC regularly evaluates the adequacy and effectiveness of the Group’s risk management by reviewing the actions taken on lapses/deficiencies identified in reports presented by the respective subsidiaries at the GRMC.

BOARD RIsK COMMITTEE

TheBRCconsistsof IndependentNon-ExecutiveDirectors. TheBRCischairedbyanIndependentNon-ExecutiveDirector,EncikMohd Tarmidzi Ahmad Nordin, who is an Associate memberof the Chartered Insurance Institute (UK) as well as MalaysianInsurance Institute.

The BRC assists the Board in ensuring that the risk exposures and outcomes affecting BHB and the Group are effectively managed and addressed by the Board. More specifically, the BRC is responsible for formulating policies and frameworks to identify, monitor, manage and control material risks impacting the Group.

The BRC is supported by the GRMC where the members consist of theGroupChief FinancialOfficerofBHB togetherwith theRiskOfficerofeachmajorkeyoperatingsubsidiary.TheGRMCassists the BRC to oversee the risk management matters relating to the activities of the Group.

The composition of the BRC, its duties and responsibilities as well as details of meetings attended by each member can be found in page 117 and from pages 149 to 152 of this Integrated Annual Report.

INTERNAL AUDIT

Internal audit is independent of the activities of its audit. The functions of the Internal Auditors of BHB and its subsidiaries (saveforTakafulsubsidiaries)iscarriedoutbytheInternalAuditDivisionofBankIslam(“Internal audit”). Itsobjectives,scopeof activities and responsibilities are defined in the Internal Audit Charter. Internal Audit reports functionally to the AEC. Internal Auditadoptsarisk-basedapproachinitsauditingactivities.Anannual audit plan is developed using a structured risk and control assessment framework through which the inherent risk and control effectiveness of each auditable entity in BHB is assessed.

Specific disclosure on the activities of the Internal Audit are provided from pages 137 and 138 of this Integrated Annual Report.



PRINCIPLE C : INTEGRITy IN CORPORATE REPORTING AND MEANINGfUL RELATIONsHIP WITH sTAKEHOLDERsThe Board has direct control over the Company, and therefore owes fiduciary duties to the Stakeholders. The duty of care requirestheDirectorstoexercisegoodbusinessjudgementwhenmaking decisions to safeguard the interest of the Company and its Stakeholders. The Board recognises the importance of timely, complete, accurate and equal dissemination of information with regard to the Company and its Group’s performance and other matters affecting Stakeholders’ interest.

CORPORATE DIsCLOsURE POLICy (“CDP”)

A CDP has been formulated to enhance BHB’s corporategovernance, particularly in the area of transparent disclosure to the public. The purpose of the CDP is to enable Shareholdersand Stakeholders to access business information beyond the Company’s financial disclosure. In addition, it ensures that both the Board and Management are able to communicate effectively with Stakeholders on a timely basis.

INVEsTOR RELATIONs/sTAKEHOLDERs POLICy

The Company has in place an IR Policy to ensure thatstakeholders, investors and the investment community, both local and international, as well as the general public are provided with relevant, timely and comprehensive information about BHB. The Company is committed to providing effective and open communication in order to improve disclosure and transparency. Theobjectiveof the IR Policy is to laydown theprinciples and practices to be adopted by BHB in handling its communication so that investors and potential investors could make an informed investment decision and for the public at large tohaveaclearunderstandingof theGroupand itsobjectives.Our investor relations activities promote regular, effective andfair communication with shareholders. Briefing sessions for the media and analysts are conducted when quarterly results are released.

BHBanditsmajorsubsidiarieshavebeenkeepingahighstandardof dissemination of relevant and material information through various channels in order to maintain a close relationship with our institutional investors, fund managers and research analysts. Thesechannelsinclude:

• quarterlyandFullYearFinancialResultsAnnouncements• AnalystsBriefingPresentations• ConferenceandRoadshows• MediaCoverage• IRsectionofthewebsite

GENERAL MEETINGs

The Annual General Meeting (“aGm”) and ExtraordinaryGeneral Meeting (“EGm”) represent theprimaryplatforms fordirecttwo-wayinteractionbetweentheshareholders,theBoardandManagementofBHBanditsmajorsubsidiaries.Withregardto shareholderdemocracy andas stipulated in theMMLRandthe Companies Act 2016, shareholder’s approval is required on allmaterial issues including,butnot limitedto,majormergers,acquisitions and divestments exercises, dividend payments, paymentofDirectors’fees,election/re-electionandappointment/re-appointment of Directors as well as the appointment ofauditors.

A summary presentation of the financial results is given before the Chairman deals with the formal business of the meeting. Shareholders are encouraged to attend the AGM and to use the opportunity to ask questions on the Company’s performance under review and thereafter to receive the audited financial statementsandthereportsofDirectorsandAuditors.TheNoticeof the 22nd AGM of the Company is issued to the shareholders of the Company more than 21 days prior to the date of the said meeting.

BHB conducts its AGM by poll/e-voting in accordance withParagraph 8.29A of the MMLR (voting by poll). The results ofvoting on the proposed resolutions are disclosed to the market and posted on the Company’s website after the AGM. The ExternalAuditorsandChiefExecutiveOfficerof the respectivemajorsubsidiariesalsoattendtheAGMtoanswershareholders’questions. BHB further encourages shareholders to access the Integrated Annual Report online to complement the Company’s commitment to the environment, as well as to achieve greater cost efficiencies. Nevertheless, shareholders are still providedwiththeIntegratedAnnualReportinCD-ROMformattogetherwithasummarisedversionoftheFinancialStatements,NoticeofAGMandProxyForm.

CONCLUsIONThe Board is fully satisfied that in the year under review, BHB has taken additional steps and observed good governance practices inaccordancewiththeMCCG2017,MMLR,BNMCG Policy, the Green Book, MSWG’s Malaysian ASEANCorporate Governance Scorecard and Bursa Securities’ 2nd Edition Corporate Governance Guide and the Companies Act 2016.

This Corporate Governance Overview Statement wasapprovedbytheBoardofDirectorsofBIMBHoldingsBerhadon 27 March 2019.

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ion AUDIT AND ExAMINATION COMMITTEE (“AEC”) REPORT

THE AEC FACILITATES AND ASSISTS THE BOARD OF DIRECTORS By REvIEwING THE FINANCIAL INFORMATION TO ENSURE THAT THE FINANCIAL STATEMENT OF THE COMPANy AND THE GROUP ARE APPROPRIATELy PREPARED IN COMPLIANCE wITH THE MALAySIAN FINANCIAL REPORTING STANDARDS (MFRS), REvIEwING THE SySTEM OF INTERNAL CONTROLS wHICH THE MANAGEMENT AND THE BOARD HAvE ESTABLISHED AND REPORTING REqUIREMENT TO ENSURE COMPLIANCE wITH THE RELEvANT LAwS AND REGULATIONS. THE AEC ALSO EvALUATES THE PERFORMANCE OF THE INTERNAL AUDITORS wHICH IS OUTSOURCED TO BANK ISLAM, AS wELL AS THE ExTERNAL AUDITORS. THE AEC IS PRIMARILy RESPONSIBLE FOR RECOMMENDING THE APPOINTMENT, RE-APPOINTMENT AND THE REMOvAL OF THE ExTERNAL AUDITORS.

ThemembersoftheAECareasfollows:

chairman

1 Noraini che Dan IndependentNon-ExecutiveDirector (Chairman since 2 February 2018) (Member since 13 October 2016)

members

2 Tan Sri Ismail adam SeniorIndependentNon-ExecutiveDirector (member since 10 December 2014)

3 mohd Tarmidzi ahmad Nordin IndependentNon-ExecutiveDirector (membersince3September2015)

4 Nik mohd hasyudeen yusoff IndependentNon-ExecutiveDirector (member since 1 August 2018)

NUMBEROFMEETINGSHELDDURINGTHEYEARUNDERREVIEW

AEC 01/2018

AECSP01/2019

AEC 02/2018

AECSP02/2018

AEC 03/2018

AEC 04/2018

AEC 05/2018

AEC 06/2018

25 Jan 18 28 Feb 18 27 March 18 26 April 18 23 May 18 26 July 18 26 Sept 18 28Nov18

Notes:Details and background of the AEC members can be found from pages 83 to 86 of this Integrated Annual Report. Further information on the AEC’s Terms of Reference is available at the Company website www.bimbholdings.com

AVERAGEATTENDANCEOFTHEAECMEETINGS

100%



NOTLESSTHAN75%

TOTALAECMEETINGSHOURS

14 hOURS 45 mINUTES



mEmBERShIP & aTTENDaNcE

The AEC members’ profile and details of their attendance of the AEC meetings held during the year under review can be found from pages 83 to 86 and page 117 respectively, of this Integrated Annual Report.

The Committee is led by its Chairman, Puan Noraini Che Dan(“Puan Noraini”), an Independent Non-Executive Directorof BHB. Puan Noraini holds a Bachelor of Econs (Hons) fromUniversity of Manchester, United Kingdom. She is also amemberoftheMIAaswellastheMICPA.Thisisinlinewiththerequirementunderparagraph15.09(1)(c)oftheMMLRofBursaSecuritiesthatatleastone(1)memberoftheCommitteemustbe a member of the MIA or equivalent expertise or experience in the field of finance.

The AEC of BHB consists of experienced and qualified members. Presently,theAECconsistsoffour(4)IndependentNon-ExecutiveDirectors.AllmembersoftheAEChavesufficientunderstandingof the Company’s business. The AEC provides an independent oversight of the internal and external audit functions, internal controls and reporting requirements as well as checks and balances within the Company.

Whilst theAEC’sTORrequires theAECtomeetsix (6) timesayear,duringtheyearunderreview,theAECmetnine(9)times.Aside fromtheAECmembers, theChiefExecutiveOfficer, theGroupChiefFinancialOfficerandtheGroupCompanySecretarywere in attendance at all the AEC meetings.

The Board has established a transparent and appropriate relationship with its external auditors through the AEC. The representatives of the external auditors are present at the AEC meetings during deliberations which require their input and advice. In addition, the AEC will meet the external auditors without the presence of the Management twice a year in compliancewithMMLR.Duringthesessionwithoutthepresenceof the Management, the external auditors will discuss with the AEC on any issues and concerns, arising from the audit and any other relevant matters the external auditors wish to highlight. Other officers of the Company are also invited to the AECmeetings during the deliberation of matters related to them as and when necessary.

The Chairman of the AEC regularly provides updates to the Board on key matters deliberated at the AEC meetings. In addition, minutes of the AEC meetings are circulated to the Board for notification. Any members of the Board may enquire or seek clarification on the matters deliberated by the AEC as recorded in the minutes.

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Internal control

• Review the adequacy and effectiveness of internalcontrols, such as regulatory and Shariah compliance and information technology controls as well as accounting policies and system; and

• Review the updates on the internal accountingcontrol and auditing process to ensure operational effectiveness, reliable financial reporting in compliance with regulations and policies.

Internal audit

• Reviewtheadequacyandeffectivenessoftheinternalaudit function and processes, as well as ensure that the Internal Audit is adequately resourced and set up to carry out its functions, including approving its budget;

• ReviewtheInternalAudit’splan,itseffectivenessandthe scope and results of audits; and

• Review key audit reports and ensure appropriatenecessary corrective actions have been taken by the Management in a timely manner to address control weaknesses, policies and other problems identified by the internal auditors and other control functions.

Related Party Transaction

• Reviewallmaterialrelatedpartytransactions(includinginterested person transactions) and keep the Boardinformed of such transactions, and the findings and conclusions from its review.

annual Report Disclosure

• ReporttheworkofAECinthedischargeofitsdutiesand how it has met its responsibilities, the number of meetings held in a year, details of attendance of each member in respect of the meeting and details of relevant training attended; and

• ReviewtheaccuracyandadequacyoftheChairman’sstatement in the directors’ report, corporate governance disclosure and statement on internal control and risk management.

Financial Reporting

• Review and recommend the quarterly and AnnualConsolidated Financial Statements of the Company and Group (including announcement and press release)fortheBoard’sapproval;

• Ensure that the Consolidated Financial Statementsof the Group are prepared in accordance with the Malaysian Financial Reporting Standard and other regulatory requirements; and

• Review on significantmatters raisedby the externalauditors and progress updates from Management.

External audit

• Review the criteria for selecting, monitoringand assessing the external auditors. Make recommendations to the Board on the proposals to shareholders on the appointment, re-appointmentand removal of the external auditor and approve the remuneration and terms of engagement of the external auditors;

• Review the scope and results of the external auditsand the independent andobjectivity of the externalauditors; and

• Ensure that the external auditors promptlycommunicate to the AEC any information regarding internal control weaknesses or deficiencies, and that significant findings and observations regarding weaknesses are promptly rectified.

ROLES aND RESPONSIBILITIES OF ThE aEc



ThE aEc acTIVITIES IN 2018

The summary of the activities of the AEC in the discharge of its duties and responsibilities for the financial year ended 31December2018includedthefollowing:

1. FINaNcIaL REPORTING

The AEC assists the Board in ensuring the financial statements of the Company and its Group is prepared in accordance with the applicable financial reporting standards. The AEC will review and determine whether in the preparation of the financial statements, appropriate accounting policies have been adopted and supported by reasonable and prudent judgmentandestimates.

