sme bank 2014 sustainability report
DESCRIPTION
2014 Sustainability ReportTRANSCRIPT
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Sustainability Report 2014
SME B
AN
K Sustainability R
eport 2014
Small Medium Enterprise Development Bank Malaysia Berhad (49572-H)Menara SME Bank, Jalan Sultan Ismail, 50250 Kuala Lumpur, MalaysiaTel +603 2615 2020 Fax +603 2698 1748 Call Centre 1800 88 3131www.smebank.com.my
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VISIONA full-fledged specialised financial institution; an international benchmark for nurturing SME excellence.
MISSIONTo develop SMEs to be the nations engine of growth, in line with the Governments economic agenda.
CORE VALUES (PaCT)PASSIONPassion in all actions derive fulfillment while ensuring success
COMMITMENTCommitment turns a promise into reality
TRUSTFaith is meaningless without upholding trust & integrity
Cover rationale: Our commitment to raising the quality of life for all is illustrated on the cover design. Our sustainability endeavours are aimed at creating vibrant citizens in a nation that is ever advancing. Lively and optimistic, the cover reaffirms our hope for a truly sustainable future.
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WORKPLA
CE
ENVIRONMEN
T
COMMUNITY
MARKET
PLA
CE
CONTENTS2 ABOUTTHISREPORT
4 SMEBANKSJOURNEYOFGROWTH
6 HIGHLIGHTS2014
7 CORPORATEVISITS
8 AMESSAGEFROMTHECHAIRMAN
12 GROUPMANAGINGDIRECTORSSTATEMENT
16 BOARDOFDIRECTORS
18 SENIORMANAGEMENT
20 SHARIAHCOMMITEEMEMBERS
22 ENGAGINGWITHOURSTAKEHOLDERS
24 SMESASTHEENGINEOFGROWTH
28 CORPORATEGOVERNANCE
32 SUSTAINABILITYINTHEWORKPLACE
54 SUSTAINABILITYINTHEMARKETPLACE
72 SUSTAINABILITYINTHECOMMUNITY
82 SUSTAINABILITYINTHEENVIRONMENT
www.smebank.com.my
1-800-88-3 131
facebook.com/smebank
This annual report is available on the web at
http://www.smebank.com.my/publication/2014-annual-report/
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2 2014SUSTAINABILITYREPORT
ABOUT THIS REPORT
This is ourfirst sustainability reportmakingus thefirstdevelopment bank to disclose our annual sustainabilityprogress in linewith theGlobalReporting Initiative (GRI)Guidelines.Wearecommittedtooperatingsustainablyandefficiently. This includes assessing the impact of ourbusiness and making improvements when required.Protecting people and the environment, promoting localeconomicdevelopmentandpartneringwithcommunitiesarepartofbusinessoperations.Weintegratesustainabilitythroughoutourproductslifecyclesfromconcepttodelivery.
Together with the annual report, which highlights thefinancialaspectsofourbusiness,thetworeportsprovideaclear,comprehensiveandtransparentrepresentationofourperformance in managing the economic, social andenvironmentalaspectsofoperations.
This report follows theGRIguidelines,an internationallyrecognisedstandardforsustainabilityreporting.Wehavealso considered several other local and internationalguidelines that are relevant to our business. We havestructured this report according to the Bursa MalaysiaCorporate Social Responsibility (CSR) Guidelines, whichdedicates separate sections to Workplace, Marketplace,Environment and Community. We have also consideredinputfromstakeholdersincludingtheGRIandthejudgingpanelsofvariousCSRawards.
Inproducingthisreport,wehavecollatedinformationonourCRpractices.Wehaveexaminedissuesaffectingourstakeholders both direct and indirect includingemployees,shareholders,thesurroundingcommunityand
thepublicatlarge.Thisreportisstructuredinamannerwhichhelpsreadersunderstandourapproachtosustainingoureconomic,socialandenvironmentalresponsibilities.Wehavepresentedourdatainthemostaccuratemannerpossible.
Thereportaimstobeinclusiveandaddressallmaterialissues our stakeholders may have. We have alsoendeavouredtoincreasetheleveloftransparencyandtheobjectivityofthisreport,usingquantitativeindicatorsforaccuracywhereverpossible.
In2015,weaimtoproduceasustainabilityreportin-linewith theGRIG4guidelines for2015.Wewill conductadetailed stakeholder and materiality study to identifyareasthatarematerialtoourstakeholdersandus.Thisinformationwillincludebusinessareasthatsignificantlyinfluence our business and can potentially affectstakeholders.Thisstakeholderandmaterialitystudy isscheduled to commence in 2015. The results will bedisclosedinournextsustainabilityreport.
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SCOPE OF REPORT
Reporting period1Januaryto31December2014unlessspecified.
Reporting CycleAnnually
CoverageSmallMediumEnterpriseDevelopmentBankMalaysiaBerhad(SMEBank):ReferencestoSMEBank,theCompany,theOrganisation,theBankandwerefertoSmallMediumEnterpriseDevelopmentBankMalaysiaBerhad.
REFERENCE AND GUIDELINES
Principal Guidelines
GRISustainabilityReportingFramework
Additional Guidelines
BursaMalaysiasCorporateSocialResponsibility(CSR)Framework
ACCAMalaysiaSustainableReportingGuidelinesforMalaysianCompanies
ISO26000:GuidanceonSocialResponsibility
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SME BANKS JOURNEY OF GROWTH
4 2014SUSTAINABILITYREPORT
Self sustaining &Global Standard
BankPerusahaanKecildanSederhanaMalaysiaBerhadorSMEBankwasestablishedasasubsidiaryofBankPembangunan dan Infrastruktur Malaysia Berhad inOctober2005. TheBankbecamea separateentity in2008tofurtherstrengthenitsmissiontodevelopSMEstobethenationsengineofgrowthwhichisinlinewiththeGovernmentseconomicagenda.
In 2012, theBankhas takena significant decision tochangeitsconventionalbankingplatformtobecomeafullyfledgedShariahcompliantDFI.TheBankchangedits name and logo to Small Medium Enterprise
DevelopmentBankMalaysiaBerhadin2013toreflectitsdevelopmentalroleinnurturingSMEs.
TheSMEsectorplaysanimportantroleindrivingtheeconomy.Uptothispoint,SMEBankhashadnumeroussuccessesinvariousindustries.TheBankhadnurturedseveralentrepreneursfromthebeginninguntilsomehavealsoachievedinternationalsuccess.However,thelistgoesonbutwhatkeepsustickingisnotthelistofsuccessesthathasbeenbuiltbutwhatwearecurrentlybuildingforthefuture.
Year
2015
2014
2013
2012
2011
2010
INCORPORATING SUSTAINABILITY INTO BUSINESS MOVING TOWARDS A SELF SUSTAINING & GLOBAL STANDARD BANK
Five-year Transformation Key Milestones
Restructuring & Transformation
Inclusiveness & Sustainable Growth
Inclusiveness & Sustainable Growth
Key functions re-alignment Service delivery enhancement Robust compliance framework Integrated IT infrastructure Human capital development Structural reform - balance sheet strengthening Self sustaining and value creation business model
Leading Business Partners for SMEs Global referral for other DFIs
Expansion and market outreach Well balanced and far reaching developmental role
Inclusiveness & Sustainable Growth Towards Self Sustaining & Global Standards
Initiatives
Self sustaining &Global Standard
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Sustainability has been a key driver since theCompanys formation. Over the years, we haveimproved our performance in many areas.We created a solid foundation on which we cancontinue to build a sustainable business.Weaggressivelypursueothergoals that touchallareasofbusinessincludingouremployeeshealthandsafety,environmentalfootprintandcommunityengagement.Reachingthesegoalsensuresthatwefulfilourcommitmentsandsurpasstheexpectationsofallkeystakeholders.
