Over

30% Growth in M2U & M2E

registrations & transactions

Over

USD60 million of consumer & business

loans under financial relief measures

Best International Bank Cambodia 2020

by Asiamoney Best Bank Awards 2020

Nobody wishes for hard times. But when the going gets tough, there is one definite silver lining. You get to find out who your true friends are – people who know you, and you can count on for support. 2020 was one such year. Because of the COVID-19 pandemic, the economy took a dive. Businesses closed down. Many were set back financially, not to mention emotionally.

Amid the shadow of the pandemic, however, Maybank was there for you. We made it our business to understand what you were going through and to help you in any way we could. Since the outbreak, Maybank has offered financial advice to customers impacted by the pandemic, in addition of financial relief schemes in the form of restructuring and rescheduling financing, as well as a moratorium on loan repayments.

At the community level, we supported the local Cambodian weavers with its noble initiative, providing supplementary economic opportunities, and aligned to the Government’s overall mission towards promoting economic growth and helping communities rebound from the unprecedented disruptions caused by COVID-19. Some 250 women weavers in Cambodia under the Maybank Women Eco-Weavers program in collaboration with our program partner, produced over 110,000 handwoven face masks made of pure cotton and silk to help limit the spread of COVID-19 in the region.

We also gave to national efforts to combat the virus. Because we care. Because that’s what our mission of Humanising Financial Services is about. Now, as we enter a new year, uncertainties still abound. But one thing is for sure, Maybank will continue to be your friend in need. Together with you, we will work to get through the pandemic and start rebuilding a better future.

2016Official launch of Maybank Tower, the new Phnom Penh skyline, demonstrating Maybank’s commitment towards partnering Cambodia in its growth journey

2016Launched the first in the market Maybank Visa Debit Picture Card

2016Introduced Maybank Foundation flagship programmes, Maybank Women Eco-Weavers and Maybank CashVille Kidz financial literacy programme

1993Opened first Maybank branch in Phnom Penh, Cambodia

2012Maybank Phnom Penh Branch locally incorporated as Maybank (Cambodia) Plc.

2012Launched Maybank’s award-winning Internet Banking portal in Cambodia, Maybank2u

2018Launched our FutureReady Digital Upskilling Programme with the aim of increasing employees’ digital literacy

2019Added Host-to-Host Capabilities to our M2E, enabling straight through processing (STP) directly from the corporate client’s host to our Cash Management System

2020Rollout of the Maybank2u KH Mobile App with a fresh and intuitive UI/UX, and standardized interface across key countries where Maybank operates

2014Launched Maybank Premier Wealth, a new branded segment offering designed to cater to affluent customers through personalized and comprehensive financial solutions

2015Launched Maybank Visa Debit Card, the first dual purpose card which provides local and international access to cardholder’s bank account

2015Entered into a licensing partnership with American Express, with Maybank becoming the sole acquirer for American Express in Cambodia

AboutOur ReportsMaybank (Cambodia) Plc’s Annual Report is our primary report and include corporate and financial statements which provides an assessment of the Bank’s performance for 2020 and outlook for 2021.

ICONS USED IN THIS REPORT

Five capitals that we use to create value are:

Intellectual Capital

Human CapitalFinancial Capital

Manufactured Capital

Social & Relationship Capital

Our identified material matters are:

Employees

Society

Environment Products and Services

Our identified stakeholders are:

Customers

Investors

Regulators

Employees

Communities

Cross references:

Tells you where you can find more information within the

reports

Tells you where you can find more information online at

www.maybank.com

Governance

InsideThis Report

01OVERVIEW

4 Who We Are & What We Do

6 Local Branch Network

8 Strategic Business Units

9 Group Corporate Structure

10 Organisation Structure

11 Key Message from Chairman

14 Key Message from CEO

18 Addressing COVID-19

02OUR STRATEGY TO CREATE VALUE

20 Our Strategy

22 Our Operating Context

03FINANCIAL CAPITAL

24 Reflections From Our Chief Financial Officer

26 Community Financial Services

28 Commercial & Transaction Banking

04INTELLECTUAL CAPITAL

30 Service Delivery

31 Risk Management

05HUMAN CAPITAL

32 Human Capital

36 Board of the Directors

38 Executive Committees

06ENSURING RESPONSIBLE GOVERNANCE

40 Corporate Governance Overview Statement

44 Statement on Risk Management and

Internal Control

49 Audit Committee Report

07SOCIAL AND RELATIONSHIP CAPITAL

53 Sustainability Review

08FINANCIAL STATEMENTS

60 Report of the Board of Directors

63 Independent Auditors’ Report

65 Statement of Financial Position

66 Statement of Comprehensive Income

67 Statement of Changes in Equity

68 Statement of Cash Flows

69 Notes to the Financial Statements

09OTHER INFORMATION

114 Corporate Information

AND OUR STRUCTURE…In serving our mission, we provide an array of financial products and services through three key business pillars, supported by shared corporate functions across our global network of 18 countries.

In Cambodia, our key business pillars and shared corporate functions are as follows.

Business Pillars

Community Financial Services

For: Individuals and Retail Small Medium Enterprise (RSME).

Offers:RSME, Consumer Finance, Premier Wealth, Funding Deposit & Bancassurance, Virtual Banking & Payments and Cards Business.

Commercial & Transaction Banking

For:Business, corporates and institutions.

Offers:SME and Business Banking, Short Term & Long Term Business loan, Overdrafts, Trade Financing, Trade Facilities, Payment and Cash Management Solution.

Global Markets

For:

Individuals and corporates.

Offers: Money Market, FI/ FX Sales & Advisory.

Corporate Functions

Business Operations Support | Corporate Affairs & Communications | Finance & Strategy | Human Capital | Compliance | Risk |

Internal Audit

OUR VALUES…

T eamwork

I ntegrity

G rowth

E xcellence & Efficiency

R elationship Building

Our TIGER Core Values are the guiding principles for all Maybankers to serve our mission of Humanising Financial Services.

fulfil

OUR MISSION

Humanising Financial ServicesWe fulfil our customers’ ambitions by building trusted relationships that last for generations through thick and thin. We believe in treating all our stakeholders fairly and in simplifying financial solutions.

guides

OUR ASPIRATION

Advancing Asia’s Ambitions With YouAs we grow together with our customers, the Maybank brand has reached all 10 ASEAN countries, Greater China and other key global financial markets. Our aspiration is to be the top ASEAN bank, fulfilling our customers’ ambitions in the region and linking them to Asia and beyond.

WITH OUR UNIQUE DIFFERENTIATORS…We serve our communities in ways that are simple,fair and human,

embodying our mission.

Over

42,000 Maybankerswho serve the mission, empowered by our

TIGER Core Values.

Our strong retail community franchise

spanning across ASEAN.

Established in 1960, Maybank is the largest financial services group in Malaysia with an established presence in the ASEAN region. Maybank established its presence in Cambodia in 1993 and has since grown from a single branch set-up to become a locally incorporated bank in 2012.

Maybank • Annual Report 2020

4

Who We Are& What We Do

AND OUR STRUCTURE…In serving our mission, we provide an array of financial products and services through three key business pillars, supported by shared corporate functions across our global network of 18 countries.

In Cambodia, our key business pillars and shared corporate functions are as follows.

Business Pillars

Community Financial Services

For: Individuals and Retail Small Medium Enterprise (RSME).

Offers:RSME, Consumer Finance, Premier Wealth, Funding Deposit & Bancassurance, Virtual Banking & Payments and Cards Business.

Commercial & Transaction Banking

For:Business, corporates and institutions.

Offers:SME and Business Banking, Short Term & Long Term Business loan, Overdrafts, Trade Financing, Trade Facilities, Payment and Cash Management Solution.

Global Markets

For:

Individuals and corporates.

Offers: Money Market, FI/ FX Sales & Advisory.

Corporate Functions

Business Operations Support | Corporate Affairs & Communications | Finance & Strategy | Human Capital | Compliance | Risk |

Internal Audit

AND BEYOND.

* The non-ASEAN countries are Greater China, India, Pakistan, Saudi Arabia, UAE, UK, USA and Uzbekistan.

HELP DELIVER VALUE ACROSS ASEAN…

Staying true to our purpose of Humanising Financial Services, we took the lead in supporting our stakeholders navigate this extraordinary year overshadowed by the global pandemic. In our commitment to stand by them through good times and tough times, we pioneered initiatives to help them survive, thrive and rise above the challenges.

USD1.89 billion(RM7.6 billion)new retail SME financing disbursed across the region in FY2020.

USD5.73 billion(RM23 billion)of the Group’s retail loans remain under relief measures as at year-end, from the initial RM165 billion moratorium and relief measures extended throughout 2020.

Over 4,400SMEs digitised through Sama-Sama Lokal, generating sales of over USD0.50 million (RM2 million) at no cost to them.

Over USD4.98 million(RM20 million)

donated to MERCY Malaysia’s and Ministry of Health’s COVID-19 initiatives.

Over USD0.75 million(RM3 million)raised from crowdfunding to assist vulnerable communities and support COVID-19 initiatives.

We are in 18* countries including all 10 ASEAN countries, with Malaysia, Singapore and Indonesia being our home markets. We are also present in international financial centres such as London, New York, Hong Kong and Dubai.

For more details about our global network, refer to Strategic Business Units on page 8, and www.maybank.com/en/worldwide/all-countries.page?

2,626retail branches

worldwide

51Investment banking branches worldwide

Retail branchesInvestment banking branches

1

1

21

2

167

65

18

354

360

6

1

2

6

4

30

We provide a full suite of conventional and Shariah-compliant products and services in commercial banking, investment banking and insurance across the Maybank Group, to close to 15 million retail, non-retail and corporate customers.

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9Who We Are & What We Do

MONDOLKIRI

RATANAKIRISTUNG TRENG

KAMPONG THOMKRATIE

KAMPONGCHAM

PREAH VIHEARSIEM REAP

OUDARMEANCHEY

BATTAMBANG

BANTEAYMEANCHEY

PAILIN

PURSAT

KAMPONGCHHNANG

KAMPONGSPEU

KOH KONG

KAMPOT

KANDAL

PHNOMPENH

TAKEO

PREYVENG

SVAYRIENG

TBOUNGKHMOM

SIHANOUKVILLE

KEP

SEREY SOPHORN

BATTAMBANG

SIEM REAP

TBENGMEANCHEY

TAKEO

KAMPOT

KAMPONGSPEU

KAMPONGCHHNANG

PURSAT

STUNG TRENG

BANLUNG

SEN MONOROM

SVAYRIENG

KOH KONG

KEP

PREYVENG

KRATIE

KAMPONG CHAM

SOUNG

SAMRONG

Maybank is among Cambodia’s top ten banks by assets. It was established in Phnom Penh in 1993 and has since grown from a single branch set up to become a locally incorporated bank in 2012. Maybank offers the full range of financial services ranging from corporate, commercial and consumer banking as well as internet and mobile banking. It operates in the main city of Phnom Penh and in most of the major provinces in Cambodia with a network of 21 branches.

Maybank • Annual Report 2020

6

Local BranchNetwork

PHNOM PENH MAIN BRANCH18 December 1993

KAMPUCHEA KROM BRANCH28 October 2013

CHBAR AMPOV BRANCH10 August 2009

SIHANOUKVILE BRANCH13 October 2010

KRONG SOUNG BRANCH29 December 2014

MAO TSE TOUNG BRANCH21 January 2009

OBEK KAORM BRANCH28 October 2013

OU RUESSEI BRANCH29 December 2014

TAKEO PROVINCIAL BRANCH29 December 2014

KAMPONG CHAM BRANCH29 April 2011

SEREY SOPHORN BRANCH28 October 2013

TA KHMAO BRANCH09 June 2014

TOEUK THLA BRANCH17 March 2008

CHROY CHANGVAR BRANCH28 October 2013

SIEM REAP BRANCH15 June 2009

PHNOM PENH SPECIAL ECONOMIC ZONE BRANCH28 October 2012

OLYMPIC BRANCH19 October 2009

BATTAMBANG BRANCH21 June 2010

TOUL KORK BRANCH28 December 2009

BOENG KENG KANG TI MOUY BRANCH18 December 2014

STUNG MEANCHEY BRANCH26 December 2011

Visit www.maybank2u.com.kh for more information

PHNOM PENH BRANCHES

PROVINCIAL BRANCHES

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9Local Branch Network

Malayan Banking Berhad is the holding company and listed entity for Maybank Group. Our key subsidiaries and international operations are as follows:

INTERNATIONAL OPERATIONS

MAYBANK SINGAPORE

Maybank Singapore Limited (MSL), our Singapore-incorporated subsidiary, is recognised as a domestic systemically important bank (D-SIB) with Qualifying Full Bank (QFB) privileges. MSL operates the retail and commercial businesses in 28 service locations and has access to over 200 ATMs across the country as part of atm5, Singapore’s only shared ATM network among six participating QFBs. Meanwhile, Maybank’s Singapore Branch operates the corporate and institutional businesses in nine branch locations. Maybank Singapore contributed 6.7% and 24.1% to the Group’s profit before tax and gross loans* respectively in FY2020.

MAYBANK INDONESIA (PT BANK MAYBANK INDONESIA TBK)

Maybank Indonesia is one of the largest commercial banks in Indonesia by assets and is listed on the Indonesia Stock Exchange (Ticker: BNII). It offers retail, non-retail and global banking products and services through its network of 361 branches (which includes 16 Shariah branches and one overseas branch in Mumbai) as well as 1,428 ATMs including Cash Deposit Machines. Maybank Indonesia contributed 7.7% and 5.9% to the Group’s profit before tax and gross loans* respectively in FY2020.

MAYBANK GREATER CHINA

Established in Hong Kong in 1962, Maybank Greater China has since expanded to include branches in Shanghai, Beijing, Kunming and Shenzhen where it provides wholesale banking services primarily to inbound/outbound ASEAN corporate clients, Chinese/Hong Kong corporates with regional operations/projects as well as financial institutions. Maybank Hong Kong also serves Private Wealth customers.

MAYBANK PHILIPPINES INCORPORATED (MPI)

MPI is a full-fledged commercial bank established in 1997 serving retail and corporate clients through its 65 branches across the Philippines.

ISLAMIC BANKING

Maybank Group Islamic Banking (MGIB) is the largest Islamic banking group by assets in ASEAN. This position is supported by our Islamic-first approach where Shariah-compliant products and services are standard offerings. MGIB operates by leveraging the Group’s system, IT infrastructure and distribution network of 354 Maybank touchpoints in Malaysia, and has a presence in Indonesia, Singapore, Hong Kong, the United Kingdom (UK) and the United Arab Emirates (UAE).

INSURANCE & TAKAFUL

Etiqa is a leading insurance and Takaful business in ASEAN, offering a full range of Life and General insurance policies as well as Family and General Takaful plans via more than 10,000 agents, 46 branches and 17 offices. It also has a bancassurance network comprising over 490 branches, cooperatives, brokers and online platforms across Malaysia, Singapore, Indonesia, the Philippines and Cambodia.

INVESTMENT BANKING

Maybank Kim Eng Group (MKE), comprising Maybank Investment Bank Berhad and Maybank Kim Eng Holdings Limited, operates in Malaysia, Singapore, Thailand, the Philippines, Indonesia, Vietnam, Hong Kong, India, the UK and the United States of America via 51 investment banking branches and 107 other touchpoints. MKE offers a complete range of investment banking products and solutions to various retail, mid-market, corporate and institutional segments, supported by on-ground, ASEAN-wide company, sector, country and macro research.

ASSET MANAGEMENT

Maybank Asset Management Group Berhad (MAMG) operates in Malaysia, Singapore and Indonesia, offering conventional, Islamic and alternative investment solutions for corporate, institutional and mass retail investors as well as high net worth (HNW) individuals.

MAYBANK CAMBODIA PLC (MCP)

MCP was established in 1993 and locally incorporated in 2012. With 21 branches across Cambodia, it provides a full range of banking services for emerging affluent and affluent consumers, retail SMEs and corporate clients.

MAYBANK VIETNAM

Maybank Vietnam was established in 1995 with two branches – in Ho Chi Minh and Hanoi – that provide wholesale banking services to regional corporate clients.

MAYBANK MYANMAR

Maybank Myanmar, established in 2015, is the first Malaysian bank to be granted a foreign banking license by the Central Bank of Myanmar. It offers wholesale banking services primarily to ASEAN corporates.

MAYBANK LAOS

Maybank Laos was established in 2012 with one branch in Vientiane that provides commercial banking services to retail SMEs, mid-tier local and ASEAN corporate clients.

MAYBANK BRUNEI

Maybank Brunei was established in 1960 and has two branches located in Bandar Seri Begawan and Seria offering a wide range of retail and commercial banking services.

MAYBANK NEW YORK

Established in 1984, Maybank New York offers wholesale banking services focusing on corporate lending, loan syndications and bilateral arrangements, treasury and capital markets as well as trade finance services to corporate clients.

MAYBANK LONDON

Established in 1962, Maybank London offers wholesale banking services primarily to our regional ASEAN corporate clients and financial institutions. It also provides Shariah-compliant products to both corporate and HNW retail clients.

Maybank • Annual Report 2020

8

StrategicBusiness Units

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9

Notes:All the following references are available in the Maybank Malaysia Annual Report accessible via www.maybank.com1. This chart is not the complete list of Maybank subsidiaries and associates. Companies that are not shown include

those that are dormant, under liquidation, have ceased operations, or are property investment or nominee services companies. For the complete list please refer to Note 66: Details of Subsidiaries, Deemed Controlled Structured Entities, Associates and Joint Ventures in the Financial Book.

2. Where investment holding companies are omitted, shareholdings are shown as effective interest. * Effective interest held by the Group. Refer to Note 66, footnote 14, on page 262 in the Financial Book for the

details.** 0.01% is held by Dourado Tora Holdings Sdn Bhd.*** 99.998% is held by Etiqa International Holdings Sdn Bhd.^ Joint Venture.# New subsidiary incorporated in Malaysia. Refer to Note 18(i), page 93 in the Financial Book for the details.@ Effective interest held by the Group. 54.66% is held by Etiqa International Holdings Sdn Bhd and 40.58% is held

by Maybank Kim Eng Capital, Inc.@@ Effective interest held by the Group. 85% is held by Maybank Kim Eng Holdings Limited and 15% is held by PT

Maybank Indonesia Finance (14.78% effective interest held by the Group).

ISLAMIC BANKING

100% Maybank Islamic Berhad (Islamic Banking)

98.54%* PT Bank Maybank Indonesia Tbk (Banking)

99.99% PT Maybank Indonesia Finance (Multi-financing)

68.55% PT Wahana Ottomitra Multiartha Tbk (Multi-financing)

99.98% Maybank Philippines, Incorporated (Banking)

100% Maybank (Cambodia) Plc (Banking)

100% Maybank Singapore Limited (Banking)

18.78% MCB Bank Limited (Banking)

20% An Binh Commercial Joint Stock Bank (Banking)

19.70% Uzbek Leasing International A.O. (Leasing)

100% Etiqa International Holdings Sdn Bhd (Investment Holding)

69.05% Maybank Ageas Holdings Berhad (Investment Holding)

100% Etiqa General Insurance Berhad (General insurance business)

100% Etiqa Family Takaful Berhad (Family Takaful and investment-linked businesses)

100% Etiqa Life Insurance Berhad (Life insurance and investment-linked businesses)

100% Etiqa General Takaful Berhad (General Takaful business)

100% Etiqa Insurance Pte Ltd (General insurance and life insurance businesses)

100% Etiqa Life International (L) Limited (Offshore investment-linked business)

100% Etiqa Offshore Insurance (L) Limited (Bureau Services)

79.87% PT Asuransi Etiqa Internasional Indonesia (General insurance business)

95.24%@ Etiqa Life and General Assurance Philippines Inc (General insurance and life insurance businesses)

100%*** Etiqa General Insurance (Cambodia) Plc (General insurance business)

100%*** Etiqa Life Insurance (Cambodia) Plc (Life insurance and investment-linked businesses)

100% Etiqa Digital Solutions Sdn Bhd#

(Other IT, business management consultancy/support services)

100% Maybank International Holdings Sdn Bhd (Investment Holding)

100% Maybank Kim Eng Holdings Limited (Investment Holding)

100% Maybank Kim Eng Securities Pte Ltd (Dealing in Securities)

83.50% Maybank Kim Eng Securities (Thailand) Public Company Limited

(Dealing in Securities)

100% Maybank Kim Eng Capital, Inc. (formerly known as Maybank ATR Kim Eng Capital Partners, Inc.) (Corporate Finance & Financial and Investment Advisory)

100% Maybank ATR Kim Eng Securities Inc (Dealing in Securities)

99.78%@@ PT Maybank Kim Eng Sekuritas (Dealing in Securities)

100% Maybank Kim Eng Securities (London) Limited (Dealing in Securities)

100% Maybank Kim Eng Securities USA Inc (Dealing in Securities)

100% Kim Eng Securities (Hong Kong) Limited (Dealing in Securities)

100% Kim Eng Securities India Private Limited (Dealing in Securities)

100% Maybank Kim Eng Securities Limited (Dealing in Securities)

Other Subsidiaries

100% Maybank Investment Bank Berhad (Investment Banking)

35.33% Anfaal Capital^ (Investment Banking)

Other Subsidiaries

80% Maybank Asset Management Group Berhad (Investment Holding)

100% Maybank Asset Management Sdn Bhd (Fund Management)

99% PT Maybank Asset Management (Fund Management)

100% Amanah Mutual Berhad (Fund Management)

100% Maybank Islamic Asset Management Sdn Bhd (Fund Management)

100% Maybank Private Equity Sdn Bhd (Private Equity Investments)

100% MAM DP Ltd (Fund Management)

100% Maybank Asset Management Singapore Pte Ltd (Fund Management)

100% Maybank Trustees Berhad (Trustee Services)

100% Maybank Shared Services Sdn Bhd (IT Shared Services)

100%** MBB Labs Pte Ltd (IT Development Services)

100% BinaFikir Sdn Bhd (Business/Economic consultancy and advisory)

Other Subsidiaries

COMMERCIAL BANKING INVESTMENT BANKING

ASSET MANAGEMENT

OTHERS

MALAYAN BANKING BERHAD

INSURANCE & TAKAFUL

GroupCorporate Structure

as at 31 December 2020

Dato’ Mohd Hanif SuadiChief Executive Officer

Helms the Bank’s overall business growth and corporate strategies and ensures the delivery of long-term value for shareholder, customers, employees and all other stakeholders.

COMMUNITY FINANCIAL SERVICES

Rath SophoanHead, Community Financial Services

Leads Community Financial Services’ business growth and strategic direction covering Retail SME, Consumer Finance, Premier Wealth, Funding, Deposit, Bancassurance, Virtual Banking & Payments, Cards, Community Distribution

and Asset Quality Management.

COMMERCIAL & TRANSACTION BANKING

Krourch SathyaHead, Commercial & Transaction Banking

Leads the Commercial & Transaction Banking’s business growth and strategies covering Corporate Banking (including Financial Institution), Business Banking,

SME Banking and Transaction Banking.

GLOBAL MARKETS

Hong SreynuonHead, Global Markets, Indochina

Manages and oversees the Bank’s Money Market, Treasury as well as Foreign Exchange Sales and Advisory.

BUSINESS

FINANCE & STRATEGY

Ekhwan JaniChief Financial Officer, Indochina

Develops the Bank’s long-term strategy and leads the financial planning, budgeting & reporting process and manages the Bank’s capital and funding

to ensure sustainable growth for the organisation.

HUMAN CAPITAL

Qazreen Chan AbdullahHead, Human Capital, Indochina

Strategises and curates innovative and meaningful human capital strategies, initiatives and policies to develop and empower talents with high adaptability

to drive sustainable growth and business performance.

RISK MANAGEMENT

Ng Yok ChinChief Risk Officer, Indochina

Strategises and leads an effective enterprise-wide risk management framework for the Bank while implementing proactive and forward-looking risk practices

to support its strategic aspirations.

BUSINESS OPERATIONS SUPPORT

Khoo Eng HoeHead, Business Operations Support

Formulates and develops the Bank’s operational strategy and oversees the efficient and effective delivery of services to support the Bank’s vision and

mission including leveraging technology as a competitive advantage.

CORPORATE AFFAIRS & COMMUNICATIONS

Qazreen Chan AbdullahHead, Corporate Affairs & Communications

Builds and leads the Bank’s corporate affairs, legal services, branding, corporate communications, marketing communications and customer

experience as well as the Bank’s corporate responsibility agenda.

FUNCTION

CORPORATE SECRETARIAL

Qazreen Chan AbdullahLong Sokmarith

Corporate Secretaries

Leads the corporate secretarial functions and advises the Bank on corporate governance practices and

regulations.

INTERNAL AUDIT

Sok ChandaraHead, Internal Audit

Leads Internal Audit in enhancing and protecting organisational value by providing risk-based and

objective assurance, advice and insight.

COMPLIANCE

Chhour SorintyHead, Compliance

Oversees a framework to ensure compliance with laws and regulations.

Full profiles can be obtained on pages 38.

Maybank • Annual Report 2020

10

OrganisationStructure

ANTHONY BRENT ELAM

Undoubtedly everything that can be said about Maybank’s performance in 2020 must be set against the COVID-19 pandemic and the resulting health and economic crisis. Over its 60-year history as a Group, and 27 years in Cambodia, Maybank has proven its resilience by overcoming various economic and financial crisis based on the Bank’s strong service ethos and by truly listening not just to our customers but also the community. Meeting our stakeholders’ needs defines Maybank in its mission of Humanising Financial Services. This unique focus sets Maybank apart from its peers as was evident in the tumultuous year that was 2020.

Maybank has been fully committed to supporting its customers, employees and communities through the COVID-19 pandemic. Maybank, together with other Banks in the industry, put into motion the loan moratorium, under the guidance of the National Bank of Cambodia, which brought immense relief to many Cambodians impacted by the COVID-19 pandemic. Under the Bank’s “Mobilise, Stabilise, Strategise” approach to planning, proactive measures were undertaken from early March 2020 to protect the health and welfare of its employees and customers, including the mobilisation of the Bank’s Crisis Management Team. Throughout this period of uncertainty, the Bank worked closely with the Cambodian Government, regulators and other authorities towards various efforts to provide relief to frontliners, medical personnel and marginalized communities. The Bank also worked closely with our customers to offer financial advice, including targeted repayment assistance and Restructuring & Rescheduling of financing to customers impacted by the pandemic. Supported by our weavers trained under the Maybank Women Eco-Weavers program, and in collaboration with our program partner, ColorSilk Cambodia, Maybank also participated actively in a face masks project, to help limit the spread of COVID-19 in the country

Maybank has maintained a strong momentum on its key priorities and accelerated certain initiatives in response to changing customer behaviour, needs and expectations.

and the region. This was expanded with a “Gift of Love” initiative that saw Cambodian hand woven masks presented to the ASEAN Secretariat bearing a message of goodwill and a show of solidarity that transcends borders, symbolising the hopes and prayers of our women weavers for all 10 ASEAN member countries. Contributions of these masks were also further made to the Ministry of Education, Youth & Sport in conjunction with the Public School Re-opening, to support efforts to resume education services, whilst taking the necessary precautions to protect students, teachers, staff and their families.

As a corporate entity, we have a responsibility to our shareholder to generate sustainable profits. However, equally important to us as a bank that cares is ensuring the survivability and sustainability of those we serve.

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9Key MessageFrom Chairman

The resilience so clearly demonstrated by Maybank in 2020 is the result of sound policies and strategies that have focused increasingly on supporting the sustainability of our stakeholders. Sustainability at Maybank is based on the incorporation of Environmental, Social and Governance (ESG) principles into key decisions. The year 2020 marked a milestone in this regard as it saw ESG being given added emphasis, along with customer experience and digitalization, in our new five-year strategy termed M25. This evolution of ESG comes on the heels of the conclusion of our last five-year 20/20 Sustainability Plan which was premised on three pillars – community and citizenship, our people, and access to products and services – resulting in various successes through community impact initiatives, digital services adoption and workforce development milestones.

Weaving For A CauseOur Maybank Group humanitarian arm, Maybank Foundation, in collaboration with the Countries, has launched various initiatives to empower marginalized communities in the different countries where we operate. One of its flagship programs is Maybank Women Eco-Weavers, under which women are trained to produce traditional textiles in order to gain financial independence.

When the shortage of face masks became apparent following the imposition of SOPs across the region, resulting in price increases, 250 of our weavers in Cambodia pledged to produce handwoven masks that people could afford and re-use. Together, they produced more than 75,000 masks as at year end, greatly helping to fill the supply gap.

As our Maybank Foundation CEO remarked, it is wonderful to see how we have not only supported the livelihood of women through our program, but also empowered these women to be able to contribute in a meaningful way to “fighting the biggest threat the world is facing”.

VALUE CREATION DESPITE THE PANDEMIC

COVID-19 has forced social and movement restrictions that have crippled businesses globally. Nevertheless, good progress was made in 2020 in advancing the Bank’s core strategy. Despite net interest margin compression and overall slower business activity amid economic contraction, Maybank has maintained a strong momentum on its key priorities and accelerated certain initiatives in response to changing customer behaviour, needs and expectations. I am pleased to share that the Bank has performed commendably, with a profit before tax of USD24.1M (2019: USD33.9M) and registered Y-o-Y double digit loan growth of 13.3% or USD89.6M.

Prudent balance sheet management underpinned the Bank’s resilient funding and liquidity positions. Strong capital discipline resulted in a solvency ratio of 20.6% (2019: 20.5%) well above the regulatory requirement of 15%. We are very comfortable with our capital levels and the buffers that positioned the Bank to take advantage of the significant profitable growth opportunities we can see in Cambodia.

The Bank also took a prudent and decisive action in recognising the Expected Credit Losses (ECLs) that emerged from the COVID-19 pandemic whilst retaining a strong capital position. We refreshed our five-year strategy to address, with greater urgency, the trends that COVID-19 is accelerating – digitalisation, sustainability and alternative ways of working. We have realistic plans to diversify our income streams and to improve the breadth of our offerings to customers.

Since the advent of COVID-19 in early 2020, the Board increased its frequency of meetings with the Management team and this heightened level of engagement continued throughout the year to 2021. The Board’s initial focus was on ensuring the health and safety of our employees and customers, the continuity of Bank’s operations, and the availability and reliability of service to our customers. The Board had continued to dedicate significant time to deliberate on the Bank’s strategy, including how COVID-19 would impact it, support required by customers facing financial distress as a consequence of the pandemic, potential financial and capital impact of COVID-19 to the Bank, as well as the role of the Bank and the banking industry in doing its part during this difficult period.

STRATEGIC & SUSTAINABLE DIRECTION

The political, regulatory and economic developments in Cambodia have a direct impact on the national banking landscape. The actions we took in response to this macro-financial backdrop demonstrated the flexible and responsive leadership that defines Maybank. With an attractive market position and the ongoing commitment of our Maybankers, the Board is confident that the Bank remains well placed to address the continuing challenges and will continue to deliver value to its stakeholders. Banking remains a risk-based industry and we will remain prudent in our management and pricing of risk.

2021 also marks the first year of M25, and we are set to put our plans into

action – differentiating ourselves through digitalisation and data analytics to better understand and serve our customers while c a p t u r i n g n e w b u s i n e s s opportunities.

Maybank • Annual Report 2020

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Key Message from Chairman

With sustainability defined as one of the three strategic priorities under M25, the Bank’s focus will be embedding sustainability within the Bank’s culture. Areas of development include our transition to a more sustainable economy through adequate management of ESG risks and delivery of sustainable financial services, financial inclusion, community empowerment as well as strengthening governance and management of our environmental and social impacts across our value chain. This is reflected Group-wide, including in Cambodia. We must be ready to face a world that recovers to a very different, more technology reliant economy. Whatever time any organisation thought it had to transform has been reduced by the consequences of the pandemic. Successful delivery for stakeholders will require the combination of rigorous prioritisation with very high-quality execution. Maybank has a proven track record of effecting transformation in recent years, and, while the external environment remains uncertain, the Board remains confident that the Bank is well placed to deliver value for its stakeholders in a sustainable manner.

Our next five-year journey will continue to centre on our mission of Humanising Financial Services and see us placing our customers and the community foremost in everything we do. This is not just ethical; it also makes business sense. Customers today are different from what they were a decade ago. They are more knowledgeable, empowered and discerning. As the number of financial services provider increases, they can pick and choose either banks or FinTechs that most closely reflect their needs and values while giving them the best customer experience. Maybank will strive continuously to meet the technical, social and environmental expectations associated with a leading regional financial institution.

FOCUS ON GOOD GOVERNANCE

Ultimately, our financial and ESG performance rests on good governance. To ensure the best governance practices, we continuously review and update our policies. In 2020, we strengthened our Anti-Bribery and Corruption Policy to address and manage bribery and corruption risks in all the Bank’s dealings within and outside Maybank. We also made significant progress in reinforcing our Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) capabilities, led by the emplacement of a Compliance Transformation Program that went into full execution in 2020. The program consisted of various key compliance initiatives that aimed to achieve the following outcome:

• Increased capacity both at the business units and at Compliance to strengthen our AML/CFT capability, as well as ensure the Bank is in compliance with all relevant laws and regulations, and businesses are conducted ethically

• Robust training and awareness programs to continuously promote a strong compliance culture that inculcates a sense of responsibility in all employees to be vigilant against money laundering and terrorist financing, and proactively play a part in maintaining public confidence in the financial system

• Continuous review and enhancement of processes to improve efficiency and effectiveness in detecting and preventing money laundering and terrorist financing activities

• Establishment of centralized specialist teams to support AML/CFT functions of our customer touchpoints

We also continued to safeguard the well-being of our people during the recent pandemic and remain focused on building capabilities and developing capacity for the new normal through learning and development programs. Identified Maybank employees can now opt to work remotely under the Mobile Work Arrangement program which was piloted in 2020, and targeted to be formalized in 2021. The upskilling of our people remains a key priority as seen by the ongoing learning interventions and opportunities made available to all employees despite the pandemic outbreak.

ACKNOWLEDGEMENTS

The year 2020 marked Maybank Group’s 60th anniversary, a veritable landmark which, unfortunately, was eclipsed by efforts to manage ours and our stakeholders’ well-being. On this note, I would like to extend my appreciation to my fellow board members for their utmost support and commitment through what has been a year like no other, and would like to particularly thank the management team for their tenacity and commitment during this challenging year and to thank all my fellow Maybankers for their incredible hard work, commitment and positivity, during a particularly challenging period. I am also grateful to all our other stakeholders – regulatory authorities, customers, business partners, and the community – for the overall support you have given Maybank in enabling us to make strides towards living our aspiration of “Advancing Asia’s Ambitions with You whilst Humanising Financial Services”. On a special note, I would like to take this opportunity to extend our thanks and appreciation for the ongoing guidance and support we have received from the National Bank of Cambodia over the years. We look forward to the continuous support and loyalty from all stakeholders in ensuring Maybank Cambodia continues to deliver balanced, sustainable and inclusive growth in 2021 and beyond – it is sincerely appreciated.

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9Key Message from Chairman

2020 was an exceptional year with a myriad of challenges affecting every facet of the communities where we operate that comprise of ordinary people as well as businesses, including banks. At Maybank, at the onset of the COVID-19 crisis, true to our mission of Humanising Financial Services, we quickly focused and worked through various initiatives to ensure that the interest of our stakeholders such as employees, customers, business partners and regulators, among others, are protected.

DATO’ MOHD HANIF SUADI

Key MessageFrom CEO

Our two topmost priorities during this pandemic have been to safeguard the well-being of our employees and customers.

I believe these initiatives undertaken by Maybank as an organization, which I will further elaborate in my note, have helped many of these members of the community to sustain and stay afloat during this immensely challenging period.

The investments we’ve made in recent years in systems and business model underpinned our ability to quickly adapt to the impact of this pandemic. At the same time, we stayed disciplined and focused on our strategic priorities throughout 2020 a key business focus of which is to grow business with due care and prudence where effective and efficient asset quality management is key to deliver sustainable growth in profitability on the back of continued growth of good quality assets. As a result, we registered a 26bps improvement to land at our NPL ratio of 2.36%. Effective & efficient cost management was also one of the Bank’s agenda to ensure that we spend with the right purpose to support our overall sustainability in the Bank’s operations.

will be individuals or businesses that would be in dire need of financial aid, Maybank had started offering assistance in terms of restructuring and rescheduling of loans at the onset of the pandemic outbreak, even before the loan restructuring guideline was announced.

We also partnered with the Cambodia SME Bank through the SME Co-Financing Scheme to facilitate the provision of financing to SMEs in an effective and sustainable manner to support local small and medium enterprises, in order to increase economic diversification and boost SMEs in Cambodia during this challenging time.