TheGCFOisresponsibleforthefinancialmanagementoftheCompany.Mr.MalkitSinghMaan, theGCFO,has27yearsof banking related experience and was previously the CFOof Bank Islam Malaysia Berhad (“Bank Islam”).Mr.MalkitisaCertifiedPractisingAccountant(“cPa”),amemberoftheAustralianSocietyofCPAsandCharteredAccountantofMIA.Detailsofhisprofileisavailableonpage96ofthisIntegratedAnnual Report.

During the year under review, theAEChas discharged itskey responsibilities in relation to financial reporting in the followingmanner:

(a) Reviewoftheunauditedquarterlyfinancialreportsandthe audited financial report for submission to BNM,Bursa Securities as well as Securities Commission with the Management before recommending to the Board of Directors for its approval prior to submission tothe relevant regulatory authorities. When reviewingthe report, the AEC would seek for the assurance that the condensed consolidated interim financial statements have been prepared in accordance with the Malaysian Financial Reporting Standards 134: InterimFinancialReporting,paragraph9.22oftheMMLRandInternationalAccountingStandards34:InterimFinancialReporting issued by the International Accounting Standards Board;

(b) Review of the audited statutory accounts of theCompany and of the Group, raised issues and concerns, if any, arising from the statutory audit with the external auditors, prior to recommending to the Board of Directorsfor itsapproval.TheAEC’sreviewincludedacritical scrutiny of the statutory accounts based on an analytical approach. At the same time, the AEC sought assurance from the Management and the external auditors that the financial statements disclosures were

in compliance with relevant and applicable statutory requirements and the Malaysian Financial Reporting Standards. The AEC’s scrutiny of the statutory accounts also included a review of the reasonableness of accounting policies and estimates applied by the Group, and reporting ongoing concerns, as concurred by the external auditors in its Report to the AEC. The AEC also reviewed pertinent audit matters highlighted by the external auditors in their report to the AEC which warrant the AEC’s attention;

(c) ReviewoftheReportoftheAECpursuanttoMMLRforinclusion in the Company’s Integrated Annual Report;

(d) Reviewof thedisclosures formingthecontentsof theCompany’sIntegratedAnnualReportasrequiredinPartAofAppendix9CofMMLR;

(e) Review of the updates on the internal accountingcontrol in accounting and auditing process to achieve operational effectiveness and efficiency, reliable financial reporting and compliance with regulations and policies;

(f) During the year under review, the GCFO and theexternal auditors have highlighted on the new/revised requirements on financial reporting standards i.e., MFRS 9 and MFRS 16. This was to enable the Management and the Board to understand the requirements of the new/revised standards and to facilitate actions to address and meet the new requirements within the stipulated deadline; and

(g) For the key audit matters, the external auditors havefocused particularly on credit and valuation. The AEC had also received reports and updates from the external auditors. The AEC was therefore made aware of all materially relevant issues of concern during the year.

Response to the Key Audit Matters

For the year under review, the external auditors have broughttheAEC’sattentiontothefollowingmatters:

i. malaysian Financial Reporting Standard 9 (“mFRS 9”)

The Group adopted MFRS 9 effective on 1 January 2018. It required considerable judgement andinterpretation in determining the classification, measurement and impairment of financial assets. MFRS 9 also introduced new disclosure requirements for classification, measurement and impairment of financial assets that are applicable to the financial statements of the Group.

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financial instruments prior to transition to MFRS 9. The Group has established the business model, measurement requirements and impairment model in accordance to the MFRS 9 requirements. Bank Islam Malaysia Berhad (“Bank Islam or “the Bank”) and Syarikat Takaful Malaysia KeluargaBerhad (formerly known as Syarikat Takaful Malaysia Berhad) (“Takaful malaysia”) had engaged thesame independent consultants to assist in the implementation of MFRS 9. The consultant has reviewed and validated the model and results to ensure the Group complied with MFRS 9 requirements. MFRS 9 has been implemented successfully on 1 January 2018.

In our preparation towards MFRS 9 implementation, the AEC was briefed on a timely basis on the proposed approach to be adopted and methodology to be applied in the implementation. As part of its oversight role over the implementation of MFRS 9, AEC has reviewed the progress update reports as wellasthefinancialimpactreportedtoBNM.

The Day One impact to provision for allowancesfor impaired financing, advances and others upon implementation of MFRS 9 was RM189.1 million, a 33% increase from that under MFRS 139 ofRM572.5 million. The Day One impact on BankIslam’s Total Capital ratio was 35 basis points. To maintain the existing strong capital ratios, Bank Islam has issued the third tranche of the subordinated Sukuk Murabahah amounting to RM300millionon13November2017andanotherRM300millionon7November2018.

The Group continued to classify and measure those financial instruments based on the model developed. The model and requirements would be reviewed regularly to ensure its appropriateness.

Ourexternalauditorshavealsoassessedandtestedthe design and effectiveness of the key controls that Management has established in relation to meeting the classifications and measurement requirements. They have also assessed the adequacy of transition adjustments and disclosures in the financialstatements.

Therefore, based on the above process, the AEC takes comfort that the requirements of MFRS 9 have been met.

ii. Impairment of financing, advances and others

The management of credit risk is being performed by CreditManagementDivisionandRiskManagementDivisionaswellasCreditAdministrationDepartmentandCreditRecoveryDepartmentofBankIslam.

The Bank monitors its credit exposures either on a portfolio basis or individual basis through annuals reviews. Credit risk is proactively monitored through a set of early warning signals that could trigger immediate reviewsof (certain part of) theportfolio. The affected portfolio or financing is placed on a watch list to enforce close monitoring and prevent financing from turning impaired and to increase chances of full recovery. The BRC, whose members are also members of the AEC, are regularly updated on the status of these financing accounts and portfolios and corrective actions taken. The BRC also requested and received additional information on potential risks, their impact as well as the measures taken to manage the risks so that impairment allowance estimates incorporated timely recognition of potential risk.

The Group also performed regular stress testing on the financing portfolios to assess the impact on the capital and profitability of the Bank under the various stress scenarios.

As mentioned above, MFRS 9 took effect on 1 January 2018, whereby the ECL model hasreplaced the incurred loss impairment model under MFRS 139. The ECL model requires impairmentto be recognised on initial recognition including expected future credit losses whilst the incurred loss impairment model only requires recognition of credit losses incurred as at reporting date.

In assessing for impairment, the Group first assesses individually whether objective evidenceof impairment exists for significant financing and collectively for financing that is not individually significant. If it is determined that objectiveevidence of impairment exists, i.e., credit impaired, foranindividuallyassessedfinancing,alifetimeECLwill be recognised for impairment loss which has been incurred.



For assessment of credit risk, as well as the estimation of ECL, the Group incorporate allavailable information which is relevant to the assessment, including information about past events, current conditions and reasonable and supportable forecast of future events and economic conditions at the reporting date. In addition, the estimationofECLalsotookintoaccounttimevalueof money.

The Group assumes that the credit risk on a financial asset has increased significantly when it is more than 30 days past due. The Group also uses its internal credit risk grading system and external risk rating to assess deterioration in credit quality of a financial asset.

The Group assesses whether the credit risk on a financing has increased significantly on an individual or collective basis. For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar risk characteristics, taking into account the asset type, industry, geographical location, collateral type, past-due status and other relevant factors. Thesecharacteristics are relevant to the estimation of

future cash flows for groups of such assets by being indicative of the counterparty’s ability to pay all amounts due according to the contractual terms of the assets being evaluated.

AsatDecember2018, theGroup’s allowance forimpairment was RM81.5 million compared to a write-back of RM15.6 million for financial yearended December 2017. The total allowancescomputed under MFRS 9 was higher than the total allowances for impairment under MFRS 139 as forward-lookingapproachwasadoptedaswellashigher financial assets, i.e., undrawn facilities were assessed for impairment.

Our external auditors have also evaluated thecomputation model, ascertained whether the borrowers were appropriately classified, if key judgementsexercisedwereappropriate,testedthekey inputs to the impairment loss computation, the completeness and accuracy of data.

Therefore, based on the above process, the AEC takes comfort that the expected credit loss provisions are sufficient and the carrying value of the financing, advances and others are appropriately stated in the financial statements.

Stage 1 12-months EcL

For exposures where there has not been a significant increase in credit risk since initial recognition and that are not credit impaired upon origination, the ECL associatedwith the probability of default events occurring within next 12 months will be recognised.

Stage 2 Lifetime EcL – not credit

impaired

For exposures where there has been a significant increase in credit risk since initial recognition butthatarenon-creditimpaired,alifetimeECLwillberecognised.

Stage 3 Lifetime EcL – credit

impaired

Financial assets are assessed as credit impaired when one or more events that have detrimental impact on the estimated future cash flows of that assets have occurred. For financing that are creditimpaired,alifetimeECLwillbe recognised.

Undercollectiveassessment,theGroupappliesthefollowingthree-stageapproachwhichreflectsthechangeincreditqualityofthefinancingsinceinitialrecognition:

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For the Group, the quantum of Level 3 financialinstruments as at 31 December 2018 was notsignificant. It only represented RM341.7 million or 0.5%ofthefinancialassetsheldatfairvalue.Thevaluation was undertaken by a unit independent of the business.

iv. Valuation of takaful contract liabilities

The takaful contract liabilities for family takaful business comprise provision for outstanding claims and participants’ funds, while takaful contract liabilities for general takaful business comprise provision for outstanding claims, provision for unearned contribution and participants’ funds.

The two (2) key components in deriving to thetakaful contract liabilities are the valuation of actuarial liabilities for the family takaful business and the provision for outstanding claims for both family and general takaful businesses.

Reports on valuation of liabilities in respect of family and general business were presented and approved bytheBoardofDirectorsofTakafulMalaysiaonanannual basis.

iv.i Valuationoftakafulcontractliabilities

Actuarialliabilitiesforlong-termfamilytakafulbusinessrequireactuarialsignificantjudgementover the estimation of future expected benefits

payable to participants. Actuarial liabilities for yearly renewal short-term family takafulbusiness is calculated based on the higher of its unexpired risk reserves and unearned contribution reserves. These estimations are made through the selection of best estimate assumptions such as mortality rates, morbidity/loss incidence rates, surrender rates and discount rates. The best estimate assumptions were derived using Takaful Malaysia’s actual past experience. An appropriate allowance for provision of risk margin for adverse deviation (“PRaD”) from best estimate assumption ismade in the valuation of liabilities such that the overall level of sufficiency of actuarial liabilities ata75%confidencelevelissecured.

The methodology used for calculating the actuarial liabilities comprise prospective actuarial valuation, cash flow projectionvaluation and unearned contribution valuation.

Although judgements are made aboutdetermining the appropriateness of discount, mortality, morbidity and surrender rate assumptions used in calculation of actuarial liabilities, there is an update to the Board on an annual basis to ensure the assumptions used are in line with actual experience and are reasonable.

iii. Valuation of financial instruments held at fair value

In determining the fair value of financial instruments, MFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to thosevaluation techniquesadoptedareobservableorunobservable.Observable inputs reflectmarket data obtained from independent sources and unobservable inputs reflect the Group’s assumptions. The three levelsinthehierarchyare:

Level 1

quoted and observable marketprices, where applicable, were used as the measure of fair value of financial instruments.

Level 2

Valuation techniques werebased on observable inputs for which pricing is obtained from independent sources. Input parameters include pricing from Bond Pricing Agency or BNMindicative yields.

Level 3

Significantvaluationjudgementisused. Judgement in relation to the valuation of financial instruments are more subjective, where thevalue is based on models that use unobservable market data, i.e., reflect the Group’s judgementand assumptions.



iv.iiValuationoftakafulcontractliabilities

The provision for outstanding claims is made for estimated cost of settling outstanding claimsincurredandIncurredButNotReportedClaims (“IBNR”) at the end of the reportingperiod by the appointed actuary.

A liability for outstanding claims is recognised when a claimable event occurs and Takaful Malaysia is notified. An explicit provision for IBNR is set up to cover delays in claimsreporting. However, the ultimate cost of these claims cannot be known with certainty at reporting date. The IBNR is calculatedusing a range of standard actuarial claim projectiontechniquesbasedonempiricaldataand current assumptions with a margin for adverse deviation to ensure the overall level of sufficiency at a 75% confidence level issecured.

For family takaful business, the IBNR iscalculatedusingtheChainLadderandExpectedLoss Ratio methods, the same methods usedinprioryears.Duringtheyear, theappointedactuary has revised the Loss DevelopmentFactors (“LDF”)downwardtoalignthefactorswith latest actual experience.

The appointed actuary will continue to closelymonitor theLDFassumptionsandwillconsider adopting a more realistic approach when the experience becomes more credible. The Management of Takaful Malaysia and appointed actuary have reviewed the treatment for case reserves amount in the calculation of IBNRforfamilytakafulproducts in2018.Theactuary will highlight and update the Board on any significant change to the assumptions used on a quarterly basis.