In2014,we identifiedfourkeysustainability focusareas.Theyrepresentbothriskstobemanagedandsignificant opportunities. These focus areas arealigned with the delivery of our businesstransformation while also being responsive tostakeholders.Overthecomingmonths,theBankwillfocusonimprovingtheseareas.
SME Banks Four Key Sustainability Focus Areas
SME Bank Stakeholder Engagement Model
Sustainability at SME Bank Moving Forward
Our sustainability roadmap begins with activeengagementwithourstakeholderstounderstandtheirpriorities.Thisyear,weproducedourfirstsustainabilityreport to illustrate our commitment to superiorgovernanceandtransparency.Italsoservesasageneraloverviewofoursocialperformanceandenvironmentalstewardshipforemployees,surroundingcommunities,supplychainpartners,industrypeersandauthorities.In recent years, we have included stakeholders invariouscorporateeventsandengagementsessionstounderstandtheirperspectivesmoreclearly.
We hope to conduct amateriality study to ascertainstakeholderpriorityareasandmatchthemagainsttheBanks businessgoals. Thiswill help to set a strongfoundationforoursustainabilitystrategy.
Understandingtheareaswhichmatterthemosttoourstakeholdershelpsusfocusondeliveringexceptionalperformancewhichwillresultinlong-termmeaningfulstakeholderrelationships.
Sustainability Reporting Stakeholders Inclusivity
ActiveEngagementwithStakeholders
Materiality Study Formalising a Sustainability Strategy
IdentifyingStakeholderNeedsandAligningThemwithSMEBanksBusiness
Addressing Stakeholders Needs Measuring Stakeholders Satisfaction
DeliveringStakeholdersExpectations
Preserving the Environment Promoting Environmental Awareness
SMEBank'sKey
SustainabilityFocusAreas
People First
Diversity and Inclusivity Training and Development Rewarding Achievements Health and Safety in the Workplace Nurturing Our Employees Welfare
Environmental Protection
Preserving the Environment Promoting Environmental Awareness
Integrity in the Marketplace
Delivering Service Excellence Prioritising Customers Growing the SME Industry
Community Development
Reaching out to the Community Nation-building
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6 2014SUSTAINABILITYREPORT
HIGHLIGHTS 2014
1,570 approvals for
RM2.90BILLION of financing from
January to December 2014
More than
3000participated in the
ENGAGEMENT SESSIONS
Entrepreneur Premises Programme (EPP)
88.8% recorded occupancy rate
An average of 55TRAINING HOURScosting RM3,900 per employee in 2014
Customer satisfaction rate of
93.3%
GREEN BUILDING CONCEPTadopted for our newly renovated office building
Impeccable health
and safety record with
ZERO injuries and
ZERO fatalities
from 2012 to 2014
184 clients achieved upward migration under the Specific Intervention Programme
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CORPORATE VISITS
FEB12
SEP19
NOV05
Visit by YB. Datuk Hj. Ahmad Bin Hj. Maslan, Deputy Minister of Finance
Visit by Minister of Commerce, Republic of Guinea
Visit by Delegation from Sri Lanka
Visit by Delegation from Ministry of Micro Small and Medium Enterprises (MSME) Government of India
JUL16
Visit by YB. Dato Lee Chee Leong, Deputy Minister, Ministry of International Trade and Industry (MITI)
Visit by YB. Datuk Chua Tee Yong, Deputy Minister of Finance
SEP02
AUG08
DEC10
AUG27
AUG05
Visit by YB. Dato Noraini Ahmad, Chairman of MATRADE
Visit by IBFIM (Afghanistan Banks Association)
Visit by YB. Datuk Ir Dr Wee Ka Siong, Minister in the Prime Ministers Department
APR04
JUN24
Visit by Libyan and Islamic Development Bank (IDB) Delegations
Visit by Saudi Credit & Savings Bank (SCSB)
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8 2014SUSTAINABILITYREPORT
CHAIRMAN
AS WE CONTINUE TO GROW, WE ARE GUIDED BY OUR SUSTAINABILITY FOCUS FOR THE NEXT GENERATION - FOR BOTH OUR BUSINESS AND SOCIETY.
Onbehalfof theBoardofDirectorsofSMEBank, I ampleased topresentSMEBanksSustainabilityReport2014.Thisyear,wehaveimplementedawiderangeofinitiativesaimedatfundamentallytransformingourbusinessanddevelopingthenation.Ourcommitmenttosustainabilityisintegraltothesuccessofour operations, whether it relates tostreamlining our supply chain, developinginnovative entrepreneurial activities,supportingthegrowthofemergingmarketsor creating professional developmentopportunities for employees. This is anincreasingly important part of being aresponsiblecorporatecitizenandimprovingcorporate performance. As we continue togrow, we are guided by our sustainabilityfocusforthenextgeneration-forbothourbusinessandsociety.Weintendtocontinuebuilding on our long track record of socialresponsibility.IamproudtosharetheBankssustainability milestones in this inauguralsustainabilityreport.
A MESSAGE FROM THE CHAIRMAN
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OVER THE YEARS, ENTREPRENEURSHIP AND ENTERPRISE HAVE GAINED STEADY RECOGNITION IN ECONOMIC THEORY FOR THEIR ROLE IN PROPELLING AND SUSTAINING A COUNTRYS ECONOMY.
AspartoftheGovernmentscontinuedfocusonsteeringthecountrytowardsbecomingadevelopednationwithahigh-incomeeconomyby 2020, numerous programmes andincentives have been introduced by variousagenciesanddevelopmentbodiesinordertoencourageentrepreneurshipatall levelsofMalaysian society. SME Bank is one suchbodythatrecentlywelcomedanallocationofRM550millioninthe2014Budgetpresentedby the Prime Minister in October 2013.ThisfundingconsistedofRM50millionfortheGraduate Entrepreneur Fund and RM300millionfortheBumiputeraEquityFund.TheremainingRM200millionwasearmarkedfordevelopmentprogrammes inMalayreservelandlocatedinstrategicareas.
Over the years, entrepreneurship andenterprisehavegainedsteadyrecognitionineconomic theory for theirrole inpropellingand sustaining a countrys economy.Entrepreneursareconsideredtobeeconomicagents that drive innovation and economicgrowth.Theyintroduceanelementofhumanproductivityandcreativityintothepreviouslyconsidered passive firms in the classicmodels of economic theory. At SME Bank,initiativestoencourageentrepreneurshiparenot limited to providing start-up funds foraspiringbeginnersandcapitalforsuccessfulbusiness.
We recorded 1,570 approvals with RM2.9billion worth of financing for the period ofJanuary to December 2014. This has beenaffectedbythevariousengagementactivitiesandtheSpecificInterventionProgrammethatweundertake.
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10 2014SUSTAINABILITYREPORT
TheSpecificInterventionProgrammefocuseson selected Bank customers. Directintervention is identified at the beginningthrough structured gaps analysis. Varioustoolswereappliedtoidentifycustomerswiththe ability tomigrate upward.We facilitateupwardmigrationbychangingdelinquentstoperforming clients; improving the risk orSCORE rating; improving from NEED toMERIT; moving from BEST to TERAS; andprogressing from local sales to exports.WeensureselectedcustomerscanestablishSMEs that can sustain their businesses,which ensures a quality portfolio for SMEBank.