WORKING TOGETHER

A key measure announced by National Bank of Cambodia (NBC) in March 2020 was the loan restructuring guidelines aimed at ensuring the effectiveness and efficiency of loans restructured by banks and financial institutions, targeted primarily for highly affected sectors. To ease the pressure on banks, NBC relaxed on its capital conservation and l iquidity requirements as wel l as loan classif ication and provisioning. As the loan restructuring period drew to a close, in response to a request put forth jointly by the Association of Banks in Cambodia and the Cambodia Microfinance Association, NBC announced a further extension to 31 December 2021.

For us at Maybank, it was in keeping with our mission of Humanising Financial Services to prioritize the financial well-being of our customers during these turbulent times. In fact, knowing that there

Maybank • Annual Report 2020

14

TAKING OUR RESPONSIBILITY TO HEART

Given our presence in Greater China, as a Group, we had an advantage of knowing the severity of this virus the moment it emerged. Reacting fast, we put into motion initiatives to brace ourselves in anticipation of the expected challenges that’s to come. In addition to strengthening our Business Continuity Management framework, we also developed a plan to protect our employees and customers.

We embarked on split operations as early as March 2020, which prepared our teams well for business continuity during various incidences when movement restrictions or various other orders were imposed by the authorities in a bid to contain the spread of the COVID-19 virus.

Our two topmost priorities during this pandemic have been to safeguard the well-being of our employees and customers. Towards this end, only Maybankers’ whose functions require them to be at our premises would work on-site. To keep our employees and customers safe, we adhered strictly to all the recommended standard operating procedures such as temperature screening, the provision of personal protective equipment and hand sanitizers, as well as maintaining physical distancing. Moving into 2021, we have also pursued various facilitation and continued to encourage our employees to participate in the government’s vaccination program, and be a Force of Good in protecting and saving lives. We also encouraged our customers to leverage our digital channels to meet their banking needs instead of personally visiting our branches. As a result, we have seen an increase in the transaction value and/or volume of our various digital platforms, i.e. Maybank2u internet and mobile banking appl icat ions as wel l as Maybank2e cash management solution.

Financially, as I had stated earlier, we provided our customers with assistance for loan repayments, particularly for the highly affected sectors as defined by the regulatory authorities, including our participation in the Special Co-Financing Scheme for SMEs under the government-owned Cambodia SME Bank, aimed at assisting this crucial segment of the economy.

We engaged with our corporate customers proactively to extend financial assistance via relief programs and restructuring and rescheduling solutions that best suited their needs. We also closely monitored vulnerable borrowers to raise early alerts, enabling swift assistance and mitigation plans.

To ensure the Bank’s capital adequacy, liquidity and asset quality were well managed, we intensified

our Asset Quality Management Committee to deliberate and execute speedy credit-related strategies. Our past emphasis on healthy liquidity and capital levels gave us an edge to meet this pandemic from a position of strength. While many may have thought we were being overly prudent in the past with our capital positions, our strategy proved judicious as this pandemic showed us how quickly an untoward event can take place and have lingering effects.

On the community side, we offered financial aid to national and government efforts in fighting the pandemic, for the purchase of protective equipment, hospital equipment, test kits and other initiatives to alleviate the burdened healthcare system and frontliners as well as to assist vulnerable communities, including the purchasing of vaccinations for COVID-19. We had also contributed to the Royal Government of Cambodia to support victims of floods during the monsoon season, which caused prolonged hardship when the community was already undergoing challenges caused by the pandemic.

We collaborated actively with our Maybank Women Eco-Weavers program partner, ColorSilk Cambodia, in support of an initiative to produce over 110,000 handwoven face masks made of pure cotton and silk to help limit the spread of COVID-19 in the country and the region. This initiative was showcased at the ASEAN level, wherein a “Gift of Love” consignment of the hand woven protective masks was presented to the ASEAN Secretariat bearing a message of goodwill and a show of solidarity that transcends borders, symbolising the hopes and prayers of our women weavers for all 10 ASEAN member countries. We supported this initiative further, with the presentation of 6,000 hand woven face masks to the Ministry of Education, Youth & Sport (MoEYS) in conjunction with the Public School Re-opening, to support the MoEYS in its effort to resume education services for the younger generation particularly children, whilst taking the necessary precautions to protect students, teachers, staff and their families. This initiative also provided great supplementary economic opportunities for the Cambodian weavers, which is aligned to the Government’s overall mission towards promoting economic growth and helping communities rebound from the unprecedented disruptions caused by COVID-19.

Further on, in line with the government’s efforts to uplift the level of financial literacy amongst Cambodians, our Maybank’s award winning CashVille Kidz Financial Literacy Programme was featured on the MoEYS digital learning platform. This was initiated to also support MoEYS’ efforts to intensify its online learning amidst the pandemic

wherein we witnessed the closure of schools on numerous occasions in response to the outbreak. The Ministry’s digital learning platform had since become a key learning delivery channel for the country. Back in January 2020, prior to the COVID-19 outbreak in Cambodia, we celebrated the achievements of schools, teachers and students in promoting and championing financial literacy with the hosting of a Maybank CashVille Kidz Grand Finale event at our Maybank Tower.

ASSISTING FROM A POSITION OF STRENGTH

COVID-19 has devastated many families and businesses in Cambodia, significantly impacted Cambodia’s economy throughout 2020 leading to reduced levels of credit formation and the generation of business and retail income. The low interest rate environment continued to negatively impact the Bank’s revenue, including net interest income and margins. The sluggish export growth and the slow pace of economic recovery also created significant uncertainty, especially for business customers. The impact of these external factors are reflected in our 2020 financial results reflecting the changed economic environment.

We entered this crisis from a position of capital strength, which we have maintained. Our capital ratios were materially in excess of the minimum regulatory requirements ensuring that we continue to deliver on our priorities. The Financial Year 2020’s Profit Before Tax (“PBT”) landed at USD24.1M with Y-o-Y decline by 28.8%. The Bank managed to deliver positive double-digit profits amid the industry’s negative Y-o-Y growth. On top of that, loan growth was commendable, maintaining positive Y-o-Y loan growth by 13.3% and strong capital adequacy ratio at 20.6%, above the regulatory’s requirement. While the low interest rate environment and the impact of the COVID-19 pandemic will continue to present near-term challenges, the overall economic outlook is positive. The Cambodian economy is expected to see a recovery in Gross Domestic Product in 2021, underpinned by the rollout of vaccine immunisation programs.

The Bank has comprehensively captured the impact of COVID-19 in our USD1.8M impairment charge. Asset quality remains strong and over 92% of payment breaks offered to customers at the start of the pandemic have now concluded with a return to pre COVID-19 repayment terms, supporting an impairment charge at the lower end of our previous guidance.

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9Key Message from CEO

By putting people at the centre of all that we do and by acting consistently in accordance with our values, we will continue to build a sustainable future for generations to come.

DIGITALISATION & AN ENHANCED EXPERIENCE

Amid the time, effort and resources that were channeled towards managing a transition to the new normal, we pushed ahead with our digital initiatives, underpinned by the absolute necessity of fully embracing digitalization in order to support new ways of working and connecting with our customers. Our digital platforms made it possible for our customers to carry out more banking transactions online, without exposing themselves to unnecessary risk from visiting our physical branches.

Aligned with our intention to enhance customer experience, we rolled out our enhanced Maybank2u mobile banking with a brand new user interface and user experience, which promises a whole new experience that provides simplicity, speed and ease of use, wherein our customers can enjoy seamless experience in doing banking transaction online. Throughout the year, we have also continued to roll out additional functionalities to our mobile banking app.

During the year, we also expanded our Premier Banking services with the opening of our third Premier Wealth lounge, in conjunction with the relocation of our Toul Kork branch in Phnom Penh, aimed to better serve our growing customer base of Maybank in the country, as well as affirming Maybank’s long term growth commitment in Cambodia.

STRATEGY & SUSTAINABILITY RESET

The year 2020 was significant for Maybank as a Group, for a couple of reasons. It was the year in which we celebrated having served our valued customers for 60 years plus the year in which we revitalized our strategy to be able to serve another 60 years and more.

In January 2021, our Maybank Group internally launched M25, our new five-year blueprint that replaces Maybank2020. This was promptly cascaded across the Group, including to our operations here in Cambodia. Still centred on our mission of

Humanising Financial Services, we took this recent opportunity in designing our next five-year strategy to ask ourselves what this phrase really means, including a review of our value proposition in Cambodia. As a Group, we agreed that our mission or purpose statement, is about building trust-based relationships with all our stakeholders and promoting a sustainable future for everyone.

We also realized that this was essentially the objective of our sustainability agenda. Hence, we made a fundamental shift by integrating sustainability into our overall business direction and made it a strategic priority. The COVID-19 pandemic has also had a positive influence on our ongoing sustainability journey, as it inspired a re-evaluation of what is really important to us, and our role in managing bigger issues in the world. The way we mobilized ourselves to support the community drove home a meaningful truth: that the people we serve are more important to us than profits. This was reflected in the materiality assessment carried out as a Group, which refined our previous material matters and identified new ones. Based on this materiality

assessment, our Group Sustainability Council spearheaded a refreshed sustainability agenda that will see strategic initiatives across three pillars anchored on long-term targets. By putting people at the centre of all that we do and by acting consistently in accordance with our values, we will continue to build a sustainable future for generations to come.

In fact, at the start of the year, we started looking beyond today, with the establishment of a partnership between our Maybank Group investment arm, Maybank Kim Eng (MKE) with the Securities and Exchange Commission of Cambodia (SECC) to work on a Cooperation and Technical Assistance Framework to advance the sustainable growth of Cambodia’s capital market. Under this partnership, MKE and SECC will cooperate in all facets for the purpose of developing Cambodia’s capital market, which includes the sharing of best practices and standards on areas of risk management, corporate governance and compliance, product development, and standard reporting system of finance and accounting.

Moving into 2021, we have also pursued various facilitation and continued to encourage our employees to participate in the government’s vaccination program, and be a Force of Good in protecting and saving lives.

Maybank • Annual Report 2020

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Key Message from CEO

2021 OUTLOOK

Prior to the onset of COVID-19, the Cambodian economy was performing strongly. The global recession triggered by the pandemic has been like no other and we have been dealing with an array of uncertainties that have made the near-term outlook more clouded than that of the medium-term.

Maybank continues to stay committed to serve and grow with our customers and the community and importantly, providing loan restructuring to our customers facing financial challenges to their business caused by the effects of COVID-19 with the support from both the Cambodian government and National Bank of Cambodia.

Whilst it will be the second half of 2021 before the vaccines become widely available, it does provide the foundations for a strong and sustained recovery to take root as the year progresses, after what has proved to be a difficult start to 2021 on many fronts. I believe once herd immunity has been achieved and as the economy slowly recovered, together with the continuing supportive stance of macro policies, points to the scope for a strong rebound in activity in the next couple of years as the COVID-19 pandemic is overcome.

Although our economic and operating environment has changed dramatically, our strategies are still robust and relevant. In fact, they have been further validated and underpinned by the crisis. Our five- year strategy will now see us delivering on a revised set of financial targets enabled by a refocused set of strategic priorities and initiatives. We reiterated our commitment to continuously deliver double digit Return on Equity for the next five years to our shareholder plus maintaining healthy Solvency Ratio. The Bank will continue and deliver our investment plans to ensure customer experience as well as operational excellence will remain strong.

APPRECIATION

I would like to thank all Maybankers for their continued commitment and tireless contributions to the Bank’s performance in the past year and into the present year. I wish to also extend my deepest appreciation to our customers and shareholder for their unwavering trust, loyalty and support rendered to us in what was an extremely challenging year.

To our partners and the wider communities, my appreciation for your efforts and cooperation in our endeavors. I have every confidence and look forward to continue, side by side, to strive for greater heights in all our future undertakings.

Finally, I’m especially grateful for the guidance and wise counsel provided by members of Maybank Cambodia’s Board of Directors and those of the other entities within the Group, as well as the regulatory bodies, particularly the National Bank of Cambodia.

Sorm Orkun!

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9Key Message from CEO

We were quick to activate our business continuity processes, as early as January 2020, when the first signs of the COVID-19 virus were reported. Our Business Continuity Management committee monitored all developments surrounding the virus. We have since been realigning our priorities to safeguard the resilience of our operations and the well-being of our stakeholders.

Measures have been rolled out progressively across our operations to ensure the safety of our customers and employees while we strive to maintain quality service with minimised disruptions. We have supported our borrowers through this period of uncertainty by providing viable financial solutions to help keep them afloat, preventing business failures and lay-offs. Compelled by a sense of responsibility, we have assisted efforts to contain the spread of the virus with various contributions to aid the tireless work of frontliners, reduce the burden on healthcare systems, as well as provide relief for marginalised communities.

Despite the unprecedented uncertainties, one thing we could always rely on for guidance as we charted our course this year was our mission of Humanising Financial Services. Driven by this sense of purpose, we prioritised doing what we can to support all our stakeholders, not leaving anyone behind.

Addressing COVID-19

Customers

• Provided financial relief and support to affected customers and clients beginning in late March 2020 through moratorium/payment deferments, as well as restructuring & rescheduling (R&R) solutions.

• Participated a Special Co-Financing Scheme, in partnership with Cambodia SME Bank, a national financial stimulus initiative led by the Royal Government of Cambodia (RGC) in collaboration with commercial banks and MFIs to support SMEs in the prioritized industries.

• Proactive engagement with customers and clients enabled us to offer guidance on options available for financial assistance while encouraging customers to bank digitally to reduce physical presence at branches, in line with movement restriction requirements.

• We accelerated the enhancement and deployment of fully digital financial products and services to enable our customers to undertake their daily banking needs remotely with minimal disruption.

• With physical branches, we conducted regular disinfection/sanitisation exercises. We ensured compliance with SOPs by enforcing physical distancing measures at customer waiting areas as well as usage of protective equipment such as masks and hand sanitiser.

For more, refer to Community Financial Services on page 26, Service Delivery on page 30 and Sustainability Review on page 53.

• In addressing regulators’ relief directives, we:

- Established new frameworks and lending guidelines including revising the relevant methodology for assessment of borrowers’ capacity for repayment, risk profile, R&R applications and collateral requirements to enable speedy and flexible responses to affected borrowers’ needs.

- Established working group to deliberate and execute speedy credit-led strategies while preserving the Bank’s capital adequacy, liquidity and asset quality.

- Intensify the Asset Quality Management Committee to govern, steer, coordinate and ensure effective implementation of the Bank’s loan moratorium strategy and program.

- Continuously undertook ad hoc stress tests and simulation analyses in response to the rapid changes in the operating environment to ensure overall resilience.

• Maybank continues to prioritise capital and liquidity strength and operates well above the regulatory minimum despite the capital and liquidity relief afforded to the banking sector through the drawdown of buffers and lowering of liquidity coverage thresholds.

For more, refer to Reflections from Our Chief Financial Officer on page 24 and Risk Management on page 31.

Regulators

Maybank • Annual Report 2020

18

• Contributed to the Royal Government of Cambodia to support the Government’s Initiative to Tackle with COVID-19, for the purchase of protective equipment, hospital equipment, test kits and other initiatives to alleviate the burdened healthcare system and frontliners as well as to assist vulnerable communities.

• Also contributed to the Royal Government of Cambodia to support victims of floods that caused prolonged hardship when the community was already undergoing challenges caused by the pandemic.

• We also enabled the public to lend a helping hand to facilitate the Royal Government of Cambodia in raising donations for the purchasing of vaccinations for COVID-19.

• Supported our local trained weavers under Maybank Women Eco-Weavers, in collaboration with our program partner, ColorSilk Cambodia to produce over 110,000 handwoven face masks made of pure cotton and silk to help limit the spread of COVID-19 in the country and the region.

• In collaboration with Maybank Foundation, we presented a consignment of the hand woven protective masks to the ASEAN Secretariat bearing a message of goodwill and a show of solidarity that transcends borders, symbolising the hopes and prayers of our women weavers for all 10 ASEAN member countries.

• We had also presented 6,000 hand woven face masks to the Ministry of Education, Youth & Sport (MoEYS) in conjunction with the Public School Re-opening, to support the MoEYS in its effort to resume education services for the younger generation particularly children, whilst taking the necessary precautions to protect students, teachers, staff and their families. This initiative also provided great supplementary economic opportunities for the Cambodian weavers, which is aligned to the Government’s overall mission towards promoting economic growth and helping communities rebound from the unprecedented disruptions caused by COVID-19.

• In line with the government’s efforts to uplift the level of financial literacy amongst Cambodians, our Maybank’s award winning CashVille Kidz Financial Literacy Programme was featured on the MoEYS digital learning platform. This was initiated to also support MoEYS’ efforts to intensify its online learning amidst the pandemic wherein we witnessed the closure of schools on numerous occasions in response to the outbreak. The Ministry’s digital learning platform had since become a key learning delivery channel for the country.

For more, refer to Community Financial Services on page 26 and Sustainability Review on page 53.

Communities

• Even before COVID-19 was declared a pandemic, we had established and implemented the Maybank Group Pandemic Preparation Framework and activated our Business Continuity Plan. To mitigate risks and flatten the COVID-19 infection curve, our actions have been guided by four key principles:

- a remote-first mentality

- reduction, if not elimination of transmission among employees

- maintaining high standards of hygiene and safe practices in the workplace

- ensuring preservation of life and safety of employees, their families, our customers and communities, as well as continuity of our operations

• Some of the key initiatives undertaken include:

- A travel policy either restricting or banning employees from business or leisure travel.

- Activation of split operations teams between offices, alternate sites and work from home.

- Implementation of strict Standard Operating Procedures including physical distancing, usage of personal protection equipment, health monitoring, travel declarations and deferment of all events requiring physical attendance.

- Accelerated implementation of flexible work policies and practices that enable mobile working, and rollout of necessary technology infrastructure.

- Reconfigured branch operations with reduced banking hours and workforce strength while ensuring services are intact.

- Established 24/7 Group Human Capital Staff Emergency Support team, as well as local Human Capital and Business Continuity Management support team and issued regular advisories including an Employee Workplace Handbook.

- Constant virtual learning and employee engagement initiatives to promote mental, physical, emotional and performance fitness. Counselors were also made available to staff for emotional support.

- Deployment of New Normal Workplace Enforcers to monitor and ensure strict compliance with all measures implemented by the Bank.

For more, refer to Human Capital on page 32.

Employees

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9Addressing COVID-19

Winner • Best International Bank Cambodia 2020 by Asiamoney Best Bank

Awards 2020• Best Retail Bank (Cambodia) by Retail Banker International Asia

Trailblazer Awards 2020• Best Retail Bank – Cambodia 2020 by Global Business Outlook

Awards 2020• Best Retail Bank 2020 by The Global Economic Awards 2020• Best Retail Bank Cambodia 2020 by The Global Banking Finance

Awards 2020

• Best CSR Initiative by Retail Banker International Asia Trailblazer Awards 2020

• Most Socially Responsible Bank – Cambodia 2020 by Global Business Outlook Awards 2020

• Best CSR Bank 2020 by The Global Economic Awards 2020• Best CSR Bank Cambodia 2020 by The Global Banking Finance

Awards 2020

Number of Maybank2u registered online users in Cambodia

35,000

Total number of transactions via Maybank2u-Individual

4.5Mil

Total amount of online transactions via Maybank2u-Individual

USD133MilOver

12,000Over

960,000 USD0.8Mil

DepositOur deposit grew by 49.3% over the last five years, contributed by effective customer relationship management and disciplined account planning across branch and distributed network.

USD1.06 billion2016

USD0.71 billion

Loan We recorded 38.2% five-year growth in loans.

USD0.76 billion2016

USD0.55 billion

• Access account detail with Biometric Login• View balances and transaction history• Transfer funds within Maybank or to other banks in

Cambodia via Internbank Funds Transfer or FAST

Introduced newly-redesigned Maybank2u KH App

THE PREFERRED COMMUNITY BANKING PARTNERTo be a leading retail and commercial financial services provide in Cambodia, leveraging our regional presence, banking expertise and growth opportunities in Cambodia and ASEAN.

KEY MAYBANK2020 ACHIEVEMENTS

Setting out with an aspiration of Advancing Asia’s Ambitions With You, the Maybank2020 strategy has been our guiding path for the last five years. During this period, Maybank strengthened its foundation to be sustainable in the long term, particularly through investments in digital platforms and capabilities.

As a testament to the forward-looking position taken on digital, we were able to leverage our digital capabilities to support our customers and community during the onset of the global pandemic in 2020. This foundation has positioned us to stay relevant, competitive and sustainable for the long term.

Introduced various digital solutions such as the best-in-class Maybank2u internet and mobile banking applications and Maybank2e cash management solution

Built new innovative capabilities through Maybank Labs

Upskilled employees through our FutureReady Programmes

Sealed strategic partnerships to strengthen our value proposition

Over OverOver

Users in 2020 Transactions in 2020 Transactions Amount in 2020

Users in 2016 Transactions in 2016 Transactions Amount in 2016

Over

2020 2020

• Pay bills online for utilities, Internet, credit card, insurance and many more

• Top-up mobile phone with or without pins.• Withdraw Cash from any Maybank ATM/Cash Deposit

Machine without Card.

eamworkWe work together as a team based on mutual respect and dignity

ntegrityWe are trusted, professional and ethical in all our dealings

Our TIGER Core Values serve as guiding principles to encourage practices that collectively form our unique culture

Maybank • Annual Report 2020

20

OurStrategy

MAYBANK’S NEXT FIVE-YEAR STRATEGY: M25

M25 is Maybank’s next long-term strategy towards 2025, capturing our strategic intent, key plans and outcomes for the next five years. With M25, our aim is to further enhance the way we leverage digital innovation to create an unmatched customer experience, whilst strengthening every aspect of our business to be FutureReady to capture new growth opportunities. Infused with our sustainability agenda, we also intend to proactively make changes to our operating model and policies that will be value-accretive in the long run.

As we drive these transitions on the digital and sustainability front, M25 will be executed with a clear line of sight of our purpose, Humanising Financial Services, as described below:

M25 GROUP FRAMEWORK

Anchored on our purpose, the M25 Group Framework will guide the next five years’ strategy, steered by the Group Strategic Priorities of being Pervasively Digital, building New Value Drivers and driving Sustainability forward, to achieve Sustainable ROE, Top Rated Customer Experience and Regional ESG Leadership. The Business Strategic Thrusts articulate the strategic objectives for our businesses, powered by our TIGER Core Values.

For our Stakeholders

Being at the Heart of the Community, we will:

Customers• Best-in-class customer experience• Convenient access to financial services (digital &

physical)• Fair terms & pricing; advisory based on needs• Transition support to sustainable practices

Shareholders• Sustainable and responsible returns• Strong governance and transparency

Employees• Growth and capability building• Inclusiveness, diversity and well-being

Regulators• Standard-bearer for the industry• Professionalism and business ethics

Communities• Financial inclusion and empowerment• Commitment to low-carbon economy

H U M A N I S I N G F I N A N C I A L S E R V I C E S

Make financial services simple, intuitive and accessible

1 Build trusted partnerships for a sustainable future together

2Treat everyone with respect, dignity, fairness and integrity

3

TIGER CORE VALUES

Pervasively DigitalEvolve from being a financial services provider towards becoming our customers’ lifestyle partner, on the back of advanced data analytics, resilient systems and platforms, enabled by a FutureReady and agile culture.

New Value DriversTransformative initiatives that go beyond the current business-as-usual outcomes and represent new growth opportunities such as in the areas of digital, sustainability, SME and wealth, with the goal of building long-term competitive advantages.

SustainabilityDrive the change for a better world and partner our stakeholders to achieve sustainable growth with a focus on enabling responsible transition to a low-carbon economy, empowering our communities and leading by example with good governance practices.

HUMANISING FINANCIAL SERVICES

M25

Regional ESG Leader

Sustainable ROE

Top RatedCustomer Experience

Group Strategic Priorities

Preferred ASEAN Bank Global Leader in Islamic Finance Leading ASEAN Insurer

Business Strategic Thrusts

rowthWe are passionate about constant improvement and innovation

xcellence & EfficiencyWe are committed to delivering outstanding performance and superior service

elationship BuildingWe continuously build genuine long-term and mutually beneficial partnerships

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9Our Strategy

This unusual yet pivotal year has seen major changes in our operating landscape, prompting us to manoeuvre carefully, albeit quickly, to adapt to and embrace the new normal while continuing to serve and deliver value to our stakeholders amidst the uncertainties.

Material Risks & Opportunities:• Increasing demand for innovative financial solutions from

urban middle classes and SMEs which make up a significant demographic in ASEAN and Cambodia

• Economic disruption impacted the livelihood of communities, impairing their ability to meet their financial obligations

• Cautious consumer sentiment resulting in demand for wealth management propositions

• Pockets of growth opportunities seen in selected emerging sectors such as e-commerce and healthcare

• Continuous technological innovation required to address rapidly evolving customer needs

• Opportunity to develop more inclusive solutions in line with growing customer demand

• ESG considerations becoming increasingly central in the financial industry as businesses and investors shift their focus towards sustainable agenda

• Explore regional and global partnerships to build synergies with our internally built capabilities

• Reinforce our security and digital infrastructure as well as approach to prevent and address cyber threats, while keeping pace with the demands of changing customer behaviours

• Accelerated need for digital transformation to enable customers to continue to perform banking needs digitally in the new normal

• Adhering and executing effective risk controls and risk mitigation measures as well as maintaining minimal system downtime

Our Response:

• Maintain diligence in managing asset quality, e.g. intensifying Asset Quality Management Committee to expedite COVID-19 credit decision making

• Consistent and proactive customer engagement as well as development of needs-based digital solutions and relief programs leveraging data-led capabilities

• Expand digital reach through enhancement of Straight-Through Processing (STP) and other back office centralized operations and credit administration capabilities

• Provide viable and affordable financial solutions to customers through, for example, the government-initiated Special Co-Financing Scheme and COVID-19 financial assistance programs

• Proactive and consistent client engagement to develop and offer relevant solutions while enabling early detection of asset quality deterioration to expedite financial relief assistance and mitigation plans

• Expand customer segment as part of the portfolio diversification strategy• Continuous enhancements to regional cash platform and trade finance operations service levels

to minimise disruption• Continuous development of ESG capabilities and participation in ESG-related opportunities• Accelerate ongoing IT infrastructure and security enhancement programs to strengthen the

protection of customers’ data, maintain operational resilience in the face of increased transaction volumes, and prevent potential cyber threats

• Establish digital partnerships with third parties to offer a holistic and seamless banking experience for customers (e.g. Bakong domestic and cross-border initiative, partnerships with payment aggregators)

• Re-focus efforts to develop products and services that cater to pressing needs enabling customers to conduct their daily essential services more conveniently including ATMs upgrading, Smart Recycler Machine (SRM) deployment, Maybank2u and Maybank2e enhancements, etc.

THE PREFERRED COMMUNITY BANKING PARTNER IN CAMBODIA

Operating Landscape Impact:

• Lower interest rate environment leading to net interest margin (NIM) compression and lower profitability, as well as overall suppressed loans growth leading to slower income growth from loan-related activities

• Soft business sentiment and subdued global economy due to the pandemic resulted in business slowdown and weaker asset quality outlook

• Increasing need to support and ensure sustainability of SMEs amid the pandemic, as they are significant drivers of the country economy

• Movement restrictions and contractions in economic activity from the COVID-19 pandemic caused stress in tourism-related, aviation, oil & gas, real estate and construction sectors, leading to pressure in asset quality

• Reduced foot traffic at our customer touchpoints and touchpoints between intermediaries and customers • Heightened awareness among financial institutions of the need to support Sustainable Development Goals (SDGs)• Accelerated need for digital infrastructure and innovation capabilities as the new normal sets in, coupled with heightened competition

from financial and non-financial technology disruptors• Surge in migration to cashless and digital platforms, due to the pandemic, intensifying the need for agile and resilient digital

capabilities and infrastructure to provide innovative, inclusive and safe solutions that meet our customers’ and communities’ needs• Heightened competition from new digital entrants, coupled with new regulatory and technology developments (Digital Bank

Frameworks, Blockchain, Work From Anywhere/Home models), requires us to continuously adapt and innovate to remain relevant and productive

Maybank • Annual Report 2020

22

Our OperatingContext

Outlook & Priorities for 2021:

The pandemic is expected to continue to impact the global economy until the comprehensive rollout of proven vaccines. However, changes in consumer behavior and preference will present pockets of opportunities in selected segments, particularly in the digital sphere.

While the industry and consumer behaviour transition into the new normal, moderate growth in Cambodia and ASEAN region is still anticipated, largely led by fiscal stimulus and easing of monetary policies in supporting households and businesses. The push for inclusive financial services is likely to persist along with increasing competition from non-bank players.

With this in mind, we remain committed to delivering meaningful customer-centric solutions that meet our customers’ and the communities’ needs. This includes developing our talent pipeline to embed a customer-centric mindset, enabling business agility to seize opportunities, and strengthening our digital propositions while managing asset quality.

We remain focused on engaging actively with our customers to mitigate its impacts while continuing to provide them with integrated and innovative financial solutions. We will also continue to strengthen our balance sheet resilience through portfolio diversifications, accelerate our investments into digital capabilities, and ramp up regional flow and cross-border propositions leveraging on our ASEAN regional connectivity.

Competition in the digital space has intensified with fast-paced landscape changes, further accelerated by the pandemic. It is critical that we put in place relevant capabilities that enable us to swiftly adapt to new business models and extract value creation opportunities to address the needs of consumers in this environment, while being able to maintain operating resilience.

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4-19Our Operating Context

ANALYSIS OF STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Our result and financial statement reflect those efforts and show that Maybank’s model remains strong even in such an uncertain scenario.

Continue to grow our Balance Sheet with discipline

Maybank Cambodia registered positive gross loans growth of 13.3% (2019: 17.2%) to USD764.1M. The growth was driven primarily by retail businesses, which represents about 80.3% of Maybank Cambodia’s total loans portfolio. Retail portfolio is mainly represented by mortgages and retail SME loans.

This strategic growth of retail business is also aligned with the Bank’s vision, which is “To be the Preferred Community Banking Partner in Cambodia”.

139 (20.3%)

544 (79.7%) Retail

Commercial

152 (19.7%)

620 (80.3%)

FY2019

+13.3%+17.2%

FY2020

Gross Loan (USD Million)

SNAPSHOT OF STATEMENT OF COMPREHENSIVE INCOME FOR FY2020

Profit & Loss SummaryFY2020

USD’000FY2019

USD’000 YoY

Net fund-based income 35,514 39,455 (10.00%)Net fee-based income 9,878 11,989 (17.61%)

Net operating income (Revenue) 45,393 51,443 (11.76%)Finance Cost (887) (791) 12.14%

Overhead expenses (18,563) (20,897) (11.17%)Pre-provisioning operating profit (PPOP) 25,942 29,755 (12.81%)

Provisions for expected credit losses (1,797) 4,146 (143.34%)

Profit before tax (PBT) 24,146 33,901 (28.77%)Net profit 18,579 26,893 (30.92%)

Escalation of COVID-19 pandemic in Cambodia coupled with changes in new regulations and frameworks have painted the Cambodian operating landscape to be more complex and challenging. In order to navigate through, Maybank (Cambodia) Plc. (“the Bank”) had focused on mitigating business operational risk with discipline, healthy capital and liquidity position whilst continue to aid vulnerable customers affected by the pandemic. Our financial performance in 2020 reflects the challenging year we have faced, as the anticipated costs of our turnaround have been compounded by a difficult operating environment. Notwithstanding these challenges, we have made good progress on executing our strategies, whilst at the same time maintaining a strong balance sheet. Our underlying performance is on track against our expectations, once adjusted for the impacts of COVID-19. As a result, the Bank maintained a commendable Profit before Tax of USD24.1M (2019: USD33.9M).

Since the beginning of the crisis, we’ve been monitoring the pandemic effects every day, creating internal communication channels, improving our controls, considering new scenarios, and – above all – listening to our customers.

Sustained healthy double-digit Profit Before Tax of USD24.1M (2019: USD33.9M)

Net fee-based to operating income ratio remains consistent above 20% at 21.8%

Maintained asset quality with NPL ratio of 2.37% (2019: 2.63%)

Robust capital and liquidity management, Capital Adequacy Ratio of 20.6%, Liquidity Coverage Ratio of 153.3%

SUSTAINABLE PERFORMANCE AGAINST CHALLENGING OPERATING LANDSCAPE

• Net-fund based income declined by 10% YoY to USD35.5M (2019: USD39.5M) on the back of healthier balance sheet optimization, with gross loans growth of 13.3% YoY (2019: 17.2%). Net fund-based income was constrained due to the compression of net interest margin (NIM) by 18bps to 2.68%.

• The compression of NIM was primary due to our strategy to grow KHR and to maintain healthier liquidity position by utilising our subordinated debt at the expense of slimmer margin. As a result, the Bank managed to deliver the targeted KHR portfolio regulatory requirement whilst still maintaining a balance liquidity position.

• Fee-based income decreased by 17.61% YoY to USD9.9M (2019: USD12.0M) attributed to interruptions of customers’ business transactions during the second-half of 2020.

• Correspond to the decline in payment business activity throughout 2020, overhead expenses improved by 11.17%.

• Expected credit losses were severely impacted by the deteriorating macroeconomic conditions resulting from the COVID-19 pandemic.

• Coupled with compression of NIM and prudent provisioning for expected credit losses amid COVID-19 environment, our full year profit before tax dropped by 29% to USD24.1M (2019: USD33.9M).

• Return on equity (“ROE”) remains healthy at 11.02%. (2019: 16.20%)

Maybank • Annual Report 2020

24

Reflections From OurChief Financial Officer

Diminishing of expensive deposits to mitigate cost of funding

One of our key strategic actions in 2020 was to minimising the acceleration of expensive funding cost from customer’s deposit, in which the deposit rate was reviewed and revised to manage better profitability and while at the same time to address market circumstances. This action has resulted in the reduction of overall customer deposit by -6.7% YoY (2019: +16.2%).

The Bank continues to optimise its funding profile through capitalising on cost efficient sources of funding while ensuring appropriate diversification in its funding base. Under the COVID-19 environment, current deposits shrank by 23% YoY to USD637M (2019: USD726M) and shifted to Term deposit which grew by 5% YoY to USD368M (2019: USD351M).

Preserving asset quality through pro-active risk management

The Bank has placed more focus towards its asset quality management’s mechanism to ensure the origination of quality asset starts from the on-boarding process. This approach has proven to be very effective with the evidence of improvement on the Non-performing loans ratio (“NPLs”) to 2.36% (2019: 2.63%).

Costs

Our strategic focus on cost discipline has continued. In 2020, amid the uncertain environment we are facing, we managed to improve cost by 11% YoY. Cost effecicencies have been delivered across a broad range of staff and non-staff initiatives and we continue to see additional opportunities to reduce our cost base and improve efficiency.

351 (33%)

596 (55%)

131 (12%)Savings Deposit

Current Deposit

368 (37%)

118 (11%)

520 (52%)

-6.7%

FY2019

+16.2%

FY2020

Term Deposit

Customer Deposit (USD Million)

LOOKING AHEAD

The challenges impacting the operating environment during 2020 have been significant. Nonetheless, the Bank’s swift and proactive response was enabled by our investment in key strategic areas prior to the pandemic. The Bank successfully adapted to the challenges it faced, ensuring ongoing support to customers, colleagues and communities while remaining focused on its strategic delivery, in particular the continued lowering of costs, the launch of new loan products for SMEs, and improvements in the profile of our business.

Looking to 2021, while we recognise the necessary ongoing restrictions and consequent challenges as we start the new year, we anticipate these will be moderate as the vaccine rollout progresses in Cambodia. We have sufficient capital to support economic recovery, we are investing in our digital and technological capabilities and customer propositions, and we are continuing to keep our costs down and maintaining robust funding and liquidity position to align with regulatory requirements and efforts. We are committed to responsibly develop our long term franchise, to serve our customers brilliantly and deliver sustainable returns to our shareholder.

Despite the clear challenges resulting from the COVID-19 pandemic, 2020 brought many encouraging signs which demonstrate our strategies is beginning to take effect. Whilst the external challenges we face will inevitably continue into 2021, we are now in a stronger position to tackle these. We will continue to focus on maintaining disciplined cost management and ensure that we continue to deliver long-term value for our stakeholders. That remains our key focus.

EFFECTIVE CAPITAL AND LIQUIDITY MANAGEMENT

1. Capital Management

The key measure of capital adequacy is the Solvency Ratio, which is based on net worth to aggregate credit risk exposure of no less than 15% as per regulatory requirement. As at 31 December 2020, the Bank’s Solvency Ratio remained well capitalised at 20.6%, which comprised of Tier 1 Capital of 14.7% and Tier 2 Capital of 5.9%. In addition, the parent company provided a fresh subordinated debt for the Bank’s further utilisation as working capital amounting to USD45M. This contributed to facilitation of daily operation and regulatory relaxation for the Bank as it improved Tier 2 Capital by 1.2% from 2019.