For general takaful business, the provision for IBNR was estimated using the Chain Ladder,Bornhuetter-FergusonandExpectedLossRatiomethods.

The AEC of Takaful Malaysia acknowledged the methodologies and assumptions used and are satisfied that they are reasonable and in line with the requirements of Risk-Based Capital

Framework for Takaful Operators and theGuidelinesonValuationBasis forLiabilitiesofFamilyandGeneralBusinessesissuedbyBNM.

2. ExTERNaL aUDIT

a) ReviewoftheauditplanoftheCompanyfortheyear(inclusive of key audit matters, audit approach, audit focus areas and scope of work) with the externalauditors prior to the commencement of the annual audit. The external auditors briefed the AEC on their audit plan pertaining to the statutory audit of the Company, highlighting areas of audit emphasis, key regulatory developments, involvement of the internal auditors and other experts;

b) Reviewoftheresultsoftheannualaudit,theExternalAuditors’ Report and the Management Representation LettertogetherwiththeManagement’scorrectiveactionto address the findings of the external auditors;

c) Meetwiththeexternalauditors(twiceayear)withoutthe presence of the Management to discuss issues and concerns if any, arising from the statutory audit and other matters the external auditors may wish to highlight, amongst others the level of assistance provided by the Company’s employees to the external auditors, and any difficulties encountered in the course of the audit work, including any restriction on the scope of activities or access to required information;

d) Evaluatetheperformance,independenceandsuitabilityof the external auditors and made recommendations to the Board of Directors on their re-appointmentand remuneration. In reviewing the performance, independence and suitability of the external auditors, the AEC reviewed the qualifications and the experiences of the audit team as well as conducted an assessment on the effectiveness and the performance of the external auditors and other areas such as the scope of the audit, theirindependenceandobjectivity,auditfeesandauditexperience;

e) Review of the nature, scope and fees for non-auditservices provided by the external auditors and ensured they were fair and reasonable and in line with the laid down practices on non-audit services in order tosafeguard the independence and objectivity of theexternal auditors and reduce potential conflict of interest; and

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3. RELaTED PaRTy TRaNSacTION

a) With the assistance of the GCFO, conduct review ofrelated party transactions entered into by the Company and the Group to ensure that the transactions entered into were in compliance with paragraphs 10.08 and 10.09oftheMMLR(Chapter10PartE–RelatedPartyTransactions)andpursuanttoMFRS124disclosure;

b) Review of the adequacy of the Company’s and theGroup’s procedures to ensure that recurrent related party transactions are not more favorable to the related party than those generally available to the public and are not to the detriment of the minority shareholders. The review done by the AEC is to ensure that the related party transactions were conducted in the best interest of the Company and its Group;

c) Review and report to the Board all related partytransactions entered into by the Company and its Group;

d) Review of the reports of recurrent related partytransactions and the Circular to Shareholders with regard to the proposed renewal of shareholders’ mandate for existing recurrent related party transactions of a revenue or trading nature; and

e) Monitor any potential conflict of interest situationsinvolvingDirectorsandensuredthatsuchsituationsofconflict were avoided and that the requirements under theDirectors’CodeofEthicswereadheredto.

4. OThER acTIVITIES

a) ReviewandendorsetheStatementofRiskManagementand Internal Control for the Board’s approval and inclusion in the Integrated Annual Report;

b) ReviewoftheZakatComputationfortheCompanyandits wholly owned subsidiaries for the year under review;

c) ReviewoftheproposalforinterimdividendsandDividendReinvestmentPlan(“DRP”)forrecommendationtotheBoard;

f) ReviewandmonitorcloselytheadoptionofMFRS,impairmentoffinancing,advancesandothers,provisionforoutstandingclaims and provision for unearned contribution as well as valuation. The external auditors have constantly updated the AEC on key matters of all materially issues of concern during the financial year.

Detailsofthestatutoryaudit,audit-relatedandnon-auditfeespaid/payabletotheexternalauditorsin2018areasfollows:

Group company Rm’000 Rm’000Fees paid/payable to KPmG Desa megat PLT (KPmG)Statutory audit 1,808 113 Regulatory-related 1,196 46

–VerificationofadoptionofMFRS9 995 20–ValidationofPerbadananInsuransDepositMalaysiaReturns 163 –– Statement of Risk Management and Internal Control 28 18 –ReportingtoLTHGroupauditors 12 12– Review of Integrated Annual Report 10 10 –Verificationofmotorcontributionincome 2 ––ReversalofFeesforReviewofStatementonRealisedandUnrealisedProfitsorLosses2017 (14) (14)Non-audit –Limitedreview&othernon-auditexpenses 386 18

3,390 177

Fees paid/payable to overseas affiliates of KPmGStatutory audit 239 –

3,629 177



d) Review of the report on the Company’s status ofcompliance with regulatory requirements namely the MMLR, Islamic Financial Services Act 2013, BNM’sGuidelines, Companies Act 2016 and Capital Market and Services Act 2007. The report also highlighted any new regulatory requirements as well as consultation papers issued by the relevant regulators and the deadline forcompliance.Whererelevant,theCommitteewouldreview the action plan proposed by the Management in meeting the regulatory requirements and discussed the implications of any latest changes and pronouncements on the Company and the Group;

e) ReporttotheBoardanysignificantissuesandconcernsdiscussed during the AEC meetings together with the relevant recommendations; and

f) ReviewoftheassuranceprovidedbytheCEOandGCFOon the scope and performance of the risk management and internal control system established by the Group prior to recommendation to the Board for acceptance.

INTERNaL aUDIT acTIVITIES REPORT

The Internal Audit functions of BHB and its wholly-ownedsubsidiaries,namelySyarikatAl-IjarahSdnBhd,BIMBSecuritiesSdn Bhd and BIMB Securities (Holdings) Sdn Bhd have beenoutsourcedtotheInternalAuditDivision(“IaD”)ofBankIslamsince December 2008. The IAD is led by the Chief InternalAuditor,EncikZalfitriAbdMutalip(“Encik Zalfitri”).EncikZalfitrijoinedBankIslam’sIADinOctober2007andwasappointedasthe Acting Head of Internal Auditors on 1 June 2017 and later promoted as the Chief Internal Auditor on 1 January 2019. Encik ZalfitriisaCertifiedPublicAccountantandaFellowmemberofthe ACCA. He is also a Certified Internal Auditor for financial institution(CIAFIN).

The internal audit function reports directly to the AEC of BHB and the abovesaid respective subsidiaries under the outsourcing arrangements. It is independent of the activities of its auditees. The primaryresponsibilitiesoftheIADaretoundertakeregularandsystemic reviews of the risk management process, internal control

and governance practices of BHB and its Group in conformance withtheInternationalProfessionalPracticesFrameworkandtheInternal Audit Charter so as to provide reasonable assurance that the risk management process, internal controls and governance practices are operating satisfactorily and effectively and are in linewiththeGroup’sgoalsandobjectives.

The internal audit functions of Bank Islam and Takaful Malaysia are carried out by their respective internal audit divisions.

The AEC reviews the adequacy and relevance of the scope, functions, resources, procedures, risk based internal audit plans andresultsoftheinternalauditprocesses,withtheIAD.Italsoreviews and approves the Annual Internal Audit Plan, whichinclude the audit scope, methodology and practices, timing and resources, assessment of risk, comparison of actual versus budgeted time spent on assignments and audit fee.

The review of the internal audit activities (comprising internal control, riskmanagementprocessandgovernancepractices) iscarriedoutbytheIAD.TheIADpreparestheauditreporttoensurecorrective action is taken by the Management in a timely manner to address the governance, risk and control issues reported. Risk based audit and governance reviews performed included accounts, regulatory, transparency and disclosure, information system risks, internal controls and operational risk management on contingency and disaster, and extent of the Company’s compliance with the policies and procedures, amongst others.

The scope of the Internal Audit reports covers improvement opportunities, audit findings, management responses and corrective actions in areas with significant risks and internal control deficiencies. All Internal Audit Reports on the Company and its wholly-owned subsidiaries were tabled to the AEC fordeliberation. The Management are present at the AEC meetings to respond and provide feedback on the progress of business process improvement opportunities identified by IAD. TheMinutes of the AEC meetings are subsequently tabled to the Board for notification.

Duringtheyearunderreview,IADhasissuedfour(4)reports.Thereportscoveredthefollowingareas:

Procurement and Finance

media and communication

corporate Governance human Resources

Operations and Risk management

Information Technology Investments corporate Strategy

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IAD is committed to provide independent, risk based andobjective assurance on the areas of operations reviewed, andgives insight and advice on best practices that will enhance, protectandaddvaluetoBHBanditswholly-ownedsubsidiaries.Thisisaccomplishedthroughthefollowing:

a) FormulatingacomprehensiveanddetailedAuditPlanusingappropriateandstructured risk-basedmethodology that isalignedtoBHB’sstrategicobjectives;

b) Adoptingasystematicanddisciplinedapproachinevaluatingrisk exposures and the adequacy and effectiveness of controls to manage the risks within BHB’s governance, operations and information systems;

c) EmbracinginternationalstandardsandbestpracticessuchasCommitteeofSponsoringOrganisations(COSO)tofurtherenhance the relevance and effectiveness of the internal audit activities;

d) Reviewing existing internal control systems and reportingon whether these provide reasonable assurance against material misstatement, loss and fraud;

e) Reportinganysignificantissuesthataffecttheprocessesofcontrolling the activities of, and managing the risks faced by the divisions/ companies audited; and

f) Seeking the Management’s agreed course of actions torectifyweaknesses identifiedandperformfollow-upauditsto confirm if the actions have been correctly implemented, and are adhered to consistently.

INTERNaL aUDIT acTIVITIES FOR 2018

The summary of the activities of the IAD for the year underreviewareasfollows:

a) PreparationoftheAuditPlanforapprovaloftheAEC.TheAudit Plan was developed based on assessment of thesignificant potential risk exposure of the auditable areas;

b) Issuance of Audit Reports to the AEC and Management,identifying weaknesses and issues as well as highlighting recommendations for improvement. Such recommendations were acted upon by Management with agreed timelines;

c) Follow-upontheManagementcorrectiveactionsonauditissues raised by the IAD. Determine whether correctiveactions taken had generally achieved the desired results;

d) ReporttotheAEC,reviewontheadequacy,appropriatenessand compliance of risk management, internal controls and governance processes;

e) ReporttotheAEConthereliability,integrityandcontinuityof Information Technology in compliance with the Company’sInformationTechnologyPolicytogetherwiththeeffectiveness and robustness of stress testing procedures andpracticesandthenecessaryback-upsystemtocoverforcontingencies and disaster;

f) Review the reliability (including accuracy andcomprehensiveness), integrity and timeliness of regulatoryreporting, accounting records, financial reports and management information; and

g) Review compliance with relevant legal, regulatory andinternal policies as well as in compliance with Shariah rules and principles as determined by the Shariah Committee.

Detailsofthefeespaid/payabletotheinternalauditorsin2018areasfollows:

company Ringgit malaysia

BIMB Holdings Berhad 21,000.00BIMB Securities Sdn Bhd 46,000.00BIMBSecurities(Holding)SdnBhd 3,144.00SyarikatAl-IjarahSdnBhd 2,340.00

TOTaL 72,484.00

cONcLUSION

During theyearunder review, theTORof theCommitteewasreviewed to reflect the recommendations of MCCG 2017. Based on the annual evaluation on the effectiveness of the Board, its committees and the members of the Board, it was revealed that the Board is satisfied with the performance of the AEC and its members. The AEC has discharged its duties in accordance with itsTORandinlinewiththerequirementsofMCCG2017,BNMCGPolicyandMMLR.

This statement is made in accordance with a resolution of the Board dated 27 March 2019.



NOMINATION & REMUNERATION COMMITTEE (“NRC’”) REPORT

THE NRC FACILITATES THE BOARD IN ENSURING A FORMAL AND APPROPRIATE PROCEDURE ON THE APPOINTMENT/RE-APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT, THE BOARD AND SENIOR MANAGEMENT’S REMUNERATION, THE BOARD’S EvALUATION AND EFFECTIvENESS, REvIEw ON THE BOARD COMPOSITION AND SUCCESSION PLANNING FOR THE BOARD AND MANAGEMENT.

ThemembersoftheNRCareasfollows:

chairman

1 Tan Sri Ismail adam SeniorIndependentNon-ExecutiveDirector (Chairman since 10 December 2014)

members

2 mohd Tarmidzi ahmad Nordin IndependentNon-ExecutiveDirector (member since 8 January 2016)

3 Noraini che Dan IndependentNon-ExecutiveDirector (member since 11 October 2016)



NRC 01/2018

NRC 02/2018

NRC 03/2018

NRC 04/2018

NRC 05/2018

NRCSP 01/2018

NRC 06/2018

25 January 18 27 March 18 23 May 18 30 July 18 26 September 18 26October18 3December18

Notes:Details and background of the NRC members can be found from pages 83 to 86 of this Integrated Annual Report. Further information on the NRC’s TOR is available at the Company website www.bimbholdings.com

AVERAGEATTENDANCEOFTHENRCMEETINGS

100%



NOTLESSTHAN75%

TOTALNRCMEETINGSHOURS

4 hOURS 55 mINUTES

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TheNRCmembers’profileanddetailsoftheirattendanceatNRCmeetings held during the year under review can be found from pages 83 to 86 and page 117 respectively, of this Integrated Annual Report.