THE ULTIMATE AIM OF THIS INITIATIVE IS TO ENSURE SELECTED CUSTOMERS CAN PROGRESS AND SUBSEQUENTLY ESTABLISH SMES THAT CAN SUSTAIN THEIR BUSINESSES.
Giventhefast-pacedchangesintheMalaysianeconomy,wewillcontinuetoplayanactiveroleindevelopingtheSMEsectorandbuildingour nation as a one-stop financing andbusiness development centre. Our strongcollaboration and close engagement withcustomers,regulators,employees,businesspartners and the public at large helps usaddress sector-related issues on a timelybasis.
Finally, I would like to record my deepestgratitude to the Board of Directors,management teamandemployees for theirdedicationtodrivetheCompanytoachieveayearofimpressivegrowth.Iwouldalsoliketothank our valued shareholders, businessassociatesandallstakeholdersfortheirvoteof confidence. We look forward to yourcontinuedsupportinthemanyyearstocome.
TAN SRI AB AZIZ KASIMCHAIRMAN
A MESSAGE FROM THE CHAIRMAN CONTD
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DATUK MOHD RADZIF MOHD YUNUSGROUPMANAGINGDIRECTOR
12 2014SUSTAINABILITYREPORT
GROUP MANAGING DIRECTORS STATEMENT
SME Bank has reached amilestone in therelease of its first sustainability report.We understand that being a responsiblecorporate citizen is essential for businesssuccessandourstrategyofcreatingvalueforour clients, employees, shareholders andcommunities.Stakeholdershavetoldustheycare deeply about corporate responsibility(CR),particularlyasitrelatestoworkplace,marketplace,communityandenvironmentalsustainability. This report examines thesefourareasofourCRstrategyextensivelyandIwelcomeyoutoreadeachaspectindetail.
WE UNDERSTAND THAT BEING A RESPONSIBLE CORPORATE CITIZEN IS ESSENTIAL FOR BUSINESS SUCCESS AND OUR STRATEGY OF CREATING VALUE FOR OUR CLIENTS, EMPLOYEES, SHAREHOLDERS AND COMMUNITIES.
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programmes covering functional, technicalandsoft-skills,wealsofocusedontwomaininitiativestomeettheBanksannualstrategicobjectives. Firstly, a full-scale trainingprogramme is delivered that supports theNewOperatingModel(NOM).ThisprogrammepromotessalesandmarketingtoensuretheBanks sustainability while supporting theGovernmentsagendaofdevelopingtheSMEentrepreneurs.Secondly,weinitiatedProjectWisdomwith the aim of achieving Shariahcomplianceby2015.
SUSTAINABILITY IN THE MARKETPLACE
Every day, we see examples of how oursupporthelpsfuelthesuccessofMalaysianSMEs,whetherbyenablingthemtopurchaseequipmenttofulfilnewcontracts,providingexpertise to manage their cash flow oradvancingfundstoexpandtheirportfolios.
SMEBankalsoprovidesfactoryspacerental,financing,entrepreneurshiptraining,advisoryand technical assistance as well asoperational improvements under theEntrepreneur Premises Programme (EPP).ThisprogrammewascreatedforBumiputeraSMEsthatareinterestedinexpandingtheirbusinesses, establishing their businesspresence and eventually competing withindustryslargestplayers.
OurEntrepreneurPremisesComplex(EPC)isunder the purview of the EPP unit thatprovides suitable factory space rental topotential business owners. Not limited tospace rental, the eligible tenants at EPCsacrossMalaysiahavetheprivilegeoffinancingfacilities,entrepreneurialtrainingaswellasfinancialandinterventionservices.
The Centre for Entrepreneur Developmentand Research (CEDAR) was established inresponsetooneofthesixfocusareasundertheSMEMasterplan. It builds capacity andcapabilityofnotonlyentrepreneursbutalsothegeneralworkforceinvolvedindevelopingSMEentrepreneurs.Itconductsentrepreneur
SUSTAINABILITY IN THE WORKPLACE
Employees play a pivotal role in increasingstakeholder value and we focus on talentmanagement and developing a knowledgeculture. Building a strong foundation for amotivatedandtalentedworkforce,exemplifiesourcorevalueswithparticularemphasisonpassion and compassion. We expand ourinitiatives and improve the workingenvironment forouremployees.Embracingthecultureofflexibleworkinghours,in-linewithglobalbestpractice,hasallowedustobooststaffproductivity.
We introduced a wide range of trainingprogrammestohelpemployeesdeveloptheircareers.ACertificateinIslamicDevelopmentBanking&Finance (CIDBF), SMEBusinessCounsellor Certification Programme,Graduate Trainee Programme (GTP) andOnboarding Programme are some of thecareerdevelopmentprogrammeswedeliver.In addition to standard core training
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14 2014SUSTAINABILITYREPORT
GROUP MANAGING DIRECTORS STATEMENT CONTD
development activities such as businesscoaching and consultancy; research anddevelopment;seminarsandconferences;andpublications.
SUSTAINABILITY IN THE COMMUNITY
WeenrichthelivesofourstakeholdersandbuildMalaysiashumancapitalinsupportofthe Governments vision of nurturinga knowledge-rich and skilled nation.We introduced a special CR initiative topromote entrepreneurship in Malaysiansecondary school students. This CR
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programme is a competition entitledProgram Inovasi Usahawan Muda SMEBankY-BizChallenge.Weimplementedthisprogrammewith theMinistry of Education(MoE) to groom and nurture futureentrepreneurs. We created interest inentrepreneurship and helped studentsexplore their creativity and innovativeness.Theprogrammealsoprovidesstudentswithexperienceandspecificknowledgeso theycan envisage entrepreneurship as theirfuturecareers.
Our CR programmes enrich the lives andfulfil the dreams of the underprivilegedincluding orphans. As we operate in amulti-cultural country, we are proud tocelebratemanyfestiveseasonsthroughouttheyearbysharingthejoywiththosewhoarelessfortunate.OneexampleofoursignatoryCR activities is the SME Bank AnnualRamadhanProgramme.InadditiontovariousactivitiesundertakenattheHeadOfficelevel,RM5,000isallocatedtoeachbranchnetworkto fund their own Ramadhan programmesincludingfooddistribution,zakatandbuburlambokdistributions.
SUSTAINABILITY IN THE ENVIRONMENT
Like other financial institutions, ourenvironmentalfootprintisrelativelysmallaswe are an office-based business. However,our initiatives minimise our environmentalfootprint ineachareaofbusiness, fromthedesignoftheofficebuilding,totheinstallationoffixturesandfittings.In2014,weintroducedagreenbuildingconceptintheupgradingofourofficebuildingbasedonMalaysiasGreenBuilding Index (GBI) rating. We have alsolaunched a number of initiatives that helpreduce our energy requirements and theamount of waste we produce, reuse andrecycle.
ACKNOWLEDGEMENT
Iwouldliketotaketheopportunitytoextendmy gratitude to all our stakeholders whoencourage us to perform better with theirfeedback, opinions and support while wecontinuetoinvestinthefutureoftheSMEsandourcountry.Onbehalfofthemanagement,I would like to express my deepestappreciation to all employees for theircontinuous dedication, commitment andcontribution.Together,webuildcapacityforgrowth in theSMEsector.Wemeasureoursuccessbyhowwehavehelpedcustomersdevelopandsustaintheirbusinessesforthefuture.Wehopeyoufindourreportusefulandinformativeandweappreciateyourfeedback.Yourinputisvitalforrefiningoursustainabilityinitiativesanddevelopingourfuture.
