ASSESSMENT OF GCG IMPLEMENTATION

SELF-ASSESSMENT RESULTS OF GCG IMPLEMENTATION

Assessment Procedures and Criteria

CIMB Niaga conducts self-assessment on the implementation of its Good Corporate Governance principles (Transparency, Accountability, Responsibility, Independency, as well as Fairness and Equality) in accordance with OJK Regulation No. 55/POJK.03/2016 and OJK Circular Letter No. 13/POJK.03/2017 regarding Implementation of Governance for Commercial Banks. GCG assessment is also intended to generate a Governance Rating which is a factor in determining the Commercial Bank Soundness Level in accordance with OJK Regulation No. 4/POJK.03/2016. There are 3 (three) aspects of Governance, namely structure, process and outcome, of 11 (eleven) factors in the governance implementation assessment.

Assessor

Self-assessment of the implementation of Bank Governance involves the Board of Commissioners, Board of Directors, Independent Parties, Executive Officers and independent units in the Bank to produce a comprehensive and structured assessment of the effectiveness of the Governance system and the quality of the Bank Governance outcomes. The self-assessment also includes the implementation of Governance in subsidiaries in accordance with the relevant stipulations.

Assessment Results and Score

The self-assessment results and scores for the implementation of CIMB Niaga Governance as of December 2018 are as follows:

Recommendation and Follow Up of GCG Assessment Results in 2018

In 2018, CIMB Niaga Governance rating for bank only and consolidated was ranked 2 (Good). Based on this rating, in general, CIMB Niaga and its subsidiaries have implemented Good Corporate Governance principles in a comprehensive and structured manner on three aspects of governance, namely Structures, Processes and Outcome. Despite the weaknesses noted in implementing the Governance principles, which is generally insignificant and could be resolved under normal actions by CIMB Niaga management and its subsidiaries.

CIMB Niaga stays committed and strives to take corrective measures aimed at supporting the Bank’s business sustainability. CIMB Niaga also aligns with Subsidiaries both in terms of strategic plans and the implementation of Risk Management, as stipulated in the regulations of the financial conglomeration.

Governance Structure

The governance structure and infrastructure at CIMB Niaga have met the requirements. Changes in the management composition of CIMB Niaga during this period have met the requirements and have been reported to the competent authorities as well as fulfilled transparency aspect to public. In addition to complying with the minimum provisions regarding the establishment of committees under the Board of Commissioners and Directors, CIMB Niaga has also established a transactional committee to support the implementation of the duties and responsibilities of the Board of Directors in managing the Bank’s operational activities. CIMB Niaga’s internal provisions are based on a Risk- Based Framework and are tailored to the business complexity and organizational levels within the Bank. Further in 2018, CIMB Niaga has adjusted its Good Corporate Governance & Sustainability unit as an effort to improve its GCG implementation and is responsible for the implementation of sustainability at the Bank. CIMB Niaga also continues to follow up on recommendations for improvements to the structure and infrastructure of Governance.

Governance Process

The process of Governance is implemented based on the principles of Governance and Prudent Principles which aim at achieving sustainable management of the Bank and and meeting the interests of stakeholders. One of the CIMB Niaga’s initiatives in this period was building a compliance and risk culture by raising the awareness of compliance and risk mitigation, strengthening and complementing the internal control function in each risk-taking unit to minimize weaknesses that may adversely affect the performance and results of Bank Governance.

In addition, with the rapid development of Information Technology, CIMB Niaga also continues to improve the quality of systems and information technology to provide optimal, safe and reliable financial services to our customers and provide accurate and timely information to stakeholders.

Governance Outcome

In order to comply with all prevailing rules and regulations, CIMB Niaga submits financial reports and non-financial information to the regulator in accordance with the requirements. CIMB Niaga also discloses financial and non-financial conditions, product and service information in accordance with the requirements on the Bank’s website. In 2018, the effectiveness of CIMB Niaga’s GCG implementation was reflected in the achievement of a good financial and operational performance throughout 2018, as follows:

1. Credit growth of 1.80%

2. Growth of Third-Party Funds of 0.76%

3. Asset Growth 0.18%

4. Equity Growth 7.12%

5. Current Year Net Profit Growth 16.95%

6. Gross NPL Improvements to 3.11%

In addition, governance outcomes from the implementation of GCG can also be identified through the Bank’s compliance with rules and regulations and no sanctions being imposed on legal proceedings involving the Bank. In 2018, CIMB Niaga has also organized other activities as a reflection of its governance outcome as disclosed under the management achievement section including other activities (such as Financial Education, Corporate Social Responsibility, awards in Conventional and Sharia banking).