TheNRCischairedbyTanSriIsmailAdam,theSeniorIndependentNon-ExecutiveDirectorofBHB.TanSriIsmailAdamholdMasterofArts(Economic)fromVanderbiltUniversity,USA.HegraduatedwithaBachelorofArts(Hons.) inEconomicsandaDiplomainPublicAdministrationfromtheUniversityofMalaya.

TanSri IsmailAdamhasvastexperience inPolicyManagementand Administration in the course of his civil service career spanning over 38 years. He has made remarkable contributions in fostering the culture of high performance in public services. AstheChairmanoftheNRC,heiswellpreparedandeffectivelyleads the Committee by encouraging active participation and contribution from all members and has been very focused and objective during the deliberation of issues and mattersconcerning BHB.

TheNRCconsistsoffour(4)membersandallthemembersareIndependent Non-Executive Directors. The current compositionofNRCcomplieswiththeBNMCGPolicyandMMLR.

WhilsttheNRC’sTORrequirestheNRCtomeetatleasttwiceayear,duringtheyearunderreview,theNRChasmetseven(7)times.Aside from theNRCmembers, theCEOand theGroupCompanySecretaryareinattendanceatallthemeetings.Whererelevant and necessary, the Head of Group Human Resources is alsoinvitedtoattendthemeetingoftheNRC.

The Chairman of the NRC updates the Board on key mattersdeliberatedat theNRC’smeetings. Inaddition,minutesof theNRCmeetingsaretabledtotheBoardfornotification.

ROLES aND RESPONSIBILITIES OF ThE NRc

The Committee ensures there is a formal and appropriate procedure for theappointment/re-appointmentofDirectors tothe Board and of key Senior Management. The Committee is responsible for leading this process and making recommendations to the Board. The Committee makes recommendations to the Board on the Company’s framework and policy for the remuneration of the Non-Executive Directors and SeniorManagement.

ThemainresponsibilitiesoftheNRCareasfollows:



Nomination Remuneration

• Reviewthestructure,sizeandcompositionoftheBoardandmake recommendations to the Board on any adjustmentsthat are deemed necessary including in terms of the appropriatesizeandskills,genderdiversityandthebalancebetween Executive Directors, Non-Executive Directors andIndependentDirectorsregularly;

• Review and recommend to the Board the fit and propercriteriaofadirector,theCEOandkeyseniormanagement;

• Perform the fit and proper assessment on the nomineesfor directorship, membership in Board Committees, the CEO and key senior management and make appropriaterecommendation to the Board;

• RecommendtotheBoardtheremovalofanydirectors,theCEOandkeyseniormanagementfromtheBoard/Committee/Management if they are ineffective, errant and negligent in discharging their responsibilities;

• InconsultationwiththeChairman,regularlyoratleastonceayear, reviewtheperformanceof individualdirectors,CEOand key senior management and evaluate the effectiveness of the Board as a whole and report to the Board as may be necessary;

• MakerecommendationstotheBoardon:

(i) reviewtotheorganisationstructureoftheCompany;

(ii) succession plan for directors, CEO and key seniormanagement personnel;

(iii) re-appointmentofanydirectors,CEOattheconclusionofhisspecifiedtermofofficeasapprovedbyBNM;

(iv) re-appointment of an independent director who hasservedacumulativeperiodofnine(9)years;

(v) any policies related to directors including policies onTenureofDirectorshipandDirectors’Training;

(vi) Assess the conduct/manner of the nominee directorsin exerting the influence of the shareholder before making any recommendation to the Board on his/her reappointment; and

(vii) Approve any request for directors to attend trainingoverseas.

• ReviewandrecommendtotheBoardtheoverallremunerationpolicyfordirectors,CEO,keyseniormanagementpersonneland such function as determined by the Board. The remunerationpolicyshould:

(i) BedocumentedandapprovedbythefullBoardandanychanges thereto should be subject to endorsement ofthe full Board;

(ii) SupporttheCompany’sculture,objectivesandstrategy;

(iii) Reflectthelevelofresponsibilityandcommitmentborneby the individual directors, the CEO and key seniormanagement personnel;

(iv) Be sufficient to attract and retain directors, the CEOand key senior management personnel of calibre that are needed to manage the Company smoothly and effectively;

• ReviewandrecommendtotheBoardspecificremunerationpackagesfordirectors,theCEOandkeyseniormanagementpersonnel.Theremunerationpackagesshould:

(i) Bebasedonanobjectiveconsiderationandapprovedbythe full Board;

(ii) Notbedecidedbytheexerciseofsolediscretionofanyone individual or restricted group of individuals;

(iii) Be competitive and consistent with the Company’sculture,objectivesandstrategy;

• ReviewandrecommendtotheBoard, theremunerationoftheCEOoftheCompany;

• Reviewand recommend to theBoard the remunerationofSeniorVicePresidentandabovewithintheCompany;

• ReviewandrecommendtotheBoard,thequantumandbasisof bonus payments to the Management and staff of the Company; and

• ToreviewandrecommendtotheBoard,policiespertainingtostaff salary, remuneration scheme and benefits.

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ThE NRc acTIVITES IN 2018

Duringtheyearunderreview,theNRCheldseven(7)meetingsonthefollowingmatters:

• AppointmentofanewChairman/IndependentNon-ExecutiveDirectorsforBHB;

• Re-electionandre-appointmentofIndependentNon-ExecutiveDirectors;

• ReviewofthestatusofindependenceoftheIndependentNon-ExecutiveDirectors;

• AnnualEvaluationoftheBoardanditsCommittees;

• Monthlyassessmentwhethereachmemberhassufficienttimetodischargehis/herresponsibilitiestakingintoconsiderationhis/her external professional commitment;

• ReviewofthecompositionoftheBoardandBoardCommittees;

• NominationofnomineedirectorsofBHBinitssubsidiary;

• AssessandrecommendtotheBoardontherenewalofcontractofserviceandremunerationofSeniorManagement;

• ReviewoftheresultsoftheannualBoardevaluation;

• DeliberatemattersrelatingtotheNon-ExecutiveDirectors’remunerationandbenefits;

• Reviewofemployees’benefitsandremuneration;and

• ReviewandrecommendtotheBoardthepaymentofbonus,specialadvanceandincrementtoemployees.

The NRC reviewed the size, composition and diversity of theBoard as well as the mix of existing and desired competencies of members in its succession planning.

BasedontherecommendationsoftheNRC,theBoardconcurredthatthecurrentsizeandcompositionoftheBoardisconduciveto facilitate effective decision-making based on a diversity ofperspectives and skills, in the best interests of the Company.

In view of the need to ensure proper processes are in place to manage succession issues at the Board level, an appropriate process for the selection, nomination and appointment of suitable candidates to the Board has been put in place.

The NRC is entrusted with the responsibility of assessing andconsidering the capabilities, commitment and qualities of director candidates for appointment to the Board as well as Board Committees. In its assessment, the NRC will take intoaccount the required mix of skills, background, experience/ expertise/knowledge relevant to Company’s business, existing commitment and potential conflict of interest.

Following each appointment, a letter of appointment will be issued and the Group Company Secretary shall undertake the necessary as authorised by the Board, so as to ensure the appointment is in accordance with the statutory requirements as prescribed by theMMLRandBNMCGPolicy.AllnecessaryinformationwillbeobtainedfromthenewlyappointedDirectorfortheCompany’s

records and for meeting the statutory requirements and other applicable rules and regulations.

SUccESSION PLaNNING

The Board assisted by the NRC is responsible for developingplans to identify the necessary and desirable competencies and skillsofDirectorsincludingsuccessionplanstoensurethereisanappropriate dynamic of skills, experience, expertise and diversity on the Board. The NRC also performs an oversight functionfor the appointment as well as the succession planning for key Senior Management.

Duringtheyearunderreview,thechangesinthecompositionoftheBoardMemberswereasfollows:

Director Status with effect from

TanSriSamsudinOsman Retired 31 January 2018

DatukZaitonMohdHassan Retired 1 February 2018

Tan Sri Ambrin Buang Appointed 2 February 2018

NikMohdHasyudeenYusoff Appointed 1 June 2018

DatukRozaidaOmar Retired 6 September 2018

Rifina Md Ariff Retired 6 September 2018



Consequently,arisingfromthesaidmovement,thefollowingchangesweremadetothecompositionoftheBoardCommittees:

committee Previous composition New composition

Chairman ChairmanDatuk Zaiton mohd hassan Puan Noraini che Dan

Members MembersPuan Noraini che Dan Tan Sri Ismail adamTan Sri Ismail adam mohd Tarmidzi ahmad Nordinmohd Tarmidzi ahmad Nordin Nik mohd hasyudeen yusoff

Chairman ChairmanTan Sri Ismail adam Tan Sri Ismail adam

Members MembersDatuk Zaiton mohd hassan Puan Noraini che Danmohd Tarmidzi ahmad Nordin mohd Tarmidzi ahmad Nordin Nik mohd hasyudeen yusoff

Chairman Chairmanmohd Tarmidzi ahmad Nordin mohd Tarmidzi ahmad Nordin

Members MembersPuan Noraini che Dan Tan Sri Ismail adamTan Sri Ismail adam Puan Noraini che Dan Nik mohd hasyudeen yusoff

AEC

NRC

BRC

Thechangesthatweremade,tookintoaccounttherequirementsunderBNMCGPolicyandMMLR.TheBoardCommitteescomprisedsolelyindependentnon-executivedirectors.

cOmPOSITION OF ThE BOaRD

TheBoardofBHBcurrently consistsoffive (5)Non-ExecutiveDirectors.All five (5) are IndependentNon-ExecutiveDirectors. TheIndependentNon-ExecutiveDirectorsareindependentofManagementandfreeofanybusinessorotherrelationshiporcircumstancethat could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise of their unfettered and independentjudgement.

Fortheyearunderreview,thecompositionoftheBoardcomplieswiththefollowingrequirements:

Requirement Relevant Provision Remarks

75%IndependentDirectors Paragraph15.02ofMMLRParagraph11.6ofBNMCGPolicyRecommendation 4.1 of MCCG 2017

Fully complied.100%ofthemembersoftheBoardareIndependentNon-ExecutiveDirectors.

Onlyone(1)ExecutiveDirectorintheBoard, unless otherwise approved by BNM.

Paragraph11.4ofBNMCGPolicy Fully complied.ThereisnoExecutiveDirectorontheBoard of BHB.

CommonDirectorstoremainintheminority

Paragraph11.11ofBNMCGPolicy Fully complied.Onlytwo(2)outoffive(5)arecommondirectors.

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aPPOINTmENT OF a DIREcTOR

There is a formal and transparent process for the appointment of a Director. The NRC, which has been delegated by theBoard to oversee the process, will consider all proposals for the appointment of new Directors. The procedure is in linewith the Company’s Policy on Fit and Proper Criteria for KeyResponsible Persons (“KRP Policy”). The KRP Policy outlinesthe attributes/qualifications required by a candidate to be deemed‘fitandproper’fortheappointmentasaDirectorandhasbeenimplementedsinceAugust2011.TheNRCmakestherecommendation to the Board on the suitability of candidates forappointmentasDirectorsandthatthecandidatessatisfytherequisite skills and core competencies in accordance with the KRPPolicyoftheCompany,MMLR,MCCG2017,BNMCGPolicyandBNM’sGuidelineonFit&Proper.Inassessingthesuitabilityof a candidate, the NRC also conducts an interview with thecandidate.BasedontheNRC’srecommendation,theBoardwilldecide on the proposed appointment based on the merit and the KRPPolicy.

In determining if an individual is ‘fit and proper’ to holdthe position of a Director, the following shall be taken intoconsideration:

• His/her probity, diligence, competence and soundness ofjudgment;

• His/her reputation, character, integrity (includingfinancialintegrity)andhonesty;

•His/herhistoryofoffence(s)involvingfraud/dishonesty/violence;

• Whether he/she has been engaged in deceitful/oppressive/improper business practices or any practices which would discredit him/ her;

• Whetherhe/shehasbeenengaged/associated/hadconductedhimself/herself in a manner which may cast doubt on his/her fitness,competenceandsoundnessofjudgment;

• Whether he/shehas contravened anyprovisionmadebyorunder any written law designed for protecting members of the public against financial loss due to dishonesty, incompetence or malpractice; and

• Whetherhe/shehasbeendeclaredabankrupt.

UpontheBoard’sconcurrence,anapplicationfortheappointmentof a director would be submitted to BNM for its approval. The selection criteria and process for the appointments of DirectorstotheBoardaredetailedintheBoardCharteravailableat www.bimbholdings.com.

Requirement Relevant Provision Remarks

MajorityIndependentDirectorsintheBoard Committees

Paragraph12.3ofBNMCGPolicy Fully complied.100%ofthemembersofallBoardCommitteesareIndependentDirectors.