DATUK MOHD RADZIF MOHD YUNUSGROUPMANAGINGDIRECTOR
OUR CR PROGRAMMES ENRICH THE LIVES AND FULFIL THE DREAMS OF THE UNDERPRIVILEGED INCLUDING ORPHANS.
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BOARD OF DIRECTORS
1 34 2
1 TAN SRI AB AZIZ KASIM Non-Executive Chairman
2 DATUK MOHD RADZIF MOHD YUNUS Group Managing Director
3 ENCIK KHAIRUZZAMAN MUHAMMAD Independent Non-Executive Director
4 DATO ADZMY ABDULLAH Independent Non-Executive Director
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5 6 7 8 9 10
5 ENCIK ISHAK ISMAIL Independent Non-Executive Director
6 DATUK MOHD NASIR AHMAD Independent Non-Executive Director
7 ENCIK ASRI HAMIDON Non-Independent Non-Executive Director
8 DATO ABD MAJID KUTIRAN Non-Independent Non-Executive Director
9 DATO JAMELAH JAMALUDDIN Independent Non-Executive Director
10 PUAN HASMAH RAZALI Group Company Secretary
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18 2014SUSTAINABILITYREPORT
SENIOR MANAGEMENT
FROM LEFT TO RIGHT
DATUK MOHD RADZIF MOHD YUNUS Group Managing Director
DATO MOHD RIZAL MOHD JAAFAR Group Chief Operating Officer Finance & Corporate Services
DATUK KAMALUDDIN ISMAIL Chief Operating Officer Banking
DATO RAZMAN MOHD NOOR Chief Risk Officer
DR. SHEIKH GHAZALI SHEIKH ABOD Chief Operating Officer CEDAR
ENCIK ASBULLAH ADNAN Director Development Banking & Liaison
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FROM LEFT TO RIGHT
ENCIK MOHAMAD SABIR MOHAMAD SABRIDirector Group Financial Management
ENCIK ISMAIL KAMARUDDIN Group Chief Internal Auditor / Director
ENCIK SHAHRIR AMRAN Acting Director Group Human Capital Management
ENCIK ABD KARIM AHMAD Director Enterprise Banking
ENCIK MOHAMMAD HARDEE IBRAHIM Director Treasury, Investment and Corporate Finance
PUAN ROKIAH RAJAK Director Operations
PUAN HASMAH RAZALI Group Company Secretary
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SHARIAH COMMITTEE MEMBERS
1 5 62 43
1 PROF. DR. ABDUL BASIR MOHAMAD Chairman
2 PROF. MADYA DR. AHMAD BASRI IBRAHIM Member
3 HAJI JALIL HAJI SAID Member
4 PROF. MADYA DR. YUSOF RAMLI Member
5 PROF. DR. NORHASHIMAH MOHD YASIN Member
6 DR. ASMAK AB RAHMAN Member
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ENGAGING WITH OUR STAKEHOLDERS
Stakeholdersplayanessential role inourcontinuedsuccess and we consider their varied perspectives.We engage with stakeholders worldwide to shareinformation; discuss our sustainability priorities,programmes and performance; and determinecollaborationopportunitiestoachievecommongoals.Operating responsibly and addressing the needs ofthese interconnected groups, help us maintaincommercialsuccess.Thisinturnallowsustodeliveronoursustainabilitypromises.
We engagewith stakeholders on key aspects of ourbusinessandproducts.Stakeholdersaredefinedasanygroup or individual who can affect or be affectedby the achievement of the organisations objectives.Ourprimarystakeholdergroupsareillustratedintheadjacenttable.Examplesofthevaluewebringeacharesummarisedbelow.
Bodies and Authorities
Government, Regulatory
Suppliers
Investors
and Shareholders
Community
Employees
General Public
Customers and
SMEBank
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Stakeholder Groups Value Provided Method of Engagement
Government,RegulatoryBodiesandAuthorities
CollaboratingwiththeGovernmenttoprovidesolutionsthatdevelopSMEs
RealisingtheGovernmentsaspirationsincludingthe10thMalaysiaPlanandNationalKeyEconomicAreas(NKEA)
Compliance Regularmeetings Certification
NGOs,IPTAandBusinessOrganisations
Assistingentrepreneursbyprovidingaccesstofinancing
Briefingonaccesstofinancingissues Organisationsweworkwithinclude:
BrandingAssociationofMalaysia UnitedMalaysNationalOrganisation(UMNO) AssociatedChineseChambersofCommerce
andIndustryofMalaysia(ACCCIM)
SpecialSecretariatforEmpowermentofIndianEntrepreneurs(SEED)
Forumsandbriefings Paneldiscussions Helpdesk Collaborationandjoint
initiatives Dialoguesessions
CustomersandGeneralPublic
Contributingtoeconomicgrowth HelpingaddresskeySMEneeds Identifyingopportunitiesandassistinginthe
developmentoflocalSMEs
Branchnetworks Socialmedia Website Onlineengagement Customerservicehotline
Employees Workingtoprotectthesafetyandhealthofemployees
Creatinganinclusiveanddiverseworkforce Providingemployeeswithprofessionalgrowth
opportunities
Regularengagement Get-togethersessions Performanceappraisal
sessions Internalnewsletters
Community Beinganexemplarycorporatecitizen Givingbackthroughphilanthropicactivities Nation-building
Communityengagement Philanthropicactivities Donations
ShareholdersandInvestors
Creatingandmaintainingshareholdervalue Annualgeneralmeetings Annualreportsandother
publications Performanceupdates
Suppliers Transparentsupplychainprocess Sustainableeconomybyprioritisinglocal
suppliers
E-bidding Updatesthroughonline,
writtenandface-to-faceengagement
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24 2014SUSTAINABILITYREPORT
SMEs AS THE ENGINE OF GROWTH
EnvironmentLegal an
d Regulatory
Technology Adopt
ion
Innovation an
d
Infrastructure
DevelopmentHuman Capital
Acce
ss to Financing
Market Access
SMEMasterplan
WehavealwaysconsideredthattheSMEsectorplaysan important yet varied role across countries andregions. In high-income countries, they support theeconomy; inmiddle and low-income countries, theycontributetoemploymentandGDP.
Worldwide,morethan95%ofenterprisesareestimatedto be SMEs, providing approximately 60% of privatesectoremployment. Thismaybedue toSMEsbeingmore labour intensive and therefore providingsubstantialemployment.
SMEsarealsoanimportantcontributortoinnovationineconomies. They tend to be more nimble andtechnologically driven, especiallywhen collaboratingwiththelargercorporatesector.
TheSMEMasterplanwaslaunchedbytheMalaysianGovernment to boost economic growth through theactivecontributionofSMEsto thenationaleconomy.The plan outlines six factors thatmay influence theperformance of SMEs and the achievement of thefollowingfourstrategicgoals:Increasingtheformationofbusinessesbyanaverageannualincreaseof6%;
Expandingthenumberofhighgrowthandinnovativefirmsbyanaverageannualincreaseof10%;
Doublingproductivityincreasefrom2010to2020;andIntensifyingtheformalisationofSMEsattherateof15%oftheGrossNationalIncome(GNI).