Profit & Loss Summary FY2020 FY2019

Core Capital – Tier 1 14.7% 17.5%Complementary – Tier 2 5.9% 4.7%

Solvency Ratio 20.6% 22.2%Net Worth (in USD’ Million) 193 187.6

Net RWA (in USD’ Million) 935.8 846.5

2. Liquidity Management

Through our agile funding strategies, we were able to maintain healthy liquidity risk indicators, with liquidity coverage ratio (“LCR”) at 153.3% as at 31 December 2020, above regulatory requirement of 100%. On the other hand, Loan to Deposit ratio (“LDR”) further increased to 75.63% in 2020 (2019: 63.1%). This indicator demonstrates the efforts by the Bank to reduce expensive funding and at the same time to grow healthy and quality loan assets.

Considering all measures taken throughout 2020, we expect to be well positioned for the re-opening and growth acceleration beyond the current crisis.

Profit & Loss Summary FY2020 FY2019

CASA Growth/(Decrease) (12.2%) 67.3%

Gross Loan to Deposit Ratio 75.63% 63.1%

Liquidity Coverage Ratio 153.3% 134.3%

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4-19Reflections from Our Chief Financial Officer

KEY FOCUS AREAS FOR 2020

Stay true to our mission – Humanizing financial services by stay close to customers, helping them through thick and thin

As COVID-19 pandemic started to hit Cambodia and its economy, we have taken necessary actions to put in place the Moratorium Assistance to our deserving customers impacted by COVID-19 either in the form of interest repayment only or repayment deferment for a period up to 6 months. As at year-end we have extended assistance to more than 200 consumer and Retail SME customers. In addition to this, we have also processed various loan restructuring on a case by case basis. To ensure the safety and wellbeing of our customers and staff, we have proactively implemented preventive measures such as social distancing, temperature scanning, hand-sanitizer, mandatory mask wearing and QR scanning in accordance with the policies and guidelines of the Ministry of Health and the government across our 21 branches and head offices.

Continue to provide customers with access to financial and financing services during the challenging period

We remain committed to support the growth of Cambodian economy by expanding our financing solutions to both SME and consumer customers whilst further strengthening our digital capability to make it convenient for customers to pay and transact. This is evidenced by the launch of SME loan, Auto loan and refreshed M2U with more payment functionalities. We continued to offer loans to customers whose businesses or earnings are not or less impacted by the pandemic to enable them to purchase homes or access to additional credit line to sustain their business. In addition, we had participated in the SME Co-Financing Scheme supported by the government via SME Bank in order to stimulate the economic growth by providing SME in target industries with access to a cheaper financial solution.

Toward a delightful customer experience by further investment to build up our digital capability and scalability

In cognition of the needs of our customers and the public to conduct themselves in the new norm, we have increased our investment and focus to enhance our digital capability by unveiling our refreshed M2U, mobile phone top up, water supply bill payment, onboarding new billers and enabled KHR capability in both M2U and ATM. We have also launched campaigns to incentivize our customers to sign up and transact online. As at year end, we have seen registered users significantly grew by 27% and active users increased by 16%. We also commenced work on few other key digital initiatives which are expected to be operational next year.

COMMUNITY FINANCIAL

SERVICES

TOP ACHIEVEMENTS IN 2020

Successfully unveiled SME s e g m e n t w i t h a m o r e streamlined lending program to supplement our existing Retail SME and further cement our leading position in the SME space.

Successfully launched Auto Loan as part of overall strategy to expand and broaden our offering in the consumer finance segment.

Revamped our UI and UX of our world-class mobi le banking, Maybank2u (M2U) and payment functions to provide customers with more functionalities and convenience e.g. mobile phone top-up and bill payment.

Supported and participated in the key initiatives of National Bank of Cambodia (NBC) to promote national KHR usage, building the digital payment ecosystem such as Bakong and Bakong Cross Border.

Significantly grew the mortgages business to become the main contributor to the overall bank’s success in 2020 whilst continues to maintain healthy asset quality.

Maybank • Annual Report 2020

26

Continue to closely engaged with our customers beyond transacting and saving to include protection during the pandemic

In order to fulfill the evolving needs of our customers including Premier Wealth clients and to realize our aspiration of being the Preferred Community Banking Partner Community Banking Partner in the market, we have rolled out the distribution partnership with Etiqa Life (Cambodia) Assurance and Etiqa General (Cambodia) Assurance to provide our customers with comprehensive financial protection and saving options as well as travel, fire and personal accidental insurance in Phnom Penh and provinces, leveraging on wealth of experience, expertise and synergy that Maybank and Etiqa have been partnering with each other in Malaysia and other countries in the region.

KEY PERFORMANCE HIGHLIGHTS

CFS’s operating profit registered a steady YoY growth by 6.2% to USD42.1 million attributed to:

• A modest growth of topline revenue at 2.1% which is mainly contributed by the net interest income.

• Favorable cost management and prudent measures, resulted in commendable reduction of total overhead by 7.2% whilst our cost to income ratio improved by 2.8%.

• Healthy loan growth by 11.2%, mainly attributed to a strong growth of mortgages at almost 29% and the newly launched SME loans.

• Achieved KHR loan book well above 10% regulatory requirement of our total loans whilst continuing our strong momentum of KHR deposit collection to fund our KHR loan book.

• Maintaining healthy deposit CASA at above 60%.

Further strengthening our product and digital offering to provide more choices and convenience to our customers:

• Successfully launched Auto Loan to the market to provide innovative auto financing solution to our existing and new customers. The launch also testifies our intention and long term

commitment to building a stronger presence in the consumer banking space.

• Unveiling our refreshed mobile banking App, M2U with a more user friendly interface with more payment functionalities such as mobile phone top and bill payments. This has led to an impressive growth of registered user and active user growth, resulting in significant surge of monetary transactions by 63%.

• Additional work already commenced to expand our M2U payment functionalities through partnership with payment aggregators and participation of the relevant payment gateway that links up to the broader online payment ecosystem.

Strategic review of our branch network to ensure it remains refreshed, welcoming and strategically located at economically vibrant area:

• Relocated one of our flagship branches at Tuol Kork to a more strategic area with a large space to meet the needs and rising demand of our customers and prepare ourselves for future growth. This enabled us to equip the branch with more multi Self Service Terminals (SST) and another full-fledged Premier Wealth Lounge. Our Premier Wealth clients can now access to our world class Premier Banking or reaching to our Premier Wealth Relationship Managers closer to where they live or work

to fulfill their financial and banking needs. Our customers can either make deposit or withdrawal 24/7 at our SST.

• We have undertaken to refresh three branches at Phnom Penh Special Economic Zone Branch, Boeng Keng Kang Ti Mouy Branch, and Krong Suong Branch for better and more consistent look and feel across all Maybank branches locally and regionally.

• To ensure safety and well-being of our customers and staff in the new norm necessitated by COVID-19 pandemic, we have implemented necessary preventive and precautionary measures across our branch network as per the standard operating procedure by Ministry of Health and government. This includes temperature scanning, QR code scanning, hand sanitizer and mask wearing when entering and being in our banking premise.

OUTLOOK & PRIORITIES FOR 2021

Outlook for 2021 remains challenging as COVID-19 pandemic will continue to cause enormous disruption and pressure to the public healthcare systems and economies whilst businesses and people are adjusting to operate, work and live in the new norm. To cope with this unprecedented challenge of our time, we have taken proactive and necessary approach and means to manage our business by intensifying our engagement with our customers and partners to navigate through 2021 by being sharper in our strategic approach to seamlessly execute core initiatives to beef up our digital offering.

Priorities for 2021:

• Continue to preserve our balance sheet and prudently managing our asset quality by intensifying our engagement with customers and where necessary provide assistance to deserving customers during this difficult period.

• Focus on key segments that remain sound or proven to be resilient, in particular consumer financing and SME segment to grow our loan book.

• Key initiatives to deliver delightful customer experience in every touch points whilst enhancing our Premier Wealth proposition, leveraging on regional connectivity and rich experience across different markets.

• Bring our digital capability to a new height by equipping more Self Service Terminals (SST) to enable our customers to do basic banking services 24/7 whilst at the same time deploying more off-site ATM to make it easier for our customers to access to their funds.

• Further strengthening and expanding the payment functionalities of our M2U so that our customers can do their banking at any time and from anywhere.

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COMMERCIAL & TRANSACTION

BANKING

TOP ACHIEVEMENTS IN 2020

Maintained high level of productivity, proven by better PBT per Staff Cost as compared to FY2019

Successfully unveiled SME segment, replicated a more streamlined lending program of Retail SME segment and achieved 45% assets growth in SME space

Registered healthy loan growth at 15% YoY growth despite the challenge of pandemic outbreak

Recorded positive income growth by 10% YoY as compared to FY2019, with favorable double-digit fee income ratio

Enabled better digital experience for corporate clients with the introduction of Host-to-Host solution on Maybank2E (M2E)

KEY FOCUS AREAS FOR 2020

Partnering customers in navigating a challenging environment

Amidst the challenges and risks brought about by the pandemic, we engaged our commercial clients proactively to extend financial assistance if required. We offered moratorium, repayment assistance (RA) in two forms either through interest repayment only or repayment deferment for a period up to 6 months and restructuring & rescheduling (R&R) solutions that best suit their needs. We also closely monitored vulnerable borrowers to raise early alerts, enabling swift assistance and mitigation plans. As of December 2020, we had provided more than USD60 million worth of relief packages in Cambodia.

We stay true to our core, being a humanizing financial partner to our commercial clients through thick and thin. On top of offering financial relief assistance, we have also took part to mitigate risks of further COVID-19 virus spread through minimizing human-to-human interactions with “M2U & M2E Interbank

Funds Transfer Promotions” to encourage Maybank customers to perform online transactions via M2U & M2E, instead of performing transactions over–the-counter (OTC). This promotion had shifted our local and corporate clients to transact online, proven by 15% QoQ growth in the number Interbank Fund Transfer transactions on M2E.

Delivering integrated digital financial solutions enabling better control and access of M2E

In line with customer migration onto digital platforms, we have launched the Host-to-Host capabilities on our M2E, enabling straight through processing (STP) directly from the corporate client’s host to our Regional Cash Management System; thus, better efficiency and effectiveness. Specially designed to provide our clients with greater efficiency and automation in managing their cash flow anytime, anywhere, taking into considerations complexity of its transactions with requirement of flexible and convenient authorization on safe & secured manner, our M2E was very relatable to corporate clients especially in the midst of global trend to work from

home or mobile work arrangement arising from the COVID-19 pandemic. This has resulted in surge of number of clients registered for M2E, at the rate of 31% YoY growth.

Supporting the transition from Retail to Commercial with introduction of SME segment

Recognizing the needs for growth amongst retail business clients, and to support their expansion transition from retail business to commercial clients by being their trusted financial partner, we introduced a niche segment – SME, focused on serving the untapped space in between Retail Business to Commercial. The newly rolled-out SME segment is a replicate success of our Retail SME segment, delivered through a more streamlined lending program that enabled better customer experience while taking into consideration the overall risk appetite of the bank. The newly introduced SME segment is a key business enabler in FY2020 for us, as it delivered very healthy quality assets growth despite the unfavorable market condition posted by the global pandemic.

Maybank • Annual Report 2020

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KEY PERFORMANCE HIGHLIGHTS

Commercial & Transaction Banking’s operating profit registered a steady YoY growth by 12% to USD21.2 million attributed to:

• Favorable growth of topline revenue at 10.3% which is mainly contributed by net interest income.

• Effective cost management and prudent measures, resulted in commendable reduction of total overhead by 10.2%.

• Healthy loan growth by 15.3%, mainly attributed to the strong growth of the newly launched SME loans.

• Maintaining healthy deposit CASA at 60.3%.

OUTLOOK & PRIORITIES FOR 2021

The impact of COVID-19 will remain likely to persist onto 2021 leading to continued slowdown and weaker market sentiments from local and corporates clients. We will remain focused on actively engaging with our customers to mitigate the impact while continuing to provide them with an integrated and innovative financial solutions through our M2U and M2E digital banking service solutions to enable our customers to transact digitally. We will also continue to strengthen our balance sheet resilience through strict supervision of restructuring portfolio due to the impact of COVID-19 and embedding a selective and prudent approach for new-to-bank client on-boarding.

PRIORITIES FOR 2021:

• Focus on the growth of corporate clients through our cash management solutions such as payroll, payments, collection and internet banking, M2U and M2E.

• Strengthen tactical account planning to support the increase of new-to-bank (NTBs) and increase utilization of credit facility and capture other cross-sell opportunities.

• Perform strict supervision of the restructuring portfolio mainly impacted by COVID-19 and ensure that there is no decline in credit quality and customer business volume.

• Fulfill the untapped segment through the launch of SME Banking and deliver its intended strategic objective to better serve the local community and the backbone of our economy – Small & Medium Enterprises (SMEs).

• Continuous enhancements to regional cash management platform (M2E) to serve our local and corporate clients and expanding the Host-to-Host capabilities on M2E that provide better efficiency and effectiveness, enabling flexible work arrangement for our commercial clients with convenient, safe and secured management of their cash flow on the finger tips.

Toward better customer experience by further investment to build up our digital capability and scalability

In order to fulfill the ever-growing sophisticated needs of local and corporate clients in their financial management with consistent experience across the region and all touchpoints, we are committed to deliver a full-suite of financial solutions, further investment to enhance our M2E in tandem with our M2U to achieve our aspirations in being the digital bank of choice in both consumer and commercial spaces.

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Commercial & Transaction Banking

Maybank was set up in 1960 with the sole intent to serve; to provide

Malaysians - and eventually the ASEAN community, including Cambodia

with financial products to enhance their lives. Over the years, this

resolution has grown stronger and more ingrained into our corporate

ethos. So much so that, as we celebrated our 60th anniversary in

2020, it has become part of our identity. Throughout the year, in

the face of multiple challenges due to COVID-19, we truly demonstrated

the humanising of financial services; providing support and assistance

beyond banking.

At Maybank Group, we raised over 0.75 billion through crowdfunding which was channeled – together with food and personal protective equipment (PPE) – to affected communities in the region. We launched a Social Impact Deposit enabling people to contribute to the needy. Leveraging technologies developed by our teams in Malaysia and Bangalore, we also introduced a suite of innovations to help small businesses stay afloat. With Sama-Sama Lokal, we did not just connect small businesses to buyers online at no cost, we even helped with delivery. In Cambodia, we joined hands with the Royal Government of Cambodia to support the initiative to tackle the spread of the COVID-19 virus via financial contributions to alleviate the impact to the severely burdened healthcare system and to reduce the humanitarian challenge faced by front liners who have been working tirelessly to contain the spread of the virus as well as to enable the country and its people to return to a path of normality. We also participated in the Royal Government of Cambodia’s in raising funds for the purchasing of vaccinations for COVID-19.

Above all, we strove to protect the well-being of our customers, and adhered to stringent SOPs in our branches while encouraging greater interaction and transactions online.

CUSTOMER EXPERIENCE

As part of our mission to deliver the best customer experience across all our platforms, we continued to embark on several improvement initiatives based on feedback (known as the Voice of Customers) garnered from the External Customer Engagement Survey (ECES). ECES evaluates key factors that influence customer behaviour throughout their banking journey via our different channels and touchpoints. In 2020, we scored improvements in both our ECES score and Net Promoter Score (NPS), entrenching our position as the preferred financial institution in the country. This was contributed by our fast and effective response to support customers affected by COVID-19, including:

• Solutions and options on loan moratorium and relief measures and packages for customers facing financial difficulties.

• Prioritising customers’ safety and providing the level of customer experience they expect at our branches by maintaining SOPs such as social distancing.

• Enhancement of our digital banking platforms, Maybank2u and Maybank2e which enabled our individual and corporate customers to perform essential banking services online.

• Additional training of frontline staff to be better prepared for the new normal. Among others, we provided bite-sized learning content and equipped our employees with the skills to resolve issues immediately, to minimise the escalation of complaints.

TIRELESS EFFORTS TOWARDS ENHANCED SUPPORT

In 2020, while continuing with several ongoing initiatives, we also took steps to ensure we were fully prepared for the changes brought about by the pandemic.

At the onset of the COVID-19 outbreak in Cambodia, we split our back-office operations into different locations to minimise the potential risk of service disruption. We also made sure our offices and branches adhered to social distancing requirements. Lifts and escalators were calibrated and floors marked; workstations were adjusted and renovated; and, where necessary, acrylic partitions were installed.

At the same time, in our attempt to minimise work disruption, we enhanced our work from home capabilities with remote digital access and infrastructure. This encompassed the extensive roll out of Virtual Private Networks (VPNs), virtual desktops, mobile emails and laptops as well as enabling virtual conferencing across the Bank and the Group. To cater to the quantum increase in number of internal users, our in-house team implemented a new remote access platform, mWorks, which enables staff to access emails, shared folders and selected applications through Virtual Desktops Infrastructure (VDI) while protecting corporate data and intellectual property.

Cyber security has acquired greater urgency as more customers take to digital banking and more employees work remotely. Over the years, we have developed increasingly robust cyber defense capabilities and extensive IT security frameworks. However, these have to be continuously enhanced as new threats continue to emerge. At the Group level, we have also expedited the enhancement and expansion of our IT infrastructure, including continued system upgrades to our newly established Disaster Recovery Data Centre. These efforts have collectively contributed to us being able to maintain our online banking availability in line with the strict regulatory requirements imposed on unscheduled downtime, in the respective countries that the Group operates in, including Cambodia.

Maybank • Annual Report 2020

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ServiceDelivery

As the COVID-19 rapidly introduces a spectacle of challenges to our customers, Maybank Cambodia invests additional effort in ensuring our customers are able to effectively perform their banking seamlessly. With the array of new challenges, Risk Management is committed to strengthen the resilience of our operation by being at the forefront in establishing, mitigating, and resolving arising risks.

KEY FOCUS AREAS FOR 2020

Support the Bank’s Risk Needs While Managing Uncertainties Arising From the COVID-19 Pandemic

Outcome:

Business Continuity Management crisis meetings spearheaded by Crisis Management Team resulted in preventive measures across our network even before COVID-19 was declared a pandemic. We also conducted a crisis management overview to quickly assess areas which could potentially be impacted by the outbreak. In addition, we developed moratorium or asset quality assessment tools to review and monitor accounts under the moratorium and to identify potential asset quality issues. This enabled early identification of vulnerable borrowers, activating prompt engagement to manage any potential impact post-moratorium and to identify borrowers who could qualify for repayment assistance.

The Bank has implemented several priority action plans focused on managing uncertainties arising from a stressed economic environment while transitioning into the new normal operating landscape, balancing risk considerations to ensure business resilience.

Enhance Operational Resilience

Outcome:

In safeguarding our operational resilience against potential loss or disruption of service provision, critical detailed analysis of our IT infrastructure and systems are frequently carried out by our IT professionals. We continue to amend and strengthen our cyber risk management policy and methodology to protect our customer sensitive data and ensure standardised data integrity is reached. Our Cybersecurity Framework and Technology Risk management Framework are tailored to suit the emerging cyber risk during COVID-19 pandemic in Cambodia.

We continued to focus on potential cyber threats, infrastructure resilience as well as data loss/theft and disruption that could impact delivery channels, business services, communications and the Bank’s digital agenda as a whole. This was especially pertinent as the volume and frequency of digital transactions surged due to the pandemic.

Support the Bank’s ESG Agenda to Promote Sustainable Business Practices

Outcome:

We leverage on the Group’s Forestry & Logging Risk Acceptance Criteria to extend sustainable standards to the entire forestry sector value chain. Group ESG Industry Scrum teams are now exploring other sectors such as power, oil & gas, construction and real estate.

We continued to enhance our ESG Policy through our Group ESG teams. We also continued to engage with industry stakeholders to promote understanding of ESG impacts and opportunities stemming from our lending activities.

Enable Actionable Risk Insights

Outcome:

The target value capture for Balance Sheet Optimisation remains wide including yield enhanced strategy, optimised Risk Weighted Assets (RWA), capital efficiency, optimal liquidity & funding strategy and effective interest rate risk management. The use of portfolio allocation analytics in deriving insights for deposit strategy helps enhance returns and long-term profitability. Data analytics use cases have enabled the identification of new business opportunities based on transaction flows, deposit relationships and mortgage portfolio analysis.

We continued to improve our risk adjusted returns and, in line with the Bank’s digital journey, enhance our Active Portfolio Management (APM) through:• Balance Sheet Optimisation by implementing a top-down

APM system to enhance risk adjusted returns.• Identification of risk adjusted opportunities and target

segments through bottom-up APM via data driven analytics

OUTLOOK & PRIORITIES IN 2021

We anticipate the operating and economic environment to remain volatile and fluid given the pandemic’s impact on customer business models and supply chain disruptions. In this regard, our key priorities in 2021 will be to:

1. Drive actionable risk intelligence by providing recommendations and tailored plans to manage asset quality and identify new revenue pools to originate quality credit while proactively managing existing exposures. The latter includes leveraging on the Group’s Capital Adequacy and Risk Management (CARisMA) application and enhancing our data warehouse to automate the reporting process.

2. Adopt a strategic data management program to streamline data management and ensure usage of high-quality risk-related data.3. Adopt a more proactive risk management approach and embed sustainability considerations into our risk strategy as well as business’s strategies.

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KEY FOCUS AREAS FOR 2020

Enabling Work From Home (WFH) with Flexible Work Arrangements (FWA)and Mobile Work Arrangement (MWA)

Strategic Imperatives:

While staying committed to “Developing World-Class Talent to Deliver World-Class Results” via our Human Capital Transformation Goals and Strategic Imperatives, the COVID-19 outbreak has inspired a renewed commitment of our priorities and propelled various initiatives to ensure our employees and organisation transition successfully to the new normal. Always focused on nurturing a safe, caring and inclusive work environment, we re-designed various solutions to enable our employees to navigate through these challenging and uncertain times. Ultimately, we seek to keep our employees connected, engaged and productive, while enabling them to deliver on the Bank’s performance expectations for business continuity.

6 Human Capital Transformation Goals

Build superior leadership and talent pipelinesBuild a tech-savvy workforce that is creative, nimble and agile

Attain world-class productivity levels

Develop thought leaders in financial services Create global ethical mindsetsCreate a caring, meaningful and exciting work environment

6 Strategic Imperatives

Workplace Futuring

Workplace Health & Well-being Exponential Productivity Enhancement

Maybank Group has been included in the Willis Towers Watson (WTW) 2020 Global High Performance Companies normative benchmark for the fifth time since 2010. An internationally acclaimed benchmark, this recognition acknowledges Maybank as an organisation that has sustained outstanding financial performance along with strong commitment and focus on our employee experience.

Unleashing Power of People Data

Workforce Futuring Digital Age Leaders

Since the COVID-19 pandemic outbreak in Cambodia in early 2020, we swiftly initiated the Live Split Operations (LSO) and facilitated WFH arrangements for all Non Critical Business Function (NCBF) employees except those critically needed on-site, for the safety and well-being of our employees, customers and communities while at the same time ensuring our Business Continuity Management. This entailed accelerating the implementation of various flexible work policies and practices including our existing FWA policy, enabling employees to continue to deliver value from the safety of their home.

We had started tracking the number of employees working from home since the beginning of the outbreak, and continued the daily practice as part of efforts to embrace a remote-first mentality while balancing the needs of our business operations. At the same time, we ensured Standard Operating Procedures (SOPs) for physical distancing were adhered to by employees on-site.

Following this, we introduced the MWA and identified employees with jobs/roles that can be done remotely, allowing employees to work from home, on-site and at split locations. Curated to strengthen organisational resilience and performance while safeguarding employees’ safety and well-being, this MWA is another step towards meeting the diverse needs of our employees as we embrace the future workplace without compromising on our service levels, customer experience and operational efficiency.

Our LSO was implemented across both Critical Business Function (CBF) and Non Critical Business Function (NCBF), although the criticality was on the former, including key management members and functions that had direct impact on the customer experience and key business operations of the Bank. Our WFH rate reached approximately 10%-20% in 2020.

Various controls and engagement platforms have been instituted to support our mobile employees and ensure they remain connected. Employees have also been assigned an agreed set of expectations and outcomes, minimum weekly scheduled physical/virtual check-ins and performance updates reflected in the myHR2u Conversation Log.

Maybank • Annual Report 2020

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Human Capital

Enabling Work From Home (WFH) with Flexible Work Arrangements (FWA)and Mobile Work Arrangement (MWA) (CONT’D)

Strategic Imperatives:

KEY FOCUS AREAS FOR 2020 (CONT’D)

As employees acclimatize to the new ways of working, it has become more important than ever to manage, monitor and evaluate their performance effectively. We have therefore encouraged employees and line managers to engage in frequent conversations for immediate feedback and improvements. These conversations are captured in the Conversation Log for real-time progress monitoring and tracking – enabling greater ownership of performance management between employees and line managers.

We also introduced Agility@Home to ease the shift to remote working by providing advice and best practices on productivity and collaboration tools, team communication strategies and time management skills to enhance collaboration in remote teams.

Staying Safe and Acing the New Normal with Wellness & Well-being Programs Strategic Imperatives:

With employees having to practice physical distancing and work remotely, it has become even more crucial to support their well-being. We therefore ramped up all efforts to promote mental, physical, emotional and performance fitness in our policies and culture. Initiatives undertaken include:

• Promoting the right precautionary efforts to flatten COVID-19 infection curve

We introduced strict health and safety protocols and Standard Operating Procedures (SOP) on COVID-19 cases to mitigate risks and promote a safer and more meaningful way of living and working. We also activated My Pledge to promote safe behaviours and to set an example of doing the right thing to fellow Maybankers and our communities. This was followed with activation of #iWillStaySafe pledge in April 2020 and #MaybankersPledge in September 2020. Continuous and regular employee advisory related to COVID-19 was rolled out to keep our employees informed, supported and enabled to continue to be safe, productive and engaged, as well as a touchpoint for employees in manoeuvring life and work during the era of COVID-19.

• Keeping employees engaged, motivated and fit

Various editions of #MaybankersWFH Challenge, #AcingtheNewNormal Challenge, virtual workout programs and talks via webinars were organized at the Maybank Group level, to help employees to gain knowledge and tips on staying mentally and physically fit, and to encourage them to take ownership of their well-being.

• Providing employee support assistance

In February, the Group Human Capital Staff Emergency Support (GHC SES) team was set up and made available 24/7 as a single point of enablement and support contact for all employees across the Maybank Group, in relation to COVID-19. A similar set up locally in Cambodia, managed within the MCP Human Capital (HC) and Business Continuity Team (BCM) was also made accessible to all employees. We also launched the Rapid Response Critical Incident Hotline, also accessible to all employees across the Group, to provide emotional support to employees and family members, thereafter supported by our internal GHC SES team/MCP HC/BCM team.

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In early March 2020, #LearningNeverStops program was introduced, running weekly, to help employees stay focused on positivity and productivity, in addition to sustaining their upskilling and reskilling efforts while empowering them to continue learning from anywhere. It is a go-to platform to access educational insights and a wide choice of capability-building programs delivered by industry and internal subject-matter experts.

We embedded gamification elements such as learning points and leaderboard to encourage healthy competition. Employees were encouraged to submit their learning activities which were converted into learning points to track skills and knowledge gained. The learning points were also used to measure progress and learning achievement.

Despite the trying times, employees continued to show agility and flexibility in learning new digital skills through the FutureReady (FR) program which supports the Bank’s aspiration to be the Digital Bank of Choice. In its third year, the FR program focuses on realising business impact from digital skills applied.

• Following the traction gained from the analytics upskilling programme in 2019, we have collaborated with a world-renowned business school to develop a customised online analytics programme, called the AI Learning Hub, for the Bank.

• Various new analytics modules such as R Programming, Structured Query Language (SQL) and Python Programming courses were rolled out and conducted virtually to enable employees to be more efficient and productive in carrying out their daily tasks.

• 2020 also saw the introduction of our Digital Marketing program to generate new sales, deepen relationships with customers and build better trust.

Building Capabilities and Developing Capacity for the New Normal and Beyond through Learning & Development Programs

Strategic Imperatives:

Showing Care & Appreciation through Management-led Engagement Strategic Imperatives:

Different means of communication and engagement were curated to enable our leaders to connect with employees. The following virtual activities were organized as a means for EXCO to ensure continued engagement and boost employees’ well-being:

• Half-yearly Management Offsite to gather management members from head office and corporate functions and Branch Managers, as a strategy retreat and checkpoint session, to reflect on organizational performance and discuss on strategic execution plans, as well as strengthening camaraderie among the leadership team.

• Half-yearly Staff Townhalls to give employees visibility of the organisation’s performance, initiatives and strategic plans, particularly concerning how the organisation is tackling COVID-19 – allowing employees to seek clarity on-the-spot from both Group and MCP EXCO.

• Annual Awards Celebration to recognize, reward and celebrate our people performance as well as to stimulate greater and stronger bond and motivation among all staff.

• Conversations with C-Suite (CWC) and Group EXCO Mentoring Program for selected key talents to enable our cross-sector talents to continue to have impactful dialogues with Group EXCO and further empower them to excel personally and professionally.

Maybank Cambodia Virtual Awards Celebration 2020 via Zoom.

KEY FOCUS AREAS FOR 2020 (CONT’D)

Maybank • Annual Report 2020

34

Human Capital

OUTLOOK & PRIORITIES FOR 2021

To enable the Bank to deliver on our M25 aspirations, HC’s 2021 priorities will be centred on developing strong talents supported by a fulfilling workplace and world-class infrastructure.

We are committed to future-proofing our workforce while ensuring that Environmental, Social and Governance (ESG) considerations are embedded into all our initiatives, aligned with Maybank’s Humanising Financial Services mission and guided by our Key Thrusts below:

• Workplace Futurisation – institutionalising more effective ways of working including reconfiguring and redesigning the business and organization

• Workforce Futurisation – accelerating the development and productivity of our talents such as ramping up training and employee well-being programs

• FutureReady Infrastructure – offering innovative platforms, processes and tools to ensure employees are supported by the right infrastructure to enable them to deliver greater outcomes.

We will continue to accelerate our readiness to enable more employees to embrace diverse ways of working by fully leveraging technology. The envisioned new normal workplace for Maybank will comprise a hybrid arrangement where employees are either located on-site, at split locations or at home.

KEY FOCUS AREAS FOR 2020 (CONT’D)

Accelerating Diversity & Inclusion

Tangible developments have been achieved since Maybank Group embarked on our transformation journey in 2009 with regards to diversity and inclusion. Since then, we have been ensuring rigorous monthly tracking of diversity and gender representation through our Human Capital Dashboard to keep a fact-based check and enable crafting of data-based actions to address imbalances. Through the Group Inclusiveness and Diversity Agenda (GIDA) Framework introduced in 2014, our efforts have been accelerated and outcomes monitored through measures reflected on the EXCO scorecard.

We also ensure our talent management practice is as inclusive as possible for stronger alignment between our talent management strategy and business strategy, enabling the Bank to realise our business goals, and robustly tracked through various key talent indicators, including but not limited to succession realization for mission critical and operational critical positions, internal vacancies realization rate for management positions, ready now successors, women representation in management positions, etc.

Strategic Imperatives:

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Maybank • Annual Report 2020

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Anthony Brent ElamIndependent

Non-Executive Director (Chairman)

Shariffuddin Khalid

Independent Non-Executive Director

Spencer Lee Tien Chye

Independent Non-Executive Director

Datuk Hamirullah Boorhan

Non-Independent Non-Executive Director

Soon Su Long

Non-Independent Non-Executive Director

Board of the Directors

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Board of Directors

Qualification(s):• Fellow of the Institute of Chartered Accountants

in England and Wales

• Member of the Malaysian Institute of Accountants

Relevant Working Experience:Over 30 years of experience in the banking sector and having served in senior management position in Maybank as well as Board Committees of Maybank.

Present Directorship(s):- Director of Maybank Singapore Limited- Director of Boardroom Pte Ltd.

Qualification(s):• Fellow Member of The Chartered Institute of

Management Accountants, UK

Relevant Working Experience:Over 30 years of experience in the banking/corporate sector and Bank Negara Malaysia (BNM). He served as Director, Strategic Communications for BNM and also served as the pioneer Director of the Malaysia International Islamic Financial Centre initiative. Earlier, he was part of the management team that established Pengurusan Danaharta Nasional Bhd.

Present Directorship(s) within Maybank Group and Other Listed Companies and Public Companies:- Director of Maybank - Director of MCB Bank Ltd (Pakistan) - Director of Maybank Islamic Berhad- Director of Marine & General Berhad

Qualification(s):• Bachelor of Science (Economics) in Accounting

and Finance, University of London

• Fellow Chartered Accountant, Institute of Chartered Accountants in England and Wales

Relevant Working Experience:Held senior management positions in Banks in Malaysia and Singapore in the areas of investment banking, commercial banking and Islamic banking. Currently the CEO of Maybank Vietnam.

Qualification(s):• Master in Business Administration (Finance

and International Business), New York University, USA

• Bachelor of Science in Foreign Service, Georgetown University, USA

Relevant Working Experience:Over 30 years of holding senior management positions in various large caps such as Chief Risk Officer of PT Bank Central Asia Tbk, and Independent Director of PT Sarana Menara Nusantara Tbk and Citibank, including assignments as Advisor to the Chairman of the Indonesian Bank Restructuring Agency and as a Commissioner of PT Bank International Indonesia.

Present Directorship(s) within Maybank Group and Other Listed Companies and Public Companies:- Director of Maybank- Director of Maybank Singapore Limited

Qualification(s):• Master of Business Administration, International

Islamic University, Malaysia

• Diploma in Accountancy, Mara Institute of Technology, Malaysia

• Certified International Retail Banker, London Executive Management – International Academy of Retail Bank

Relevant Working Experience:

Over 20 years of experience in retail banking. Currently the Senior Executive Vice President and Head of Community Financial Services of Maybank.

Membership of Board Committees in Cambodia:

MemberChairman

Anthony Brent ElamIndependent Non-Executive Director (Chairman)

Appointed: 3 December 2018

Datuk Hamirullah BoorhanNon-Independent Non-Executive Director

Appointed: 23 March 2012

Shariffuddin KhalidIndependent Non-Executive Director

Appointed: 29 March 2019

Soon Su LongNon-Independent Non-Executive Director

Appointed: 31 March 2015

Spencer LeeIndependent Non-Executive Director

Appointed: 23 March 2012 AC

RMC

AC

RMC

Declaration:All the Directors have no:• family relationship with any director and/or major shareholder of Maybank (Cambodia) Plc.• conflict of interest with Maybank (Cambodia) Plc. and has never been charged for any offence.

AC

RMC

AC

RMC

Audit Committee

RMC Risk Management Committee

AC

Maybank • Annual Report 2020

38

EXECUTIVE COMMITTEE

5 Ekhwan Bin JaniChief Financial Officer, Indochina

6 Ng Yok ChinChief Risk Officer, Indochina

7 Qazreen Chan AbdullahHead, Human Capital, Indochina/Head, Corporate Affairs & Communications

8 Khoo Eng HoeHead, Business Operations Support

1 Dato’ Mohd Hanif SuadiChief Executive Officer

2 Rath SophoanHead, Community Financial Services

3 Krourch SathyaHead, Commercial & Transaction Banking

4 Hong SreynuonHead, Global Markets, Indochina

1

5

2

6

3

7

4

8

Declaration:The Executive Committee members have no family relationship with any director and/or major shareholder of Maybank (Cambodia) Plc., conflict of interest with Maybank (Cambodia) Plc. and has never been charged for any offence, convictions for offences within the past five years and public sanction or penalty imposed by the relevant regulatory body during the financial year.

ExecutiveCommittee

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Qualification(s):

• Bachelor of Business Administration, Accounting and Finance, National University of Management, Cambodia

• Master of Business Administration (Finance), Charles Sturt University, Economics and Finance Institute (EFI), Cambodia

Relevant Working Experience:

Over 20 years of banking experience and held various key roles including professional sales, client relationship management, high risk and distress portfolio management and credit risk management. Previously held senior management roles in business and corporation banking, as well as credit and lending.

Qualification(s):

• Master of Laws, majoring in Comparative and International Law, National University of Singapore (NUS) as an ASEAN Fellow.

• Bachelor of Laws jointly run by the National University of Management (NUM) and the University of San Francisco (USF) – Major in Commercial Law with a Minor in Business Administration.

Relevant Working Experience:

Over 15 years of experience in the financial industry covering both banking & life insurance, comprising of retail, business & corporate banking, operations & IT as well as risk & compliance. Previously held senior management roles in both consumer banking and banking operations.

Qualification(s):

• Banking, Corporate Finance and Securities Law at UiTM

• Advance Management Programme, INSEAD Business School, Fontainbleu, Paris

• Master of Business Administration, Finance (M.B.A), University of Wales, Cardiff.

• International Coaching Federation-trained Coach.

Relevant Working Experience:

Over 40 years in Maybank covering all aspects of commercial banking from branch operations to top management formulation of policies and strategy, sat on the Maybank Group Internal Audit Committee, Group Property & Procurement Committee and Director of the Board for Maybank Trustees Berhad

Dato’ Mohd Hanif SuadiChief Executive Officer

Appointed: 1 March 2018

Rath SophoanHead, Community Financial Services

Appointed: 24 July 2018

Krourch SathyaHead, Commercial & Transaction Banking

Appointed: 1 December 2017

Qualification(s):

• Master Degree of Accounting and Finance at University of Melbourne

Relevant Working Experience:

More than 10 years of experience in treasury, finance, trading foreign exchange and money market. Previously held senior management roles as Chief Financial Officer and Head of Treasury.