Board Committees must not have any ExecutiveDirectorinitsmembership

Paragraph12.5ofBNMCGPolicy Fully Complied.ThereisnoExecutiveDirectorinanyBoard Committees.

TheCompany’sConstitutionprovidesthattheCompanymusthaveatleastfive(5)Directorsbutnotmorethan15Directors.

The Board is satisfied that it currently has an appropriate balance of skills, experience, knowledge and independence to deliver the Group’s strategy, to enable theNon-ExecutiveDirectors to effectively challenge the viewsof theManagement and to satisfy therequirements of good governance.

WithintheBoardthereisdiversityandawealthofknowledge,experienceandskillsintheareaofaccountancy,banking,takaful,publicadministration and fund management, human resources management, corporate finance and risk management. A brief profile of each member of the Board is provided on pages 82 to 86 of this Integrated Annual Report. The diverse background and expertise of the DirectorsbringsnewperspectivetotheCompanyanditsGroup’soperationsandenhancestheeffectivenessoftheBoard.


TheprocessflowfortheappointmentofanewDirectorisasfollows:

RE-ELEcTION aND RE-aPPOINTmENT OF DIREcTORS

InaccordancewiththeCompany’sConstitution,allDirectorsofBHBaresubjecttore-electionbytheshareholdersattheAGMatthe first opportunity after their appointment, and in subsequent year one-third (1/3) of the Directors for the time being, or iftheirnumberisnotthree(3)oramultipleofthree(3),thenthenearestone-thirdare subject to retirementby rotationat leastonceeverythree(3)yearsinaccordancewithParagraph7.26(2)oftheMMLR,Articles61and66oftheCompany’sConstitution.

For the year under review, the Board recommended the re-electionandre-appointmentofthefollowingDirectorswereduly approved by the shareholders at the 21st AGM held on 15 May2018:

1. Tan Sri Ambrin Buang;

2. EncikMohdTarmidziAhmadNordin;and

3. PuanNorainiCheDan.

For the forthcoming 22nd AGM, the Board of Directors hasrecommended the re-election of the following Directors forapprovalbytheShareholders:

(a) Encik Nik Mohd Hasyudeen Yusoff shall be retiring at theforthcoming AGM and being eligible, has offered himself for re-election pursuant to Article 66 of the Company’sConstitutionandParagraph7.22oftheMMLR.

(b) Tan Sri Ambrin Buang and Tan Sri Ismail Adam shall beretiring at the forthcoming AGM and being eligible, have offeredthemselvesforre-electionpursuanttoArticle61oftheCompany’sConstitution andParagraph7.26(2) of theMMLR.

TheDirectors’performanceisusedasthebasisinrecommendingto the shareholders their re-election and re-appointment. AnannualevaluationandindependenceassessmentoftheDirectorsare conducted and the results are assessed by the NRC andcommunicatedtotheBoard.Whererelevant,recommendationsare made to the Board for certain actions to be taken to address issues or concerns on the Board’s effectiveness and composition.

The annual evaluation and independence assessment of the DirectorscoverstheassessmentontheDirectors’professionalism,experience, material relationship, competency and commitment inperformingtheirrespectiveduties.TheNRChasconcludedthatallDirectorswhoareseekingre-electionattheforthcomingAGMhave met the Board’s expectation by continuously discharging theirdutiesdiligentlyasDirectorsoftheCompany.

Forthesubmissionofanapplicationforthere-appointmentofDirectors to BNM, the NRC will first assess the Directors whoaredueforre-appointmentandthensubmititsrecommendationtotheBoardfordeliberationandapproval.UponobtainingtheBoard’s endorsement, the relevant submission, supported by the justifications for such re-appointment, is made to BNM for itsapproval three (3) months prior to the expiry of the Director’stenure.

Details of the Directors who are due for re-election at theforthcoming 22nd AGM are disclosed on page 376 of this Integrated Annual Report.

INDEPENDENcE aSSESSmENT OF INDEPENDENT DIREcTORS

BHB recognises the important contribution of the Independent DirectorsinlinewiththerequirementsundertheBNMCGPolicywhere a majority of its Directors must be independent. Thepresence of majority Independent Directors within the currentBoard facilitates an effective and independent oversight over the Management providing the necessary checks and balances in ensuring the Company operates in a safe and sound manner. To ensure the independence of the Independent Directors aremaintained at all time, all Independent Directors are required


Identification of candidates

Evaluation of suitability on Fit

andProper

Interview session byNRC

DeliberationbyNRCand

recommendation to the Board

Board Approval

1 2 3 4 5

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ion to declare their independence on a monthly basis. Through

the annual evaluation and independence assessment of the Directors, the Independent Non-Executive Directors are alsoassessed on their ability to provide strong, valuable contributions to the Board’s deliberations, without interference and acting in the best interest of BHB.

For the year under review, the NRC has considered theindependence of each Independent Director in office andhas concluded that each Independent Director has met theindependencecriteriaassetoutintheMMLRaswellasBNMCGPolicy.ThishasbeenconcurredbytheBoard.

The tenure of the Director is also taken into accountwhen assessing the independence of the Independent Director.AdditionalcriteriathatareassessedtodeterminesuchindividualDirectors’abilitytoexerciseindependentjudgementare:

• The Director is free from any business or otherrelationship which can materially pose any conflict of interestorinterferewiththeexerciseoftheDirector’sjudgementorwillbedisadvantageoustoBHBorBHB’sinterest;

• The Director’s ability to provide objective challengesand constructive feedback to Management, focusing on root cause of issues and potential actions required to rectify the issues discussed;

• TheDirector’s readiness tochallengeotherDirectors’assumptions, believes or viewpoints for the good of BHB;

• The ability to challenge the assumptions, beliefs orviewpointsofotherswiththeobjectiveofquestioningand challenging constructively in the interest of the Company;

• Willingness to stand up and defend his/her views,beliefs and opinions for the ultimate good of the Company; and

• HasagoodunderstandingoftheCompany’sbusinessactivities in order to provide appropriate responses on the various strategic and technical issues put forth and deliberated by the Board.

The effective participation of Independent Directorsenhances accountability in the Board’s decision-makingprocess. The responsibilitiesofan IndependentDirectorincludebutnotlimitedtothefollowing:

• ProvideandenhancethenecessaryindependenceandobjectivitytotheBoard;

• EnsureeffectivechecksandbalancesontheBoard;

• Mitigateanypossibleconflictofinterestbetweenthepolicymakingprocessandtheday-to-daymanagementof the Company;

• Constructively challenge and contribute to thedevelopment of business strategy and direction of the Company; and

• Ensure that adequate systems and controls tosafeguard the interests of the Company are in place.

TENURE OF INDEPENDENT DIREcTOR

InlinewiththeaboveandbasedontheNRC’srecommendation,during the period under review, the Board has agreed that the tenure of an Independent Non-Executive Director should notexceed a cumulative term of nine (9) years. This decision wasmade pursuant to the new Practice 4.2 of MCCG 2017. TheCompanynowhasapolicythatlimitsanIndependentDirectortoamaximumtenureofnine(9)years.However,anIndependentDirectorwhohasservedformorethannine(9)years,may,subjecttotheShareholder’sandBNM’sapproval,continuetoservetheCompanyasanIndependentNon-ExecutiveDirector.Otherwise,such Independent Director would be re-designated as a Non-Independent Non-Executive Director although he/she does notrepresentanyshareholder.Inanyevent,noIndependentDirectorwill continue to serve the Board for more than 12 years.

BHB gives cognisance to the importance of this new Practice4.2 of MCCG 2017 and has introduced a voting policy for the Group on the re-election of directors at the general meeting.The voting policy would provide transparency and consistency in implementingthePractice4.2ofMCCG2017onre-electionofindependent directors within the BHB Group.

Thevotingpolicystatesthefollowing:

a) BHBdoesnotsupportandwouldvoteagainsttheresolutiontore-electindependentdirectorwhohasreachedthetenureof 12 years; and



b) BHBdoesnotsupportandwouldvoteagainsttheresolutionon the re-electionofNon-IndependentDirectorwhodoesnot represent any shareholder unless justified on thefollowingbasis:

i) he/she possesses the relevant experience and skill thatare crucial to support the business operation of the subsidiaries and such experience and skill are not available within the current composition of the Board; and

ii) suchexperienceandskillarescarceorhardtofindwithinthe industry.

Detailsofthevotingpolicyaredisclosedonpages110and111of this Integrated Annual Report.

BOaRD TRaINING & DEVELOPmENT

The Company recognises the value of enhancing the skills and knowledgeofitsDirectorsonrelevantnewlawsandregulations,the changing business environment and risk profile, as well as the latest developments and key challenges in the financial sector.

Duringtheperiodunderreview,apartfromtheexternaltrainingsthatwereattendedbytheDirectors,theManagementhasalsoorganised in-housetrainingsontheNewCompaniesAct2016(Roles and Duties of Director and Shareholders’ Right) as partof the Board’s Continuing Development, to enable them todischarge their responsibilities.

The BHB’s Board Charter incorporates a policy on Director’sTrainingwhich,amongstothers,requires:

a) Newly appointedDirector toundergo an inductionprogramme by the Management where the Company’s governance structure, the key business and operations and important regulations and laws are highlighted. The induction programme is to be heldas soonaspracticable,no later than three (3)monthsupontheappointmentoftheDirector;

b) ToundergoandcompletetheDirector’sMandatoryAccreditationProgrammebyBursaSecuritieswithinfour(4)monthsofhis/herappointment;

c) To complete a core training programme under theFinancial Institutions Directors’ Education Program(“FIDE”) within one (1) year and the same to becompletedwithin two (2)yearsupontheDirector’sappointment to the Board; and

d) Toattendat least two (2) trainings in the calendaryear.

BasedonthesaidDirectors’Trainingpolicy,thelistoftrainingsattendedbytheDirectorsiscirculatedtotheBoard.

The Board is mindful of the need for continuous training to keep abreastwithnewdevelopments.TheDirectorsareencouragedtoattend forums and seminars facilitated by external professionals in accordance with their respective needs in discharging their duties as Directors. The Board will continue to evaluate anddetermine the training needs of its Directors to enhance theirskills and knowledge.

The Company provides a dedicated training budget for the Directors’ continuingeducation.Relevant trainingprogrammesarearrangedbytheCompanyfortheDirectorsandmembersoftheBoardCommittees.TheDirectorsmayalsorequesttoattendadditional trainings according to their specific requirements as DirectorsormembersoftheBoardCommittees.

Asattodate,allDirectorshaveattendedtheFIDEprogrammeasrequiredbyBNMandMandatoryAccreditationProgrammebyBursa Securities. For the year under review, the average number of trainings attended by the Directors were seven (7). TheManagement conducted an induction programme for all newly appointedDirectorswithinamonthoftheirappointment.

The newly appointed Directors were given an informationpack comprising relevant updated corporate information on BHB, Board Charter, Term of References of the Board and Board Committees, as well as other relevant policies related to the Board. The induction programme was arranged to assist the Directors in familiarising themselves with the roles andresponsibilitiesofDirectors. ItalsoservestointroduceBHBandthe Group’s businesses, operations and governance practice and arrangements, amongst others. The Directors were briefed onthe business operations of the respective subsidiaries during the induction programme.

The induction session is also attended by Senior Management, namely, the CEO, the Group Chief Financial Officer and theGroup Company Secretary to assist newly appointed Directorsto have an understanding on the Company’s core businesses and its whole operation. Apart from the operational briefing, the Management also organised separate briefing sessions with theBoardofmajorsubsidiariestohaveanunderstandingofthebusiness operation as well as challenges faced by them.

The Group Company Secretary co-ordinates the organisationof induction programme, internal training programmes and the Directors’ attendance of external seminars and programmes.The Group Company Secretary keeps a complete record of the trainingsattendedbytheDirectors.

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ion Detailsoftheconferences,seminarsandtrainingprogrammesattendedbyeachdirectorsin2018disclosedonpages121and122of

this Integrated Annual Report and CG Report.

BOaRD EVaLUaTION

Anobjectiveandwell-managedboardevaluationprocesscanleadtosubstantialimprovementintheBoard’seffectivenesswhichwilleventually bring significant benefits to the Company.

ThroughaBoardandPeerAnnualAssessment(“Board Evaluation”),theNRCundertakesaformalandtransparentprocesstoassesstheeffectivenessofindividualDirectors,BoardCommitteesandtheBoardasawhole.Thefactorsconsidered,amongstothers,includethefollowing:

category criteria

Peers/Individual Director • Contributionof theDirector inmeetings,whenconfrontedwith the conflict andhis/herwillingness to challenge prevailing opinion;

• qualityofinputprovidedbytheDirector;and• contributiontointeractionandtheDirector’sunderstandingofhis/herrolesandresponsibilities

i.e.,inhis/hercapacityasaDirectoringeneral,ChairmanofBoardandBoardCommitteesaswellasanIndependentDirector.

Board committees • TermsofReference;• skillandcompetency;• meetingandadministration;• conductofmeeting;• communicationtotheBoard;• areaoffocusspecifictoeachBoardCommittee;• effective role supporting and facilitating the Board’s effectiveness in discharging its

responsibilities; and • sufficientaccesstoreviewmattersdeliberated.