ThesefactorsalsoserveasfocusareastoformulatepoliciesthatimproveSMEsperformance.
We work together with the Government to increaseAccesstoFinancing.Thisfactorismostrelevanttousand ensures that creditworthy SMEs have access tofinancing for working capital and investment.We achieve this through our comprehensive andconsistentdevelopmentandinterventionrolesto: Strengthenthecurrentcustomerbase; Improve the Banks customers business
sustainability; Implement technology tools to improve client
communicationandrelationships;and Programme-basedfinancing.
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OUR ROLE
As a development financial institution, it is ourresponsibility to bemore involved in developing thesector.
WepromoteandhelpachievetheGovernmentsspecificsocialandeconomicobjectives.
We do whatever necessary to help SMEs succeed.Thisrolefillsthevoidleftbycommercialbanksthataredrivenmorebymarketforcesandprofitabilitythantheoveralldevelopmentofsmallercompanies.
Weprovidemediumandlong-termfinancingofprojects,whichrequirespecialisedskillsandfocus.Thistypeoffinancingcarrieshighercreditormarketrisksastheytypicallyhavelongerinvestmenttenures.
WefocusonfiveNationalKeyEconomicAreas:oil,gasandenergy;wholesaleandretail;education;healthcareandtourism.Thepotentialandnumericalvaluebroughtto theeconomy isconsideredwhenassessingSMEsviability.
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26 2014SUSTAINABILITYREPORT
SMEs AS THE ENGINE OF GROWTH CONTD
Duringitsestablishmentin2005,SMEBanksIslamicfinancingwasonly15%ofthetotalbanksportfolio.InJune2011,SMEBankdecidedtotransformitsbusinessintoanoperationallyefficientIslamicfinancialproviderunderProjectWisdomwhichofficiallycommencedinMay2012.Allnewapprovalsonconventionalloanswerereplacedwith Islamicfinancing followingan internalcirculationdated22February2011.
Weidentifiedgapsandraisedawarenessoftheprocess,people,productandsystem.InMay2012,theIslamicfinancing portfolio was estimated to be 44.5%; byDecember2014,theportfoliohadincreasedto85.4%withatotalamountofRM4.1billion.ThetotalIslamicfund acceptance increased to 100% from 57.6%, anincrease of 42.4%. The total Islamic fundplacementalsoincreasedto98.8%from51.6%,atotalincreaseof47.9%.Several Islamicfinancingcontractshavealsobeen developed. Commodity Murabahah and IjarahMuntahiah Bitamlik serve SMEs needs in serviceindustries.SincetheBanksportfolioandcompetencylevelshaveimprovedsignificantly,theBankhassetatargettobecomeafull-fledgedShariahcompliantDFIby2015.
ThisdecisioncomplementsMalaysiabecomingthehubfor Islamic finance, which is part of Bank NegaraMalaysiasFinancialMasterPlan.ThegrowthofIslamicbanking in Malaysia has been impressive and thepotential for further growth is huge. The Islamicfinancialservicesindustryisnowatthethresholdofitsnext stage of development. Significant progress hasbeenmadeoverthelastdecadeandIslamicfinanceisnow more widely accepted as a form of financialintermediation.
SMEBankhasbecomeacompetitiveformoffinancialintermediationthat isabletomeet thedifferentiatedrequirementsofeconomies.Inanenvironmentofrapidchange,akeyfactorinfluencingfutureprospectsoftheIslamicfinancialservicesindustrywillbeinvestmentstobuildthefoundationsonwhichfurtherprogresscanbe achieved. Investing in the future; research anddevelopment;anddevelopingtalentandexpertisewillbe differentiating factors that will contribute to theindustryseffectiveness,resilienceandcompetitiveness.Thisundertakingmustbethejointresponsibilityoftheprivate and public sectors to mutually elevate theindustrysperformance,therebyincreasingitswealthcreationpotentialfortheprosperityofournation.
TheBanksShariahCommitteeensuresthatallaspectsoftheBanksIslamicbankingbusinessareconductedin accordance with the Shariah principles. It addsanotherlevelofoversightwhichinherentlysafeguardsagainstirresponsiblepractices.
Moving Towards Becoming A Full-Fledged Shariah Compliant DFI
-
27
IslamicPortfolio
ConventionalPortfolio
Banks Islamic Financing and Treasury Portfolio
As at December 2014
As at 31 May 2012
44.5%-RM
1.81
5b
55.5%-RM2.266b
14.6%- R
M704m
85.4%-RM4.133b
42.4%-RM
1.52
4b
57.6%-RM2.071b
100.0%-RM3.461b
48.4%-RM
1.64
9b
51.6%-RM1.760b
1.2%- RM21.5m
98.8%-RM1.727b
FinancingsPortfolioComposition
BanksTotalFinancingPortfolio:
RM4.081b
FinancingsPortfolioComposition
BanksTotalFinancingPortfolio:
RM4.837b
FundAcceptanceCompositionTotalFundAcceptance
RM3.596b
FundAcceptanceCompositionTotalFundAcceptance
RM3.461b
FundPlacementCompositionTotalFundPlacement:
RM3.409b
FundPlacementCompositionTotalFundPlacement:
RM1.748b
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28 2014SUSTAINABILITYREPORT
CORPORATE GOVERNANCE
TheBoardofDirectors (Board) is committed tohighstandards of Corporate Governance. The Boardsubscribes to Bank Negara Malaysias Guideline onCorporateGovernanceStandardsonDirectorship forDevelopmentFinancialInstitutions(BNM/RH/GL005-14)toachieveanoptimalgovernanceframeworkandmaximiseshareholdervalue.
BOARD OF DIRECTORS
TheBoardisgovernedbyninemembersconsistingofoneNon-Executive Chairman, oneNon-IndependentExecutiveDirectorwhoistheBanksGroupManagingDirector, two Non-Independent Non-ExecutiveDirectorsrepresentingMinisterofFinanceIncorporated(MOF)andMinistryofInternationalTradeandIndustry(MITI)respectivelyandfiveIndependentNon-ExecutiveDirectors.
The diversity of theDirectors backgrounds from thefieldsofManagement,Banking,Finance,Accounting,LegalandEntrepreneurDevelopmentwereaccumulatedwhileservinginbothprivateandgovernmentsectors.ItbringsthenecessaryrangeofexpertiseandexperiencerequiredbytheBoardtoeffectivelyperformitsfunctions.
The Chairman and all Directors are experts in theirrespectivefieldsandhavecontributedsignificantlytothe Boards decision making process. The GroupManagingDirectorexecutesthepoliciesoftheBoardandmanagestheday-to-dayaffairsoftheBank.
TheBoardisresponsibleforensuringtheeffectivenessoftheBanksoperations.ThisincludestheresponsibilityfordeterminingtheBanksoverallstrategicdirection,approvalof performance targets, monitoring of managementachievements, providing overall policy guidance andensuringthatpoliciesandproceduresfortheinternalcontrolsystemandsuccessionplanningareinplace.
The Board meets at least once a month to discussmattersrelatingtopolicies,strategies,performance,resources,overallconductoftheBanksbusinessandfinancial matters as well as to monitor the Banksoverallperformance.
TheappointmentoftheChairmanandalltheDirectorsare with accordance to the Guidelines on CorporateGovernance for DFIs and the Banks Articles ofAssociation.
ThecompositionoftheBoardofDirectorsduring2014ispresentedbelow.In2014,fifteenmeetingswereheld.