Hong SreynuonHead, Global Markets, Indochina

Appointed: 1 January 2020

Qualification(s):

• Master of Business Administration, University of Bath, UK

• Bachelor of Education (Guidance & Counselling), Universiti Putra Malaysia

• Certificate in Industrial Relations, Malaysian Institute of Management

• Certified Product Marketing Manager, Association of International Product Marketing & Management, USA

Relevant Working Experience:

More than 20 years of experience in corporate communications, marketing communications, customer experience, corporate governance and human capital covering employee communications, change management, employee relations and employee engagement.

Qualification(s):

• Bachelor of Accounting & Finance at Liverpool John Moores University/Dublin Business School, Ireland

• Fellow member of the Association of Chartered Certified Accountants (FCCA), United Kingdom

• Chartered Accountant (CA) Membership, Malaysian Institute of Accountants.

• Chartered Banker, Asian Institute of Chartered Bankers.

Relevant Working Experience:

More than 19 years of experience in audit, accounting and finance in various audit and financial services industries. Held key management roles as Vice President, Financial Operations & Treasury at Maybank Investment Bank Berhad and Head of Regional Business support role with Maybank Kim Eng. Previously, served as the Chief Financial Officer and a Board Member for Maybank ATR Kim Eng Group of Companies, Philippines.

Qualification(s):

• Bachelor Degree of Economics, University Malaya , Malaysia

Relevant Working Experience:

Over 30 years of experience in credit and risk management. Previously held senior role as the Chief Risk Officer of Maybank Philippines and Head, Special Project/ International, Group Risk.

Ng Yok Chin Chief Risk Officer, Indochina

Appointed: 11 May 2018

Ekhwan Bin JaniChief Financial Officer, Indochina

Appointed: 1 June 2018

Qazreen Chan AbdullahHead, Human Capital, Indochina/Head, Corporate Affairs & Communications

Appointed: 1 March 2017 / 2 April 2012

Qualification(s):

• Certified Credit Professional (CCP – Consumer), Institute of Bankers, Malaysia.

Relevant Working Experience:

Over 30 years of experience in the banking industry covering branch sales, branch operations, trade finance operations and credit administration.

Khoo Eng HoeHead, Business Operations Support

Appointed: 8 May 2015

Executive Committees

The Board of Directors of Maybank (Cambodia) Plc. (the Board) believes that good corporate governance (CG) practices enable the Bank to operate more efficiently, improve access to capital, mitigate risks, and facilitate better oversight of the business, management and operations of the Bank. In the long term, good CG practices allow the Bank to be more accountable and transparent, and also contribute towards value creation for all its stakeholders. The emergence of the COVID-19 pandemic since early 2020 presents a challenge to the Board to ensure that our CG Framework remains resilient and is able to adapt to the demands of the rapidly changing operating environment. In this regard, the Board remains steadfast in meeting these challenges as the Bank strives to achieve its aspiration of being the top ASEAN bank, fulfilling customers’ ambitions in the region and linking them to Asia and beyond.

Testament to the Board’s commitment, Maybank, as a Group was conferred the following awards for CG excellence by the Minority Shareholders Watch Group (MSWG) in 2020:

1. Excellence Award for Overall CG & Performance2. Excellence Award for CG Disclosure3. Top 3 Public Listed Companies (PLCs) in Malaysia4. Top 20 ASEAN PLCs5. ASEAN Asset Class Award

We are grateful for these recognitions and will endeavour to remain as one of the top PLCs in terms of good CG practice in Malaysia and in ASEAN.

The Bank is subject to a comprehensive regulatory regime and the Board is committed to ensure that a robust CG Framework is in place by keeping abreast of the latest developments in respect of the CG regulatory framework and requirements. Our CG Framework is based on the following key statutory provisions, best practices, policies and guidelines:

1. Law on Commercial Enterprise;2. Prakas on Governance in Banks and Financial Institutions of Cambodia; and3. Maybank Group’s Corporate Governance Framework

This statement sets out a summary of the Bank’s CG practices during the financial year ended 31 December 2020 (FY2020).

Corporate Governance Framework

Shareholders

Executive Committee (EXCO)

Management Committee

Board

Corporate Secretary

OperationStandards

Delegation Accountability

VisionMissionValues

ManagementStandards

Policies Level ofAuthorities

CEOComplianceCommittee

AuditCommittee

Risk Management

Committee

Group Nomination & Remuneration

Committee

IndependentAssurance

ExternalAuditors

InternalAuditors

Management Framework

Maybank • Annual Report 2020

40

Corporate GovernanceOverview Statement

BOARD LEADERSHIP AND EFFECTIVENESS

The Role of the Board

The Board directs and oversees the business and affairs of the Bank by periodically reviewing and approving the overall strategies and significant policies of the Bank. The Board also establishes the Bank’s core values and adopts proper standards to ensure that the Bank operates with integrity, and complies with the relevant rules and regulations. A description of the roles and responsibilities of the Board can be found in our Board Charter.

The Board believes that the success of the Bank’s strategy requires the same to be aligned with good governance practices. To achieve this, a strong system of risk management and internal controls have been put in place to ensure that the Bank’s risk appetites are set and risks identified, assessed and managed effectively.

Apart from setting the tone from the top and establishing the core values of the Bank, the Board also monitors the management’s execution of strategy and financial performance. While the Board’s ultimate focus is on long term sustainable growth, the Board also ensures that the management strikes the right balance between short term and long term goals. The Board is also mindful of their wider obligations and considers the impact their decisions will have on the Bank’s various stakeholders such as employees, shareholders, customers, and the community as a whole.

The Board also has a formal schedule of matters specifically reserved for its decision, details of which can also be found in our Board Charter.

CG in COVID-19 Environment

Since the onset of COVID-19 last year, the Board has been closely monitoring not only the impact of the pandemic on the global economy and the Bank’s overall financial performance, but also on the general health and welfare of the Bank’s staff across the region. The Board has also been addressing “live” issues on how to continue servicing customers in this challenging environment. Agenda items and matters discussed at the Board and Board Committee meetings have been re-aligned accordingly, to address various issues and challenges which the pandemic presents. These include addressing work from home requirements of the staff across the region, and rolling out various measures to help deserving customers.

Understanding the need to have closer interaction with the management during this time of crisis, members of the Board/Board Committees have also made themselves available at any time to discuss matters of importance. Ad-hoc meetings are being held as and when required. In line with the Bank’s standard operating procedures, meetings of the Board and Board Committees have been conducted remotely. When quick decisions are required, they may be sought and obtained via circular resolutions. Those who seek further clarification, actively engages the management team for elaboration.

For further details on the various initiatives undertaken by the Bank to address the COVID-19 pandemic, please refer to the Addressing COVID-19 section on page 18.

Board Deliberations

Among the areas/matters reviewed, deliberated and approved by the Board during FY2020 were as follows:

Strategy

• Business strategy of various sectors within the Bank

• Budget and Business Plan for the Bank for FY2021

• M25 - Maybank’s Next Long Term Strategy and Plans

• SME+ Transformation & Target Operating Model

• PDA Auto Loan• MFI/MDI Lending• Annual Capital Plan 2020-2022• The Bank Sustainability and Corporate

Responsibility Strategy

Risk, Compliance & Oversight

• Chief Risk Officer’s risk reports• Bank’s Risk Appetite Statements for FY2020• Recovery and Resolution Plan• Quarterly Risk Appetite Statements and Capital

Adequacy Assessment Process reports• Deliverables to address Anti-Money Laundering

and Counter Financing Terrorism Issues• Implementation of the Bank’s “Financial

Consumer Fair Treatment Charter” and “Financial Consumer Fair Treatment Policy”

• Policy on Management of Customer Information and Permitted Disclosure

• Audit Plan for 2020• Legal Developments, Impact and Challenges

in Light of the COVID-19 Pandemic

Governance

• Board Effectiveness Evaluation and Fit and Proper Assessment

• Total rewards (variable bonus and salary increment) and remuneration for the Bank

• Recommendation for the appointment of external auditors for the Bank

• Corporate Governance Disclosure in 2019 Annual Report

• Updates on Corporate Governance / Corporate Governance Monitor 2020, New Guidelines on Conduct of Directors of Listed Corporations and their Subsidiaries issued by the Securities Commission Malaysia.

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Maybank • Annual Report 2020

42

The composition of the Board is in compliance with NBC’s regulation, as at least two of its members are Independent Directors.

The Board is also committed in maintaining diversity and inclusion in its composition and decision-making process. In this regard, the Board considers diversity from a number of different aspects, including gender, age, cultural and educational background, nationality, professional experience, skills, knowledge and length of service.

The current skills and experience of the Board include the following:

• Banking

• Insurance/Takaful

• Asset Management

• Strategic Planning & Business Strategy

• Risk Management

• Regional Experience

• Corporate Governance

• Legal and Compliance

• Public Policy & Regulatory

• Accounting & Finance

• Human Resources

Separation of Roles of the Chairman and CEO

The roles and responsibilities of the Chairman and the CEO are separated by a clear division of responsibilities which are defined and approved by the Board in line with best practices to ensure the appropriate supervision of management. This distinction allows for better understanding and distribution of jurisdictional responsibilities and accountabilities. The clear hierarchical structure with its focused approach, facilitates efficiency and expedites informed decision-making.

Independence

To assist the Group NRC in evaluating the independence of the INEDs, the Board has established a Policy on Directors Independence (the Independence Policy) which sets out the Board’s approach in determining directors’ independence. Pursuant to the Independence Policy, the NRC and the Board had assessed the independence of each INED during FY2020 as part of the annual Fit and Proper assessment and were satisfied that all INEDs have met the independence criteria and are able to act in an independent and objective manner. Additionally, all the INEDs had, during the Fit and Proper Assessment, declared and affirmed their independence. Each INED also has an ongoing obligation to inform the Board of any circumstances which could impair his or her independence.

Nomination and Remuneration Committee

Maybank Cambodia leverage on the Group NRC consists of a majority of INEDs and is chaired by the Senior INED. The roles and responsibilities of the NRC are set out in its Terms of Reference which are available on Maybank Group’s corporate website at www.maybank.com.

Board Size, Composition and Diversity

As at 31 December 2020, the Board maintained its ideal size of 5 members, comprising the following:

23

40%60%

Non-Independent Non-Executives Directors (“NINEDs”)

Independent Non-Executive Directors (“INEDs”)

Board Appointment and Succession Planning

The NRC plays a major role in the nomination and selection process of potential candidates for appointment to the Board of Maybank and its subsidiaries. The nomination and appointment of new Directors is guided by the policies and processes as set out below:

1. Policy on Fit and Proper Criteria for Appointment/Re-Appointment of Key Responsible Persons of Licensed Institutions in Maybank Group;

2. Policy on Nomination Process for Appointment of Chairman, Director and Chief Executive Officer of Licensed Institutions in Maybank Group (Policy on Nomination Process);

3. Policy on Tenure of Directorship;

4. Policy on Directors Independence; and

5. Policy on Board Gender Diversity.

The details of the above policies are provided in the CG Report.

The Policy on Nomination Process sets out a clear and transparent nomination and appointment process, as follows:

Stage 1 – Identification of candidates

Stage 2 – Engagement with candidates

Stage 3 – Deliberation by the NRC

Stage 4 – Recommendation to the Board

The Board believes that effective succession planning mitigates the risks associated with the departure or absence of well qualified and experienced individuals and aims to ensure that the Board and management are always well resourced with the right people in terms of skills and experience, in order to effectively and successfully deliver the Bank’s and Group’s strategy.

As part of succession planning, the NRC has established a Talent Pool which comprises potential candidates to be considered for appointment as NEDs on the Board of Maybank and its subsidiaries. From time to time, the NRC procures the curricula vitae of prospective candidates discreetly from various internal and external sources for its review and consideration. The NRC also reviews the Group’s NED Talent Pool regularly in order to ensure that the Board will always have a steady pool of talent for selection whenever there is a need to appoint new directors.

The Group’s Policy on the Tenure of Directorships (Directors Tenure Policy) facilitates succession planning by providing the Board with the opportunity to consider and reassess its membership periodically. This is to ensure continuity in meeting its long term goals and objectives and also to ensure that the knowledge, experience, and skill set of its Board members would be well suited to meet the demands of the ever-changing landscape of the financial industry. Pursuant to the Directors Tenure Policy, the tenure of an INED is limited to a cumulative period of nine (9) years. As at 31 December 2020, none of the INEDs had exceeded the nine (9) years tenure.

Corporate Governance Overview Statement

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Board Effectiveness Evaluation

The effectiveness of the Board is vital to the success of the Bank. The Board conducts a rigorous evaluation process each year to assess the performance of the Board, Board Committees and each individual Board member. In 2017, the Board decided that the BEE exercise should be conducted by an independent firm of consultants once every three (3) years. In line with this principle, the NRC had during FY2020 appointed an independent firm of consultants to undertake the BEE for FY2020 for Maybank and its subsidiaries. The BEE exercise was undertaken in two (2) phases:

Phase 1 – Interviews with individual directors and selected members of senior management to assess the effectiveness of the Board and Board Committees

Phase 2 – Questionnaires to evaluate the effectiveness of performance, personality and quality aspects of individual directors as well as independence assessment on INEDs

The overall results of the BEE conducted for FY2020 were positive with all evaluated areas rated as either “strong” or “satisfactory” reflecting strong performance by the Board and Board Committees. Among the key strengths identified were as follows:

(i) Positive Board culture and dynamic;

(ii) Positive Board interaction and communication;

(iii) Effective demonstration of leadership by the Board Chairman;

(iv) Highly diverse and knowledgeable Directors;

(v) Strong support from the Board Committees; and

(vi) Effective oversight in the key areas of Board responsibilities;

(vii) Effective Board administration and process.

Apart from the above, the Board has also identified the following key areas to further strengthen in the future:

(i) Strengthening interaction and communication with Maybank Group;

(ii) Strategy in respect of digital and deeper understanding and application of appropriate strategy for the local market;

(iii) Oversight in key areas of Board responsibilities; and

(iv) Directors’ learning and development

Overall, the results of the Board evaluation for FY2020 were positive and satisfactory, reflecting strong and improving performance by the Board and Board Committees.

During the BEE exercise, all Board members had provided feedback not only on the areas of assessment but also on areas that the Board could improve on moving forward.

Director’s Training

The Board acknowledges the importance of continuing education for the Directors to ensure that they are well equipped with the necessary skills and knowledge to perform their duties and meet the challenges facing the Board.

During FY2020, all the Board members attended various training programmes and workshops on issues relevant to the Bank. As for FY2021, the following key training needs of Directors were identified during the BEE exercise:

(i) Digital banking;

(ii) Open banking; and

(iii) Digital knowledge and technology

Induction Programme

A comprehensive induction programme has been established to ease new Directors into their role and to assist them in their understanding of the Bank’s business strategy and operations. New Directors are required to attend the programme as soon as possible once they have been appointed. Typically undertaken within a period of two (2) days, the programme includes intensive one-on-one sessions with the CEO and the EXCO members, wherein new Directors will be briefed and updated on the business operations, as well as challenges and issues faced by the Bank.

EFFECTIVE AUDIT AND RISK MANAGEMENT

Internal Controls and Risk Management

The Bank has a comprehensive system of internal controls in place, designed to ensure that risks are mitigated and that the Bank’s objectives are attained. The Board recognises its responsibility to present a fair, balanced and understandable assessment of the Bank’s position and prospects. It is accountable for reviewing and approving the effectiveness of internal controls operated by the Bank, including financial, operational and compliance controls, and risk management. The Board recognises its responsibility in respect of the Bank’s risk management process and system of internal control, and oversees the activities of the Bank’s external auditors and the Bank’s risk management function which have been delegated to the Audit, Risk and Compliance Committees.

A review of the Bank’s risk governance structure and risk management approach is further discussed on pages 44 to 48. Refer to page 46 for further details on the Audit, Risk and Compliance Committees’ roles.

KEY FOCUS AREAS AND FUTURE PRIORITIES

Apart from the usual matters reserved for Board deliberation and decision, the Board has identified the following key areas for future priority:-

(a) Overseeing the effective delivery of strategic priorities identified in the Bank’s new 5-year plan (M25) which among others, encompasses ESG and strategy for its business;

(b) Strengthening the Bank’s overall CG framework; and

(c) Ensuring effective succession planning for the Directors and senior management.

Corporate Governance Overview Statement

Maybank • Annual Report 2020

44

The Board of Directors is pleased to provide the Statement on Risk Management and Internal Control (“Statement”) which outlines key features of risk management and internal control system of the Bank during the year under review. The Statement was prepared in guidance with the Prakas on Internal Control of Bank and Financial Institution issued by National Bank of Cambodia.

BOARD RESPONSIBILITY

The Board is responsible to establish a sound risk management and internal control system of the bank as well as reviewing its adequacy and effectiveness in identifying, assessing and responding to risks to achieve the Bank’s objectives. One of the vital roles of the Board is to establish the risk appetite which articulates the levels and types of risk that the Bank is willing to accept in the pursuit of its business and strategic objectives. In this respect, the Board actively participate in the setting of the strategic goals and plans of the Bank and ensures the corresponding risks are adequately mitigated within its approved risk appetite. In view of the inherent limitations in any risk management and internal control system, such system can therefore only provide reasonable, rather than absolute assurance to realise the Bank’s objectives and against material financial misstatement, fraud or losses.

The Board has established a strong risk management and internal control governance structure that is crucial in setting the tone and culture of effective risk management and internal control. To effectively carry out its risk and control oversight responsibilities, the Board is assisted by the Risk Management Committee (RMC) and Audit Committee of the Board (ACB) to oversee all matters relating to risk, compliance and controls respectively. These Board committees update the Board periodically of their work, key deliberations and decisions on the delegated matters.

The Board is also satisfied that the bank has put in place an on-going process to identify, evaluate, monitor, manage and response to significant risks faced by the Bank in achieving its business and strategic objectives amidst the dynamic and challenging business environment and increasing regulatory scrutiny, particularly during the time of the global COVID-19 pandemic. This process has been in place for the entire financial year under review up until the date of approval of this Statement for inclusion in the Annual Report.

1Risk Culture

Risk culture is a vital component in strengthening risk governance and forms a fundamental principle of

strong risk management.

5Governance & Risk Oversight

There is a clear, effective and robust governance structure with well-defined, transparent and consistent

lines of responsibility.

3Risk Appetite

The risk appetite defines the levels of risk that the Bank is willing to

assume within its risk capacity.

7Stress Test

Stress testing is used to identify and quantify possible events or future changes in the financial and economic condition that could have unfavourable

effects on the Bank’s exposure.

2Risk Coverage

The Bank must determine its business strategy; its goals and objectives, and assess the risks implied in that strategy before it can articulate its

risk appetite.

6Risk Management Practices &

Processes

Robust risk management processes are in place to actively identify, measure, control, monitor and report risks inherent in all products and activities undertaken by the Bank.

4Risk Response

Selection of the appropriate risk response is imperative to align the risks with Group’s risk tolerance and

risk appetite.

8Resources & System

Infrastructure

Ensure sufficient resources, infrastructure and techniques are established to enable effective risk management.

MANAGEMENT RESPONSIBILITY

The Management is overall responsible to implement the policies and procedures established by the Board in relation to risk and control. The role of the Management includes:

• Identifying and evaluating the risks relevant to the Bank’ business and the achievement of business objectives and strategies;

• Formulating relevant policies and procedures to manage these risks in accordance with the Bank’s strategic vision and overall risk appetite;

• Designing, implementing and monitoring the effective implementation of risk management and internal control system;

• Implementing the remedial actions to address the compliance deficiencies as directed by the Board; and

• Reporting in a timely manner to the Board on any changes to the risks or emerging risks and the corrective and mitigation actions taken.

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

RISK MANAGEMENT

Risk Management Framework

Risk management has evolved into an important driver for strategic decisions in support of business strategies while balancing the appropriate level of risk taken to the desired level of rewards. To complement this, we have adopted the Maybank Group Enterprise Risk Management Framework, to institutionalise vigilance and awareness of the most significant risks to the achievement of the Bank’s most important objectives, i.e. to humanise financial services by putting customers and the wider community at the heart of everything that the Bank does. It is underpinned by a set of building blocks which serves as the foundation in driving strong risk management culture, practices and processes:

Statement on Risk Managementand Internal ControlFinancial year ended 31 December 2020

Risk Appetite

The Bank’s risk appetite is an integral component of the Bank’s robust risk management framework which is driven by both top-down Board leadership and bottom-up involvement of management at all levels. Our risk appetite enables the Board and Senior Management to communicate, understand and assess the types and levels of risk that the Bank is willing to accept in pursuit of its business and strategic goals while taking into consideration constraints under stressed environment.

The risk appetite is integrated into the strategic planning process, and remains dynamic and responsive to the changing internal and external drivers such as market conditions, stakeholder’s expectations and internal capabilities. In addition, the budgeting process is aligned to the risk appetite in ensuring that projected revenues arising from business transactions are consistent with the risk profile established. Our risk appetite also provides a consistent structure in understanding risk and is embedded in the day to day business activities and decisions throughout the Bank. Guided by these principles, our risk appetite is articulated through a set of Risk Appetite Statements for all material risks across the Bank to ultimately balance the strategic objectives of the Bank.

Risk CapacityWhat and how much risk

should we take?

CapitalHow much capital do we

need?

Strategic Planning

Where should we place our strategic bets?

How should we allocate

resources for sustainable

growth?

Principles of Risk Appetite

IDENTIFICATION• Identify, understand and assess risks inherent in the Bank’s operations,

activities and business initiatives.• Enable early detection of risk and ensure sound risk management practices

are in place to manage and control product risk.• Adopt forward looking approach in identifying emerging risk to ensure

appropriate steps are taken to minimise Bank’s exposure.

MEASUREMENT• Develop risk measurement techniques across different dimensions of

risk factors to ensure continual reassessment and identification of risks.• Measure aggregate exposure of the Bank, individual business and country,

the risk types as well as the short and long run impact of the exposures.

CONTROLS• Establish quantitative and qualitative controls including risk limits, thresholds

and triggers to oversee and manage the risk exposures identified. • Implement risk mitigation techniques aimed to minimise existing or in some

instances to prevent new or emerging risks from occurring.

MONITORING & REPORTING• Monitor forward looking key risk indicators and early warning signals to

ensure that sufficient and timely action is in place to mitigate any potential risk to the Bank.

• Report the state of compliance to the Management level and Board level risk committees as well as to the Board on a regular basis.

Risk Governance and Oversight

The risk governance model adopted provides a formalised, transparent and effective governance structure that promotes active involvement from the Board and Senior Management in the risk management process to ensure a uniformed view of risk across the Bank. The governance model aims to place accountability and ownership whilst facilitating an appropriate level of independence and segregation of duties between the three lines of defence. The management of risk broadly takes place at different hierarchical levels and is emphasised through various levels of committees, business lines, control and reporting functions.

Risk and Compliance Culture

The risk and compliance culture is driven with a strong tone from the top and strengthen by the tone from the middle which serves as the foundation upon which a robust enterprise wide risk management structure and governance are built. This is to ingrain the expected values and principles of conduct that shape the behaviour and attitude of employees at all levels of business and activities across the Bank.

Risk and compliance policies are clearly defined, consistently communicated and continuously reinforced throughout the Bank to embed a robust culture that cultivates active identification, assessment and mitigation of risk. As part of the risk and compliance culture, the Bank has instilled a compliance culture where the Board, Senior Management and employees of the Bank are committed to adhere to the requirement of relevant laws, rules and regulations. This commitment is clearly demonstrated through the establishment and strengthening of policies, processes and controls in managing and preventing non-compliances.

Risk Management Practices and Processes

The risk management practices and processes enable systematic identification, measurement, control, monitoring and reporting of risk exposures across the Bank.

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4-19Statement on Risk Management and Internal Control

Financial year ended 31 December 2020

Maybank • Annual Report 2020

46

• Annual Business Plan and Budget

The Board deliberates and approves the annual business plan and budget for the year. The performance achievements are reviewed monthly against the targeted results, allowing time for the appropriate responses and required remedial actions to be taken. The Board reviews regular reports from the management on the key operating statistics, as well as legal and regulatory matters. Any material changes or amendments to the Bank’s policies are also tabled to the Board for approval.

• Oversight by Risk Management Committee (RMC)

The Board has delegated the risk oversight responsibility to the Risk Management Committee (RMC). The committee is responsible for formulating policies and frameworks to identify, measure, monitor, manage and control the material risk components impacting the businesses. The effectiveness of the risk management system is monitored and evaluated by the Credit & Risk Management (CRM) function, on an on-going basis. The RMC also assist the Board in the assessment of compliance risk and ensure it is given the needed attention at the highest level to ascertain regulatory compliance risk is effective managed to support business growth in line with the bank aspiration and risk appetite. The RMC also review and assess the adequacy of infrastructure, resources and system to manage compliance risk across the Bank and recommend improvement to ensure effectiveness of compliance framework.

• Oversight by Audit Committee of the Board (ACB)

The ACB is established by the Board to assist in the execution of its governance and oversight responsibilities, as well as to ensure that there is a reliable and transparent financial reporting process within the Bank. The responsibilities include the assessment of the effectiveness and adequacy of the Bank’s governance, risk management and internal controls system through the Internal Audit (IA) function. The ACB has active oversight on Internal Audit’s independence, scope of work and resources of IA. The ACB meets periodically to review audit and investigation reports prepared by IA, taking into consideration the corresponding Internal Audit Committee’s (IAC) deliberation of the same report. Significant control lapses are escalated by the ACB to the Board for further deliberation, where necessary. As for the unresolved audit findings, the ACB deliberates on them and ensure that the Management undertakes the necessary remedial actions within the committed timeline.

• Executive Level Management Committees

The Management establishes various Executive Level Management Committees (ELCs) to assist and support the various Board Committees in overseeing the core areas of business operations. These ELCs include the Executive Committee, Credit Committee, Asset and Liability Management Committee, IT Steering Committee, Project Steering Committee, Internal Audit Committee, Staff Committee and Compliance Management Committee.

• Management of Information Assets

Confidentiality, integrity and availability of information are critical to the day-to-day operations and to facilitate management decision making. The Maybank Information Risk Management Guidelines outlines the guiding principles for an effective management of information assets. All information must be properly managed, controlled and protected as guided by these information handling rules which are also within the Maybank Cyber and Technology Risk Management Policy and Guideline. With the increase adoption of technology capability and increasing risk of cyber threats, information security has been among our key focus areas. Technology controls are applied at various stages of information cycle. Among the controls are Data Lost Protection to protect and prevent the potential of data loss or theft.

Technology infrastructure and security controls continue to be strengthened and monitored as Maybank embraces mobile work arrangements following the COVID-19 pandemic outbreak. Clear desk policy is reinforced in the primary, alternative or mobile work arrangement site(s) to protect confidential and proprietary information

Compliance Framework

The framework provides the key principles and guidelines for managing compliance risk within the Bank. It is adopted and implemented by all businesses and support sectors of the Bank. This Framework serves as a guide for the Compliance function alongside Board of Directors, Senior Management and all employees in understanding, complying and managing compliance risk.

• The overarching principles for the management of compliance risk across the Bank;

• The overall strategy in managing compliance risk to ensure uniformity in practices across the Bank in meeting regulatory and legal obligations;

• The minimum expected standards for compliance risk management; and

• The roles and responsibilities of compliance risk management across the Bank.

Stress Testing

The Bank’s stress testing programme is embedded within risk and capital management process and also is a key function of the business planning process. It serves as a forward looking tool to facilitate the understanding of the risk profile under extreme but plausible events that maybe contributed by various factors such as economic, political and environmental and ascertain the impact to the Bank and how this can be proactively managed.

Responsible Lending

Our long term financial success depends upon our ability to not only identify and address environmental, social and governance (ESG) issues that present risks to our business but more importantly, to identify areas of opportunities for our businesses as well as our customers to grow sustainably. With this, and premised on the principles of responsible lending which are embedded in the Maybank Environmental, Social and Governance Policy, we continuously review and enhance our ESG practices by working with our stakeholders to drive efforts on responsible lending.

Cyber and Technology Risk Management Policy and Guideline

The Cyber Risk Management Policy has been established to identify risks, build resilience, detect cyber threats and effectively respond to cyber related events. The Policy and Guideline encompasses the cyber risk management strategy, governance structure and risk management enablers. It complements the Technology Risk Management Guideline and covers both Business and Technology drivers from an end-to-end perspective, which focuses on the key layers of People, Process and Technology. With the issuance of technology risk management by National Bank of Cambodia (NBC), the policy is being reviewed to ensure continue compliance with regulatory requirements.

Technology Risk Management Guideline sets the standards for identifying the risk and required controls in the organisation’s technology related functionalities and taking the appropriate risk remedial actions. This is established to standardise the technology operations environment which will increase high service levels to the customers as well as business units.

INTERNAL CONTROL SYSTEM

The key elements of the internal control system established by the Board that provides effective governance and oversight of internal control include:

• Organisation Structure

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.

Statement on Risk Management and Internal Control Financial year ended 31 December 2020

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Maybank and the employees which offers mutually-beneficial outcomes for both parties. Various controls and engagements are put in place to actively manage and ensure employees under the Mobile Work Arrangement continue to be supported. Being a disciplined and tracked arrangement, employees are assigned an agreed Management Model which includes agreed expectations and outcomes, minimum weekly scheduled physical/virtual check-ins and performance updates reflected in the myHR2u Conversation Log.

• Core Values and Code of Ethics and Conduct

The Bank’s core values, T.I.G.E.R. (Teamwork, Integrity, Growth, Excellence and Efficiency, Relationship Building) are the essential guiding principles to drive behavioral ethics while fulfilling our collective responsibility to serve our mission of Humanising Financial Services. It is further complemented by the Code of Ethics and Conduct that sets out sound principles and standards of good practice to be observed by all employees.

• Fraud Management

The Bank instils a culture of vigilance among all employees in handling and combating fraud and to defer future occurrences. Robust and comprehensive tools, infrastructure and programmes are emplaced to ensure risks resulting from fraud are identified, escalated/reported and managed in a decisive and timely manner. Stern disciplinary action is taken against employees involved in fraud.

• Reputational Risk Management

The Bank adopts a holistic approach and sound governance in managing reputational risk, and to institutionalise awareness and its consequences. Protecting our reputation is paramount to operating as an institution that provides financial services. Upholding trust and creating better customer experience and security forms a vital part of our obligation as a financial institution. Hence, the bank has emplaced policy with roles and responsibilities of key stakeholders and processes to facilitate an effective reputational risk management and monitoring the risk exposure to be within the risk appetite.

• Whistleblowing Policy and Procedures

Maybank is committed to the highest standard of ethics and integrity in its conduct of business and operations. The bank’s whistleblowing policy and Procedures encapsulate the governance and standards to promote an ethical, responsible and secure whistleblowing practice in the Bank. The policy provide a proper and secured avenue for the employees and/or members of the public, who has knowledge or is aware of any improper conduct, to report any suspected fraud, corruption, criminal activity or unethical conduct/behaviour in the workplace, without fearing any adverse consequences.

The access to whistleblowing information is governed with strictest confidentiality under the oversight of an independent non-executive director of the board.

• Anti-Bribery and Corruption Policy and Procedures

Maybank adopts a zero tolerance approach against all forms of bribery and corruption in carrying out its daily operations. The Maybank Anti-Bribery & Corruption Policy and Procedures set out the guiding principles for the bank to address and manage bribery and corruption risks in all its dealings within and outside Maybank.

• Financial Crime Compliance

Maybank is committed to fight against financial crime and ensuring compliance with the relevant laws and regulations. Financial crime risks are managed as part of its efforts to protect the integrity and reputation of the Bank. Then Bank has established effective control to anticipate, prevent, detect and response to money laundering and terrorist financing risk. Various initiatives and investments have been made to strengthen financial crime compliance controls in FY2020 and in the following years. These include further forming and strengthening a dedicated Financial Crime Compliance (FCC) function which primarily focus on ensuring effective implementation of measures in the areas of anti-money laundering and counter financing of terrorism (AML/CFT), sanctions and anti-bribery and corruptions (AB&C). In addition, on-going enhancement on people, culture, process and systems are being carried out to improve the Bank’s ability to prevent, deter and detect financial crime activities.

• Sustainability Management

Premised on the mission of Humanising Financial Services, the Bank has in place a set of core ambitions which underpin our responsibility in promoting and driving sustainable growth as outlined in the Maybank Environmental, Social and Governance Policy. These ambitions include having sustainability as an integral part of our strategy and culture, whilst partnering with our clients to facilitate the transition towards more sustainable and responsible development. In an effort to integrate these ambitions into business practices, the Group Sustainability Council has been established, with the aims of setting the Bank’s sustainability strategy, defining boundaries and approving proposals as well as monitoring and advising on sustainability-linked action plans and issues. Another key focus area is our stakeholders whom we recognise the need to understand their material issues to enable a more holistic approach towards addressing sustainability across the Group. Maybank Cambodia, is adopting policies & practice as relevant.

• Regular Updates and Communication of Risk Management Principles, Policies, Procedures and Practices

Risk management principles, policies, procedures and practices are reviewed and updated regularly to ensure relevance to the current business environment as well as compliance with applicable laws and regulations. Risk frameworks, policies and procedures are adopted in accordance with the principles prescribed by the Bank while complying with the local requirements. To strengthen consistent adoption of Group’s standards, Group Risks has oversight over the adoption and customisation across the Bank.

• Procurement Manual and Non-Credit Discretionary Power

The Bank’s Procurement Manual is designed to streamline the procurement functions within the Bank. It serves as a standard guideline on good management practices expected in the procurement process and procedures. Authority to approve any requisition against budgeted or unbudgeted expenditures shall be in accordance with relevant approving authority policies, i.e. the Non-Credit Discretionary Power (NCDP) or any equivalent. The NCDP defines the authority limits approved by the Board for procurement activities, acquisition & disposal of assets, operational write-off, donations, as well as approving general and operational expenses.

• Standard Practice Instruction

Policies and procedures are in place to ensure compliance with internal controls and the prescribed laws and regulations. These policies and procedures are set out in the Bank’s Standard Practice Instruction (SPI) and are updated from time to time in tandem with changes to the business environment or regulatory guidelines. These SPIs are communicated to relevant employees, where applicable.

• Maybank People Policies

The Bank’s People Policies serves as a baseline with clarity on the philosophy and principles for People Management and Development in the Bank. It incorporates key principles and philosophies that support Maybank’s Mission for Humanising Financial Services. The People Policies consist of a set of policies and guidelines that governs all aspects of human resource management, from talent acquisition and development, performance and consequence management and code of conduct to cessation of employment. A Disciplinary Policy is also established to provide for a structure where disciplinary matters are dealt with fairly, consistently and in line with the prevailing labour laws and employment regulations.

Due to the COVID-19 pandemic and as a requirement by Business Continuity Management (BCM) in anticipation of future pandemics, Maybank has introduced a Mobile Work Arrangement Policy. The policy reflects the overall mobile working arrangement that will enable the organisation to balance its objectives of achieving a highly productive and harmonious work environment that is responsive to the changing professional and personal needs of today’s workforce, while taking into account business and organisational needs to ensure business continuity and sustainability. The policy enables employees to work from home, on-site and at split locations. It is a bilateral agreement between

Statement on Risk Management and Internal ControlFinancial year ended 31 December 2020

• Independent Assurance by Internal Audit

The Board sets up the IA function to provide independent assurance on the adequacy and effectiveness of governance, risk management and internal control. The IA function is independent of the activities and operation of other operating units in the Bank. The function is managed by Head of Internal Audit who report functionally to the ACB and administratively to the CEO. The IA processes and activities are guided by the audit charter and governed by relevant regulatory guideline, bank’s code of ethic and mandatory guidance established under the International Professional Practices Framework (IPPF) by The Institute of Internal Auditors (The IIA).

ASSURANCE FROM MANAGEMENT

The CEO and the CFO have provided their reasonable assurance to the Board that the Bank’s risk management and internal control system is adequate and operating effectively in all material aspects. After taking into consideration the assurance from Management and input from relevant assurance providers, the Board is of the view that the Bank’s risk management and internal control system is adequate and operating effectively to safeguard the interest of the shareholders and the assets of the Bank.

The Board is also satisfied that the bank has put in place an on-going process to identify, evaluate, monitor, manage and response to significant risks faced by the Bank in achieving its business and strategic objectives amidst the dynamic and challenging business environment and increasing regulatory scrutiny, particularly during the time of the global COVID-19 pandemic. This process has been in place for the entire financial year under review up until the date of approval of this Statement for inclusion in the Annual Report.