Board • The responsibilities of the Board in relation to strategic planning, risk management,performance management, financial reporting and succession planning;

• Boardcommunicationandcorporategovernance;• Boardoperationandinteraction;• theBoard’scomposition,sizeandbackground;and• thecontributionsofeachmemberattheBoardmeetings,decision-makingandoutput.

Wherenecessary,anexternalconsultant/expertwillbeengagedtoassistinandlendobjectivitytotheannualassessment.

Duringtheperiodunderreview,theprocesswasinternallyfacilitatedandconductedthroughquestionnairescirculatedtotheBoardcoveringavarietyofaspectsassociatedwiththeboardeffectivenesssuchasBoardStructure,BoardOperationsandInteraction,BoardRolesandResponsibilities,UnderstandingtheCommittees’Roles,MixofSkillsandKnowledgeandCommitmentofMembers.Thesequestionnaires were designed to recognise the Board’s strengths and to identify gaps or areas for improvement for the Board and its Committees.

Uponcompletionoftheevaluation,theGroupCompanySecretarywouldcompiletheresultsfortheBoard’sdeliberationandapprovalof any action plan required. The Chairman will engage and discuss the peer assessment results with individual members if necessary.

Havingconsideredtheresultsoftheannualevaluationfortheyearunderreview,theNRCconcludedthattheDirectorsandrespectiveBoard Committees as a whole have remained effective and have consistently met high performance standards and all expectations. ThisindicatesthattheDirectorshavecontinuouslyfulfilledtheirresponsibilitiesasMembersoftheBoardandBoardCommittees.



Themajorkeyoperating subsidiariesalsoperformed individualassessment of its Directors, Chief Executive Officer/ManagingDirectoraswellasotherkeyresponsiblepersonsanditsShariahCommittee members annually. The assessment covers amongst other the person’s probity, personal integrity and reputation, competence and capability, and financial integrity.

DIREcTORS’ REmUNERaTION

AmongsttheobjectivesoftheNRCistodetermineanappropriateremuneration policy that aligns remuneration with strategy to drive the long-term successof theCompanyandensures thatthe Company can continue to attract, retain and motivate quality leaders.

During the year under review, the director’s remunerationframework was developed taking into account FIDE Director’sRemuneration Report 2015 (“FIDE Report”)andBNMCGPolicyon Remuneration. The six (6) factors considered in the settingof Non-Executive Directors remuneration to ensure there wasequitable remuneration for role, effort and risk highlighted in the FIDEReportwereasfollows:-

a) The number of meetings attended as an indicator of a Non-ExecutiveDirector’scontributions;

b) A meeting fee rate based on a comparable rate that themarket pays for a talent with similar caliber and expected contributions;

c) The fixed fee (retainer fee) and the meeting fee (sittingfee) component are determined in such manner that theNon-Executive Directors were better recognised for theirpreparation and contributions at meetings including meetings with BNM. Fixed fee would be determined by taking intoaccount the Non-Executive Director’s expected time spenton Board’s education, networking and engagement with stakeholders;

d) RateforallmeetingfeesarestandardisedforallBoardandBoard Committee meetings to recognise the value of each member’s contributions;

e) TheChairmanoftheBoardandtheBoardCommitteesareremunerated at a premium given the additional role that they play in guiding and managing the Board and the Board Committees; and

f) Theremunerationispaidonatimelyandperiodicbasis.

TheDirectorsofBHBareremuneratedasfollows:

(a) FeesandOtherEmolumentsNon-ExecutiveDirectorsareremuneratedbywayofmonthlyfees, a sitting allowance and other emoluments. Fees payable to Non-Executive Directors are subject to Shareholders’approval at the Annual General Meeting.

(b) BenefitsinKindOtherbenefitssuchasDirectors’HealthandMedicalBenefittogether with Directors’ and Officers’ (“D&O”) liabilityinsurance and travelling allowance are also provided.

TheremunerationoftheDirectorsisreviewedonceeverythree(3)yearstoensuretheDirectorsarereasonablyremuneratedtoreflect their role, responsibilities and efforts in discharging their fiduciary duties.

Details of each director’s remuneration for the financial yearended31December2018aredisclosedonpages123and124of this Integrated Annual Report and CG Report.

SENIOR maNaGEmENT REmUNERaTION

The remuneration package for the Senior Management is structured to link rewards to corporate and individual performance. It comprises salary, allowances, bonuses and other customary benefits as accorded by comparable companies. A significant portion of the Senior Management’s compensation package has been made variable and is determined by performance during theyearagainst individualKPIs inascorecardalignedwiththecorporateobjectivesasapprovedbytheBoard.TheNRCreviewsthe performance of the Senior Management annually and submits views/recommendations to the Board on the remuneration and/or rewards to reflect the Senior Management’s contributions towards the Company’s achievements for the year.

Bands of the Senior Management’s remuneration for the financial yearended31December2018aredisclosedonpage125ofthisIntegrated Annual Report and CG Report.

cONcLUSION

TheNRCissatisfiedthat ithasdischargeditsresponsibilities inaccordance with the mandate given by the Board and its Terms of Reference.

This statement was made in accordance with the resolution of theBoardofDirectorsdated27March2019.

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ion BOARD RIsK COMMITTEE (“BRC’”) REPORT

THE BRC wAS ESTABLISHED ON 11 OCTOBER 2016 By THE BOARD TO ASSIST THE BOARD TO DISCHARGE ITS RESPONSIBILITIES. wHILST THE BOARD IS ULTIMATELy RESPONSIBLE FOR THE COMPANy AND ITS GROUP’S RISK MANAGEMENT FRAMEwORK, THE BRC, FACILITATES AND ASSISTS THE BOARD TO PERFORM THE OvERSIGHT ON THE GROUP’S RISK MANAGEMENT FRAMEwORK AND DASHBOARD REPORTING, TO SAFEGUARD SHAREHOLDERS’ INvESTMENTS AND THE GROUP’S ASSETS. THIS IS IN LINE wITH THE REqUIREMENTS OF THE MALAySIAN CODE ON CORPORATE GOvERNANCE 2017 (“MCCG 2017”) AND THE MAIN MARKET LISTING REqUIREMENTS (“MMLR”) AS wELL AS BANK NEGARA MALAySIA’S CORPORATE GOvERNANCE POLICy (“BNM CG POLICy”).

ThemembersoftheBRCareasfollows:

chairman

1 Encik mohd Tarmidzi ahmad Nordin IndependentNon-ExecutiveDirector (Chairman since 11 October 2016)

members

2 Noraini che Dan IndependentNon-ExecutiveDirector (member since 11 October 2016)

3 Tan Sri Ismail adam SeniorIndependentNon-ExecutiveDirector (member since 31 May 2017)



BRC 01/2018

BRC 02/2018

BRC 03/2018

BRC 04/2018

BRC 05/2018

BRC 06/2018

23 Feb 18 27 March 18 4 June 18 27 August 18 29Oct18 3Dec18

Notes:Details and background of the BRC members can be found from pages 83 to 86 of this Integrated Annual Report. Further information on the BRC’s Terms of Reference is available at the Company website www.bimbholdings.com

AVERAGEATTENDANCEOFTHEBRCMEETINGS

100%



NOTLESSTHAN75%

TOTALBRCMEETINGSHOURS

12 hOURS 24 mINUTES



mEmBERShIP & aTTENDaNcE

The BRC members’ profile and details of their attendance of the BRC meetings held during the year under review can be found from pages 83 to 86 and page 117 respectively, of this Integrated Annual Report.

TheBRC ischairedbyEncikMohdTarmidziAhmadNordin,anIndependentNon-ExecutiveDirectorofBHB.EncikMohdTarmidziholdsMasterofBusinessAdministrationfromIslamicUniversityof Malaysia in Islamic Banking & Finance. He is also an Associate memberoftheCharteredInsuranceInstitute(UK)(“acII”)andaFellow of the Malaysian Insurance Institute (“FmII”).EncikMohdTarmidzi has more than 30 years of experience in takaful andfinance.PriortohisretirementinOctober2009,hewastheChiefExecutiveOfficerofEtiqaTakafulBerhad.

The BRC has four (4) members and all the members areIndependent Non-Executive Directors. The current compositionof BRC complies with BNM CG Policy requirements. The BRCmembers have vast experience in fields such as takaful/insurance, finance, accounting, audit and procurement to enable them to discharge their responsibilities as members of the Committee.

The BRC is supported by the Group Risk Management Committee (“GRmc”)whichischairedbytheGroupChiefFinancialOfficer.TheothermembersoftheGRMCaretheChiefRiskOfficerandtheChiefComplianceOfficerofeachkeyoperatingsubsidiaries.The GRMC assists the BRC to effectively manage the key risk areas of the Company and Group and to ensure that an appropriate risk management system and internal controls are in place and functioning effectively.

ROLES aND RESPONSIBILITIES OF ThE BRc

The purpose of the BRC is to assist the Board in ensuring that the Group has in place a sound and robust risk management framework and such framework has been effectively implemented toenhancetheGroup’sabilitytoachieveitsstrategicobjectives.

The Committee facilitates and assists the Board in fulfilling its statutory, oversight and fiduciary responsibilities to its stakeholders. The BRC’s salient responsibilities include the following:

• Reviewtheriskmanagementpolicystatementandframeworkfor the Company and its Group including the strategies, policies, the risk tolerance levels, governance and reporting structure;

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ion • Review and assess the adequacy of the risk management

policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these risks are operating effectively;

• Reviewandassess theadequacyof infrastructure, resourcesand systems at the subsidiaries for an effective risk management;

• Review theadequacyof relevantpolicies at the subsidiariesand the Company in meeting the relevant regulatory requirements as a financial holding company including capital plan, dividend policy, investment and financing policy, single customer limit, business continuity plan and etc.;

• Review and assess risk methodologies for measuringand managing risks arising from the subsidiaries’ overall management of all risks including market, credit, operational, and etc., through identified tools;

• Regularlyreviewtheriskprofilingreportsbythesubsidiariesto ensure all risks at the subsidiaries are effectively managed and assess the potential impact of those risks to the Group as a whole;

• Review issues or findings by the relevant authorities thatregulate the business and activities of the subsidiaries and the Company and assess the adequacy and effectiveness of the rectification measures;

• Reviewtheriskappetitestatementandkeyemergingriskofkey operating subsidiaries;

• ReviewthecompliancereportinginaccordancewiththeAnti-Money Laundering, Anti-Terrorism Financing and Proceedsof Unlawful Activities Act 2001, Islamic Financial ServicesAct2013andPersonalDataProtectionAct2010andotherregulatory requirements;

• Review the adequacy and provide independent assuranceto the Board of the effectiveness on the risk management framework and internal control implemented in the Group on annual basis; and

• Oversee the functions of the Group Risk ManagementCommittee.

hOw ThE BRc OPERaTES

The BRC meetings schedule is planned ahead for the following financial year. The proposed schedule of meetings is tabled to the Board and later communicated to the BRC members.

Duringtheyearunderreview,six(6)BRCmeetingswereheld.TheBRCmemberswereprovidedwithmeetingpapersand updates of outstanding matters from the previous meeting for the members’ review prior to the meeting.

TheChiefExecutiveOfficer,theGroupChiefFinancialOfficer,theGroupCompanySecretary,theChiefRiskOfficerandtheChiefComplianceOfficerofthekeyoperatingsubsidiariesattendthemeetings.Otherattendees,whetherinternalor external are invited to present the matters within their purview.

The Chairman of the BRC updates the Board on key matters deliberated at the BRC’s meetings. In addition, minutes of the BRC meetings are tabled to the Board for notification. Any members of the Board may enquire or seek clarification on the matters deliberated by the BRC as recorded in the minutes.



RISK maNaGEmENT

In order to support the BRC, the GRMC is responsible for the ongoingdevelopmentandco-ordinationoftheCompany’sriskmanagement framework within the Group. The GRMC is also responsible to consolidate, assess and report risk information from across the Group. It ensures the implementation of the risk management process within the Group. The Company risk management process is a step-by-step process of riskassessment (risk identification, riskanalysisandriskevaluation)and risk treatment in the context of the internal and external environments.

During the year under review, the GRMC met six (6) times.DuringtheGRMCmeeting,theChiefRiskOfficerandtheChiefComplianceOfficeroftherespectivekeyoperatingsubsidiariespresented the risks associated to the subsidiaries. The risks

include credit, market as well as operational risk. Emerging issues and compliance risks are also deliberated in the meetings and further action is taken by the relevant key operating subsidiaries where necessary.

cONcLUSION

The BRC continues to diligently exercise its risk oversight responsibilities by ensuring that risk management is an integralpartofstrategicplanninganddecision-makingfor theachievementoftheGroup’sstrategicandlong-termobjectives.

The BRC is satisfied that it has discharged its responsibilities in accordance with its mandate and Terms of Reference.

This statement was made in accordance with the resolution of theBoardofDirectorsdated27March2019.