Board of Directors Meetings Held in 2014
No. Name of Director Designation No. of Meetings Attended
1. TanSriAb.AzizbinKasim Non-ExecutiveChairman(appointedw.e.f.1May2014)
9/9
2. DatukMohdRadzifbinMohdYunus GroupManagingDirector(Non-IndependentExecutiveDirector)
15/15
3. DatoAbdMajidbinKutiran Non-IndependentNon-ExecutiveDirector(representingMITI)(appointedw.e.f.1October2014
2/2
-
29
No. Name of Director Designation No. of Meetings Attended
4. EncikAsribinHamidon Non-IndependentNon-ExecutiveDirector(representingMOF)
14/15
5. DatukMohdNasirbinAhmad IndependentNon-ExecutiveDirector 15/15
6. DatoAdzmybinAbdullah IndependentNon-ExecutiveDirector 14/15
7. EncikIshakbinIsmail IndependentNon-ExecutiveDirector 15/15
8. EncikKhairuzzamanMuhammad IndependentNon-ExecutiveDirector 14/15
9. DatoJamelahJamaluddin IndependentNon-ExecutiveDirector(appointedw.e.f.1February2014)
12/13
10. DatoAbdulGhafarbinMusa Non-IndependentNon-ExecutiveDirector(representingMITI)(ceasedw.e.f.1May2014)
*4/5
*ThenumberofmeetingsattendedduringthetimetheDirectorheldoffice.
SUPPLY OF INFORMATION
DirectorsareprovidedwithnoticesandboardpaperspriortoBoardmeetings.ThisgivesDirectorstimetodeliberateonissuesraisedatmeetings.
AllDirectorshavedirectaccesstotheservicesoftheGroup Company Secretary and seniormanagement.IndependentprofessionaladviceisalsomadeavailabletoDirectorsinfurtheranceoftheirdutiesintheeventsuchservicesarerequired.
TRAINING OF DIRECTORS
ItistheBankspracticethateachnewDirectorisgivenaBoardKit.Anon-boardingsessionbriefstheDirectorson the Banks history, operations and financialperformance to enable them to have first-handunderstandingoftheBanksoperations.
The members of the Board keep abreast withdevelopments in the banking industry by attendingconferencesandseminarsheldinMalaysiaandabroad.
TheBankalsoorganisesAMLAandtalksonrelevancetopicsandencouragesDirectorstoattendtalks,trainingprogrammesandseminars toupdate themselvesonnewdevelopmentsinthebusinessenvironment.
TheDirectorsoftheBankin2014attendedtheFinancialInstitutions Directors Education (FIDE) Programme
organised by The Iclif Leadership and GovernanceCentre.
BOARD COMMITTEES
Therearefiveboardcommitteesestablishedtoassistthe Board in discharging of its duties andresponsibilities,namelytheAuditCommittee(AC),RiskManagement Committee (RMC), NominationCommittee (NC),RemunerationCommittee (RC) andAssetQualityReviewCommittee (AQRC) (establishedeffective28October2014).
SMEBankBoard
Committees
Audit Committee
Risk Managem
ent
Committee
Nomina
tio
n
Committe
eRemuneration
Committee
Asset Quality Review
Committee
-
SUSTAINABILITY IN THEWORKPLACE
HUMANCAPITALDEVELOPMENT
-
32 2014SUSTAINABILITYREPORT
Ourcompetitivebenefitspackagehelpusattractandretainaskilledworkforcesowecanremainrelevantinthe market. Our rigorous career developmentprogrammes are specifically designed to increaseproductivity, maintain a safe environment, boostemployee engagement and encourage innovation.Weengagewitheachandeveryemployeeregularly.Oureffectivesafetyandhealthprogrammeshaveresultedinzeroinjuriesandfatalitiesoverthelastthreeyears.
AN EMPLOYER OF CHOICEOurambitionistobetheemployerofchoicebothforourcurrent and future employees as this will lead tobusinesssuccess.Whilewecontinuetoattracttalentedandqualifiedindividuals,wealsochallengeourselvesto do whatever necessary to remain an attractiveemployer. Our approach is straightforward. We takefeedbackfromcurrentandpotentialfutureemployeesand act to continually improve our employmentperformance. We measure this through employee
engagement and benchmarking ourselves againstindustrybestpractice.
Companiesfocusingonorganisationstrategy,systems,organisational structure and climate, shared values,workforce skills, individual attitudes, beliefs andcompetencies are able to transform themselves intohighlyeffectiveandefficientbusinesses.Thisprocessisusedbyalargenumberofnationalandglobalorganisationsto achieve superior performance. It supports leaders,managers and teams to drive change and transformsituationsintheirrespectivebusinessunits.
Our transformation journey commenced with theCorporateTeamBuildingProgramme(CTP)from2010to2011. It continuedwith the InternalisingBusinessMindsetandSharedValuesProgramme(InMINDs) in2012;followedbyServiceTransformationforExcellentPerformance(STEP)in2013.TheBrandInternalisationProgramme(BRAIN)commencedin2014.
SUSTAINABILITY IN THEWORKPLACE
CultureTransformation
Service
Transform
ation
For Exce
llent
Performan
ce (ST
EP)
Brand
Internalisation
(BRAIN)
Corporate Team
Building
Program
me (CTP)
Internalising
Business Mindset
Shared Values
Programme (InMINDs)
TheProcessof Changeand
Transformation
Organisational
Performance
Change
Initiatives
Struct
ure, Sy
stems
,
Style
Shared Va
lues,
Tech
nology
Strateg
y,
Sk
ills,
Beliefs,
Superstitions
Mindset,
Attitudes,
Organisational
Behaviour
CHANGE MANAGEMENT - CULTURE TRANSFORMATION
-
33
BRAIN encompasses our core values of Passion,Commitment and Trust (PaCT); and behaviourcompetenciesofLeadership,Integrity,Performance,CompetentandInnovation(LIPCI).Wedevisedabrandidentity that is demonstrated through the BrandPersonality of Care, Empathy and Subject MatterExpert(S.M.E.).
BRAINwasofficiallylaunchedbyourGroupManagingDirectoron14April2014andincorporatedaspartoftheBanksstrategicplan.ProgressisassessedduringthemonthlyBRAINSteeringCommittee(BSC)meetingchairedbytheGroupManagingDirector.
Brand Personality We Desire Employees to Demonstrate
i. Care-befair,sincereandattentivetoallinternalandexternalcustomers.Severalprogrammesandactivitieswereconductedtoinstilthispersonality:
Iron Man & Iron Lady: A designated SMCmember for each regionwasassistedby co-agents from head office, regional office andenterprisecentres.
Acknowledgementsandsmallcelebrationssuchasweddings,childbirthandchildrensexaminations
Recognition:Longserviceawardsandexcellentserviceawards
NGOassociationii. Empathyberesponsive,reliableandgotheextra
mile.Hospitalisationvisits,deathorfuneralvisitsaresomeoftheactivitiesandprogrammesofferedtoinstilthispersonality.Kita-KitaAje,areinformalsessions with respective Iron Men or Ladies todiscusspersonalorworkrelatedissues.
iii. Subject Matter Expert (S.M.E.)-beknowledgeable,solutionproviderandgoodlisteners.Plannedactivityisbeareferralpointbyestablishingareferralpointgroupwithin theorganisation foremployeeseasyreference. A newcomer induction programme(CorporateOn-boarding), talksbyguestspeakers,benchmarking visitsand trainingaresomeof theactivities and programmes that emphasise thispersonality.