Statement on Risk Management and Internal ControlFinancial year ended 31 December 2020

Maybank • Annual Report 2020

48

A. COMPOSITION AND TERMS OF REFERENCE

COMPOSITION

The Committee shall consist of at least three (3) members, with at least two (2) non-executive directors appointed by the Board from amongst its non-executive directors of the Bank:

1. The Chairman must be an independent director and at least an independent person of the committee must have expertise in finance and accounting, and an independent person with expertise in legal issues and banking.

2. Where the Chairman is unable to attend the meeting, the members shall elect a person among themselves as Chairman.

3. Review of the membership must be undertaken once every three (3) years. This review pertains to the term of office and performance of the members.

MEETINGS

1. Meetings shall be held at least once a quarter, to coincide with the Board of Directors meeting or at a frequency to be decided by the Committee. The Committee may invite any person to be in attendance to assist in its deliberations. The CEO and Head of Internal Audit (HIA) shall normally attend the meetings. At least once a year, the Committee shall meet with the external auditor without the presence of management.

2. The Committee will regulate its own procedure particularly with regard to the calling of meetings, the notice to be given of such meetings, the voting and proceedings of such meetings, the keeping of minutes and the custody, production and inspection of such minutes.

3. Upon the request of the external auditor, a meeting is to be convened to consider any matter that the auditor believes should be brought to the attention of the directors and shareholders.

QUORUM

At least 51% of the number of directors must be present to form a quorum.

SECRETARY

The joint secretaries to the ACB are the Head of Corporate Affairs & Communications and the Head of Corporate & Legal Services.

AUTHORITY

The Committee is authorised by the Board to:

• Investigate any activity or matter within its terms of reference.

• Have necessary resources, which are required to perform its duties.

• Have full and unrestricted access to any information and documents relevant to its activities.

• Have direct communication channels with external auditors, person(s) carrying out the internal audit function or activity and senior management of the Bank.

• Obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.

• Convene meetings with internal and external auditors, without the attendance of the executives, whenever deemed necessary.

B. DUTIES & RESPONSIBILITIES

The primary duties and responsibilities of the ACB with regards to the Bank’s internal audit function, external auditor, financial reporting, related party transactions, annual reporting and investigation are as follows:

INTERNAL AUDIT

• Review and approve the adequacy of the internal audit scope and plan, functions and resources of the internal audit function, internal audit charter and ensure that it has the necessary authority to carry out its work.

• Review and assess the internal audit reports and ensure appropriate and prompt remedial actions are taken by the Management on lapses in controls or procedures identified by Internal Audit.

• Appraise and approve the appointment or termination of the Head of Internal Audit.

• Assess the performance of the internal auditors; determine/approve the remuneration and annual increment of the internal auditors.

• Take cognizance of resignation of internal audit staff and the reason for resigning.

EXTERNAL AUDIT

• Review the appointment, performance, resignation and dismissal of the external auditors, the audit fee, and to make recommendations regarding the same to the Board.

• Assess the qualification, expertise, resources and effectiveness of the external auditors.

• Monitor the effectiveness of the external auditors’ performance and their independence and objectivity.

• Review the external auditors’ audit scope and plan, including any changes to the planned scope of the audit plan.

• Review major audit reports and findings raised by the external auditors and the Management’s responses, including the status of previous audit recommendations.

• Review the assistance given by the Bank’s officers to the external auditors and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.

• Approve non audit-services provided by the external auditors.

INTERNAL CONTROL SYSTEM

Review, appraise and report to the Board of Directors on:

• The adequacy of established policies, procedures and guidelines on the internal control system.

• The effectiveness of the internal control system and the internal and/or external auditor’s evaluation of the system and in particular the external auditor’s management letter and management response.

FINANCIAL REPORTING

Review the quarterly and year-end financial statements focusing on:-

• Any changes in accounting policy and practices.

• Significant and unusual events.

• Compliance with applicable Financial Reporting Standards and other legal and regulatory requirements.

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Report

Maybank • Annual Report 2020

50

Audit Committee Report

RELATED PARTY TRANSACTIONS

Review any related party transactions and conflict of interest situations that may arise within the Bank or Maybank Group including transactions, procedures or conduct that may raise questions on Management’s integrity.

ANNUAL REPORT

Prepare an audit committee report at the end of each financial year and this report will be set out clearly in the Annual Report.

INVESTIGATION

Instruct the conduct of investigation into any activity or matter within its terms of reference.

OTHER MATTERS

Act on other matters as the Committee considers appropriate or as authorised by the Board of Directors. Receive and consider reports relating to the perpetuation and prevention of fraud.

C. ACTIVITIES OF ACB FOR FINANCIAL YEAR ENDED 31 DECEMBER 2020

ATTENDANCE OF MEETINGS

A total of six (6) meetings were held during FY2020 and the details of meeting attendance are set out as follows:

Name of Committee MemberNumber of meetings held

and attended during FY2020

Mr. Shariffuddin Khalid (Chairman)

- Appointed on 29/3/2019

- Independent Non-Executive Director

6/6

Mr. Spencer Lee (Member)

- Appointed on 23/3/2012

- Independent Non-Executive Director

6/6

Datuk Hamirullah Boorhan (Member)

- Appointed on 23/3/2012

- Non-Independent Non-Executive Director

6/6

Mr. Soon Su Long (Member)

- Appointed on 31/3/2015

- Non-Independent Non-Executive Director

6/6

To facilitate deliberation of the audit results, the Head of Internal Audit (HIA) and Internal Audit Managers attended the ACB meetings to present their audit and investigation reports. The Chief Financial Officer (CFO) as Chairman of the Internal Audit Committee (IAC), represented the Management team to provide assurance and commitment to the ACB on prompt resolution of audit issues and area of concerns highlighted by Internal Audit (IA). In addition, the management representatives of the audit subjects were also called to the meeting, where required, to provide explanation to the ACB on specific topics or issues arising from the relevant reports.

The external auditor (EA) was invited to the ACB meetings to discuss their Audit Planning Memorandum (APM), Management Letters and other matters deemed relevant. Together with the Chief Executive Officer (CEO) and CFO, the external auditor also attended the meetings where the ACB met to discuss and review the annual audited financial statements of the Bank.

During FY2020, the ACB had TWO private sessions with auditors without the presence of Management team. One session was with IA and another session was with EA.

During the year under review, the ACB has carried out the following activities in the discharge of its duties and functions:

INTERNAL AUDIT

1. Reviewed and approved the revisions made to AAP2020 in view of the disruption caused by the pandemic and given the emerging risks/concerns that may arise from changes of work processes, the new operating environment and the new normal in managing the businesses. This is to ensure that audit assurance could be continuously provided, by focusing on pertinent risk areas as well as considering other alternative methods that could be performed.

2. Reviewed and approved the Annual Audit Plan for FY2021 (AAP2021) to ensure comprehensiveness of scope and coverage as well as adequacy and competency of IA resources to discharge the internal audit functions effectively. The ACB also took cognisance of the IA’s annual operating budget requirement as presented in AAP2021 which was later tabled to the Board for approval together with the annual operating budget requirement for the entire Bank.

3. Assessed and approved FY2019 performance and rewards for HIA and IA staff in consideration of the overall achievement of IA for the year and in accordance with the matrix approved by the Board.

4. Deliberated and approved the FY2020 Balanced Scorecard (BSC) for HIA taking into consideration the relevance and importance of the key performance indicators set for the year.

5. Reviewed IA monthly performance report outlining the completion of the planned audits in the approved AAP2020 as well as the turnover of IA staff.

6. Deliberated audit and investigation reports and directed Management to formulate and implement the necessary remediation controls to strengthen the internal control system. Where necessary, CFO was directed to escalate the control lapses and recommendations to the EXCO for deliberation.

7. Reviewed the monthly audit finding status reports and deliberated on the corrective actions and timelines taken by the Management to ensure timely resolution of the control lapses highlighted.

8. Reviewed and noted the Internal Audit Committee (IAC) minutes of meetings for an overview of the deliberation and remedial actions taken by the Management on the control lapses raised by IA.

9. Deliberated the Internal Quality Assurance Review Report prepared by Group Audit on the works carried out by MCP IA to ensure continuous conformance with the International Standards promulgated by the Institute of Internal Auditors (IIA).

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ANNUAL REPORT

10. Reviewed and endorsed the Statement on Risk Management and Internal Control (SORMIC) for Board’s approval for inclusion in the FY2019 Annual Report and submission to the National Bank of Cambodia (NBC).

11. Reviewed and approved the Audit Committee Report for inclusion in the FY2019 Annual Report and submission to NBC.

FINANCIAL REPORTING

12. Reviewed the annual audited financial statements of the Bank to ensure that the financial reporting and disclosure requirements are in compliance with the accounting standards, with special focus placed on the changes in accounting policy, as well as significant and unusual events or transactions.

EXTERNAL AUDIT

13. Reviewed and endorsed the reappointment of external auditors for FY2021 and audit fee for FY2020. Assessed the independence, objectivity, qualification, expertise, resources and effectiveness of the external auditors.

14. Reviewed the results of the audits, the relevant audit reports and Management Letters together with Management responses or comments to the audit findings.

15. Reviewed the written assurance provided by external auditors in respect of their independence. Reviewed the assistance given by the Bank’s officers to the external auditors and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.

16. Reviewed related party transactions as disclosed in the financial statements and the adequacy of the Bank’s procedures in identifying, monitoring, reporting and reviewing related party transactions.

D. INTERNAL AUDIT FUNCTION

ORGANISATIONAL INDEPENDENCE

The Internal Audit (IA) function is established by the Board to undertake independent review and assessment in order to provide independent and objective assurance on the adequacy, efficiency and effectiveness of governance, risk management and internal controls processes implemented by the Management. The IA function of Maybank (Cambodia) Plc. is organised in-house with direct accountability to the ACB. The HIA reports functionally to the ACB and administratively to CEO and matrix reporting to Group Chief Audit Executive (GCAE) to maintain the requisite independence and objectivity as outlined in the Audit Charter approved by the ACB. The IA function is independent of the operations of the other operating units.

Currently, the IA function is headed by Mr. Sok Chandara, he has more than 10 years of audit experience in financial industry in Cambodia. He holds two bachelor degrees in Information Technology & Economic Development. He is currently pursuing the Certified Internal Auditor certification by the Institute of Internal Auditors.

RESPONSIBILITY, SCOPE & METHODOLOGY

The principle responsibility of IA is to evaluate the adequacy and effectiveness of the governance, risk management and internal control processes and to assess whether the risks that may hinder the Bank from achieving its objectives are adequately evaluated, managed and controlled. It provides risk-based and objective assurance, advice and insight to enhance and protect organisational values and assist the Management to achieve its objectives.

The IA scope of work for the year, covering the business and operations of the Bank was defined in AAP2020 approved by the ACB in December 2019. In establishing the plan, all the auditable units are risk-ranked using the Maybank Risk Based Audit (MRBA) approach while the COSO Framework is used to assess the adequacy and effectiveness of internal controls. The AAP is aligned with the strategies, objectives and risks of the Bank and is developed in consultation with Group Audit and the Management. IA also provides independent and objective consultative reviews over the implementation of new initiatives and projects in the Bank.

The IA processes and activities are governed by the relevant regulatory guidelines as well as the Bank’s Code of Ethics & Conduct and mandatory guidance of the International Professional Practices Framework (IPPF) issued by the IIA. Audit reports, along with the issues, root causes and recommendations as well as Management’s responses and action plans for improvement and/or rectification, were tabled to the ACB for review and deliberation. The rectification status of the audit findings were closely tracked and periodically reported to the ACB to ensure prompt resolution. The requests for rectification timeline extension were also tabled to the ACB.

The Quality Assurance and Improvement Program (QAIP) continues to be used to assess the quality of audit process against the International Standards promulgated by The IIA. Recommendations and opportunities for improvement are identified through internal and external assessments. The internal assessment is performed annually by an independent internal Quality Assurance team under the direct supervision of the GCAE, while the external assessment is conducted once every five years by a qualified and independent external assessor. The QAIP conducted by Group Audit on MCP IA in FY2020 was presented ACB. The last external assessment was conducted by KPMG in 2017 where MCP IA was assessed to be in conformance with the IIA Standards and leading practices.

As of 31 December 2020, the IA function has a staff strength of 6 individuals from diverse backgrounds and qualifications. In view of the movement control order and the need for social distancing, the development and building of the auditors’ skillset and competence continued on the virtual platform. IA staffs are currently pursuing various professional qualifications such as ACCA, Credit Assessment Certification, Professional Banker Program, Certified Internal Auditor etc. A series of in-house virtual trainings were conducted by Group Audit to equip auditors with the requisite audit and product knowledge in various areas. Guidance were also provided by Group Audit to the MCP IA, where relevant to ensure consistency in the application of auditing standards, processes and practices as well as testing procedures.

Audit Committee Report

SUMMARY OF ACTIVITIES UNDERTAKEN BY INTERNAL AUDIT IN FY2020

1. Attended periodical meetings of the various management level committees (onsite/virtual) such as Information Technology Steering Committee (ITSC), Executive Committee (EXCO) and Compliance Management Committee (CMC) on a consultative and advisory capacity to provide independent feedback on governance, risk management and internal control.

2. Established a risk-based Annual Audit Plan for FY2020 (AAP2020) and revised the plan in view of the emerging significant risk areas brought about by the pandemic as well as ad-hoc requests made by Management and the ACB, in order to ensure that audit assurance could be continuously provided, focusing on pertinent risk areas and considering other alternative methods to perform audit.

3. Participated in a three-day virtual Regional Group Audit Challenge Session to deliberate the audit approach and coverage for 2021 prior to finalizing the AAP2021. The AAP2021 was tabled and approved by the ACB and later presented to the Board for information in December 2020.

4. Performed periodic internal control testing of business units, operations and processes across the Bank as identified in the AAP2020 and provided independent assessment and objective assurance over the adequacy and effectiveness of governance, risk management, and internal control processes of the units audited. Among the areas that were tested during the FY2020 were Branch & Channel Distribution, Information Technology Infrastructure and Security, Loan Origination of all segments, Risk Functions, AML/CFT Function, Asset Quality Management, Digital Banking Platforms, Credit Administration, ICAAP, Stress Testing Process etc.

5. Prepared and issued audit reports to the respective auditees, Management and the ACB concluding results of audit testing conducted together with detailed observations, management responses and audit recommendations to improve and strengthen the system of internal controls and risk management.

6. Provided independent and objective reviews of the adequacy and relevance of internal controls enforced to mitigate the identified risk exposures in the introduction of new products/services and enhancement of existing products and processes.

7. Conducted ad-hoc, special review and investigations into activities or matters as instructed by the ACB or requested by Management. The outcomes of such reviews were tabled to the IAC and ACB for deliberation.

8. Prepared the Audit Committee Report and Statement on Risk Management and Internal Control for inclusion into the FY2019 Annual Report upon approval by the ACB and the Board.

9. Participated in Business Continuity Management exercises during the pandemic outbreak to ensure resumption of business activities is not hampered.

10. Engaged with relevant units to discuss and raise awareness on risk and control environment within their respective areas.

11. Tracked and reported the implementation of action plans to address audit findings highlighted by IA. The requests for timeline extension were also escalated to the ACB for deliberation and approval.

Maybank • Annual Report 2020

52

Audit Committee Report

Our commitment to sustainability is grounded in the knowledge that economically, environmentally and socially responsible business practices are imperative to the long-term well-being of our stakeholders and our business. In line with our mission of Humanising Financial Services, Maybank’s efforts to instil sustainability into our business are guided by the needs of those we serve, including our customers, our environment, our workforce and our community. In this sustainability review, we outline the ways in which the Bank created value for these stakeholders and others in the year 2020.

Since 2015, Maybank’s sustainability efforts have been guided by the Bank’s 20/20 Sustainability Plan, which focuses on the creation of long-term value across the three pillars: Community and Citizenship, Our People and Access to Products and Services. Guided by the 10 Commitments set out in the 20/20 Sustainability Plan, Maybank has delivered powerful impact-based programmes and initiatives across the countries in which we operate over the past five years. The 20/20 Plan has also helped to strengthen the integration of sustainability into our business practices, creating a foundation from which to drive future impact.

MAYBANK 20/20 SUSTAINABILITY PLAN

20/2

0 Su

stai

nabi

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Pla

n P

illar

s10

Com

mit

men

tsA

lignm

ent

wit

h SD

Gs

Community and Citizenship

Investing for Impact• Education• Community Empowerment• Arts and Culture• Environmental Diversity• Healthy Living• Disaster Relief

Our People

Employee Engagement Platforms

Talent and Leadership

Learning and Development

Diverse and Inclusive Workplace

Safety, Health and Well-being

Access to Products and Services

Commitment to the Environment

Focus on Customers

Digitalisation

Product Stewardship

A group photo of H.E. Chea Serey, Director General, Central Banking and Assistant Governor, NBC, H.E. Dr. Im Koch, Secretary of State, MOEYS, Dato’ Mohd Hanif Suadi, CEO of Maybank Cambodia, Shahril Azuar Jimin, CEO of Maybank Foundation, Michael Reyes, Founder of MoneyTree Asia Pacific, Maybank Cambodia management team, Maybank Foundation team, the winners of Best Student, Best Teacher & Best School Awards, the finalists of all categories and the parents.

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4-19Sustainability

Review

Governance

• Responsible Lending Guidelines were established in 2015 and subsequently expanded in 2018 to form the Group ESG Policy.

• Climate-related considerations are being integrated into our ESG Policy and categorised as sustainability risk. The Group Executive Committee and the Board have oversight of these through the Group Sustainability Council, the Risk Committee and the 20/20 Sustainability Plan.

Risk management

• Maybank has a formal NDPE stance as endorsed by the Board.

• ESG risks are integrated into lending assessments, and Risk Acceptance Criteria are in place for the forestry & logging, oil & gas, palm oil and mining & quarrying industries.

• Developing Maybank Group ESG Framework to provide direction for management of ESG risk as supported by material risk frameworks and associated policies and procedures.

Managing Environmental, Social and Governance Risks

Maybank is continuously enhancing the integration of environmental, social and governance (ESG) considerations into our risk management activities in order to ensure that we are adequately addressing this emerging risk area. Maybank’s ESG risks are managed through our Integrated Risk Management Framework, which identifies sustainability as a significant driver of risk. In 2020, we began developing the Maybank Group ESG Risk Framework, a comprehensive Group Risk document outlining principles and key building blocks for the management of ESG risk. It complements the Maybank Group Enterprise Risk Management Framework and is supported by all risk policies, which contain ESG risk elements. This will be further cascaded and adopted by the Countries, including Cambodia.

Our financing activities present us a significant area with potential to generate ESG risk for the Group. Our ESG Policy integrates consideration of ESG risk into our financing practices so that we may focus on mitigating ESG risks while creating long-term value for shareholders and clients. Under our ESG Policy, requirements for ESG-related industry certifications and specific Risk Acceptance Criteria (RAC) have been established for high-risk industries, including the forestry & logging, oil & gas, palm oil and mining & quarrying industries. Beyond the evaluation process set out in our ESG Policy, Maybank takes a proactive approach to developing institutional capacity for ESG risk management. Our ESG interventions are managed by the ESG Industry Scrum team, which works with industry players and clients to identify opportunities to integrate sustainability into clients’ business practices. The team will also work to provide a clear understanding of potential and emerging business risks and work to mitigate such risks.

Climate-Related Financial Disclosure

Our phased approach to identifying and managing climate risk allows us to focus on truly understanding risks, putting targeted policies in place and effectively contributing to low-carbon initiatives. As a Group, this is our third year of providing disclosure in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

SUSTAINABILITY GOVERNANCE

Responsibility for Maybank’s sustainability strategy resides at the highest level of corporate governance. Oversight of the Bank’s sustainability approach and performance rests with the Board of Directors. Sound sustainability governance is further cascaded throughout the Bank, with fixed responsibilities delegated across different levels of management.

MAYBANK CAMBODIA

Governing Body Role

Board of Directors Reviews sustainability performance and corporate strategy of the Bank to advance sustainability with a focus on ESG aspects.

Chief Executive Officer Deliberates and approves all key sustainability-related matters for the Bank.

Group Sustainability Council

Sets the Group Sustainability Agenda, including strategy, roadmap and monitoring of action plans. The Council reports to the Group President and Chief Executive Officer and is represented by Country CEOs, Business Sector Heads and Support Sectors Heads, with other selected Department Heads as invitees.

Various Departments Operationalise the 20/20 Sustainability Plan in respective business and operational areas. Departments and teams provide information against measurable indicators.

MAYBANK FOUNDATION

Governing Body Role

Board of Trustees Approves and reviews programs and performance.

Chief Executive Officer Oversees the overall strategy and progress.

Maybank Foundation Team Implements and monitors Maybank’s flagship community programmes based on focus areas under the Community and Citizenship pillar in our 20/20 Sustainability Plan. Supports community programme partnerships and initiatives throughout the Group.

Metrics and targets

• In line with Maybank’s sustainability strategy, the 20/20 Sustainability Plan, we track our direct environmental impacts, including the carbon footprint of our Malaysian and selected Singaporean operations.

• Maybank measures the footprint of resources used internally such as electricity and paper consumption.

Maybank • Annual Report 2020

54

Maybank • Annual Report 2020

Sustainability Review

A community bank at heart, our focus has always been to ensure individuals, families and households can access the financial services they need. In recent years, we have harnessed innovative new technologies to provide financial services which are increasingly digital, portable and available on demand. As we expand and enhance our product and service offerings for individuals and households, we remain focused on acting with care and delivering the best possible customer experience for those we serve.

In 2020, our delivery of retail financial services was shaped significantly by the COVID-19 pandemic. In response to the financial strain brought about by this event, Maybank enacted a number of measures to support our customers, including free financial advisory services to all our business clients who needed support arising from the continued impact from the COVID-19 pandemic in addition to a financial relief scheme in the form of restructuring and rescheduling financing, as well as moratorium on loan repayments. The financial relief is open to businesses and individuals affected by the hard-hit situation, to be assessed on a case-to-case basis.

As customers’ needs evolve in the digital sphere, Maybank has continued to deliver superior customer experience and convenience in line with our commitment to be the Digital Bank of Choice. This year, we continued to improve our offerings for customers, including the Regional Cash Management System (Maybank2e) enhancement with the introduction of host-to-host solutions for the Bank’s

CARING FOR INDIVIDUALS AND HOUSEHOLDS

20/20 SUSTAINABILITY PLAN SCORECARD

Progress:

Maybank has continued to enhance customer experience under the 20/20 Sustainability Plan. Digitalisation has served as a key driver for improving customer access to financial products and services, and the Bank has successfully launched many industry firsts in digital financial products. Maybank also continues to offer products and services that meet targeted socioeconomic customer needs.

SDGsCommitments:

• Focus on Customers• Digitalisation• Product Stewardship

business clients and the rollout of an all-new Maybank2u mobile app for our customers in Cambodia. This newly-redesigned Maybank2u mobile app offers an enhanced look and feel, and loaded with new features such as biometric login, push notification, combined balance, bill payment, phone top-up, etc.

We also promote essential online banking, and introduced a number of campaigns, among others, a special offer of USD1 Interbank Funds Transfer in Cambodia via our Maybank2u and Maybank2e, Download, Transact & Win campaign, etc.

At Maybank, we work hard to help businesses to thrive. In doing so, we are particularly conscious of the needs of SMEs, which play a vital role in driving economic growth and job creation. Maybank partnered with the Cambodia SME Bank through the SME Co-Financing Scheme to facilitate the provision of financing to SMEs in an effective and sustainable manner to support local small and medium enterprises, in order to increase economic diversification and boost SMEs in Cambodia during this challenging time.

In order to support our business customers throughout the COVID-19 pandemic, Maybank enacted a number of measures to work closely with our customers to offer financial advice, including targeted repayment assistance and Restructuring & Rescheduling of financing to customers impacted by the pandemic.

SUPPORTING BUSINESS

20/20 SUSTAINABILITY PLAN SCORECARD

Progress:

Over the past year, Maybank has continued to support business customers, particularly SMEs and small enterprises with limited access to finance or financial services. These efforts were driven through partnerships with the Cambodia SME Bank to address the needs of this segment.

SDGsCommitments:

• Focus on Customers

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4-19Sustainability Review

SAFEGUARDING THE ENVIRONMENT

20/20 SUSTAINABILITY PLAN SCORECARD

Progress:

As a Group, Maybank has continued to monitor its operational environmental footprint to strengthen data integrity for the establishment of goals and targets. In recent years, we have facilitated the greening of the financial system by supporting the issuance of several green securities and issuing our first green fund. Maybank has also continued to finance renewable energy and other green infrastructure projects.

Commitments:

• Commitment to the Environment• Product Stewardship

With operations spanning all 10 ASEAN countries and major financial centres around the world, we are conscious of the impact that our business practices bear on the global environment. Since 2014, we have been monitoring the resources consumed and the greenhouse gases emitted by our operations in order to understand and minimise our impact. We continue to focus on enhancing our ability to track and manage our environmental footprint, using a variety of indicators and approaches.

The Bank is also committed to supporting environmentally sustainable business practices and driving a green economy through financial services. In addition to the measures we take to address the ESG risks of our lending activities, Maybank continues to finance renewable energy projects and support the issuance of green investment securities. In 2020, Maybank Malaysia launched its first sustainable equity fund, Global Sustainability Equity-i Fund, which will integrate environmental, social and governance factors into the investment decision-making process.

SDGs

The well-being of our workforce is central to our sustainability strategy, not only as a driver of progress but also as a critical component of any sustainable business as well as society. After all, our more than 42,000 employees Group-wide have a wide reach and influence in the societies where we operate. As the COVID-19 pandemic evolves, we continue to curate best practices and nurture a thriving ecosystem at work and in the community. In 2020, we equipped our employees for a new normal workplace to enable them to navigate through the challenges and achieve their professional and personal goals. From implementing the Bank’s Standard Operating Procedures and directives, to curating diverse and holistic learning and development, engagement and well-being initiatives, everything that we do is to create valuable opportunities for our employees, while at the same time ensuring business continuity to sustain the Bank’s strong performance.

For more information on how we continued to support our workforce in 2020, please refer to Human Capital on page 32.

EMPOWERING OUR WORKFORCE

20/20 SUSTAINABILITY PLAN SCORECARD

Progress:

Under the 20/20 Sustainability Plan, Maybank has continued to demonstrate industry-leading best practices in building a safe, diverse and encouraging workplace. Our efforts have been particularly driven by digitalisation – adopting innovative approaches to enrich employee experience and leveraging digital platforms to develop and upskill employees to thrive in a digital age.

Commitments:

• Employee Engagement Platforms• Talent and Leadership• Learning and Development• Diverse and Inclusive Workplace• Safety, Health and Well-being

SDGs

We issued regular advisories and an Employee Workplace Handbook with a wide-range of topics to keep e m p l o y e e s i n f o r m e d . Messages of empathy and support are prevalent, providing guidance for employees to remain productive, collaborative a n d r e s o l u t e , w h i l e navigating through the new normal.

Maybank • Annual Report 2020

56

Maybank • Annual Report 2020

Sustainability Review

For 60 years, Maybank has been a trusted partner in communities across ASEAN. In Cambodia, Maybank was established in 1993, and grew from a single branch to be among Cambodia’s top ten banks by asset. Just as these communities’ loyalty and support have driven our business success, we in turn endeavour to promote their growth and development through targeted initiatives and investments carried out by Maybank Foundation in collaboration with the Countries. In 2020, caring for our community was more important than ever, and the Bank sought to do so through both our existing programs as well as targeted initiatives to address the impact of COVID-19

In 2020, as a Group, we reinvested approximately 1% of our net profit in our community – a level we have maintained since 2013. These funds helped to support our ongoing initiatives across ASEAN in the areas of education, disaster relief, environment, well-being and arts and culture. In addition to adapting several of our Flagship Programs to address community needs arising from the COVID-19 pandemic, this year the Bank also launched a number of community initiatives to directly respond to the impact of COVID-19.

COVID-19 Community Care

In Cambodia, we stood strongly with the Royal Government of Cambodia to tackle the COVID-19 through a number of initiatives such as funds contribution via the Association of Banks in Cambodia (ABC) and participating in the Royal Government of Cambodia’s initiative in raising donations for the purchase of vaccinations for COVID-19. We had also contributed to the Royal Government of Cambodia to support victims of floods during the monsoon season, which caused prolonged hardship when the community was already undergoing challenges caused by the pandemic.

At the community level, we supported some 250 women weavers’ initiatives, under Maybank Women Eco-Weavers in collaboration with ColorSilk Cambodia to pursue a project initiated by the weavers to produce 111,000 hand woven face masks made of pure cotton and silk in support of easing the pressure on the demand for surgical masks. From this initiative alone, the weavers were able to earn between USD200 and USD350 per month to support their family during the pandemic.

UPLIFTING OUR COMMUNITY

20/20 SUSTAINABILITY PLAN SCORECARD

Progress:

Under the 20/20 Sustainability Plan, Maybank has expanded its community impact to become a regional leader in well-designed and meaningful community impact programs. Through the Bank’s Flagship Programs as well as the involvement of Maybank employees in community volunteering initiatives, the Bank has had far-reaching positive influence in communities across ASEAN.

Commitment:

• Investing for Impact

SDGs

A “Gift of Love” consignment of the hand woven protective silk masks produced by the weavers were presented to the ASEAN Secretariat bearing a message of goodwill and a show of solidarity that transcends borders.

The consignment consisting of 150 face masks were presented to H.E. Dato’ Lim Jock Hoi, Secretary-General of ASEAN for distribution to the 10 Permanent Representatives to ASEAN, the Ambassador Representatives of ASEAN Dialogue Partners, the ASEAN Secretariat and the two Malaysian Missions in Jakarta. In addition, a specially framed plaque consisting of 10 masks symbolising the hopes and prayers of the women weavers for all 10 ASEAN member countries were also handed over to Dato’ Lim to commemorate the special occasion.

A group photo of H.E. Dato’ Lim Jock Hoi, Secretary-General, Permanent Representatives to ASEAN, the Ambassador Representatives of ASEAN Dialogue Partners and the ASEAN Secretariat during the face masks and special framed plaque handover ceremony at ASEAN office in Jakarta.

A group photo of the handover of hand woven protective silk masks to H.E. Dr. Hang Chuon Naron, Minister of Education, Youth and Sport.

We expanded this “Gift of Love” initiative with a contribution of face masks to the Ministry of Education, Youth & Sport (MoEYS) in conjunction with the Public School Re-opening and Maybank’s 60th Anniversary.

The face masks were presented to H.E. Dr. Hang Chuon Naron, Minister of Education, Youth and Sport. This initiative marked Maybank’s ongoing commitment to support the MoEYS in its effort to resume education services for the younger generation particularly children, whilst taking the necessary precautions to protect students, teachers, staff and their families. This initiative also provided great supplementary economic opportunities for the weavers, which is aligned to the Government’s overall mission towards promoting economic growth and helping communities rebound from the unprecedented disruptions caused by COVID-19.

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4-19Sustainability Review

COMMUNITY PROGRAMMES 2020 HIGHLIGHTS

In 2020, our focus shifted to ensuring the continuation of our community programs where possible, whilst mindful of COVID-19 regulations and safety precautions. This included a shift in execution from face-to-face to virtual engagement, without compromising on our targeted deliverables. For example, in view that the Maybank Cashville Kidz program implementation was deferred due to the closure of schools due to the COVID-19, we had continued to execute this program, with an initiative to uplift the level of financial literacy amongst Cambodians via the virtual platform. The adoption of online platform has allowed us to continue with the implementation of our Maybank CashVille Kidz Financial Literacy program, through the broadcasting of our Maybank CashVille Kidz financial literacy animated series on the Ministry of Education, Youth & Sport’s (MoEYS) digital learning platform, which had since become a key learning delivery channel for the country.

Program deferred to 2021 due to the impact of COVID-19

Completion of the 3rd Floor concrete

Sponsored 50 highschool students

eMpowering Youths Across AseanFunding for youth to run projects that positively impact poverty rates or better livelihoods in ASEAN communities.

Maybank Women Eco-WeaversEmpowering women weavers from poor and marginalised communities with training, capacity-building and microfinancing to revive traditional weaving practices and attain financial independence. A complementing sericulture programme provides farmers with mulberry tree saplings to maintain the supply of silk thread, an additional source of income for communities.

Rebuilding PIO ShelterRebuilding the People Improvement Organization (PIO) Shelter to allow PIO to assist more children with an opportunity to escape poverty through proper and complete education.

Maybank Child Sponsorship Sponsorship and engagement support to underprivileged students from families who used to live and make their living in the city dumpsites and slum areas in collaboration with People Improvement Organization (PIO).

Initiatives to Tackle COVID-19Funds contribution to the Royal Government of Cambodia to support the Government’s Initiative to Tackle COVID-19 and participation in the Royal Government of Cambodia’s initiative in raising donations for the purchasing of vaccinations for COVID-19.

Cashville KidzA financial literacy programme targeted at schoolchildren aged 9-12 that focuses on personal finance management offering modules on critical thinking, economics, income, consumption, purchases and savings.

Over

55,000 views

Over

3,600 likes

Total view and likes on the 12 episodes on MoEYs Facebook page.

Trained 88 new weavers

and supported 172 new farmersThe total number of trained weavers and farmers supported in 2020.

From Left to Right: Qazreen Chan Abdullah, Head, Corporate Affairs & Communications and Head, Human Capital; Dato’ Mohd Hanif Suadi, CEO of Maybank Cambodia; H.E. Dr. Hang Chuon Naron, Minister of Education, Youth and Sport, H.E. Kim Sethany, Secretary of State and H.E. Dr Sann Vathana, Undersecretary of State, Ministry of Education, Youth and Sport

Maybank • Annual Report 2020

58

Maybank • Annual Report 2020

Sustainability Review

SUSTAINABILITY DIRECTION

For every ending, there’s a deep learning journey and a beginning. 2020 marks the conclusion of the 20/20 Sustainability Plan, which has guided the Bank’s sustainability strategy for the past five years. Under the 20/20 Sustainability Plan, Maybank has realised key achievements in expanding its community impact, accelerating the provision of digital services, supporting the development of our workforce and more. As we continue building a sustainable future for generations to come, it is important that we transition with purpose, upholding stakeholders’ confidence in Maybank as a trusted financial services provider. This will be particularly important as the world continues to respond to and recover from the impact of COVID-19, with Maybank seeking to strengthen resilience in a post-pandemic world.

Determining Priorities

We are working to establish a strategy which will guide the next steps of our sustainability journey with clear roadmaps, targets and key performance indicators. In recognition of the fact that the Bank’s and Group’s financial success relies on a strategy which creates positive outcomes not just for our business but for society and the environment, a key foundation of our strategy development process is stakeholder engagement. This year, we engaged key internal and external stakeholders in detailed and in-depth conversations which covered a range of material issues and focused on both our current strategy and processes as well as risks and opportunities. The outcome of the assessment has allowed a renewed emphasis on how we can drive a just transition for all our stakeholders, one which continues to provide sustainability-focused products and services, and with our communities very much at the centre of our decision making.

Moving Forward with M25

As Maybank moves forward with the rollout of M25, the Maybank 2025 Strategy, sustainability will play a key role in our plans for the future. Setting out sustainability as one of the Group’s three strategic priorities, the M25 Group Framework will serve to instill ESG considerations as fundamental to Maybank’s future.

Our approach to driving sustainability under M25 will be guided by three pillars which will deepen our efforts to humanise financial services. The first of these focus areas, “Responsible Transition”, will centre on supporting a responsible transition to a more sustainable economy through the delivery of sustainability focused financial services and the adequate management of ESG risks. The second area, “Enabling our Communities with a Vision of the Future”, focuses on opening up new opportunities for a just, inclusive and climate-resilient society, through such areas as financial inclusion, community empowerment and inclusive operations. Finally, we will focus on upholding best practices within our business under the pillar “Our House is in Order & We Walk the Talk”, which will see Maybank hone in on strengthening our governance, workforce strategy and the management of environmental and social impacts across our value chain. Across these three pillars, our strategy will be anchored in ambitious long-term targets, which will cement Maybank’s commitment to delivering sustainable solutions for the communities in which we operate.

Throughout 2021 we will continue to calibrate the impact areas that will be our focus over the next years, setting appropriate targets, establishing effective monitoring systems and developing a strategy for transparent reporting on our progress. Ultimately, the next stage of our sustainability journey will continue to be guided by our mission of Humanising Financial Services, as we deepen our engagements and investments into building a more sustainable future.

Deepen Humanising Financial Services in the communities in which we operateBy putting people at the centre of all that we do and by acting consistently in accordance with our values, we

will continue to build a sustainable future for generations to come.

Responsible Transition

• Supporting the Transition to a Low-Carbon Economy

• Developing Sustainability Focused Products & Services

• Systemic Risk Management

• ESG integration in Financial Analysis

• Engaging our People in Sustainability

• Business Ethics

Enabling our Communities with a Vision for the

Future• Empowering Communities

• Financial Inclusion

• Climate Resilience

• Transparency and Trust

• Diversity, Equity and Inclusion

Our House is in Order &We Walk the Talk

• Governance and Compliance

• Privacy

• Our Supply Chain

• Our Environmental Impact

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4-19Sustainability Review

The Board of Directors of Maybank (Cambodia) Plc. (“the Bank”) presents its report and the Bank’s financial statements as at 31 December 2020 and for the year then ended.