ThE BRc acTIVITES IN 2018

TheBRCactivitiesintheyearunderreviewaresummarisedbelow:

• Review of the Statement of Risk Managementand Internal Control, which summarised the risk management practices and internal controls implemented by the Management. Assurances from the Chief Executive Officer and the Group ChiefFinancial Officer were given to the Board that theGroups’ risk management and internal control system were operating adequately and effectively, in all material aspects;

• ReviewoftheBoardRiskCommittee’soverviewreport;

• Streamline the risk reporting to facilitate easiermonitoring of the risk associated to the key operating subsidiaries;

• Review of the risk management dashboard (marketrisk, operational risk, credit risk, concentration risk, liquidity risk, capital adequacy and insurance risk movement),theriskparametersandstresstesttabledby the key operating subsidiaries;

• Review of the Group’s strategic risks and thecorresponding key operational risks as well as key controls taken to manage the risks. Further

mitigations to strengthen the management of existing and emerging risks were recommended for the Management’s action;

• Reviewofreportsonriskincidentswhichoccurredinthe financial year and deliberated the adequacy and effectiveness of preventive and corrective actions taken;

• Review of the compliance management reportincluding AML/CFT reporting, regulatory complianceand Shariah non-compliance, tabled by the keyoperating subsidiaries;

• Briefing by an external consultant to the BRC on‘ImpactofIFRS17onTakafulBusiness’;

• Reviewof thePersonalDataProtectionAct2010onthePDPAprinciples;and

• Review of the submission to BNM on OperationalRisk Reporting – Capital Adequacy Framework that enhanced the reporting to include Credit, Market and OperationalRiskinformation.

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ion INTRODUcTION

Pursuant to Paragraph 15.26(b) of the Main Market ListingRequirements (“mmLR”) of Bursa Malaysia Securities Berhad,the Board of Directors (“Board”) is pleased to provide thefollowing Risk Management and Internal Control Statement (the “Statement”)whichoutlinesthenatureandscopeofriskmanagement and internal controls of the Group during the financialyearended31December2018.

For the purpose of disclosure, this Statement is guided by the StatementonRiskManagement& InternalControl:Guidelinesfor Directors of Listed Issuers. The Board is committed andacknowledges its responsibility to oversee the system of risk management and internal controls within the Group including reviewing its adequacy, integrity and effectiveness to safeguard shareholders’ investments and the Group’s assets.

The Board has received assurance from BHB’s Chief Executive Officer (“cEO”) and the Group Chief Financial Officer thatthe Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, during the financial year under review and up to the date of this Statement.

Taking into consideration the assurance from the Management and the input from the relevant assurance providers, the Board is of the view that the systems of risk management and internal control are performing satisfactorily and are adequate to safeguard the shareholders’ investments, customers’ interest and the Group’s assets. The Group will continue to implement new measures to strengthen the internal control and risk management environment.

BOaRD RESPONSIBILITy

The Board recognises that a sound system of internal control and risk management practices are essential in ensuring good corporate governance. Such a system is designed to manage an acceptable risk profile rather than eliminate the risk of failure to achievethebusinessobjectivesoftheBHBGroup;andcanonlyprovide reasonable and not absolute assurance against material misstatement, fraud or loss.

As a financial holding company (“Fhc”), continuousenhancements are being made to the system of internal control in line with the Board’s commitment to improve the Group’s governance, risk management and internal control framework and control culture. The environment for the proper control of theGroup’sbusinessoperationsisalsoinlinewithBankNegaraMalaysia’s (“BNm”)regulatoryframework.

At BHB level, the internal control oversight responsibilities were initiallycarriedoutbythefollowingcommittees:-

• Audit&ExaminationCommittee(“AEC”)

The main responsibility of the AEC is to assist the Board in assessing the effectiveness of the Group’s internal control systems and overseeing the accounting system’s internal control. This is to ensure that appropriate methods and procedures are in place to obtain the level of assurance required by the Board. The AEC also review the quarterly reports relating to regulatory developments, compliance and operational deficiencies identified within the Company. The AEC also assists the Board to review the adequacy and effectiveness of the accounting system’s internal control and ensures that appropriate methods and procedures are in place to obtain the level of assurance required by the Board. The minutes of the AEC is escalated to the Board for information.

The Terms of Reference is available on the Company’s website at www.bimbholdings.com

• BoardRiskCommittee(“BRC”)

The BRC is responsible to assist the Board on risk management and oversee the Management’s activities in managing significant risk areas and to ensure that the risk management framework is in place and functioning effectively. At the Management level, the BRC is supported by the Group Risk Management Committee (“GRmc”) tooversee the risk management matters relating to the Group risk management activities. The minutes of the BRC is escalated to the Board for information.

The Terms of Reference is available on the Company’s website at www.bimbholdings.com

In respect of the key operating subsidiaries, in particular Bank Islam Malaysia Berhad (“Bank Islam”) and Syarikat TakafulMalaysia Keluarga Berhad (formerly known as Syarikat Takaful Malaysia Berhad) (“Takaful malaysia”), the internal controloversight function is carried out by the respective subsidiaries’ BRC. At BIMB Securities Sdn Bhd (“BImB Securities”),theriskmanagement and internal control oversight function is carried out by its AEC.

The risk management control structure and processes which have been instituted throughout the BHB Group are reviewed from time to time to cater for the changes in the business environment. BHB’s AEC and BRC together with the respective AEC/BRC at the

STATEMENT OF RISK MANAGEMENTAND INTERNAL CONTROL


STATEMENT ON RISK MANAGEMENTAND INTERNAL CONTROL

key operating subsidiaries regularly reviews and monitors the Management’s approach and actions in addressing key risks at Company and subsidiaries level. It also provides the Board and the Management with the platform to anticipate and manage both the existing and potential risks, taking into consideration changing risk profile and risk appetite. This process has been in place and continued to be BHB Group’s practice for the financial year under review and up to the date of approval of this Statement for inclusion in this Integrated Annual Report.

Assurance in relation to the above risk management and internal control are also obtained from the key operating subsidiaries confirming that their risk management and internal control are operating adequately and effectively, in all material aspects. Any material risk management and internal control deficiencies will be presented to the respective subsidiaries’ BRC/AEC and subsequently to the respective Board.

KEy INTERNaL cONTROL STRUcTURE

Key processes that the Board has established in reviewing the adequacy and effectiveness of the system of internal controls include thefollowing:

• RiskManagementFramework

The Board has established an organisation structure and charter with clear defined lines of responsibility, authority limits and accountability in association with BHB Group’s business and operational requirements in order to maintain a sound control environment. The key process that the Board has established in reviewing the adequacy and effectiveness of the system of internal controlsoutlinedinthediagrambelow:-

maNaGEmENT RESPONSIBILITy

The Management is responsible for implementing the Board’s policies and procedures on risks and control and its roles includes butnotlimitedto:

• Identifytherisksrelevanttothebusiness,implementationofstrategiesandtheachievementofitsobjectives;

• Implementregularriskmanagementreporting,monitoringandreviewaspartofitsriskmanagementframework;

• Identifychangestorisksoremergingrisks,takeactionsasappropriate,andpromptlybringthesetotheattentionoftheBoard;

• Discussthetolerancelevelforeachoftheoperationalbusinessandensurethattheyarewithintheacceptedparameterbythe relevant regulatory bodies;

• ImplementthepoliciesapprovedbytheBoard;and

• ReportinatimelymannertotheBoardanychangestotheriskandanycorrectiveactiontaken.

External auditInternal audit

BOaRD OF DIREcTORS

Shariah SupervisoryBRc

GRmc

aEc

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ion Risk management is considered an integral part of BHB

Group’sday-to-dayoperationstofacilitateBHBinachievingits objectives as well as to protect its shareholders andstakeholders’ interest. The risk management is embedded in the Group’s key processes and monitored through a Risk ManagementDashboard(“RmD”)report.TheGroup’skeyoperatingsubsidiariesreporttheirrisksviaRMDattheirBRCsix(6)timesayear.ForBIMBSecurities,itreportsitsrisksviatheRMDatitsAEConquarterlybasis.

The Group’s risk management framework seeks to ensure thatthereisaneffectiveon-goingprocessinplacetomanagerisk across the Group. This process is regularly reviewed by the Board through the BRC which provides oversight over the risk management activities for the Group to ensure that the Group’s risk management process is functioning effectively. The BRC also assists the Board to review the Group’s overall risk management philosophy, frameworks, policies and models. In discharging its overall duties and responsibilities, the BRC is supported by the Group Risk Management Committee which monitors and evaluates the effectiveness of the Group’s risk management system on an on-goingbasis.

In addition to the risk management framework, the Group’s key operating subsidiaries has implemented the Internal CapitalAdequacyAssessmentProcess(“IcaaP”)frameworkto ensure that the Group maintains adequate capital levels consistent with the risk profiles including capital buffers to support theGroup’s current andprojected demand forcapital under existing and stressed conditions.

The key operating subsidiaries, respectively, have appointed a qualified risk officer who is responsible to monitor, assess and manage the risks associated with the business and operations of the respective subsidiaries. The RMD of therespective subsidiaries are tabled at the GRMC and where relevant, subsequently tabled at BHB’s BRC.

TheBRCortheAEC(asthecasemaybe)ofthekeyoperatingsubsidiaries will escalate and update their respective Board on any new regulatory or statutory requirement that could impact the internal control and the risk management principles, policies, procedures and practices of the Companies and its subsidiaries.

• RiskAppetite

The BRC, through the Group’s key operating subsidiaries establishes the risk appetite and risk tolerance for the relevant entities. The defined risk appetite and risk tolerance are periodically reviewed by the respective Management and the respective Board in line with the Group’s business strategies and operating environment. The review includes identifying and setting new risk appetite metrics for the business entity or removal of risk appetite metrics that are no longer applicable as well as updates on the risk appetite thresholds to be in line with the Group’s business strategy and risk posture. The main business and operations inherent risks that were considered in the risk appetite review include regulatory compliance risk, credit risk, market and liquidity.

• AuditandExaminationCommittee(“AEC”)

The AEC of BHB reviews the adequacy of internal controls within the Company based on the assessment performed by the internal auditors. Similarly, the AEC of the key operating subsidiaries reviews relevant matters pertaining to its internal accounting controls on quarterly basis. In addition, the AEC of BHB and its key operating subsidiaries also review and assess the adequacy of the scope and effectiveness of the internal and external audit functions. For the external auditors, the AEC assess their independence and the quality of their resources.

All significant findings by the internal auditors, external auditors and regulators are reported to the AEC for review and deliberation. The AEC reviews and ascertains that mitigation plans are implemented by Management to safeguard the interests of the Group and upkeep proper governance. The risk responses and internal controls that the Management has initiated are documented and recorded in the AEC meeting minutes.

Pursuant to Paragraph 15.17(f) of the MMLR of BursaMalaysiaSecuritiesBerhad,two(2)separatemeetingswiththe external auditors were conducted with the AEC of BHB without the presence of any Management of the Company, to discuss on any issues relating to BHB Group during the financialyearended31December2018.


• BoardRiskCommittee(“BRC”)

The BRC is kept informed by its subsidiaries on their risk management policy statement and framework including the strategies, policies, the risk tolerance levels, governance and reporting structure.

At the key operating subsidiaries level, reviews and assessments were carried out on the adequacy of the risk management policies and framework in identifying, measuring, monitoring and controlling risks and the extent to which these risks are operating effectively. In addition, they would also review the adequacy of relevant policies at the subsidiaries in meeting the relevant regulatory requirements including capital plan, dividend policy, investment and financing policy, single customer limit, business continuity plan, and etc.

• GroupRiskManagementCommittee(“GRMC”)

The GRMC has been established to identify and review the key risk areas of BHB Group. It ensures that an appropriate risk management system and internal controls are in place and functioning effectively. The GRMC is also responsible for assessing the adequacy of infrastructure, resources and systems for effective risk management, and where necessary to embark on the Group’s initiative to share facilities, mobilise resources, and etc. In addition, the GRMC reviews the subsidiaries risk management periodic reports presented by the key operating subsidiaries on risk exposure, risk portfoliocompositionandriskmanagementactivitiessix(6)times a year.

TheGRMC ischairedby theGroupChiefFinancialOfficerandthemembersconsistoftheChiefRiskOfficerandtheChiefComplianceOfficerofthekeyoperatingsubsidiaries.

• InternalAudit

The internal audit function of BHB and its subsidiaries (save for Takaful Malaysia) is carried out by the Internal AuditDivision of Bank Islam. For Takaful Malaysia, the internalaudit function is carried out by its own independent internal audit department.

The Internal Audit assesses compliance with policies and procedures and the effectiveness of the Group’s internal

control systems. The Internal Audit undertakes regular reviews of BHB and its subsidiaries’ operations and business processes. It examines and evaluates the adequacy and efficiency of financial and operating controls and highlights significantrisksandnon-compliance.Whereapplicable,theInternal Audit will provide recommendations to improve the management of risks, control and governance processes. The AEC regularly reviews the status of rectification actions on the findings or recommendations by the internal auditors. Further details on the internal audit activities are provided in BHB’s AEC report.

Internal audit is performed on all key divisions in BHB Group, providing the respective AEC an independent assurance on the operational, financial, compliance and risk related activitieswithintheGroup.Therisk-basedinternalauditplanis approved by the AEC of the key operating subsidiaries on an annual basis. All internal audit observations are highlighted in the internal audit reports and reviewed by the AEC.