BRAIN commenced with TeamBonding and BRAINLaunch Pad sessions. A total of 31 sessions weredeliveredthroughoutAugustandSeptember2014.In2014,1,000employeesenrolledandgraduated.
TheSMEBankWayconsistsofSALAM,SAPA,MESRA,SOPAN, MATA, HATI, HELO and CLEAN. It wasintroducedtostandardisebankbehaviourstointernaland external customers. The SME Bank ways arepromotedviavariouscommunicationchannelssuchasposters,quizzesandevents.
-
34 2014SUSTAINABILITYREPORT
PRIORITISING LOCAL TALENT
Wemakeadifference to the communitieswhereweoperateandseekwaystoassistthem.Thehiringanddevelopmentoflocalpeopleareprioritisedandweworkwith local supply chainswherever possible.We takepart invariouscareerfairstoattractgraduatesfromour country and offer various forms of workopportunitiesincludinginternshipprogrammes.
Internship Programme
We recognise our community service role to provideMalaysian students with an opportunity to join theInternship Programme for a specific duration. TheInternship Programme is offered to students fromrecognisedhigherlearninginstitutionsthat:
HaveobtainedacurrentcumulativeGPAofatleast3.0;
Areundergoingadiploma,degreeorequivalentprogrammeinafieldofstudyspecifiedbytheheadsofdepartmentfromarecognisedhigherlearninginstitution;
Demonstrateanacceptablelevelofinterpersonalskills;
Areactiveincurriculumactivitiesinuniversitiesorcolleges;and
Havestronginitiativeandareabletoworkindependently.
The internship period varies betweenuniversities orcollege programmes. Most candidates had abackgroundineconomics,accounting,finance,Islamicbanking,ITorhumanresources.In2014,wewelcomed10internshipcandidateswhowereattachedtovariousfunctions.
Breakdown of Internship Candidates in 2014
COMPETITIVE BENEFITS AND REMUNERATION
Afairandadequateremunerationsystemiscriticaltomotivate, attract and retain competent and high-potentialemployees.Ourinternalequitypromotesfairand equitable compensation for all employees withremunerationthatisproportionatetotheircontribution.We also believe in external equity, which deliversremunerationpackagesthatarefairandequitableincomparisontotheexternalmarket.
We conduct remuneration reviews regularly todetermineadequateremunerationforemployees.Thishelps us align our remuneration packages with thechangingbusinessenvironment.Itallowsustobemoreequitableinrewardinghighachieversintheworkplace,develop employee talent and determine ourcompetitivenessvis--visthemarket.
SUSTAINABILITY IN THEWORKPLACE CONTD
Finance and Accounting
Human Capital Development
Human Capital Services
Information Technology
33
21
1
-
35
ApercentageofemployeesbasicsalariesisgiventotheEmployees Provident Fund (EPF) as per statutoryrequirements. This is inclusive of the employerscontributiontoEPFrequiredbylaw.
Benefits are defined as forms of value other thanpaymentthatareprovidedtoemployeesinreturnfortheircontributiontotheorganisation.Weoffervariousemployment benefits to all levels of employees.Keybenefitsareillustratedinthediagramabove.
Practices for Retiring Employees
Retirement Age
On 16 August 2012, the Malaysian Governmentannouncedtheenforcementoftheminimumretirementage forprivatesectoremployees,upon reaching theageof60years,throughtheenforcementofMinimumRetirementAgeAct2012.
Employeesmay opt to retire early at any time oncereaching50yearsofage.However,approvalissubjectto themanagementsdiscretion.Employeeswhoarenotmedicallyorphysicallyfittoworkmaybeadvisedto
retireearlierbyadoctorfromoneofourpanelclinics,hospitalsoranygovernmentmedicalpractitioner.
Employeesretiringinthenormalcourseofservicewhohavereachedtheretirementagereceiveonemonthspaidleave.
Retirement Benefit
Employees who joined the Bank are eligible forretirement benefit in terms of additional employersEPFcontributionsbasedontheyearsofservice.ThesebenefitsvaryslightlydependingonwhentheemployeejoinedtheCompany.
Additional EPF Contributions
Additional Contributions (% Basic Salary)
LengthofService
Joinedbefore1July2012
Joinedafter1July2012
10years 6.5% 5.5%
Key BenefitsAllowances
MedicalBenefits
Leave
EducationStaff
Financing
Others
InsuranceScheme
East Malaysia, COLA for Non-executives, car, petrol, mobile phone, treasury dealers, subsistence, accomodation, mileage, miscellaneous, short-term placement and secondment
Group Term Life (GTL), Group Personal Accident (GPA) and Group Hospitalisation & Surgery (GHS)
Staff financing subsidy scheme for housing
and vehicleCorporate club m
emberships, flexible w
orking
hours, shift working hours, em
ergency cash advance,
discretionary retirement gifts and interest free
festival cash advance for Non-Executives
Intere
st free
educa
tion fin
ancing
and E
mploy
ee
Educat
ion As
sistan
ce Prog
ramme
Generous annual leave, m
edical, com
passionate,
marriage, maternity/paternity, special paid, Hajj,
replacem
ent and retitrement
Unlim
ited
outpa
tien
t, hospitalis
ation an
d surgical for
employee
s, maternity, health screen
ing, den
tal and
spectacles
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36 2014SUSTAINABILITYREPORT
LEARNING AND DEVELOPMENT
Employeesneedtodeveloptheirtechnical,behaviouraland leadership competencies in relation to theiremployment functions, which are aligned with theBanksbusinessstrategy,visionandmission.
Theaverageannualtrainingrequirementisfivedaysforexecutivelevelandaboveandthreefornon-executives.Theaveragenumberofhoursoftrainingspentperyearperemployeeforthepastthreeyearsislistedbelow.
Superiors are responsible for nominating theiremployeestoattendprogrammesintheannuallearningand development calendar as and when required.Employees areprovidedwith opportunities to attendexternal training that is not in this calendar. Suchtraining is assessed on a needs basis and requiresapprovalbytherespectivedivision.
Annuallearninganddevelopmentneedsareidentifiedforallemployees.Itisconductedduringtheperformance
appraisalprocessandconsidersinformationfromtheappraisal form and competency assessment. TheHuman Capital Development and Learning andDevelopment divisions determine the appropriatetrainingandnon-traininginterventions.Theydevelopatrainingplanbasedontheperformanceappraisalandcompetencygapresults.
Employees learning and development needs areidentifiedasaresultof: Corporate,organisationrequirementsandbusiness
plan; Theperformanceappraisalprocessandcompetency
gaps; Feedbackfromsuperiorsorheadsofdepartment;
and Regulatoryrequirements.
Backgroundinformationfromsomeofoursignificanttrainingprogrammesheldin2014ispresentedbelow.
SUSTAINABILITY IN THEWORKPLACE CONTD
Averageannualtrainingbudget
peremployee
2012 2013 2014
RM Hours
60
3,70
0
3,90
055
56
4,00
0
4,000
3,900
3,800
3,700
3.600
3,500
62
60
58
56
54
52
Training Budget and Hours
-
37
Name of Programme Background Objective
CertificateinIslamicDevelopmentBanking&Finance(CIDBF)
Currently,SMEBankistransformingintoanoperationallyefficientIslamicFinancial Provider under ProjectWisdom. All new approvals forconventional loans have ceased andbeenreplacedwithIslamicfinancing.TheBankidentifiesgapsandcreatesawareness on the process, people,product and system. 278 employeesenrolled and 202 graduated from acourse in Certified IslamicDevelopment Banking (CIDB). 305employeesenrolledand287graduatedfromacourseinProfessionalIslamicDevelopmentBanking(PIDB).