THE BANK

Maybank in Cambodia was established since 1993 and initially operated as Phnom Penh Branch (“the Branch”) of Malayan Banking Berhad (“MBB”), a bank incorporated in Malaysia.

On 2 April 2012, the Branch was incorporated as Maybank (Cambodia) Plc., a public limited company and as a subsidiary of MBB. The Bank was duly incorporated under the Cambodian Law on Commercial Enterprises and licensed under the regulations of the National Bank of Cambodia (“NBC”).

The Bank is engaged in the provision of comprehensive banking and related financial services in the Kingdom of Cambodia in accordance with Banking License No. 02 issued by the NBC for an indefinite period.

The Bank’s registered office address is at No.43, Preah Norodom Boulevard, Sangkat Phsar Thmey 3, Khan Daun Penh, Phnom Penh, Cambodia.

FINANCIAL RESULTS

The financial results of the Bank for the year ended 31 December 2020 are set out in the statement of comprehensive income.

DIVIDENDS

The Board of Directors declared and paid dividends amounting to US$16.0 million from the net income after tax for the year ended 31 December 2019 based on approval of the NBC on 20 January 2020.

SHARE CAPITAL

There were no movements in the share capital of the Bank during the year.

RESERVES AND PROVISIONS

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

EXPECTED CREDIT LOSSES ON LOANS AND ADVANCES

Before the financial statements of the Bank were drawn up, the Directors took reasonable steps to ascertain that actions had been taken in relation to writing off of bad loans and advances and the provision of allowance for loan losses, and satisfied themselves that all known bad loans and advances had been written off and adequate allowance had been made for expected credit losses.

At the date of this report, the Directors are not aware of any circumstances, which would render the amount written off for bad loans and advances, or the amount of allowance for expected credit losses as at statement of financial position date inadequate in any material respects.

ASSETS

Before the financial statements of the Bank were drawn up, the Directors took reasonable steps to ensure that any assets, other than debts, which were unlikely to be realized in the ordinary course of business at their value as shown in the accounting records of the Bank had been written down to an amount which they might be expected to realize.

At the date of this report, the Directors are not aware of any circumstances, which would render the values attributed to the assets in the financial statements of the Bank misleading or inappropriate in any material respects.

VALUATION METHODS

At the date of this report, the Directors are not aware of any circumstances that have arisen which would render adherence to the existing method of valuation of assets and liabilities in the financial statements of the Bank misleading or inappropriate in any material respects.

Maybank • Annual Report 2020

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Report of the Board of Directors

CONTINGENT AND OTHER LIABILITIES

At the date of this report, there is:• No charge on the assets of the Bank which has arisen since the end of the period which secures the liabilities of any other person; and

• No contingent liability in respect of the Bank that has arisen since the end of the period other than in the ordinary course of business.

No contingent or other liability of the Bank has become enforceable or is likely to become enforceable within the period of twelve months after the end of the period which, in the opinion of the Directors, will or may have a material effect on the ability of the Bank to meet its obligations as and when they become due.

EVENTS AFTER THE REPORTING PERIOD

There have been no significant events occurred after the reporting period that require disclosure or adjustments in the financial statements.

THE BOARD OF DIRECTORS

The members of the Board of Directors during the period and at the date of this report are:

Anthony Brent Elam Chairman / Independent non-executive director

Spencer Lee Tien Chye Independent non-executive director

Datuk Hamirullah Bin Boorhan Non-independent non-executive director

Soon Su Long Non-independent non-executive director

Shariffuddin Khalid Independent non-executive director

AUDITOR

Ernst & Young (Cambodia) Ltd. is the auditor of the Bank.

DIRECTORS’ INTERESTS

No members of the Board of Directors have an interest in the shares of the Bank.

DIRECTOR’S BENEFITS

As at 31 December 2020 and for the year then ended, no arrangement existed, to which the Bank was a party, whose object was to enable the Directors of the Bank to acquire benefits by means of the acquisition of shares in or debentures of the Bank or any other corporate body.

No Director of the Bank has received or become entitled to receive any benefit by reason of a contract made by the Bank or with a firm which the director is a member, or with a company in which the director has a material financial interest other than those disclosed in the financial statements.

STATEMENT OF BOARD OF DIRECTORS’ RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS

The Board of Directors is responsible for ensuring that the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with Cambodian International Financial Reporting Standards (CIFRSs). The Board of Directors oversees preparation of these financial statements by management who is required to:

• Adopt appropriate accounting policies which are supported by reasonable and prudent judgments and estimates and then apply them consistently;

• Comply with CIFRSs or, if there have been any departures in the interest of fair presentation, these have been appropriate disclosed, explained and quantified in the financial statements.

• Maintain adequate accounting records and an effective system of internal controls;

• Prepare the financial statements on a going concern basis unless it is inappropriate to assume that the Bank will continue operations in the foreseeable future; and

• Effectively control and direct the Bank in all material decisions affecting the operations and performance and ascertain that these have been properly reflected in the financial statements.

Management is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Bank and to ensure that the accounting records comply with the registered accounting system. It is also responsible for safeguarding the assets of the Bank and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors confirms that the Bank has complied with these requirements in preparing the financial statements.

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19Report of the Board of Directors

APPROVAL OF THE FINANCIAL STATEMENTS

We hereby approve the accompanying financial statements which give a true and fair view of the financial position of the Bank as at 31 December 2020, and its financial performance and cash flows for the year then ended in accordance with Cambodian International Financial Reporting Standards.

On behalf of the Board of Directors

Anthony Brent Elam

Chairman / Independent non-executive director

Phnom Penh, Kingdom of Cambodia

26 March 2021

Maybank • Annual Report 2020

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Report of the Board of Directors

Opinion

We have audited the accompanying financial statements of Maybank (Cambodia) Plc. (“the Bank”) which comprise the statement of financial position as at 31 December 2020, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with Cambodian International Financial Reporting Standards (“CIFRSs”).

Basis for opinion

We conducted our audit in accordance with Cambodian International Standards on Auditing (“CISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the Prakas on the Code of Ethics for Professional Accountants and Auditors issued by the Royal Government of Cambodia, and we have fulfilled our other ethical responsibilities in accordance with its requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information Other than the Financial Statements and Auditor’s Report Thereon

The other information obtained at the date of the auditor’s report is the Report of the Board of Directors. Management is responsible for the other information.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with CIFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with CISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

IndependentAuditors’ Report

To The Shareholder of Maybank (Cambodia) Plc.

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19

To The Shareholder of Maybank (Cambodia) Plc.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Emmanuel A. Guelas

Partner

Ernst & Young (Cambodia) Ltd.

Certified Public Accountants

Registered Auditors

Phnom Penh, Kingdom of Cambodia

26 March 2021

Maybank • Annual Report 2020

64

Independent Auditor's Report

Notes

31 December 2020 31 December 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

ASSETSCash on hand 66,820,402 270,288,526 43,865,242 178,750,861Balances with the National Bank of Cambodia 4 236,584,358 956,983,728 395,510,749 1,611,706,302Balances with other banks 5 224,268,689 907,166,847 231,242,408 942,312,813Due from parent company 6 125,694 508,432 10,378 42,290Balances with affiliates 7 1,514,534 6,126,290 1,017,554 4,146,533Loans and advances 8 764,152,987 3,090,998,832 674,515,974 2,748,652,594Property and equipment 9 4,480,736 18,124,577 3,671,526 14,961,468Software costs 10 1,533,763 6,204,071 1,093,390 4,455,564Right-of-use assets 11 18,903,708 76,465,499 19,219,240 78,318,403Deferred tax assets 14 1,844,479 7,460,918 2,135,731 8,703,104Other assets 12 3,007,701 12,166,151 3,250,120 13,244,240

TOTAL ASSETS 1,323,237,051 5,352,493,871 1,375,532,312 5,605,294,172

LIABILITIES AND SHAREHOLDER’S EQUITYLIABILITIESDeposits from customers 13 1,009,986,960 4,085,397,253 1,079,464,510 4,398,817,878Deposits from other financial institutions 13 53,652,734 217,025,309 53,958,368 219,880,350Borrowing 2,472,188 10,000,000 - -Due to parent company 6 2,273,412 9,195,952 3,102,957 12,644,550Subordinated debt 6 45,000,000 182,025,000 30,000,000 122,250,000Income tax payable 14 4,576,501 18,511,947 6,179,875 25,182,991Lease liabilities 15 21,090,297 85,310,251 20,373,978 83,023,960Other liabilities 16 15,588,132 63,053,993 16,434,877 66,972,124

Total liabilities 1,154,640,224 4,670,519,705 1,209,514,565 4,928,771,853

SHAREHOLDER’S EQUITYShare capital 18 75,000,000 300,000,000 75,000,000 300,000,000General reserve 10,000,000 40,000,000 10,000,000 40,000,000Regulatory reserve 18 8,988,816 36,428,342 7,612,089 30,815,426Retained earnings 74,608,011 302,441,609 73,405,658 297,539,616Cumulative exchange differences on translation - 3,104,215 - 8,167,277

Total shareholder’s equity 168,596,827 681,974,166 166,017,747 676,522,319

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY 1,323,237,051 5,352,493,871 1,375,532,312 5,605,294,172

The attached notes 1 to 30 form part of these financial statements.

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19Statements ofFinancial Position

as at 31 December 2020

The attached notes 1 to 30 form part of these financial statements.

Maybank • Annual Report 2020

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Notes

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Interest income 19 60,004,697 244,639,150 58,104,845 235,440,832Interest expense 20 (24,490,335) (99,847,096) (18,650,211) (75,570,656)

Net interest income 35,514,362 144,792,054 39,454,634 159,870,176

Fee and commission income 21 7,638,584 31,142,507 8,982,967 36,398,982Fee and commission expense (1,168,425) (4,763,669) (1,408,639) (5,707,805)

Net fee and commission income 6,470,159 26,378,838 7,574,328 30,691,177

Other income 22 3,408,231 13,895,358 4,414,519 17,887,631

Net operating income 45,392,752 185,066,250 51,443,481 208,448,984Finance cost 23 (886,914) (3,615,948) (791,386) (3,206,695)General and administrative expenses 24 (18,562,928) (75,681,058) (20,896,754) (84,673,647)(Provision for) reversal of expected credit losses 5, 8, 12, 27 (1,797,135) (7,326,919) 4,145,575 16,797,870

Income before income tax 24,145,775 98,442,325 33,900,916 137,366,512Income tax expense 14 (5,566,695) (22,695,416) (7,007,445) (28,394,167)

Net income for the year 18,579,080 75,746,909 26,893,471 108,972,345Exchange differences on translation - (5,063,062) - 8,548,633

Total comprehensive income for the year 18,579,080 70,683,847 26,893,471 117,520,978

Statements ofComprehensive Incomefor the year ended 31 December 2020

Paid up capital General reserve Regulatory reserve Retained earnings

Cumulative exchange

differences on translation

Total

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

KHR’000 equivalent

(Note 2.1.4)US$

KHR’000 equivalent

(Note 2.1.4)

Balance as at 1 January 2020 75,000,000 300,000,000 10,000,000 40,000,000 7,612,089 30,815,426 73,405,658 297,539,616 8,167,277 166,017,747 676,522,319

Net income for the year - - - - - - 18,579,080 75,746,909 - 18,579,080 75,746,909

Cash Dividends (Note 18) - - - - - - (16,000,000) (65,232,000) - (16,000,000) (65,232,000)

Transfer to regulatory reserve - - - - 1,376,727 5,612,916 (1,376,727) (5,612,916) - - -

Exchange difference on translation during the year - - - - - - - - (5,063,062) - (5,063,062)

Balance as at 31 December 2020 75,000,000 300,000,000 10,000,000 40,000,000 8,988,816 36,428,342 74,608,011 302,441,609 3,104,215 168,596,827 681,974,166

Balance as at 1 January 2019 75,000,000 300,000,000 10,000,000 40,000,000 4,108,337 16,618,223 50,015,939 202,764,474 (381,356) 139,124,276 559,001,341

Net income for the year - - - - - - 26,893,471 108,972,345 - 26,893,471 108,972,345

Transfer to regulatory reserve - - - - 3,503,752 14,197,203 (3,503,752) (14,197,203) - - -

Exchange difference on translation during the year - - - - - - - - 8,548,633 - 8,548,633

Balance as at 31 December 2019 75,000,000 300,000,000 10,000,000 40,000,000 7,612,089 30,815,426 73,405,658 297,539,616 8,167,277 166,017,747 676,522,319

The attached notes 1 to 30 form part of these financial statements.

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19Statements ofChanges in Equity

for the year ended 31 December 2020

Notes

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

OPERATING ACTIVITIESNet cash (used in) provided by operating activities 25 (84,742,760) (345,496,232) 80,605,059 326,611,698

INVESTING ACTIVITIESAcquisitions of:Property and equipment 9 (2,228,629) (9,086,120) (735,136) (2,978,771)Software costs 10 (896,885) (3,656,600) (700,380) (2,837,940)Proceeds from disposal of property and equipment 9 2,218 9,043 - -

Net cash used in investing activities (3,123,296) (12,733,677) (1,435,516) (5,816,711)

FINANCING ACTIVITIESProceeds from:Issuance of subordinated debt 6 45,000,000 183,465,000 - -Borrowing 2,472,188 10,079,110 - -Payments of:Subordinated debt 6 (30,000,000) (122,310,000) - -Cash dividends 18 (16,000,000) (65,232,000) - -Principal portion of lease liabilities 15 (2,005,114) (8,174,850) (1,602,067) (6,491,575)

Net cash used in financing activities (532,926) (2,172,740) (1,602,067) (6,491,575)

Net (decrease) increase in cash and cash equivalents (88,398,982) (360,402,649) 77,567,476 314,303,412 Cash and cash equivalents at beginning of the year 512,998,128 2,090,467,372 435,430,652 1,749,560,360 Exchange difference on translation - (12,561,178) - 26,603,600

Cash and cash equivalents at end of the year 4 424,599,146 1,717,503,545 512,998,128 2,090,467,372

Additional information on operational cash flows from interest

Interest received 59,424,805 242,274,930 57,923,394 234,705,592

Interest paid 21,903,585 89,300,916 18,096,379 73,326,528

The attached notes 1 to 30 form part of these financial statements.

Maybank • Annual Report 2020

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Statement ofCash Flowsfor the year ended 31 December 2020

1. CORPORATE INFORMATION

Establishment and operations

Maybank in Cambodia was established in 1993 and operated as Phnom Penh Branch (“the Branch”) of Malayan Banking Berhad (“the parent company” or “MBB”), a bank incorporated in Malaysia.

On 2 April 2012, the Branch was incorporated as Maybank (Cambodia) Plc, (“the Bank”), a public limited company and as subsidiary of MBB. The Bank is duly incorporated under the Cambodian Law on Commercial Enterprises and licensed under the regulations of the National Bank of Cambodia (“NBC”).

The Bank is engaged in the provision of comprehensive banking and related financial services in the Kingdom of Cambodia in accordance with Banking License No. 02 issued by the NBC for an indefinite period.

Share capital

The total share capital of the Bank as at 31 December 2020 is US$ 75,000,000 or KHR 300 billion (2019: US$ 75,000,000 or KHR 300 billion).

Board of Directors

The members of the Board of Directors during the year and at the date of the financial statements are:

Anthony Brent Elam Chairman/ Independent non-executive directorSpencer Lee Tien Chye Independent non-executive directorDatuk Hamirullah Bin Boorhan

Non-independent non-executive director

Soon Su Long Non-independent non-executive directorShariffuddin Khalid Independent non-executive director

Location

The Bank’s registered office address is at No.43, Preah Norodom Boulevard, Sangkat Phsar Thmey 3, Khan Daun Penh, Phnom Penh, Cambodia. As at 31 December 2020, the Bank has a total of 21 branches located in Phnom Penh, Siem Reap, Sihanoukville, Battambang, Tboung Khmum, Kampong Cham, Banteay Meanchey and Takeo.

Employees

As at 31 December 2020, the Bank has a total of 406 employees (2019: 405 employees).

Approval of the financial statements

The financial statements were authorized for issue by the Board of Directors on 26 March 2021.

2. ACCOUNTING POLICIES

2.1 Statement of compliance

The financial statements of the Bank have been prepared in accordance with Cambodian International Financial Reporting Standards (“CIFRSs”), issued by the International Accounting Standards Board (“IASB”) which the Cambodian Accounting Standards Board of the National Account Council fully adopted.

The accounting policies set out below have been consistently applied by the Bank.

2.1.1 Basis of preparation

The financial statements have been prepared on a historical cost basis, except for financial assets at fair value through other comprehensive income (“FVOCI”) which have been measured at fair value.

2.1.2 Fiscal year

The Bank’s fiscal year starts on 1 January and ends on 31 December.

2.1.3 Functional and presentation currency

The financial statements are presented in United States dollar (“US$”) and all values are rounded to the nearest dollar, except when otherwise indicated. The translation of the US$ amounts into Khmer Riel (“KHR”) is included solely for meeting the presentation requirement pursuant to the Law on Accounting and Auditing. The functional currency of the Bank is US$.

Transactions in foreign currencies (“FC”) are translated into US$ at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in currencies other than US$ at the statement of financial position date are translated into US$ at the rates of exchange ruling at that date. Exchange differences arising on translation are recognized in the statement of comprehensive income.

2.1.4 Translation of US$ into KHR

The translation of the US$ amounts into thousands KHR (“KHR’000”) is presented in the financial statements to comply with the Law on Accounting and Auditing using the closing and average rates for the year then ended, as announced by the National Bank of Cambodia (“NBC”).

Assets and liabilities included in the statement of financial position are translated at the closing rate prevailing at the end of each reporting year, whereas income and expense items presented in the statement of comprehensive income are translated at the average rate for the year then ended. All resulting exchange differences are recognized in the statement of comprehensive income. Such translation should not be construed as a representation that the US$ amounts represent, or have been or could be, converted into KHR at that or any other rate. All values in KHR are rounded to the nearest thousand (“KHR’000”), except if otherwise indicated.

The financial statements are presented in KHR based on the applicable exchange rates per US$1 as follows:

2020 2019

Closing rate 4,045 4,075

Average rate 4,077 4,052

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19Notes to theFinancial Statements

2. ACCOUNTING POLICIES (CONT’D)

2.2 New and amended accounting standards and interpretations

The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended accounting standards and interpretations which became effective starting January 1, 2020. Except as otherwise indicated, these changes in the accounting policies did not have any significant imp act on the financial position or performance of the Bank.

Revised Conceptual Framework for Financial Reporting

The IASB has issued a revised Conceptual Framework which will be used in standard-setting decisions with immediate effect. Key changes include:

• increasing the prominence of stewardship in the objective of financial reporting

• reinstating prudence as a component of neutrality

• defining a reporting entity, which may be a legal entity, or a portion of an entity

• revising the definitions of an asset and a liability

• removing the probability threshold for recognition and adding guidance on derecognition

• adding guidance on different measurement basis, and

• stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in other comprehensive income should be recycled where this enhances the relevance or faithful representation of the financial statements.

No changes will be made to any of the current accounting standards. However, entities that rely on the Framework in determining their accounting policies for transactions, events or conditions that are not otherwise dealt with under the accounting standards will need to apply the revised Framework from 1 January 2020. These entities will need to consider whether their accounting policies are still appropriate under the revised Framework.

The Bank has assessed that the amendment did not have any impact to the financials during the year since the Bank has established accounting policies in accordance with CIFRS.

Classification of Liabilities as Current or Non-current (Amendment to CIAS 1)

On 23 January 2020, the IASB issued a narrow-scope amendment to CIAS 1 to clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. The amendment requires the following:

• Liabilities are classified as non-current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights, since loans are rarely unconditional (for example, because the loan might contain covenants).

• The assessment determines whether a right exists, but it does not consider whether the entity will exercise the right. So, management’s expectations do not affect classification.

• The right to defer only exists if the entity complies with any relevant conditions at the reporting date. A liability is classified as current if a condition is breached at or before the reporting date and a waiver is obtained after the reporting date. A loan is classified as non-current if a covenant is breached after the reporting date.

‘Settlement’ is defined as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument.

The Bank, which is a financial institution, does not classify liabilities as either current or non-current.

Definition of a Business – Amendments to CIFRS 3

The IASB issued amendments to the definition of a business in CIFRS 3, Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

In particular, the amendments clarify the minimum requirements to be a business, remove the assessment of a market participant’s ability, to replace missing elements, and narrow the definition of outputs.

The Bank has assessed that the amendment did not have any impact to the financials during the year since the Bank did not enter into business combination during the year.

CIFRS IC decision on CIFRS 16 lease term

CIFRS 16, Leases, requires a lessee to recognize a lease liability for almost all leases. The lease liability is the present value of lease payments during the lease term. A longer lease term will typically create larger lease liabilities.

The lease term cannot exceed the period for which the lease is enforceable. Paragraph B34 of CIFRS 16 says that ‘A lease is no longer enforceable when the lessee and the lessor each has the right to terminate the lease without permission from the other party with no more than an insignificant penalty.’

CIFRS 16 does not define the words ‘penalty’ or ’enforceable’. The interpretation committee observed that, in applying paragraph B34, an entity considers the broader economics of the contract, and not only contractual termination payments. If either party will incur a more than insignificant penalty from terminating (including economic penalties), the lease is enforceable beyond that date.

Once the enforceable period has been determined the lessee applies the guidance on lessee extension/termination options to determine the lease term, that is, if the lessee is reasonably certain to continue using the asset, the periods are included in the lease term.

The Bank has assessed that the amendment did not have any impact to the financials during the year since all of the Bank’s leases do not contain extension/ termination options to determine the lease term.

COVID-19-Related Rent Concessions – Amendment to CIFRS 16

The IASB published an amendment to CIFRS 16, Leases that provides an optional practical expedient for lessees from assessing whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for such rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in the period in which the event or condition that triggers the reduced payment occurs.

The Bank has assessed that the amendment did not have any impact to the financials during the year.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, unless otherwise indicated.

70

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements, unless otherwise indicated.

2.3.1 Financial assets

(a) Date of recognition

All financial assets are initially recognized on the trade date, i.e. the date that the Bank become a party to the contractual provisions of the instrument. This includes regular way trades, purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

(b) Initial recognition and subsequent measurement

All financial assets are measured initially at their fair value plus directly attributable transaction costs, except in the case of financial assets recorded at fair value through profit or loss.

The Bank classify all of its financial assets based on the business model for managing the assets and the asset’s contractual cash flow characteristics, measured at either:

- Amortised cost

- Fair value through other comprehensive income (“FVOCI”)

- Fair value through profit or loss (“FVTPL”)

Financial assets at amortised cost

The Bank measures financial assets at amortised cost if both of the following conditions are met:

- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding; and

- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.

The details of these conditions are outlined below:

(i) The SPPI test

As a first step of its classification process, the Bank assess the contractual terms of financial assets to identify whether they meet the SPPI test.

‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation of the premium/discount).

The most significant elements of interest within a lending arrangement are typically the consideration for the time value of money and credit risk.

To make the SPPI assessment, the Bank apply judgment and consider relevant factors such as the currency in which the financial asset is denominated, and the period for which the interest rate is set.

Contractual terms that introduce a more than de minimis exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement do not give rise to contractual cash flows that are solely payments of principal and interest on the amount outstanding. In such cases, the financial asset is required to be measured at FVTPL.

(ii) Business model assessment

The Bank determine its business model at the level that best reflects how groups of financial assets are managed to achieve its business objective.

The Bank’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios and is based on observable factors such as:

• How the performance of the business model and the financial assets held within that business model are evaluated and reported to the key management personnel

• The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed

• How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected)

• The expected frequency, value and timing of sales are also important aspects of the Bank’s assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realized in a way that is different from the Bank’s original expectations, the Bank do not change the classification of the remaining financial assets held in that business model but incorporate such information when assessing newly originated or newly purchased financial assets going forward.

Included in financial assets at amortised cost are cash and short-term funds, deposits and placements with financial institutions, financial assets purchased under resale agreements, financial investments and loans, advances and financing as disclosed in the respective notes to the financial statements.

71

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.1 Financial assets (cont’d)

(b) Initial recognition and subsequent measurement (cont’d)

(ii) Business model assessment (cont'd)

Financial assets at FVOCI

The Bank applies the new category under CIFRS 9 of debt instruments measured at FVOCI when both of the following conditions are met:

- The instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling financial assets; and

- The contractual terms of the financial assets meet the SPPI test.

Financial assets at FVOCI are subsequently measured at fair value with gains and losses arising due to changes in fair value recognized in other comprehensive income (“OCI”). Interest income and foreign exchange gains and losses are recognized in profit or loss in the same manner as for financial assets measured at amortised cost. Where the Bank holds more than one investment in the same security, they are deemed to be disposed off on a first–in first–out basis. On derecognition, cumulative gains or losses previously recognized in OCI are reclassified from OCI to profit or loss.

Equity instruments are normally measured at FVTPL. However, for non-traded equity instruments, with an irrevocable option at inception, the Bank measures the changes through FVOCI (without recycling profit or loss upon derecognition).

Financial assets at FVTPL

Financial assets at FVTPL are those that are held-for-trading and have been either designated by management upon initial recognition or are mandatorily required to be measured at fair value under CIFRS 9. Management designates an instrument at FVTPL upon initial recognition when one of the following criteria’s is met. Such designation is determined on an instrument-by-instrument basis:

- The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis; or

- The assets and liabilities are part of a group of financial assets, financial liabilities or both, which is managed, and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

Included in financial assets at FVTPL are financial investments, financial assets designated upon initial recognition, loans, advances and financing to customers and derivatives.

Subsequent to initial recognition, financial assets held-for-trading and financial assets designated at FVTPL are recorded in the statement of financial position at fair value. Changes in fair value are recognized in the income statements under the caption of ‘other operating income’.

Loans and advances

Loans and advances captions in the statement of financial position include loans and advances measured at amortised cost; they are initially measured at fair value plus incremental direct transaction costs, and subsequently at their amortised cost using the effective interest rate.

(c) Derecognition due to substantial modification of terms and conditions

The Bank derecognizes a financial asset, such as a loan to a customer, when the terms and conditions have been renegotiated to the extent that, substantially, it becomes a new loan, with the difference recognized as a derecognition gain or loss, to the extent that an impairment loss has not already been recorded.

The newly-recognized loans are classified as Stage 1 for ECL measurement purposes, unless the new loan is deemed to be purchased or originated credit-impaired (“POCI”).

If the modification does not result in cash flows that are substantially different, the modification does not result in derecognition. Based on the change in cash flows discounted at the original effective interest rate (“EIR”), the Bank record a modification gain or loss, to the extent that an impairment loss has not already been recorded.

(d) Impairment of financial assets

The CIFRS 9 impairment requirements are based on an expected credit loss (“ECL”) model which applies to financial assets measured at amortised cost or at FVOCI, irrevocable loan commitments and financial guarantee contracts, which include loans, advances and financing and debt instruments held by the Bank. The ECL model also applies to contract assets under CFRS 15, Revenue from Contracts with Customers and lease receivables under CIFRS 16, Leases.

The measurement of expected credit loss involves increased complexity and judgement that include:

(i) Determining a significant increase in credit risk since initial recognition

The assessment of significant deterioration since initial recognition is key in establishing the point of switching between the requirement to measure an allowance based on 12-month ECL and one that is based on lifetime ECL. The quantitative and qualitative assessments are required to estimate the significant increase in credit risk by comparing the risk of a default occurring on the financial assets as at reporting date with the risk of default occurring on the financial assets as at the date of initial recognition.

72

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.1 Financial assets (cont’d)

(d) Impairment of financial assets (cont'd)

(i) Determining a significant increase in credit risk since initial recognition (cont'd)

The Bank applies a three-stage approach based on the change in credit quality since initial recognition:

3-stage approach Stage 1 Stage 2 Stage 3

Performing Under-

performingNon-

performing

ECL approach12-month

ECL Lifetime ECL Lifetime ECL

Criterion No significant increase in credit risk

Credit risk increased

significantly

Credit-impaired

assets

Recognition of interest income

On gross carrying amount

On gross carrying amount

On net carrying amount

(ii) ECL measurement

There are three main components to measure ECL which are a probability of default model (“PD”), a loss given default model (“LGD”) and the exposure at default model (“EAD”). The model is to leverage as much as possible the Bank’s existing Basel II models and perform the required adjustments to produce CIFRS 9 compliant model.

CIFRS 9 does not distinguish between individual assessment and collective assessment. Therefore, the Bank have decided to continue measuring the impairment mainly on an individual transaction basis for financial assets that are deemed to be individually significant, and collectively assess for other financial assets per Bank’s policy.

(iii) Expected life

Lifetime expected credit losses must be measured over the expected life. This is restricted to the maximum contractual life and takes into account expected prepayments, extensions, calls and similar options, except for certain revolver financial instruments such as credit cards and overdrafts. The expected life for these revolver facilities generally refers to their behavioral life.

(iv) Financial investments at FVOCI

The ECLs for financial investments measured at FVOCI do not reduce the carrying amount of these financial assets in the statement of financial position, which remains at fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortised cost is recognized in OCI as an accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss recognized in OCI is recycled to the profit and loss upon derecognition of the assets.

(v) Forward-looking information

ECL are the unbiased probability-weighted credit losses determined by evaluating a range of possible outcomes and considering future economic conditions. The reasonable and supportable forward-looking information is based on the Group’s and the Bank’s research arm, Maybank Kim Eng (“MKE”). In addition, the MKE’s research assumptions and analysis are also based on the collation of macroeconomic data obtained from various sources such as, but not limited to regulators, government and foreign ministries as well as independent research organizations.

Where applicable, the Bank incorporate forward-looking adjustments in credit risk factors of PD and LGD used in ECL calculation; taking into account the impact of multiple probability-weighted future forecast economic scenarios.

Embedded in ECL is a broad range of forward-looking information as economic inputs, such as:

- Gross domestic product (“GDP”) growth

- Unemployment rates

- House price indices

- Central banks’ policy rates

The Bank applies the following three alternative macroeconomic scenarios to reflect an unbiased probability-weighted range of possible future outcomes in estimating ECL:

Base scenario: This scenario reflects that current macroeconomic conditions continue to prevail;

Upside and downside scenarios: These scenarios are set relative to the base scenario; reflecting best and worst-case macroeconomic conditions based on subject matter expert’s best judgement from current economic conditions.

(vi) Valuation of collateral held as security for financial assets

The Bank’s accounting policy for collateral assigned to it through its lending arrangements under CIFRS 9 is the same as it was under previous GAAP.

(vii) Write-offs

Where a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are written off after the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of the amounts previously written off are recognised in profit or loss.

73

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.1 Financial assets (cont’d)

(e) Restructuring of financial assets

If the terms of a financial asset are renegotiated or modified or an existing financial asset is replaced with a new one due to financial difficulties of the borrower, then an assessment is made of whether the financial asset should be derecognised and ECL are measured as follows.

- If the expected restructuring will not result in derecognition of the existing asset, then the expected cash flows arising from the modified financial asset are included in calculating the cash shortfalls from the existing asset.

- If the expected restructuring will result in derecognition of the existing asset, then the expected fair value of the new asset is treated as the final cash flow from the existing financial asset at the time of its derecognition. This amount is included in calculating the cash shortfalls from the existing financial asset that are discounted from the expected date of derecognition to the reporting date using the original effective interest rate of the existing financial asset.

Loan restructuring during the COVID-19 crisis:

In response to the economic situation caused by the COVID-19 pandemic, and in order to maintain financial stability and relieve the burden of borrowers whose main sources of income are impacted by the pandemic the NBC has issued Circular No. T7.020.001 directing banking and financial institutions in Cambodia to be flexible with regard to debt repayment by offering loan restructuring for customers.

The loan restructuring applies to performing loans (those that are not past due more than 30 days) and non-performing loans for customers whose financial difficulties are expected to be temporary only, and is valid until 30 June 2021. In all cases, the loan classifications for non-performing loans remain the same.

(f) Reclassification of financial assets

Reclassification of financial assets is permissible when and only when there is change in business model for managing financial assets.

- An item that was previously a designated and effective hedging instrument in a cash flow hedge or net investment hedge no longer qualifies as such;

- An item becomes a designated and effective hedging instrument in a cash flow hedge or net investment hedge; and

- Changes in measurement where the Bank adopt fair value option.

2.3.2 Financial liabilities

(a) Date of recognition

All financial liabilities are initially recognized on the trade date i.e. the date that the Bank becomes a party to the contractual provision of the instruments. This includes regular way trades: purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place.

(b) Initial recognition and subsequent measurement

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. All financial liabilities are measure initially at fair value plus directly attributable transaction costs, except in the case of financial liabilities at FVTPL.

Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

(i) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held-for-trading (“HFT”) and financial liabilities designated upon initial recognition at FVTPL.

Financial liabilities HFT

Financial liabilities are classified as held-for-trading if they are incurred for the purpose of repurchasing in the near term. This category includes derivatives entered into by the Bank that do not meet the hedge accounting criteria.

Gains or losses on financial liabilities HFT are recognized in the statement of comprehensive income.

Financial liabilities designated at fair value

Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition.

CIFRS 9 does not deviate away treatment on initial recognition and subsequent measurement of financial liabilities.

However, the changes in fair value are presented differently as follows:

• Change in fair value due to own credit risk - presented in other comprehensive income

• Change in fair value due to market risk or other factors – presented in income statement

(ii) Other financial liabilities

The bank’s other financial liabilities include deposits from customers, deposits from other financial institutions, lease liabilities, balances with parent company, subordinated debt and other liabilities.

These other financial liabilities are carried at amortised cost using EIR method.

(c) Derecognition

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such as exchange or modification is treated as derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the original financial liability and the consideration paid is recognized in the income statement.

74

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.2 Financial liabilities (cont'd)

(d) Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position of the Bank if there is a current legally enforceable right to offset the recognized amount and there is an intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.

(e) Derivative financial instruments

The Bank trade derivatives such as interest rate swaps and futures, credit default swaps, commodity swaps, currency swaps, currency forwards and options on interest rates, foreign currencies, equities and commodities.

Derivative financial instruments are initially recognized at fair value. For non-option derivatives, their fair value is normally zero or negligible at inception. For purchased or written options, their fair value is equivalent to the market premium paid or received. The derivatives are subsequently remeasured at their fair value. Fair value is obtained from quoted market prices in active markets, including recent market transactions and valuation techniques that include discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

2.3.3 Financial guarantees contract

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified party fails to meet its obligation when it is due in accordance with the contractual terms. In the ordinary course of business, the Bank give financial guarantees, consisting of letters of credit, guarantees and acceptances.

Financial guarantees premium is initially recognized at fair value on the date the guarantee was issued. Subsequent to initial recognition, the received premium is amortised over the life of the financial guarantee. The guarantee liability (the notional amount) is subsequently recognized at the higher of this amortised amount and the present value of any expected payments (when a payment under guarantee has become probable). The unamortised premium received on these financial guarantees is included within ‘other liabilities’ in the statements of financial position.

2.3.4 Cash and cash equivalents

For cash flow statement purposes, cash and cash equivalents consist of cash and bank balances, demand deposits and short-term highly liquid investments with original maturities of three months or less when purchased, and that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.

2.3.5 Deposits and placements with banks

Deposits and placements with banks are stated at cost less allowance for expected credit losses.

2.3.6 Loans and advances

Loans and advances are initially measured at fair value plus incremental direct transaction costs, and subsequently measured at amortized cost using the effective interest method.

2.3.7 Property and equipment

(i) Items of property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Where an item of property comprises major components having different useful lives, they are accounted for as separate items of property and equipment.

(ii) Depreciation of property and equipment is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives, as follows:

No. of years

Leasehold improvements 5 to 15

Office equipment 4 to 5

Furniture and fittings 5

Motor vehicles 4

(iii) Subsequent expenditure relating to an item of property and equipment that has already been recognized is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Bank. All other subsequent expenditure is recognized as an expense in the year in which it is incurred.

(iv) Gains or losses arising from the retirement or disposal of an item of property and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the assets and are recognized in the statement of comprehensive income on the date of retirement or disposal.

(v) Fully depreciated property and equipment are retained in the financial statements until disposed or written off.

(vi) Construction in progress is transferred to each class of assets when it is complete and ready for use. Construction-in-progress is not depreciated until such time as the relevant assets are ready for use.

2.3.8 Software costs

Software costs are stated at cost less accumulated amortisation and impairment losses, if any. Software costs are amortised on a straight-line method over 5 to 7 years.

75

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.9 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and its value in use.

Any impairment loss is charged to the statement of comprehensive income in the period in which it arises. Reversal of impairment loss is recognized in the statement of comprehensive income to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized.