• ShariahAdvisory

It is a fundamental requirement of an Islamic financial institution that its entire business practices and operations are based on Shariah rules and principles. Islamic finance derives its value proposition from the application of Shariah contracts in financial transactions that provide for different risks and return profiles. Adherence to Shariah principles under such distinct contracts preserves the validity and sanctity of any Islamic financial transactions. BHB is committed to upholding these principles via strict observance oftheShariahGovernanceFrameworkoutlinedbyBNM.

The Shariah advisory function of BHB and its subsidiaries (saveforTakafulMalaysiaandBIMBSecurities)iscarriedoutby the Shariah Supervisory Council of Bank Islam (“SSc”).For Takaful Malaysia and BIMB Securities, the Shariah advisory function is carried out by its own independent Shariah committee.

OneofthekeyresponsibilitiesoftheSSC/Shariahcommitteesis to advise its respective Board on Shariah matters in relation to business operations, compliance with Shariah principles at all times, auditing the operational aspect of BHB and endorsingthezakatcomputationanddistribution.


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Board Meetings

Group Organisation Structure

Limit of Authority Matrix

Human Resources Policies and Procedures

Standard Operating Procedures

Annual Business Plan and Budgeting Process

OThER KEy ELEmENTS OF INTERNaL cONTROL

Theotherkeyelementsoftheinternalcontrolsystemsaredescribedbelow:

Ataminimum,theBoardmeetssix(6)timesayearandhasaformalagendaonmattersfordiscussion.TheCEOleadsthepresentationofboardpapersandprovidesexplanationonpertinentissues.Athoroughdeliberation and discussion by the Board is a prerequisite before arriving at any decision. In addition, the Board is kept updated on the Group’s activities and operations on a timely and regular basis.

The Board has established an organisation structure with clearly defined lines of responsibility, authority limits, and accountability aligned to business and operations requirements which support the maintenance of a strong control environment.

The Group has clearly defined lines of authorities to facilitate prompt responses in the continuously evolvingbusinessenvironment,effectivesupervisionofday-to-daybusinessconductsandaccountability.TheestablishmentofLimitofAuthority (“Loa”)matrixclearlyoutlinestheBoardandManagement’slimits and approval authorities across various key processes. The LoA is duly approved by the Boardandsubjecttoregularreviewandenhancementtoensureitreflectschangesinaccountabilityandriskappetite of the Group.

The Human Resources policies and procedures of BHB and its subsidiaries encompasses areas of human resourcesmanagementsuchastherecruitmentofnewemployeesbasedon“fitandproper”criteria,performance appraisals, training and development.

DocumentedStandardOperatingProcedures(“SOPs”)foralldepartmentsofBHBanditssubsidiarieswereapprovedbytherespectiveManagement.TheSOPsservesasaday-to-dayoperationalguidetoensure compliance with financial and operational controls as well as the applicable laws and regulations. AllSOPsarereviewedandupdatedregularlytoreflectcurrentrisks,newregulatoryrequirementsandcurrent operations.

The Group’s budget is prepared based on the annual business plans of BHB’s key operating subsidiaries. The budget and business plan are approved by the respective Board and subsequently endorsed by BHB’s Board. Actual performances of the subsidiaries are reviewed against the targeted results on a quarterly basis allowing for timely response and corrective actions to be taken to ensure the business targets are met.

The subsidiaries’ performances are assessed against the budget, business plans and relevant key financial indicators.


Information Technology (“IT”) System

whistle Blowing Policy

Performance Review

REVIEw OF ThE STaTEmENT By ExTERNaL aUDITORS

The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in the Audit and Assurance Practice Guide 3 (“aaPG 3”)(Revised2018),Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“mIa”)for inclusion inthe IntegratedAnnualReportoftheGroupforthefinancialyearended31December2018.

Based on the review conducted, the external auditors have reported to the Board that nothing has come to their attention thatwouldcausethemtobelievethatthisstatement:

(a) hasnotbeenprepared in accordancewith thedisclosuresrequired by paragraphs 41 and 42 of the Statement on Risk ManagementandInternalControl:GuidelinesforDirectorsofListedIssuers,or

(b) isfactuallyinaccurate.

AAPG3(Revised2018)doesnotrequiretheexternalauditorstoconsiderwhethertheDirectors’StatementonRiskManagementand Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and theManagement thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the Integrated Annual Report will, in fact, remedy the problems.

This statement is made in accordance with the resolution of the Board dated 27 March 2019.

IT is key in supporting the service efficiency and delivery systems of the Group. The IT Risk Framework was developed to ensure that risks are correctly identified and mitigated accordingly. Bank Islam and Takaful Malaysia have developed their IT policies to address issues of security and risk related to IT. The subsidiaries continue to upgrade their IT systems to enhance efficiency of their business operations and services.

There is an established process for reporting anyone suspected to be abusing or circumventing processes andcontrols.Allstaffareaccordedtheopportunitytoreportviathewhistle-blowingmechanismwiththe assurance that the report will be dealt with confidentially and that the reporter’s identity will be protected.

The Board receives and reviews reports from the Management on the Group’s financial and operational performance,riskmanagementaswellaslegalandregulatorymattersonceineverytwo(2)months.Thefinancial performance presented highlights the key financial indicators of which include amongst others the ratio on profitability, capital adequacy and asset quality.

The actual performance of BHB and its key operating subsidiaries are assessed against approved budgets and business plans, key financial indicators as well as industry’s benchmark. The assessment enables the Management to identify any significant deviations and gaps for remedial measures to be implemented where necessary.


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ion 1. ShaRE BUyBacKS

BHBdidnotpurchaseanyofitsownsharesduringthefinancialyearended31December2018.

2. OPTIONS, waRRaNTS OR cONVERTIBLE SEcURITIES

BHBhadon11December2013issued426,715,958FreeDetachableWarrantspursuanttotheRenounceableRightsIssueof426,715,958newordinarysharesofRM1.00eachinBHBinrespectofthefinancialyearended31December2013.Detailsofthe warrant holdings is set out on page 360 to 362 of the Integrated Annual Report.

BHBdidnotissueanyoptions,warrantsorconvertiblesecuritiesinrespectofthefinancialyearended31December2018.

3. amERIcaN DEPOSITORy REcEIPT (aDR) OR GLOBaL DEPOSITORy REcEIPT (GDR)

BHBdidnotsponsoranyADRorGDRprogrammeinthefinancialyearended31December2018.

4. NON-aUDIT FEES

Theamountofnon-auditfeespaid/payablebyBHBtoitsexternalauditorsandtheiraffiliatedcompaniesforthefinancialyearended31December2018issetoutonpage135oftheIntegratedAnnualReport.

5. PROFIT GUaRaNTEE

BHB did not give out any profit guarantee during the financial year under review.

6. LIST OF PROPERTIES

The list of BHB’s properties is set out on pages 350 to 356 of the Integrated Annual Report.

7. maTERIaL cONTRacTS INVOLVING DIREcTORS aND maJOR ShaREhOLDERS

Saveasdisclosedbelowandtherelatedpartytransactionsdisclosedonpages279to280(Note44)oftheFinancialStatements,noothermaterialcontractenteredintobyBHBoritssubsidiarycompaniesinvolvingDirectorsand/ormajorshareholders’interestwas still subsisting at the end of the financial year or entered into since the end of the previous financial year.

(a) ADeedPoll dated25October2013was executedbyBHB constituting the issuanceof426,715,958 freedetachablewarrants pursuant to the renounceable rights issue of 426,715,958 new ordinary shares of RM1.00 each in BHB (“Right Share”)togetherwith426,715,958freedetachablewarrants.

8. ImPOSITION OF SaNcTIONS aND/OR PENaLTIES

Therewerenopublicsanctionsand/orpenaltiesimposedontheCompanyoritssubsidiaries,DirectorsorManagementarisingfrom any significant breach of rules/guidelines/legislations by the relevant regulatory bodies during the financial year under review.

9. VaRIaTION ON RESULTS

Therewasnovariationinresults(differingby10%ormore)fromanyprofitestimatedforecastorprojectionofunauditedresultsannounced.

10. GENERaL maNDaTE

BHB Group had at the last AGM obtained a general mandate from its shareholders to allow BHB and/or its subsidiaries, in their normalcourseofbusiness,toenterintorecurrenttransactionsofarevenueortradingnaturewithrelatedparties(RRPTs)whicharenecessaryforitsday-to-dayoperations,ontermsnotmorefavourabletotherelatedpartythanthoseavailableinthegeneralpublicandnottothedetrimentoftheminorityshareholders.TheRRPTsMandateisvaliduntiltheconclusionoftheforthcomingAGMoftheCompany.TheBoardproposestoseektherenewaloftheexistingRRPTsMandateattheforthcoming22nd AGM of the Company which will be held on 15 May 2019 at 10.00 a.m. This Mandate, if approved by shareholders, will be valid until the conclusion of the next AGM of the Company in the year 2020.

ADDITIONAL COMPLIANCEINFORMATION


ADDITIONAL COMPLIANCEINFORMATION

ExIsTING MANDATE

NATURE Of TRANsACTIONs

RELATED PARTy/PRINCIPAL ACTIVITIEs INTEREsTED DIRECTOR AND/OR MAJOR sHAREHOLDERs1

PREVIOUs EsTIMATED AGGREGATE

VALUE As DIsCLOsED IN

THE CIRCULAR TO sHAREHOLDERs

DATED 17 APRIL 2018

RM’000

ACTUAL VALUE TRANsACTED fROM 15 MAy

2018 (BEING THE DATE Of THE

LAsT AGM) TO 31 MARCH 20192

RM’000

NEW EsTIMATED AGGREGATE

VALUE fROM THE fORTHCOMING 22ND AGM ON 15 MAy 2019 TO THE NExT

AGM IN 20203

RM’000

• 4Rental of office premises payable by Bank Islam to TH.

Th

TH is principally involved in providing pilgrimage management services, saving and depository services, investment holding and rental of buildings.

Interested major shareholder

TH is a major shareholder of BHB with 53.82% shareholding.

Interested Directors1) Datuk Rozaida Omar and Puan Rifina Md Ariff were

nominee directors of TH in BHB. They have no direct/indirect shareholding in TH and BHB.

2) Encik Nik Mohd Hasyudeen Yusoff and Puan Noraini Che Dan are Directors of Bank Islam and they are also Directors of BHB. They have no direct/indirect shareholding in Bank Islam and BHB.

3) Encik Mohd Muazzam Mohamed, the Chief Executive Officer of BHB is also the Chief Executive Officer of Bank Islam. Encik Mohd Muazzam Mohamed has no direct/indirect shareholding in BHB and Bank Islam.

26,889 21,788 25,608

• 4Rental of office premises payable by Bank Islam to Takaful Malaysia.

Takaful malaysia

Takaful Malaysia is principally involved in family and general takaful business.

Interested Directors1) Datuk Rozaida Omar was a director of Takaful Malaysia

and BHB. Encik Mohd Tarmidzi Ahmad Nordin is a Director of Takaful Malaysia. He is also a Director of BHB. They have no direct/indirect shareholding in Takaful Malaysia and BHB.

2) Encik Nik Mohd Hasyudeen Yusoff and Puan Noraini Che Dan are Directors of Bank Islam and they are also Directors of BHB. They have no direct/indirect shareholding in Bank Islam and BHB.

3) Encik Mohd Muazzam Mohamed, the Chief Executive Officer of BHB is also the Chief Executive Officer of Bank Islam. Encik Mohd Muazzam Mohamed has no direct/indirect shareholding in BHB and Bank Islam.

2,934 2,449 2,965

ThereisnoamountdueandowingtoBHBbyitsrelatedpartiespursuanttotheRRPTs.

Notes:1 The direct and indirect shareholdings of the related parties in BHB above are set out in Section 6 of the Circular to Shareholders

dated 19 April 2019.2 LPDbeforeprintingofCircularis31March2019.3 The next AGM after the forthcoming 22ndAGMforthepurposesofestimatingthevaluefortheRRPTisassumedtobesometime

in May 2020 as no specific date can be determined at the point of the printing of the Circular.4 Therentalsumofthepropertieswasarrivedatorestimatedbasedontheon-goingorexpectedmarketrateatthetimethetenancy

agreement was or to be executed.

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ion ThisstatementispreparedpursuanttotheCompaniesAct,2016andtheListingRequirementsofBursaSecurities.TheDirectorsare

required to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of their cash flows for that year then ended.

Inpreparingthefinancialstatementsfortheyearended31December2018,theDirectorshave:

• adoptedsuitableaccountingpoliciesandappliedthemconsistently;

• madejudgementsandestimatesthatarereasonableandprudent;

• ensuredapplicableFinancialReportingStandardshavebeenfollowed;and

• preparedthefinancialstatementsonagoingconcernbasis.

The Board has the overall responsibility to take all steps as are reasonably necessary to safeguard the assets of the Group to prevent and detect fraud and other irregularities.

This statement is made in accordance with a resolution of the Board dated 27 March 2019.

STATEMENT ONDIRECTORS’ RESPONSIBILITy

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