2.3.10 Leases

At inception of a contract, the Bank assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Bank assesses whether:

- The contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right throughout the period of use, then the asset is not identified;

- The Bank has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

- The Bank has the right to direct the use of the asset. The Bank has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In cases where all the decisions about how and for what purpose the asset is used are predetermined, the Bank has the right to direct the use of the asset if either:

• The Bank has the right to operate the asset; or

• The Bank designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease and non-lease component, the Bank allocates the consideration in the contract to each lease component and aggregate of non-lease components on the basis of their relative stand-alone prices. However, for the leases of buildings in which it is a lessee, the Bank has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

Leases in which the Bank is a lessee

An arrangement conveyed the right to use the asset if one of the following was met:

- The purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output;

- The purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or

- Facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.

The Bank recognizes a right-of-use asset and a lease liability at the lease commencement date, including leases of ATM spaces that have a lease term of 12 months or less and leases of low-value assets. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurement of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, to the lessee’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

- Fixed payments, including in-substance fixed payments;

- Lease payments in an optional renewal period if the Bank is reasonably certain to exercise an extension option.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in the lease term or a change in future lease payments.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

2.3.11 Other assets

Other receivables included in other assets are carried at anticipated realizable values. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the statement of financial position date.

76

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.12 Deposits from customers and other financial institutions

Deposits from customers and other financial institutions are stated at placement value.

2.3.13 Subordinated debt

Subordinated debt represents long-term debt that is subordinated to all other liabilities of the Bank. This is treated as part of the Bank’s liabilities and included in the Bank’s net worth computation under the NBC’s guidelines.

2.3.14 Other liabilities

Other liabilities are stated at cost.

2.3.15 Provisions for liabilities

Provisions for liabilities are recognized when the Bank has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of the provision is the present value of the expenditure expected to be required to settle the obligation.

2.3.16 Employee benefits

Salaries, wages, allowances, and other benefits are accrued in the period in which the associated services are rendered by employees of the Bank.

In 2018, the Ministry of Labour and Vocational Training’s (“MoLVT”) Prakas No. 443 dated 21 September 2018 mandated the payment of seniority indemnity for unspecified duration contracted employees with implementation guidelines issued on 22 March 2019.

The said Prakas requires retroactive seniority payment equal to fifteen days per year of employee service for a maximum period not exceeding 6 months based on the average net wages for each year. Payment shall be spread over a period beginning December 2021 and every June and December thereafter as follows:

- Equal to three days payable every June, and

- Equal to three days payable every December.

2.3.17 Income tax

Income tax expense comprises current and deferred tax. It is recognized in profit and loss except items recognized directly in equity or in other comprehensive income.

The Bank has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore has accounted for them under CIAS 37, Provision, Contingent Liabilities and Contingent Assets, and has recognized that related expense in ‘other expenses’.

(i) Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amounts expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted at the balance sheet date.

(ii) Deferred income tax

Deferred income tax is provided using the balance sheet liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognized for all deductible temporary differences to the extent that it is probable that future taxable profits will be available against which these differences can be utilized, except where the deferred income tax arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. Unrecognized deferred income tax assets are re-assessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred income tax assets to be recovered.

2.3.18 Equity

(i) Paid-up capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of the ordinary share are recognized as a deduction from equity, net of any tax effects. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument. Distributions to holders of a financial instrument classified as an equity instrument are charged directly to equity.

(ii) Retained earnings

Retained earnings represent accumulated earnings of the Bank less dividends declared.

77

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.18 Equity (cont’d)

(iii) General and regulatory reserves

The general reserve is set up for any overall financial risk. The Board of Directors exercises its discretion for the use and maintenance of the general reserve. The transfer from retained earnings to general reserve is subject to the approval of Board of Directors of the Bank.

Regulatory reserve is set up to account for the difference in provision between ECLs determined in accordance with CI FRS 9 and the regulatory provision computed in accordance with NBC Prakas No. B7-017-344 dated 1 December 2017 and Circular No. B7-018-001 dated 16 February 2019 on credit risk classification and provision on impairment for banks and financial institutions. The regulatory provision requires banks and financial institutions to classify their loan classification as disclosed in Note 2.3.1(d).

The Bank shall compare the provision calculated in accordance with CIFRS 9 and the regulatory provision, and:

(i) In case the regulatory provision is lower than provision calculated under CIFRS 9, the Bank shall record the provision calculated in accordance with CIFRS 9, and

(ii) In case the regulatory provision is higher than provision calculated under CIFRS 9, the Bank shall record the provision calculated in accordance with CIFRS 9 and transfer the difference from retained earnings or accumulated loss account to the regulatory reserve.

2.3.19 Recognition of interest income and expense

Effective interest rate

Interest income and expense are recognized in profit and loss using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

- The gross carrying amount of the financial asset; or

- The amortised cost of the financial liability.

When calculating the effective interest rate for financial instruments other than purchased or originated credit-impaired assets, the Bank estimates future cash flows considering all contractual terms of the financial instrument, but not ECL. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated using estimated future cash flows including ECL. The calculation of the effective interest rate includes transaction costs and fees and points paid or received that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or financial liability.

Amortised cost and gross carrying amount

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any expected credit loss allowance.

The ‘gross carrying amount of a financial asset’ is the amortised cost of a financial asset before adjusting for any expected credit loss allowance.

Calculation of interest income and expense

The effective interest rate of a financial asset or financial liability is calculated on initial recognition of a financial asset or a financial liability. In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit- impaired) or to the amortised cost of the liability. The effective interest rate is revised as a result of periodic re-estimation of cash flows of floating rate instruments to reflect movements in market rates of interest. The effective interest rate is also revised for fair value hedge adjustments at the date amortisation of the hedge adjustment begins.

However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

For financial assets that were credit-impaired on initial recognition, interest income is calculated by applying the credit-adjusted effective interest rate to the amortised cost of the asset. The calculation of interest income does not revert to a gross basis, even if the credit risk of the asset improves.

Presentation

Interest income calculated using the effective interest method presented in the statement of profit and loss and OCI includes interest on financial assets and financial liabilities measured at amortised cost.

Interest expense presented in the statement of profit and loss and OCI includes financial liabilities measured at amortised cost.

2.3.20 Fee and commission income

Fee and commission income and expense that are integral to the effective interest rate of a financial asset or financial liability are included in the effective interest rate.

Other fee and commission income, including account servicing fees, are recognized as the related services are performed.

A contract with a customer that results in a recognized financial instrument in the Bank ’s financial statements may be partially in the scope of CIFRS 9 and partially in the scope of CIFRS 15. If this is the case, then the Bank first applies CIFRS 9 to separate and measure the part of the contract that is in the scope of CIFRS 9 and then applies CIFRS 15 to the residual.

2.3.21 Interest expense

Interest expense on deposits of customers, settlement accounts of other banks and borrowings is recognized on an accrual basis.

2.3.22 Fee and commission expense

Fee and commission expense are recognized as incurred.

78

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

2. ACCOUNTING POLICIES (CONT’D)

2.3 Summary of significant accounting policies (cont’d)

2.3.23 Related parties

Parties are considered to be related if the Bank has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or vice-versa, or where the Bank and the other party are subject to common control or significant influence. Related parties may be individuals or corporate entities and include close family members of any individual considered to be a related party.

2.3.24 Fiduciary assets

Assets held in trust or in a fiduciary capacity are not reported in the financial statements since they are not the assets of the Bank.

2.3.25 Contingent assets

Where it is not possible that there is an inflow of economic benefits, or the amount cannot be estimated reliably, the asset is not recognised in the statements of financial position and is disclosed as a contingent asset, unless the probability of inflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets unless the probability of inflow of economic benefits is remote.

2.3.26 Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

2.3.27 Rounding of amounts

Except as indicated otherwise, amounts in the financial statements have been rounded off to the nearest dollar and nearest thousands (“KHR’000”) for US$ and KHR amounts, respectively.

2.4 Standards issued but not yet effective

Pronouncements issued but not yet effective are listed below. The Bank intends to adopt the following pronouncements when they become effective. Adoption of these pronouncements is not expected to have a significant impact on the Bank’s financial statements.

Effective beginning on or after January 1, 2021

• CIFRS 17, Insurance Contracts

In May 2017, the IASB issued CIFRS 17, Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, CIFRS 17 will replace CIFRS 4, Insurance Contracts that was issued in 2005. CIFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply.

CIFRS 17 introduces new accounting requirements for banking products with insurance features that may affect the determination of which instruments or which components thereof will be in the scope of CIFRS 9 or CIFRS 17.

CIFRS 17 is effective for reporting periods beginning on or after 1 January 2023, with comparative figures required. Early application is permitted, provided the entity also applies CIFRS 9 and CIFRS 15 on or before the date it first applies CIFRS 17.

The Bank is currently in the process of assessing the impact of adopting CIFRS 17 on its financial statements.

• Amendment to CIFRS 9, Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities (2018-2020 Annual Improvements)

The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted.

The Bank will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual period in which it will first apply the amendment and does not expect this will result in a material impact on its financial statements.

Deferred effectivity

• Amendments to CIFRS 10, Consolidated Financial Statements, and CAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The amendments address the conflict between CIFRS 10 and CAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that a full gain or loss is recognized when a transfer to an associate or joint venture involves a business as defined in CIFRS 3, Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does not constitute a business, however, is recognized only to the extent of unrelated investors’ interests in the associate or joint venture.

79

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the financial statements in accordance with CIFRSs requires the Bank to make estimates and assumptions that affect the reported amounts of resources, liabilities, income and expenses and the disclosures of contingent resources and contingent liabilities. Future events may occur which can cause the assumptions used in arriving at the estimates to change. The effects of any change in estimates are reflected in the financial statements as they become reasonably determinable.

3.1 Judgments

The following are the critical judgments and key assumptions that have a significant risk of material adjustment to the carrying amounts of assets and liabilities within the next financial year:

3.1.1 Classification of financial assets

The Bank classifies its financial assets depending on the business model for managing those financial assets and whether the contractual terms of the financial asset are solely payments of principal and interest (“SPPI”) on the principal amount outstanding. The Bank performs the business model assessment based on observable factors such as:

- Performance of the business model and the financial assets held within that business model are evaluated and reported to the Bank’s key management personnel

- Risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed

- Compensation of business units whether based on the fair value of the assets managed or on the contractual cash flows collected

- Expected frequency, value and timing of sales

In performing the SPPI test, the Bank applies judgment and considers relevant factors such as the currency in which the financial asset is denominated, the period for which the interest rate is set, contingent events that would change the amount and timing of cash flows, leverage features, prepayment and extension terms and other features that may modify the consideration for the time value of money.

3.1.2 Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded in the statement of financial position or disclosed in the notes to financial statements cannot be derived from active markets, these are determined using internal valuation techniques using generally accepted market valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.

3.1.3 Effective interest rate (“EIR”) method

The Bank’s EIR method recognizes interest income using a rate of return that represents the best estimate of a constant rate of return over the expected behavioral life of loans and deposits and recognizes the effect of potentially different interest rates charged at various stages and other characteristics of the product life cycle (including prepayments and penalty interest and charges). This estimation, by nature, requires an element of judgment regarding the expected behavior and life cycle of the instruments, as well expected changes to Bank’s base rate and other fee income/expense that are integral parts of the instrument.

3.1.4 Leases

The Bank determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

Extension and termination options

The Bank has several lease contracts that include extension and termination options. The Bank applies judgment in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors such as leasehold improvements and location that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Bank reassess the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

Estimating the incremental borrowing rate (“IBR”) for lease liabilities

The Bank cannot readily determine the interest rate implicit in the lease, therefore, it uses its IBR to measure lease liabilities. The IBR for lease liabilities is the rate of interest that the Bank would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the ROU asset in a similar economic environment. The Bank estimates the IBR for lease liabilities using observable inputs (by reference to prevailing risk-free rates) adjusted to take into account the entity’s credit risk (i.e. credit spread).

3.2 Estimates

3.2.1 Expected credit losses on financial assets

The measurement of impairment losses on loans, advances and financing requires judgment. In particular, the estimation of the amount and timing of future cash flows, the assessment of a significant increase in credit risk (“SICR”) and incorporation of forward-looking information in the measurement of impairment losses. These estimates are driven by a number of factors, changes in which can result in different levels of impairment losses.

80

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONT’D)

3.2 Estimates (cont’d)

3.2.1 Expected credit losses on financial assets (cont’d)

The impairment losses computed based on the ECL models are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. A number of significant judgments are also required in applying the accounting requirements for measuring impairment losses, such as determining criteria for SICR, choosing appropriate models and assumptions for the measurement of impairment losses, establishing the segmentation of loans for purposes of measuring impairment losses on a collective basis, determining the number of economic inputs (e.g. gross domestic product growth rates, consumer price index, housing price index, etc.) as well as the effects on default rates and recovery rates, and selecting forward-looking macroeconomic scenarios and determining its probability-weightings.

For credit-impaired loans, advances and financing loans which are individually assessed, judgment by management is required in the estimation of the amount and timing of future cash flows in the determination of impairment losses. In estimating these cash flows, judgments are made about the realizable value of collateral pledged and the borrower’s financial position. These estimations are based on assumptions and the actual results may differ, hence resulting in changes to impairment losses recognized.

The Bank’s ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates include, among others:

- Segmentation of the portfolio, where the appropriate model or ECL approach is used

- Criteria for assessing if there has been a SICR and so allowances for debt financial assets should be measured on a lifetime ECL basis and the qualitative assessment

- Segmentation of debt financial assets when their ECL is assessed on a collective basis

- Development of ECL models, including the various formulas and the choice of inputs

- Determination of associations between macroeconomic scenarios and economic inputs and the effect on PDs, EADs and LGDs

- Selection of forward-looking macroeconomics scenarios and their probability weightings, to derive the economic inputs into the ECL models.

3.2.2 Recognition of deferred tax assets

Deferred tax assets are recognized for all unused tax losses and temporary differences to the extent that it is probable that future taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and level of future taxable income together with future tax planning strategies.

3.2.3 Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The Bank assesses impairment on assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the Bank considers important which could trigger an impairment review include the following:

- Significant underperformance relative to expected historical or projected future operating results;

- Significant changes in the manner of use of the acquired assets or the strategy for overall business; and

- Significant negative industry or economic trends.

81

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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4. BALANCES WITH THE NATIONAL BANK OF CAMBODIA

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Current accounts US$ 112,400,209 454,658,845 218,476,586 890,292,088 KHR 21,641,256 87,538,881 23,790,849 96,947,710Term deposits in US$ 12,700,000 51,371,500 9,000,000 36,675,000Statutory deposits Reserve requirement 82,342,893 333,077,002 136,743,314 557,229,004 Capital guarantee 7,500,000 30,337,500 7,500,000 30,562,500

236,584,358 956,983,728 395,510,749 1,611,706,302

Reserve requirement

Under the NBC Prakas No. B7-020-230 dated 18 March 2020, commercial banks are required to maintain certain cash reserves with the NBC in the form of compulsory deposits, computed at 7.00% of customer deposits and borrowings in KHR and other currencies (2019: 8.00% and 12.50% for KHR and US$, respectively). The reserve requirements do not earn any interest based on the NBC Prakas No. B7-018-282 dated 29 August 2018.

Capital guarantee

Under NBC Prakas No. B7-01-136 dated 15 October 2001, banks are required to maintain a statutory deposit of 10.00% of registered capital with the NBC. This deposit is not available for use in the Bank’s day-to-day operations but is refundable when the Bank voluntarily ceases to operate the business in Cambodia. This deposit earned interest rate at 0.06% per annum (2019: 0.48%).

For purposes of preparing the statement of cash flows, cash and cash equivalents comprise the following:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Cash on hand 66,820,402 270,288,526 43,865,242 178,750,861Balances with the NBC Current accounts 134,041,465 542,197,726 242,267,435 987,239,798 Term deposits 12,700,000 51,371,500 9,000,000 36,675,000Settlement accounts with other banks 1,397,051 5,651,071 2,384,262 9,715,868Term deposits Parent company 165,000,000 667,425,000 120,000,000 489,000,000 Other banks 43,000,000 173,935,000 94,453,257 384,897,022Settlement accounts Parent company 125,694 508,432 10,378 42,290 Affiliates 1,514,534 6,126,290 1,017,554 4,146,533

Total cash and cash equivalents 424,599,146 1,717,503,545 512,998,128 2,090,467,372

The term deposits are unrestricted and have original maturities of three months or less.

During the year, interest earned from balance with NBC amounted to US$ 21,295 or KHR’000 86,820 (2019: US$ 47,195 or KHR’000 191,234) Note 19.

82

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

5. BALANCES WITH OTHER BANKS

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Settlement accounts Overseas banks 963,132 3,895,869 842,920 3,434,899 Local bank 433,919 1,755,202 1,541,342 6,280,969

Term deposits with banks 223,000,000 902,035,000 229,453,257 935,022,022

224,397,051 907,686,071 231,837,519 944,737,890Allowance for ECLs (128,362) (519,224) (595,111) (2,425,077)

Net 224,268,689 907,166,847 231,242,408 942,312,813

Settlement accounts with overseas banks earn interest at 0.15% per annum (2019: 0.15% per annum) while the account with a local bank does not earn interest

Annual interest rates on term deposits range from 1.00% to 5.00% (2019: 1.00% to 2.50% per annum).

During the year, interest earned from balance with other banks amounted to US$ 2,737,552 or KHR’000 11,161,000 (2019: US$ 4,798,562 or KHR’000 19,443,773) Note 19.

Movements of allowance for ECLs

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Balance as at 1 January (595,111) (2,425,077) (118,214) (474,983)Provision for (reversal of) ECLs 466,749 1,888,000 (476,897) (1,943,355)Translation adjustment - 17,853 - (6,739)

Balance as at 31 December (128,362) (519,224) (595,111) (2,425,077)

83

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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6. BALANCES WITH PARENT COMPANY

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Due from parent company Settlement accounts 125,694 508,432 10,378 42,290

Due to parent company Settlement accounts 2,273,412 9,195,952 3,102,957 12,644,550

Subordinated debt Principal amount 45,000,000 182,025,000 30,000,000 122,250,000

47,399,106 191,729,384 33,113,335 134,936,840

Subordinated debt

In January 2015, the parent company provided a subordinated debt for the Bank’s use as working capital amounting to US$30 million. The debt bears fixed annual interest at 7.00% and has a term of 10 years with principal amount to be repaid on maturity and interest payable every six months. On 17 January 2020, the Bank prepaid in full the principal amount and accrued interest of the subordinated debt amounting to US$30 million and US$923,067, respectively, as approved by the NBC on 3 January 2020.

In January 2020, the parent company provided a new subordinated debt for the Bank’s use as working capital amounting to US$45 million. The debt bears fixed annual interest at 7.95% and has a term of 10 years with principal amount to be repaid on maturity and interest payable every six months. During the year, interest expense for subordinated debt amounted to US$ 3,532,790 or KHR’000 14,403,185 (2019: US$ 2,135,000 or KHR’000 8,651,020) Note 20.

7. BALANCES WITH AFFILIATES

The Bank maintains settlement accounts with the following Maybank overseas branches:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Malayan Banking Berhad (“Maybank”) New York Branch 505,828 2,046,074 812,838 3,312,315Maybank Singapore Branch 365,443 1,478,217 46,005 187,470Maybank London Branch 619,696 2,506,670 146,697 597,790Maybank Hong Kong 5,078 20,541 2,307 9,401Maybank Vietnam, Hanoi Branch 4,722 19,100 3,209 13,078Maybank Shanghai 13,767 55,688 6,498 26,479

1,514,534 6,126,290 1,017,554 4,146,533

84

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

8. LOANS AND ADVANCES

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Commercial lendingTerm loans 78,130,751 316,038,888 70,206,191 286,090,228Overdraft 30,023,333 121,444,382 37,093,319 151,155,275Trade financing 43,497,708 175,948,229 31,649,484 128,971,647

151,651,792 613,431,499 138,948,994 566,217,150

Consumer lendingTerm loans 263,090,559 1,064,201,311 251,332,888 1,024,181,519Residential mortgages 236,680,779 957,373,751 180,831,370 736,887,833Overdraft 94,842,059 383,636,129 93,107,774 379,414,179

Staff related loans 15,614,073 63,158,925 11,041,872 44,995,628

Trade financing 9,952,270 40,256,932 7,810,224 31,826,663

620,179,740 2,508,627,048 544,124,128 2,217,305,822

Loans and advances, gross 771,831,532 3,122,058,547 683,073,122 2,783,522,972

Accrued interest receivable 5,795,393 23,442,364 4,848,243 19,756,591

Total 777,626,925 3,145,500,911 687,921,365 2,803,279,563Allowance for ECLs (13,473,938) (54,502,079) (13,405,391) (54,626,969)

Loans and advances, net 764,152,987 3,090,998,832 674,515,974 2,748,652,594

Movements of allowance for ECLs are as follows:

2020

Stage 1US$

Stage 2US$

Stage 3US$

TotalUS$

Balance as at 1 January 3,860,982 950,105 8,594,304 13,405,391 Newly-originated assets 242,058 - - 242,058 Payments and assets derecognized 2,326,046 (316,083) (3,062,250) (1,052,287) Transfers to Stage 1 14,204 (14,204) - - Transfers to Stage 2 (2,892,139) 2,897,079 (4,940) -

Transfers to Stage 3 (530,491) (247,681) 778,172 -

Impact on ECLs of exposures transferred between stages 296,196 582,580 - 878,776

Allowance for ECLs 3,316,856 3,851,796 6,305,286 13,473,938

KHR’000 equivalent (Note 2.1.4) 13,416,683 15,580,515 25,504,882 54,502,079

2019

Stage 1US$

Stage 2US$

Stage 3US$

TotalUS$

Balance as at 1 January 3,779,837 394,696 14,392,639 18,567,172 Newly-originated assets 1,619,928 - - 1,619,928 Payments and assets derecognized (2,119,117) (1,596,511) (5,303,970) (9,019,598) Transfers to Stage 1 322,101 (48,342) (273,759) - Transfers to Stage 2 (171,027) 1,713,121 (1,542,094) - Transfers to Stage 3 (88,763) (53,291) 142,054 -

Impact on ECLs of exposures transferred between stages 518,023 540,432 1,179,434 2,237,889

Allowance for ECLs 3,860,982 950,105 8,594,304 13,405,391

KHR’000 equivalent (Note 2.1.4) 15,733,502 3,871,678 35,021,789 54,626,969

85

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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8. LOANS AND ADVANCES (CONT’D)

Further analyses of loans and advances are follows:

(i) Staging of the loan portfolio, including net interest receivable

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Stage 1 746,349,878 3,018,985,257 663,523,829 2,703,859,603Stage 2 12,865,713 52,041,809 6,400,173 26,080,705Stage 3 18,411,334 74,473,845 17,997,363 73,339,255

Total 777,626,925 3,145,500,911 687,921,365 2,803,279,563

Refer to Note 28.2 (d) and (e) on Credit quality

(ii) By industrial sector

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Wholesale/retail 340,234,373 1,376,248,039 47,214,198 192,397,857 Consumers 256,741,599 1,038,519,768 315,313,055 1,284,900,699 Financial services 66,265,531 268,044,073 9,783,738 39,868,732 Manufacturing 37,427,849 151,395,649 40,314,665 164,282,260 Construction 31,875,335 128,935,730 33,352,936 135,913,214 Education, health & others 16,933,126 68,494,495 18,340,183 74,736,246 Education 11,584,921 46,861,005 13,520,376 55,095,532 Import/export 10,065,410 40,714,583 201,482,435 821,040,923 Agriculture 5,556,980 22,477,984 7,306,474 29,773,882 Energy 941,801 3,809,585 1,293,305 5,270,218

777,626,925 3,145,500,911 687,921,365 2,803,279,563

(iii) By residency, relationship, exposures and interest

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

ResidencyResidents 777,626,925 3,145,500,911 687,921,365 2,803,279,563Non-residents - - - -

777,626,925 3,145,500,911 687,921,365 2,803,279,563

RelationshipRelated parties 744,311 3,010,738 373,661 1,522,669Non-related parties 776,882,614 3,142,490,173 687,547,704 2,801,756,894

777,626,925 3,145,500,911 687,921,365 2,803,279,563

86

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

8. LOANS AND ADVANCES (CONT'D)

(iii) By residency, relationship, exposures and interest (cont')

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Large exposures - - 18,523,286 75,482,391Non-large exposures 777,626,925 3,145,500,911 669,398,079 2,727,797,172

777,626,925 3,145,500,911 687,921,365 2,803,279,563

Based on NBC Prakas No. B7-06-226, large exposure is defined as the overall gross exposure resulting from banking operations with one single beneficiary, where such exposure exceeds 10% of the Bank’s net worth. Exposure means the higher of two items: (a) the outstanding loans or commitments, and (b) the authorized loans or commitments.

Annual interest rates range as follows:

2020 2019

Overdraft 4.00% - 15.00% 6.00% - 14.75%Term loans 5.25% - 12.25% 6.50% - 12.25%Trust receipts 6.50% - 9.00% 7.25% - 9.25%Staff loans 3.50% - 7.88% 3.50% - 6.25%

During the year, interest earned on loans and advances amounted to US$ 57,245,850 or KHR’000 233,391,330 (2019: US$ 53,259,088 or KHR’000 215,805,825) Note 19.

(iv) By maturity

Refer to Note 17 on Maturity profile.

87

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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9. PROPERTY AND EQUIPMENT

2020

Construction in-progress

Leasehold improvements

Office equipment

Furniture and fittings

Motor vehicles Total

US$ US$ US$ US$ US$ US$

CostAs at 1 January 12,000 9,293,185 6,583,709 894,691 373,600 17,157,185 Additions 355,411 761,823 1,011,364 100,031 - 2,228,629 Disposals and write-offs - - (30,074) - - (30,074)

As at 31 December 367,411 10,055,008 7,564,999 994,722 373,600 19,355,740

Less accumulated depreciationAs at 1 January - 7,404,536 5,035,696 719,214 326,213 13,485,659 Charge for the year - 574,894 684,139 121,134 38,739 1,418,906 Disposals and write-offs - - (29,561) - - (29,561)

As at 31 December - 7,979,430 5,690,274 840,348 364,952 14,875,004

Net book valueAs at 31 December 367,411 2,075,578 1,874,725 154,374 8,648 4,480,736

KHR’000 equivalent (Note 2.1.4) 1,486,177 8,395,713 7,583,263 624,443 34,981 18,124,577

2019

Construction in-progress

Leasehold improvements

Office equipment

Furniture and fittings

Motor vehicles Total

US$ US$ US$ US$ US$ US$

CostAs at 1 January 8,793 9,282,315 6,566,778 876,090 373,600 17,107,576Additions 46,001 2,077 687,058 - - 735,136Transfers in (out) (42,794) 8,793 15,400 18,601 - -

Disposals and write-offs - - (685,527) - - (685,527)

As at 31 December 12,000 9,293,185 6,583,709 894,691 373,600 17,157,185Less accumulated depreciationAs at 1 January - 6,844,357 4,990,069 594,355 279,192 12,707,973Charge for the year - 560,179 731,089 124,859 47,021 1,463,148Disposals and write-offs - - (685,462) - - (685,462)

As at 31 December - 7,404,536 5,035,696 719,214 326,213 13,485,659

Net book valueAs at 31 December 12,000 1,888,649 1,548,013 175,477 47,387 3,671,526

KHR’000 equivalent (Note 2.1.4) 48,900 7,696,245 6,308,153 715,068 193,102 14,961,468

88

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

10. SOFTWARE COSTS

2020US$

2019US$

CostAs at 1 January 2,877,473 2,177,093

Additions 896,885 700,380

As at 31 December 3,774,358 2,877,473

Less accumulated amortisationAs at 1 January 1,784,083 1,365,492Charge for the year 456,512 418,591

As at 31 December 2,240,595 1,784,083Net book value

As at 31 December 1,533,763 1,093,390

KHR’000 equivalent (Note 2.1.4) 6,204,071 4,455,564

89

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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11. RIGHT-OF-USE ASSETS

The Bank leases its head office and branch premises for periods ranging from five (5) to fifteen (15) years, renewable upon mutual agreement of both parties. Various lease contracts include escalation clauses, most of which bear annual rent increase ranging from 10.00% to 12.50%. The Bank also has certain leases of ATM spaces with lease terms ranging from two (2) to four (4) years, renewable upon mutual agreement of both parties.

Information about leases for which the Bank is a lessee is presented below.

2020

Office space ATM space Total

US$ US$ US$KHR’000

equivalent (Note 2.1.4)

CostAs at 1 January 27,631,504 242,288 27,873,792 113,585,702 Additions 3,058,701 93,396 3,152,097 12,851,099 Derecognition (691,162) - (691,162) (2,817,867)Exchange difference on translation - - - (914,963)

As at 31 December 29,999,043 335,684 30,334,727 122,703,971

Less accumulated amortisationAs at 1 January 8,499,168 155,384 8,654,552 35,267,299 Depreciation 3,043,919 109,326 3,153,245 12,855,780 Derecognition (376,778) - (376,778) (1,536,124)Exchange difference on translation - - - (348,483)

As at 31 December 11,166,309 264,710 11,431,019 46,238,472

Net book value As at 31 December 18,832,734 70,974 18,903,708 76,465,499

2019

Office space ATM space Total

US$ US$ US$KHR’000

equivalent (Note 2.1.4)

CostAs at 1 January 24,615,620 209,981 24,825,601 99,749,266Additions 3,015,884 32,307 3,048,191 12,421,378Exchange difference on translation - - - 1,415,058

As at 31 December 27,631,504 242,288 27,873,792 113,585,702

Less accumulated amortisation

As at 1 January 6,502,615 73,799 6,576,414 26,424,031Depreciation 1,996,553 81,585 2,078,138 8,420,615Exchange difference on translation - - - 422,653

As at 31 December 8,499,168 155,384 8,654,552 35,267,299

Net book value As at 31 December 19,132,336 86,904 19,219,240 78,318,403

90

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

12. OTHER ASSETS

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Refundable deposits 1,493,649 6,041,810 1,397,034 5,692,914Prepayments 413,014 1,670,642 554,571 2,259,877Card-related receivables 329,861 1,334,288 662,780 2,700,829Interest receivable from balances with the NBC and other banks 100,999 408,541 468,258 1,908,151Deposits to suppliers 44,484 179,938 37,756 153,856

Others 625,694 2,530,932 131,931 537,619

3,007,701 12,166,151 3,252,330 13,253,246Allowance for ECLs on interest receivable from balances with the NBC and other banks - - (2,210) (9,006)

3,007,701 12,166,151 3,250,120 13,244,240

91

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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13. DEPOSITS FROM CUSTOMERS AND OTHER FINANCIAL INSTITUTIONS

13.1 Deposits from customers

Deposits from customers consist of:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Current accounts 520,095,247 2,103,785,274 595,770,447 2,427,764,572Term deposits 368,176,109 1,489,272,361 351,358,786 1,431,787,053Savings accounts 117,723,010 476,189,575 131,069,501 534,108,216Margin deposits 3,992,594 16,150,043 1,265,776 5,158,037

1,009,986,960 4,085,397,253 1,079,464,510 4,398,817,878

Further analyses of deposits from customers are as follows:

(i) By type of customers

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Individuals 665,686,256 2,692,700,906 710,709,457 2,896,141,037Domestic Corporations 344,300,70 1,392,696,347 368,755,053 1,502,676,841

1,009,986,960 4,085,397,253 1,079,464,510 4,398,817,878

(ii) By currency

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

US$ 898,776,386 3,635,550,481 983,349,095 4,007,147,562KHR 110,161,242 445,602,224 95,804,147 390,401,899Others 1,049,332 4,244,548 311,268 1,268,417

1,009,986,960 4,085,397,253 1,079,464,510 4,398,817,878

(iii) Annual interest rates

2020 2019

Current accounts 0.00% - 2.50% 0.00% - 3.00%Savings accounts 0.50% - 2.75% 0.50% - 2.00%Term deposits 0.75% - 7.75% 1.25% - 6.00%Margin Nil Nil

During the year, interest expense on deposits from customers amounted to US$ 14,613,699 or KHR’000 59,580,051 (2019: US$ 9,797,008 or KHR’000 39,697,476) Note 20.

(iv) By maturity analysis

Refer to Note 17 on Maturity profile

92

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

13. DEPOSITS FROM CUSTOMERS AND OTHER FINANCIAL INSTITUTIONS (CONT'D)

13.2 Deposits from other financial institutions

Deposits from other financial institutions consist of:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Current accounts 18,341,371 74,190,846 28,828,463 117,475,987Term deposits 35,311,363 142,834,463 25,129,905 102,404,363

53,652,734 217,025,309 53,958,368 219,880,350

Further analyses of other financial institutions are as follows

(i) By currency

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

US$ 29,792,633 120,511,200 36,636,337 149,293,073KHR 23,259,610 94,085,122 17,304,690 70,516,612Others 600,491 2,428,987 17,341 70,665

53,652,734 217,025,309 53,958,368 219,880,350

(ii) Annual interest rates

Current accounts and term deposits bear interest at rates ranging from 0.00% to 1.00% (2019: 0.00% to 2.25%) and from 0.75% to 6.00%, respectively (2019: 1.00% to 3.85%).

During the year, interest expense on deposits from other financial institutions amounted to US$ 626,588 or KHR’000 2,554,599 (2019: US$ 395,724 or KHR’000 1,603,474) Note 20.

(iii) By maturity analysis

Refer to Note 17 on Maturity profile.

93

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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14. INCOME TAX

Components of income tax expense are as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Current 5,288,082 21,559,510 6,885,621 27,900,536Deferred 278,613 1,135,906 121,824 493,631

Income tax expense 5,566,695 22,695,416 7,007,445 28,394,167

14.1 Current corporate income tax (“CIT”)

In accordance with Cambodian Law on Taxation, the Bank has an obligation to pay current CIT of 20% of taxable income.

The reconciliation of income tax computed at the statutory tax rate to the current income tax and income tax expense shown in the income statement is as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Income before income tax 24,145,775 98,442,325 33,900,916 137,366,512Income tax based on statutory tax rate 4,829,155 19,688,465 6,780,183 27,473,302

Non-deductible expenses 737,540 3,006,951 227,262 920,865

Current tax expense 5,566,695 22,695,416 7,007,445 28,394,167

The Bank’s tax returns are subject to periodic examination by the tax authorities. Because the application of tax laws and regulations to many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed later upon final determination by the tax authorities.

Movements of income tax payable during the year are as follows:

2020 2019

US$ US$

As at 1 January 6,179,875 3,028,002Current income tax 5,288,082 6,885,621Income tax paid (6,891,456) (3,733,748)

As at 31 December 4,576,501 6,179,875

KHR’000 equivalent (Note 2.1.4) 18,511,947 25,182,991

14.2 Deferred tax assets

Details of deferred tax assets recognized by the Bank are as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Unamortised processing fees 949,373 3,840,214 971,436 3,958,602Property and equipment and software costs 593,395 2,400,283 678,472 2,764,773Allowance for ECLs 174,777 706,973 436,342 1,778,094 Unearned tax income 97,500 394,388 - -Provision for employee benefits 27,098 109,611 33,974 138,444

Unrealized foreign exchange gains 2,336 9,449 15,507 63,191

1,844,479 7,460,918 2,135,731 8,703,104

94

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

15. LEASE LIABILITIES

Amounts recognized in the statement of comprehensive income comprise:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Maturity analysis – contractual undiscounted cash flowsLess than one year 3,014,353 12,193,058 2,512,986 10,240,418One to five years 11,606,863 46,949,761 11,579,053 47,184,641More than five years 10,912,809 44,142,312 11,138,169 45,388,039

25,534,025 103,285,131 25,230,208 102,813,098

Present value of lease liabilitiesCurrent 2,221,114 8,984,406 1,729,665 7,048,385

Non-current 18,869,183 76,325,845 18,644,313 75,975,575

21,090,297 85,310,251 20,373,978 83,023,960

Amounts recognized in the statement of comprehensive income comprise:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Depreciation of right-of-use assets (Note 24) 2,451,525 9,994,867 2,078,138 8,420,615Interest on lease liabilities (Note 23) 865,891 3,530,238 769,550 3,118,217

3,317,416 13,525,105 2,847,688 11,538,832

Amounts recognized in the statement of comprehensive income comprise:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Payment of principal portion of lease liabilities 2,005,114 8,174,850 1,602,067 6,491,575

Set out below are the carrying amounts of lease liabilities and the movements during the year:

2020 2019

US$ US$

As at 1 January 20,373,978 19,008,996Additions 3,081,500 2,967,049Derecognition (360,067) -Accretion of interest 865,891 769,550Payments (2,871,005) (2,371,617)

As at 31 December 21,090,297 20,373,978

KHR’000 equivalent (Note 2.1.4) 85,310,251 83,023,960

95

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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16. OTHER LIABILITIES

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Interest payable 7,204,225 29,141,090 5,247,556 21,383,791 Accrued expenses 2,790,005 11,285,570 3,199,801 13,039,189 Interest payable for subordinated debt 1,457,831 5,896,926 827,750 3,373,081 Clearing account 1,329,614 5,378,289 3,036,485 12,373,676 Accrued bonuses 996,972 4,032,752 1,434,940 5,847,381

Allowance for ECLs on off-balance sheet commitments 743,695 3,008,246 545,806 2,224,159 Bankers’ cheques 240,289 971,969 910,792 3,711,477 Payable to suppliers 106,208 429,611 115,679 471,392 Card-related liabilities 3,936 15,921 684,133 2,787,842 Others 715,357 2,893,619 431,935 1,760,136

15,588,132 63,053,993 16,434,877 66,972,124

Others mainly include ATM settlement, rental deposit and unclaimed balances.

96

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

17. MATURITY PROFILE OF ASSETS AND LIABILITIES

Analysis of assets and liabilities by expected date of recovery and settlement from the balance sheet date is as follows:

2020

Within 12 months

Over 12 months Total

US$ US$ US$

Financial assetsCash and balances with other banks 437,958,918 - 437,958,918 Due from parent company 125,694 - 125,694 Balances with affiliates 1,514,534 - 1,514,534 Loans and advances 186,202,048 591,424,877 777,626,925 Other assets 470,273 1,454,236 1,924,509 Non-financial assets Statutory deposits with the NBC - 89,842,893 89,842,893 Property and equipment - 19,355,740 19,355,740 Software costs - 3,774,358 3,774,358 Right-of-use assets - 30,334,727 30,334,727 Deferred tax assets - 1,844,479 1,844,479 Other assets 1,083,192 - 1,083,192

Total 627,354,659 738,031,310 1,365,385,969

KHR’000 equivalent (Note 2.1.4) 2,537,649,596 2,985,336,649 5,522,986,245

Allowance for ECLs on: Balances with other banks (128,362) Loans and advances (13,473,938)Accumulated depreciation and amortisation of: Property and equipment (14,875,004) Software costs (2,240,595) Right-of-use assets (11,431,019)Net 627,354,659 738,031,310 1,323,237,051

KHR’000 equivalent (Note 2.1.4) 2,537,649,596 2,985,336,649 5,352,493,871

Financial liabilitiesDeposits from customers and other financial institutions 1,055,893,532 7,746,162 1,063,639,694 Borrowing 2,472,188 2,472,188 Due to parent company 2,273,412 - 2,273,412 Subordinated debt - 45,000,000 45,000,000 Lease liabilities 2,221,114 18,869,183 21,090,297 Other liabilities 9,637,828 25,136 9,662,964 Non-financial liabilitiesIncome tax payable 4,576,501 - 4,576,501 Other liabilities 5,925,168 - 5,925,168

Total 1,082,999,743 71,640,481 1,154,640,224

KHR’000 equivalent (Note 2.1.4) 4,380,733,960 289,785,746 4,670,519,705

97

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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17. MATURITY PROFILE OF ASSETS AND LIABILITIES (CONT'D)

2019

Within 12 months Over 12 months Total

US$ US$ US$

Financial assetsCash and balances with other banks 526,970,196 - 526,970,196 Due from parent company 10,378 - 10,378 Balances with affiliates 1,017,554 - 1,017,554 Loans and advances 172,682,454 515,238,911 687,921,365 Other assets 1,175,923 1,352,149 2,528,072 Non-financial assetsStatutory deposits with the NBC - 144,243,314 144,243,314 Property and equipment - 17,157,185 17,157,185

Software costs - 2,877,473 2,877,473 Right-of-use assets - 27,873,792 27,873,792 Deferred tax assets - 2,135,731 2,135,731 Other assets 724,258 - 724,258

Total 702,580,763 710,878,555 1,413,459,318

KHR’000 equivalent (Note 2.1.4) 2,863,016,609 2,896,830,112 5,759,846,721

Allowance for ECLs on: Balances with other banks (595,111) Loans and advances (13,405,391) Other assets (2,210)Accumulated depreciation and amortisation of: Property and equipment (13,485,659) Software costs (1,784,083) Right-of-use assets (8,654,552)

Net 702,580,763 710,878,555 1,375,532,312

KHR’000 equivalent (Note 2.1.4) 2,863,016,609 2,896,830,112 5,605,294,172

Financial liabilitiesDeposits from customers and other financial institutions 1,118,405,586 15,017,292 1,133,422,878Due to parent company 3,102,957 - 3,102,957Subordinated debt - 30,000,000 30,000,000Lease liabilities 1,729,665 18,644,313 20,373,978Other liabilities 8,021,336 900,546 8,921,882Non-financial liabilitiesIncome tax payable 6,179,875 - 6,179,875Other liabilities 7,512,995 - 7,512,995

Total 1,144,952,414 64,562,151 1,209,514,565

KHR’000 equivalent (Note 2.1.4) 4,665,681,087 263,090,765 4,928,771,853

98

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

18. SHARE CAPITAL AND REGULATORY RESERVE

Share capital

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Authorized, issued and fully paid with par value of US$ 1 per share:

As at 1 January and 31 December 75,000,000 300,000,000 75,000,000 300,000,000

Retained earnings

On 20 January 2020, the NBC approved the Bank’s declaration of dividend amounting to US$16.0 million. The Bank paid the dividends in full during the year.

Regulatory reserve

The movements in regulatory reserve (Note 2.3.19) are as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

As at 1 January 7,612,089 30,815,426 4,108,337 16,618,223

Transfer to regulatory reserve 1,376,727 5,612,916 3,503,752 14,197,203

As at 31 December 8,988,816 36,428,342 7,612,089 30,815,426

19. INTEREST INCOME

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Loans and advances (Note 8) 57,245,850 233,391,330 53,259,088 215,805,825Balance with other banks (Note 5) 2,737,552 11,161,000 4,798,562 19,443,773 Balance with NBC (Note 4) 21,295 86,820 47,195 191,234

60,004,697 244,639,150 58,104,845 235,440,832

99

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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20. INTEREST EXPENSE

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Deposits from customers and other financial institutions Term deposits 15,240,287 62,134,650 10,192,732 41,300,950 Current accounts 4,894,241 19,953,821 5,462,301 22,133,244 Savings accounts 746,359 3,042,906 847,011 3,432,089Subordinated debt and other interest expense 3,609,448 14,715,719 2,148,167 8,704,373

24,490,335 99,847,096 18,650,211 75,570,656

21. FEE AND COMMISSION INCOME AND OTHER INCOME

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Swift charges 3,170,811 12,927,396 3,501,104 14,186,473Debit card fees 1,432,418 5,839,968 3,186,000 12,909,672Commission earned from trade finance 955,163 3,894,200 834,387 3,380,936Service charges 788,354 3,214,119 605,978 2,455,423Loan commitment fees 628,796 2,563,601 601,526 2,437,383Bankers’ cheques 43,037 175,462 67,203 272,307Others 620,005 2,527,761 186,769 756,788

7,638,584 31,142,507 8,982,967 36,398,982

Others mainly include miscellaneous loan fees and service charges.

22. OTHER INCOME

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Foreign exchange gains 2,587,363 10,548,679 2,793,832 11,320,607Rental income (Note 27.4) 590,388 2,407,012 611,916 2,479,484Accreted interest on refundable deposit 57,038 232,544 51,731 209,614Others 173,442 707,123 957,040 3,877,926

3,408,231 13,895,358 4,414,519 17,887,631

Others include mainly insurance referral fee and electricity income.

100

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

23. FINANCE COST

Finance cost comprises accreted interest on:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Lease liabilities 865,891 3,530,238 769,550 3,118,217Restoration provision 21,023 85,710 21,836 88,478

886,914 3,615,948 791,386 3,206,695

24. GENERAL AND ADMINISTRATIVE EXPENSES

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Salaries and fringe benefits 8,726,442 35,577,704 8,889,863 36,021,725Depreciation of right-of-use assets 2,451,525 9,994,867 2,078,138 8,420,615Depreciation and amortization 1,875,418 7,646,079 1,881,739 7,624,806Acquirer fees 972,315 3,964,128 2,457,081 9,956,092Taxes and licenses 824,021 3,359,534 1,258,710 5,100,293Repairs and maintenance 682,599 2,782,956 731,779 2,965,169Utilities 576,389 2,349,938 585,869 2,373,941Building securities 468,657 1,910,715 476,857 1,932,225Management service fees 436,267 1,778,661 300,403 1,217,233Communication 256,232 1,044,658 256,124 1,037,814Directors' fees and meetings' allowance 234,037 954,169 254,402 1,030,837Professional fees 217,357 886,164 233,150 944,724Stationeries and supplies 164,700 671,482 227,258 920,849Advertising 127,553 520,034 245,371 994,243Insurance 98,226 400,467 77,685 314,780Transportation 72,435 295,317 33,622 136,236Representation 9,514 38,789 36,405 147,513Trainings and seminars 6,503 26,513 93,486 378,805Others 362,738 1,478,883 759,151 2,045,244

18,562,928 75,681,058 20,896,754 84,673,647

Others include mainly charitable donations and realized exchange loss.

101

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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25. NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

Notes

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

OPERATING ACTIVITIESIncome before income tax 24,145,775 98,442,325 33,900,916 137,366,512Adjustments for: Depreciation of right-of-use assets 3,153,245 12,855,780 2,078,138 8,420,615 Depreciation and amortisation 9 1,875,418 7,646,079 1,881,739 7,624,806 Provision for (reversal of) ECLs 1,797,135 7,326,919 (4,145,575) (16,797,870) Write-off of right-of-use assets 314,384 1,281,744 - - Interest accretion on refundable deposit 12 (57,038) (232,544) (51,731) (209,614)

Loss (gain) from sale of property and equipment (1,705) (6,951) 65 263

Net cash generated from operations before changes in net operating assets and liabilities

31,227,214 127,313,352 33,663,552 136,404,712

(Increase) decrease in operating assets: Balances with the NBC 4 54,400,421 221,790,516 (7,727,037) (31,309,954) Balances with other banks - - (15,000,000) (60,780,000) Loans and advances 8 (91,705,219) (373,882,178) (101,588,172) (411,635,273)

Other assets 12 314,306 1,281,426 (402,622) (1,631,424)Increase (decrease) in operating liabilities: Deposits from customers and other financial institutions 13 (69,783,184) (284,506,041) 174,378,204 706,580,483 Due to parent company 6 (829,545) (3,382,055) (76,030) (308,074)

Other liabilities 16 (1,475,297) (6,014,786) 1,090,912 4,420,375

Net cash (used in) generated from operations (77,851,304) (317,399,766) 84,338,807 341,740,845

Income tax paid 14.1 (6,891,456) (28,096,466) (3,733,748) (15,129,147)

Net cash (used in) provided by operating activities (84,742,760) (345,496,232) 80,605,059 326,611,698

102

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

26. RELATED PARTY TRANSACTIONS AND BALANCES

(i) Significant related party transactions of the Bank during the year and outstanding balances as at statement of financial position date are as follows:

Related partyNature of transactions/balances

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Malayan Banking Berhad (“MayBank”) Settlement accounts - nostro 125,694 512,454 10,378 42,052Placements with parent company

180,000,000 733,860,000 135,000,000 547,020,000

Subordinated debt 45,000,000 183,465,000 30,000,000 121,560,000Settlement accounts - vostro 2,325,593 9,481,443 3,102,957 12,573,183Interest expense 3,541,143 14,437,240 2,148,167 8,704,371Interest payable 1,457,831 5,943,577 827,750 3,354,043Interest income 1,428,790 5,825,177 3,625,951 14,692,352Interest receivable 92,432 376,845 339,458 1,375,485

Maybank Shared Service Management service fees 436,267 1,778,661 300,403 1,217,232Management service fees payable

73,375 299,150 262,562 1,069,942

Maybank London Settlement accounts 619,696 2,526,501 146,697 597,790Maybank New York Settlement accounts 505,828 2,062,261 812,838 3,293,620Maybank Singapore Settlement accounts 365,443 1,489,911 46,005 186,410Maybank Hong Kong Settlement accounts 5,078 20,703 2,307 9,348

Interest expense 41 168 - -Maybank Vietnam, Hanoi Branch Settlement accounts 4,722 19,252 3,209 13,005Maybank Shanghai Settlement accounts 13,767 56,128 6,498 26,330Maybank International Labuan Branch Loan arrangement fee 143,069 583,292 43,487 176,208

Maybank Yangon BranchServices rendered for banking facilities

- - 42,000 170,184

103

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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26. RELATED PARTY TRANSACTIONS AND BALANCES (CONT'D)

(i) Significant related party transactions of the Bank during the year and outstanding balances as at statement of financial position date are as follows: (cont'd)

Related partyNature of transactions/balances

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Etiqa Life Insurance (Cambodia) Plc. Fixed deposit 7,056,501 28,769,355 6,025,755 24,416,359Receivable income on upfront access fee

500,000 2,038,500 - -

Interest expense 245,147 999,464 86,361 349,935Interest payable 107,583 438,616 57,395 232,565Rental income 37,092 151,224 2,663 10,790Referral fee income 11,364 46,331 - -

Etiqa General Insurance (Cambodia) Plc. Fixed deposit 8,019,651 32,696,117 6,985,276 28,304,340Interest expense 338,770 1,381,165 99,380 402,689Interest payable 197,085 803,516 84,047 340,558Rental income 36,723 149,720 2,663 10,788

Etiqa International Rental income - - 61,227 248,092Payable - - 65 262

(ii) Key management personnel compensation:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Remuneration of key management personnel 1,937,606 7,899,620 2,032,789 8,236,861

Outstanding balance as at 31 December 210,723 852,375 274,255 1,117,589

Key management personnel include the directors and executive management.

104

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

27. COMMITMENTS, CONTINGENCIES AND LEASING ARRANGEMENTS

27.1 Lending commitments

To meet the financial needs of customers, the Bank enters into various commitments and contingent liabilities, as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Unutilized portion of overdraft 69,395,349 280,704,187 72,064,029 293,660,918Letters of credit 53,789,943 217,580,319 34,562,520 140,842,269Guarantees 24,595,897 99,490,403 15,738,546 64,134,575Undrawn balance of term loans 1,189,332 4,810,848 2,351,610 9,582,811

148,970,521 602,585,757 124,716,705 508,220,573

27.2 Taxation contingency

The taxation system in Cambodia is characterized by numerous taxes and frequently changing legislation, which is often unclear, contradictory, and subject to interpretation. Often, differing interpretations exist among numerous taxation authorities and jurisdictions. Taxes are subject to review and investigation by a number of authorities, who are enabled by law to impose severe fines, penalties and interest charges.

These facts may create tax risks in Cambodia substantially more significant than in other countries. Management believes that it has adequately provided for tax liabilities based on its interpretation of tax legislation. However, the relevant authorities may have differing interpretations and the effects could be significant.

27.3 Legal contingency

During the year, the Bank pursued legal claims against borrowers in default. Majority of these claims are still being negotiated and/or disputed by borrowers, thus, neither the ultimate outcome of these claims, nor the amounts recoverable can be determined at this time.

27.4 Operating leases – Bank as lessor

The Bank acts as lessor of office space. These leases have an average life of between five (5) to ten (10) years with no renewal option included in the contracts. There are no restrictions placed upon the lessee by entering into these leases. Rental income recognised by the Bank during the year amounted to US$590,388 (2019: US$611,916).

Future minimum lease payments under non-cancellable operating leases as at 31 December were as follows:

2020 2019

US$KHR’000

equivalent (Note 2.1.4)

US$KHR’000

equivalent (Note 2.1.4)

Within one year 489,300 1,979,219 651,060 2,653,070Between one to five years 2,348,640 9,500,249 2,368,212 9,650,464More than five years 390,672 1,580,268 860,400 3,506,130

3,228,612 13,059,736 3,879,672 15,809,664

28. FINANCIAL RISK MANAGEMENT

The Bank’s activities are exposed to a variety of financial risks: credit risk, market risk (including currency risk and interest rate risk) and liquidity risk. Taking risk is core to the financial business, and operational risks are an inevitable consequence of being in business.

The Bank does not use derivative financial instruments such as foreign exchange contract and interest rate swaps to manage its risk exposure.

The Bank intends to comply with NBC’s regulations for financial risk management purposes. In addition to the minimum requirements of NBC, the Bank also adopts relevant financial risk management procedures of the parent company.

105

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.1 Operational risk

The operational risk which would result from inadequate or failed internal processes, people and systems is managed through established operational risk management processes, proper monitoring and reporting of the business activities by control and support units which are independent of the business units and oversight provided by the management.

The operational risk management entails the establishment of clear organizational structures, roles and control policies. Various internal control policies and measures have been implemented. These include the establishment of signing authorities, defining system parameter controls, streamlining procedures and documentation. These are reviewed continually to address the operational risks of its banking business.

28.2 Credit risk

The Bank takes on exposure to credit risk, which is the risk that a counter party will cause a financial loss to the Bank by failing to discharge an obligation. Credit risk is the most important risk for the Bank’s business. Credit exposure arises principally in lending activities that lead to loans and advances. There is also credit risk in off-balance sheet financial instruments, such as loan commitments.

(a) Credit risk measurement, mitigation and concentration control

Governance

Overall supervision and responsibility in managing risk resides with the Bank’s Board-level Risk Management Committee. At management level, supervision of material credit risk is being done by the Executive Committee and the Credit Committee of the Bank. Risk pricing is covered by the Asset and Liability Management Committee. These committees ensure that all the relevant risk areas are properly identified, measured, managed, priced, monitored, and disclosed within their respective terms of reference.

The following are the key risk areas encountered by the Bank and how they are managed:

(i) Credit risk management framework

Develop, enhance and communicate an efficient, effective and consistent credit risk management framework, leveraging on people and technology.

(ii) Credit policies

Develop and review credit policies including providing empowerment to approve loans.

(iii) Regulatory requirements

Ensure compliance with NBC and other regulatory requirements on credit risk management.

(iv) Risk limits concentrations

Set, review and monitor risk limits and concentrations according to various categories such as a single customer group and product types.

(v) Portfolio management

Manage and control the Bank’s portfolio, including providing analysis of the overall composition and quality of the various credit portfolios to identify any particular sensitivities and concentrations. At the same time, to safeguard and preserve the asset quality of the Bank by analyzing vulnerable industries where prospects have changed or are showing unfavorable signs.

(vi) Credit review

Perform post-approval review of credit proposals to assess whether loan originators, pre-evaluators and approving authorities have addressed and analyzed credit risks sufficiently and provided mitigating factors.

(b) Maximum exposure to credit risk before collateral held or other credit enhancements

For maximum exposure of financial assets to credit risk, refer to Note 28.2 (c).

The credit exposure arising from off-balance sheet activities i.e. commitments and contingencies is disclosed in Note 27.

(c) Concentration of risks of financial assets with credit risk exposure

Concentrations arise when a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations indicate the relative sensitivity of the Bank’s performance to developments affecting a particular industry or geographic location.

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Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.2 Credit risk (cont'd)

(c) Concentration of risks of financial assets with credit risk exposure (cont'd)

Risk concentration by industry is as follows:

2020

Balances with the NBC

Balances with other banks

Due from parent company and balances with

affiliatesLoans and advances Other assets Total

US$ US$ US$ US$ US$ US$

Financial services 146,741,465 224,397,051 1,640,228 66,265,531 1,924,509 440,968,784 Consumers - - - 255,931,346 - 255,931,346

Wholesale/retail - - - 341,044,628 - 341,044,628

Manufacturing - - - 37,427,849 - 37,427,849 Import/export - - - 10,065,410 - 10,065,410 Construction - - - 31,875,335 - 31,875,335 Agriculture - - - 5,556,980 - 5,556,980 Energy - - - 941,799 - 941,799

Education, health and others - - - 28,518,047 - 28,518,047

Total 146,741,465 224,397,051 1,640,228 777,626,925 1,924,509 1,152,330,178

Allowance for ECLs - (128,362) - (13,473,938) - (13,602,300)

Net 146,741,465 224,268,689 1,640,228 764,152,987 1,924,509 1,138,727,878

KHR'000 equivalent (Note 2.1.4) 593,569,226 907,166,847 6,634,722 3,090,998,832 7,784,639 4,606,154,267

2019

Balances with the NBC

Balances with other banks

Due from parent company and balances with

affiliatesLoans and advances Other assets Total

US$ US$ US$ US$ US$ US$

Financial services 251,267,435 231,837,519 1,027,932 9,783,738 2,528,072 496,444,696Consumers - - - 315,313,055 - 315,313,055

Wholesale/retail - - - 47,214,198 - 47,214,198

Manufacturing - - - 40,314,665 - 40,314,665

Import/export - - - 201,482,435 - 201,482,435Construction - - - 33,352,936 - 33,352,936Agriculture - - - 7,306,473 - 7,306,473Energy - - - 1,293,305 - 1,293,305

Education, health and others - - - 31,860,560 - 31,860,560

Total 251,267,435 231,837,519 1,027,932 687,921,365 2,528,072 1,174,582,323

Allowance for ECLs - (595,111) - (13,405,391) (2,210) (14,002,712)

Net 251,267,435 231,242,408 1,027,932 674,515,974 2,525,862 1,160,579,611

KHR'000 equivalent (Note 2.1.4) 1,023,914,798 942,312,813 4,188,823 2,748,652,594 10,292,888 4,729,361,915

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Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

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28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.2 Credit risk (cont'd)

(d) Credit quality by class of financial assets

The credit quality of financial assets is managed by the Bank using internal credit ratings. The table below shows the credit quality by class of asset for all financial assets exposed to credit risk, based on the Bank’s internal credit rating system. The amounts presented are gross of any required impairment allowance.

2020

Stage 1US$

Stage 2US$

Stage 3US$

TotalUS$

Balances with the NBC 146,741,465 - - 146,741,465 Balances with other banks 224,397,051 - - 224,397,051 Due from parent company and balances with affiliates 1,640,228 - - 1,640,228 Loans and advances – gross 746,349,878 12,865,713 18,411,334 777,626,925

Other assets 1,924,509 - - 1,924,509

Total 1,121,053,131 12,865,713 18,411,334 1,152,330,178

Allowance for ECLs (3,445,218) (3,851,796) (6,305,286) (13,602,300)

Net 1,117,607,913 9,013,917 12,106,048 1,138,727,878

KHR'000 equivalent (Note 2.1.4) 4,520,724,008 36,461,294 48,968,964 4,606,154,266

2019

Stage 1US$

Stage 2US$

Stage 3US$

TotalUS$

Balances with the NBC 251,267,435 - - 251,267,435Balances with other banks 231,837,519 - - 231,837,519Due from parent company and balances with affiliates 1,027,932 - - 1,027,932Loans and advances – gross 663,523,829 6,400,173 17,997,363 687,921,365

Other assets 2,528,072 - - 2,528,072

Total 1,150,184,787 6,400,173 17,997,363 1,174,582,323

Allowance for ECLs (4,458,303) (950,105) (8,594,304) (14,002,712)

Net 1,145,726,484 5,450,068 9,403,059 1,160,579,611

KHR'000 equivalent (Note 2.1.4) 4,668,835,422 22,209,027 38,317,465 4,729,361,914

(e) Credit quality

The Bank applies a three-stage approach based on the change in credit quality since initial recognition:

Allowance for impairment will be made based on the following three-stage approach which reflects the change in credit quality of the financial instrument since initial recognition:

(i) Stage 1: 12-month ECL – not credit-impaired

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 associated with the probability of default events occurring within next 12 months will be recognized.

(ii) Stage 2: Lifetime ECL – not credit-impaired

For exposures where there has been a significant increase in credit risk since initial recognition but that are not credit-impaired, a lifetime ECL will be recognized.

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Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.2 Credit risk (cont'd)

(e) Credit quality (cont'd)

(iii) 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 asset have occurred. For financial assets that are credit-impaired, a lifetime ECL will be recognized.

Stage Credit risk status Default indicator

1 12-month ECL – not credit-impaired 0 to 29 days past due (“DPD”)

2 Lifetime ECL – not credit-impaired 30 to 89 DPD

3 Lifetime ECL – credit-impaired More than 90 DPD

Restructured and rescheduled

Forced default

Related default

The definition of default used for these purposes shall be applied consistently to all financial assets unless information becomes available that demonstrates that another default definition is more appropriate for a particular financial instrument.

Based on the Bank’s definition of default, an account classified as default will be automatically tagged as “Yes” in the “Impairment Indicator" field when the “Default-Reason” field shows one of the four default reasons below:

- Normal turn: The account’s delinquency exceeds 90 DPD and is applicable to all products except Trade Finance product which has definition of default 31DPD due to the short-term nature of the product.

- Restructured and rescheduled: When the account undergoes debt restructuring or rescheduling;

- Forced: When account shows deterioration in its credit profile, but its delinquency does not exceed 90 DPD; and

- Related: Refers to cross default by obligor(s) of the same borrower type within the same loan listing source.

(iv) Incorporation of forward-looking information

The Bank incorporates forward-looking information into both the assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and the measurement of ECL.

External information considered includes economic data and forecasts published by governmental bodies and monetary authorities in the countries where the Bank operates, supranational organizations such as the International Monetary Fund, and selected private-sector and academic forecasters.

The Bank has identified and documented key drivers of credit risk and credit losses for each portfolio of financial instruments in accordance with each country and, using an analysis of historical data, has estimated relationships between macro-economic variables and credit risk and credit losses.

(f) Collateral repossessed

During the year, the Bank did not obtain assets by taking possession of collaterals held as security.

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Maybank • Annual Report 2020

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Notes to the Financial Statements31 December 2020

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28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.3 Market risk

Market risk is the risk of loss arising from adverse movement in the level of market prices or rates, there are two key components being monitored under Market Risk i.e. Foreign Exchange (“FX”) Risk and Interest Rate Risk.

28.3.1 Foreign currency exchange risk

Foreign currency exchange risk refers to the adverse exchange rate movements on foreign currency exchange positions taken from time to time. The Bank maintains a policy of not exposing itself to large foreign exchange positions. Any foreign currency exchange open positions are monitored against the operating requirements, predetermined position limits and cut-loss limits.

As at balance sheet date, balances in monetary assets and liabilities denominated in currencies other than US$ are now somewhat significant. Therefore, the sensitivity analysis for foreign currency exchange risk was presented specifically on the Translational Exposure.

28.3.2 Interest rate risk

Interest rate risk refers to the volatility in net interest income as a result of changes in the levels of interest rate and shifts in the composition of the assets and liabilities. Interest rate risk is managed through close monitoring of returns on investment, market pricing, cost of funds and through interest rate sensitivity gap analysis. The potential reduction in net interest income from an unfavorable interest rate movement is monitored against the risk tolerance limits set.

Fair value sensitivity analysis for fixed rate instruments

The Bank does not account for any fixed rate instruments at fair value through profit or loss, and the Bank does not have derivatives as at year end. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

The Bank does not have significant variable-rate instruments. Therefore, no cash flow sensitivity analysis for variable-rate instruments was presented.

28.4. Liquidity risk

Liquidity risk relates to the ability to maintain sufficient liquid assets to meet its financial commitments and obligations when they fall due at a reasonable cost. Management believes that the Bank fully complies with all liquidity requirements of NBC as it closely monitors all inflows and outflows and the maturity gaps through periodical reporting. Additionally, movements in loans and advances and customers' deposits are monitored and liquidity requirements adjusted to ensure sufficient liquid assets to meet its financial commitments and obligations as and when they fall due.

Analysis of the financial assets and liabilities of the Bank into relevant maturity groupings based on the remaining periods to repayment follows:

2020

On demand Up to 1 month >1 - 3 months >3 - 12 months >1 to 5 years Over 5 years Total

US$ US$ US$ US$ US$ US$ US$

Financial assetsCash on hand 66,820,402 - - - - - 66,820,402 Balances with the NBC 134,041,465 10,000,268 2,700,870 - - - 146,742,603

Balances with other banks 1,397,051 148,021,604 60,040,301 15,016,493 - - 224,475,449

Balances with parent company 125,694 - - - - - 125,694 Balances with affiliates 1,514,534 - - - - - 1,514,534 Loans and advances - gross 127,675,090 7,175,336 18,305,205 33,290,547 166,195,064 911,820,518 1,264,461,760 Other assets - 423,928 31,943 14,402 316,412 1,137,824 1,924,509

Total financial assets 331,574,236 165,621,136 81,078,319 48,321,442 166,511,476 912,958,342 1,706,064,951

Financial liabilities

Deposits from customers and other

financial institutions 660,152,222 94,308,943 98,082,519 206,710,633 8,060,705 - 1,067,315,022

Borrowing - - 2,486,412 - - - 2,486,412 Balances with parent company 2,298,348 - - - - - 2,298,348 Subordinated debt - - - - - 45,000,000 45,000,000

Other liabilities - - - 2,221,114 7,963,755 10,905,428 21,090,297 Lease liabilities - 2,074,152 2,909,081 4,654,595 25,136 - 9,662,964

Total financial liabilities 662,450,570 96,383,095 103,478,012 213,586,342 16,049,596 55,905,428 1,147,853,043

Net liquidity surplus (gap) (330,876,334) 69,238,041 (22,399,693) (165,264,900) 150,461,880 857,052,914 558,211,908

KHR’000 equivalent (Note 2.1.4) (1,338,394,771) 280,067,876 (90,606,758) (668,496,521) 608,618,305 3,466,779,037 2,257,967,168

110

Maybank • Annual Report 2020

Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

28. FINANCIAL RISK MANAGEMENT (CONT'D)

28.4. Liquidity risk (cont'd)

2019

On demand Up to 1 month >1 - 3 months >3 - 12 months >1 to 5 years Over 5 years Total

US$ US$ US$ US$ US$ US$ US$

Financial assetsCash on hand 43,865,242 - - - - - 43,865,242Balances with the NBC 242,267,435 9,003,459 - - - - 251,270,894Balances with other banks 2,384,262 117,384,290 97,552,268 15,098,075 - - 232,418,896Balances with parent company 10,378 - - - - - 10,378

Balances with affiliates 1,017,554 - - - - - 1,017,554

Loans and advances - gross 130,252,601 5,853,567 22,633,617 14,424,875 148,330,007 725,512,808 1,047,007,475Other assets - 893,283 189,174 93,466 259,252 1,092,897 2,528,072

Total financial assets 419,797,472 133,134,600 120,375,060 29,616,416 148,589,259 726,605,705 1,578,118,512

Financial liabilitiesDeposits from customers and - (595,111) - (13,405,391) (2,210) (14,002,712)other financial institutions 756,934,187 85,177,058 87,940,735 189,629,281 20,630,188 - 1,140,311,449Balances with parent company 3,112,558 - - - - - 3,112,558Subordinated debt - - - - 30,000,000 - 30,000,000Lease liabilities - - - 1,729,665 8,738,294 9,906,019 20,373,978Other liabilities - 1,787,078 2,606,668 3,627,590 330,213 570,333 8,921,882

Total financial liabilities 760,046,745 86,964,136 90,547,403 194,986,536 59,698,695 10,476,352 1,202,719,867

Net liquidity surplus (gap) (340,249,273) 46,170,464 29,827,657 (165,370,120) 88,890,565 716,129,353 375,398,645

KHR’000 equivalent (Note 2.1.4) (1,386,515,786) 188,144,640 121,547,702 (673,883,239) 362,229,051 2,918,227,112 1,529,749,479

28.5 Capital management

28.5.1 Regulatory capital

The Bank's lead regulator, NBC, sets and monitors capital requirements for the Bank as a whole.

The Bank's policy is to maintain a strong capital base so as to maintain market confidence and to sustain further development of the business.

The impact of the level of capital on shareholders' return is also recognized. As such, the Bank tries to maintain a balance between the higher returns that might be possible with greater gearing and advantages and security afforded by a sound capital position.

The Bank has complied with all externally imposed capital requirement throughout the year.

28.5.2 Capital allocation

The allocation of capital between specific operations and activities is, to a large extent, driven by optimization of the return achieved on the capital allocated. The amount of capital allocated to each operation or activity is based primarily upon the regulatory capital.

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Notes to the Financial Statements31 December 2020

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29. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Financial instruments comprise financial assets, financial liabilities and off-balance sheet instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Bank has access at that date. The information presented herein represents the estimates of fair values as at the financial position date.

Quoted and observable market prices, where available, are used as the measure of fair values of the financial instruments. Where such quoted and observable market prices are not available, fair values are estimated based on a range of methodologies and assumptions regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors.

Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of CIFRS 7: Financial Instruments Disclosures which requires the fair value information to be disclosed. These include investment in subsidiaries and property and equipment.

The fair value of the Bank’s financial instruments such as cash and short-term funds, balances with NBC, deposits and placements with banks and other financial institutions, deposits from customers and banks, other assets, other liabilities and short-term borrowings are not materially sensitive to shifts in market profit rate because of the limited term to maturity of these instruments. As such, the carrying value of these financial assets and liabilities at financial position date approximate their fair values.

The methods and assumptions used by the Bank in estimating the fair value of the financial instruments are:

Cash on hand, balances with the NBC and other banks

The carrying amounts approximate the fair values due to the short-term nature of these accounts.

Loans and advances

The fair value is estimated by discounting the estimated future cash flows using the prevailing market rates of financing with similar credit risks and maturities.

Deposits and borrowings

The estimated fair value of demand deposits with no stated maturity, which includes noninterest-bearing deposits, is the amount repayable on demand. The estimated fair value of long-term fixed interest-bearing deposits and other borrowings without quoted market price is based on discounted cash flows using interest rates for new debts with similar remaining maturity.

Other assets and liabilities

Due to their short duration, the carrying amounts of other liabilities in the statement of financial position are considered to be reasonable approximation of their fair values.

Fair value hierarchy

CIFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources and unobservable inputs reflect the Bank’s market assumptions. The fair value hierarchy is as follows:

- Level 1 – Quoted price (unadjusted) in active markets for the identical assets or liabilities. This level includes listed equity securities and debt instruments.

- Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

- Level 3 – Inputs for asset or liability that are not based on observable market data (unobservable inputs). This level includes equity instruments and debt instruments with significant unobservable components.

The table below summarizes the fair value of financial assets which are not carried at fair value in the statements of financial position at the reporting date analyzed by various levels within the fair value hierarchy.

2020 2019

Carrying amount

US$

Fair value Level 3

US$

Carrying amount

US$

Fair value Level 3

US$

Loans and advances 764,152,987 777,628,874 674,515,974 687,921,795

Equivalent in KHR’000 (Note 2.1.4) 3,090,998,832 3,145,508,795 2,748,652,594 2,803,281,315

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Notes to the Financial Statements31 December 2020

Notes to the Financial Statements31 December 2020

30. SUBSEQUENT EVENTS

With the COVID-19 pandemic, many countries have required entities to limit or suspend business operations and implemented travel restrictions and quarantine measures. These measures and policies have significantly disrupted (or are expected to disrupt) the activities of many entities. The condition of the coronavirus outbreak has continued to evolve throughout the timeline crossing 31 December 2020. Cambodia is among those affected countries that signifies economic slowdown due to global recession. Amid the outbreak, the NBC advised all banks and financial institutions to delay or suspend all loan and interest payments as part of measures to soften the economic blow of coronavirus on business and household borrowers.

Based on management’s assessment on forward-looking to 2021, the impact of the potential disease outbreak could be minimal due to availability of loan protection measures in controlling credit risks of the portfolio, management does not consider it practicable to provide a quantitative estimate of the potential impact of this pandemic on the Bank. Management will continuously pay attention to the situation of the COVID-19 in Cambodia, operations of its loan customers, as well as their ability to service debts.

Other than as disclosed elsewhere in these financial statements, at the date of this report, there were no events which occurred subsequent to 31 December 2020 that had significant impact on the financial position of the Bank as at 31 December 2020.

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EXTERNAL AUDITORS

Ernst & Young (AF:0039)Certified Public AccountantsRegistered AuditorsEmerald Building, 5th Floor, Norodom Boulevard corner Street 178, Sangkat Chey Chomneah, Khan Daun Penh, Phnom Penh, Cambodia.Tel : (855) 23 860 450 /451

Fax : (855) 23 217 805

FINANCIAL YEAR END

31 December

REGISTERED OFFICE

Maybank Tower No.43, Preah Norodom Boulevard, Sangkat Phsar Thmey 3,Khan Daun Penh,Phnom Penh, CambodiaTel : (855) 23 210 123Fax : (855) 23 210 099SWIFT : MBBEKHPPWebsite : www.maybank2u.com.khE-Mail : contactus.mcp@maybank.com

CORPORATE SECRETARIES

QAZREEN CHAN ABDULLAHCorporate Secretary

LONG SOKMARITHJoint Corporate Secretary

ANTHONY BRENT ELAMIndependent Non-Executive Director(Chairman)

SHARIFFUDDIN KHALIDIndependent Non-Executive Director

SPENCER LEE

Independent Non-Executive Director

DATUK HAMIRULLAH BOORHAN

Non-Independent Non-Executive Director

SOON SU LONGNon-Independent Non-Executive Director

BOARD OF DIRECTORS

CorporateInformation

Maybank • Annual Report 2020

114

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