TobuildcapacitybyprovidingfundamentalknowledgeforDFIexecutivesconsideringincorporatingIslamicfinancingproductsintheirbusinessoperations
ToimproveDFIexecutivesappreciationofthe concept and application of Islamicfinance and its relevance in day-to-daybankingoperations
On-boardingProgrammeforExecutive(COPE)
COPEispartoftheTalentManagementProgrammethatprovidesasystematicand comprehensive approach toorientingnewemployees.
ToallowemployeestounderstandsomeoftheCompanysvaluesandpriorities
Toencouragesocialisationandcreateasenseofbelonging
TobuildanoptimisticattitudetowardstheCompany
ProfessionalCreditCertification(PCC)
Developed by AICB in consultationwith senior credit practitioners, thespecialist PCC professionalcertification demonstrates theachievement of the minimumprofessional standard of corecompetencyforcreditpersonnelinthebankingandfinanceindustry.
Toraisecreditmanagementawarenessof the Malaysian financial system andregulationsgoverninglendinginMalaysia
Tobriefemployeesontypesofborrowers,securitiesandcreditsupportaswellascreditprocessesspecifictoconsumerorbusinesslending
SalesandMarketing(Mastersalesprofessionalprogramme)-MSP
TheMSPisundertheValueCreationProgramme to support the Bankstransformationalagenda.
Toequipandimproveofficersskillstobemoreconfident insellingandfinalisingdeals
To inculcate a mentally tough sales-orientedmindsettoovercomeobjectionsandincreasetheclosingrate
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38 2014SUSTAINABILITYREPORT
Staff Training Fund
TheStaffTrainingFund(STF)actsasadeterrentagainstrecruitingexperiencedpersonnel fromotherfinancialinstitutions.ThehiringinstitutionisrequiredtocontributeamaximumofsixmonthsofthepersonnelsnewgrosssalarytotheSTF.TheSTFisapplicableiftherecruitmentismadewithinsixmonthsoftheemployeesresignationwhoseprevious salary exceededRM5,000permonth.In 1993, staff pinching rules were liberalised andredefinedtorefertotherecruitmentofnewemployeeswhohadnotbeenreleasedbyapreviousemployer.
AllcontributionstotheSTFareusedtofundtrainingcourses for banking personnel. This scheme is incollaborationwithAsianInstituteofCharteredBanker,which was previously known as Institut Bank-BankMalaysia.
International Mobility Programme
We value employees with global skill sets andinternational technical exposure. SME Bank andselectedinternationalfinancialinstitutionscollaborateon the International Mobility Programme. Thisprogrammeexposesemployeestovariousinternationalassignments and provides international exposureopportunities. It supports the development andretentionofbankingprofessionals.
Secondmentsorengagementsvaryfromashort-termof between three and 12 months, to long-term ofbetweenoneandthreeyears.
The programme is designed to improve globalknowledge, teach skill sets, build cross-culturalcapabilities and develop leadership or managementcompetencies. Employees selected to undergo thisinternationalprogrammearebondedforaminimumofoneyear,dependingonthetotalcost.Theseemployeesareexpectedtosharetheirknowledge,experienceand
SUSTAINABILITY IN THEWORKPLACE CONTD
Name of Programme Background Objective
Up-skillingandRe-skillingRedeploymentProgramme
NewoperatingmodelstrengthenstheBanks operation by moving staff todifferent job functions. Theredeploymentprogrammeequipsstaffwith relatedskillsandknowledgeofoperations.
To ensure proper learning anddevelopmentinterventionsareprovidedtoemployees
SMEBusinessCounsellorCertificationProgramme
This programme is an adaptation ofsimilar certification from Japan.Certified business counsellors arehighly sought after and play aimportant role in improving SMEbusinesses in the country. 26employees enrolled and graduatedfromthisprogramme.
TodevelopapoolofexpertiseaccessibletoSMEs to improve competitiveness inlocalandglobalmarkets
To ensure high quality counsellingservicesareprovided
-
39
newly acquired skills with the Bank upon theprogrammescompletion.
Tobeeligibleforthisprogramme,employeesmust: BeproficientinEnglish; Beofmanageriallevelwithatleastthreeyearsof
experiencewithSMEBank; Possessadegreeorequivalenttechnical
qualification; Haveexceededexpectationsinthepasttwo
performanceappraisals; Beagedbetween35and50yearsoldwith
potential;and Bewillingtorelocateduringtheprogramme.
In 2014, we collaborated with Kalkinma on thisprogramme,whichranfrom26Mayto6June.ThreecandidatesweresecondedtotheDevelopmentBankofTurkeyforthisprogramme.
Graduate Trainee Programme (GTP)
The SME Bank Graduate Trainee Programme isdesigned to accelerate learning and developmentopportunities to prepare young talents for futuremanagerialandleadershiproleswithintheBank.GTPprovides young talent with an opportunity to launchtheircareersindevelopmentbankingthroughanon-joblearningtraineeship.TheBankselectstraineesfromlocalandinternationaltertiaryinstitutions.
Traineesundergoatrainingprogrammeconsistingofformal training, on-job training and assessments tomeettheBanksentrylevelofrequirements.Mentorsareassignedtocoachandguidetraineesthroughouttheprogramme.
In 2014, 30 new trainees have undergone thisprogramme and have been placed in variousdepartments within Enterprise Banking, CorporateFinanceandEnterpriseCentres.
On-Boarding Programme
Ourguidelinesensureallnewemployeesareeffectivelyandefficientlyintroducedtotheirnewpositions.Theyaregivenaccesstoallrelevantpolicies,systemsandprocessestoperformanddeveloptheirroles.
Theobjectivesofthisprogrammeareto: Facilitatenewemployeesabilitiestocontribute
tothenewrole; Increasenewemployeescomfortlevelsintheir
newroles; Reinforceemployeesdecisionstostaylongerin
theirroles; Enhanceproductivity;and Encouragecommitmentandemployee
engagement.
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40 2014SUSTAINABILITYREPORT
SUSTAINABILITY IN THEWORKPLACE CONTD
Expected Outcomes
Anemployeewhohasparticipatedintheon-boardingprogrammewill:Understandtheirroleandtheworkrequired
ofthemFeelvalued,supportedandinvolvedinthe
organisationWorksuccessfullyinthecontextofdepartmentUnderstandandknowhowtoaccessrelevant
policies,guidelinesandproceduresUnderstandtheprofessionalstandardsand
behaviourexpectedofthem
New Operating Model
In2014,wefocusedontwomaininitiativesinadditiontoour core functional, technical and soft-skill trainingprogrammesthatsupportourstrategicobjectives.
Ourfull-scaletrainingprogrammesupportedtheNewOperating Model (NOM) that covered sales andmarketing.ThisprogrammecontributedtotheBankssustainabilityandsupportedthegovernmentagendaofdevelopingSMEentrepreneurs.
WealsosupportedoneprogrammefromProjectWisdomthat aimed to make the Bank fully Shariah compliantby2015.
Up-skilling
Re-skillingProfessional
Master Sales
NewOperatingModel
Non-executive to Relationships Managers (RMs) Non-operations to RMs Credit Admins (CAs) to RMs
RMs to RMs Credit Admin to General Intervention
Stage 1 (Professional selling methods, continuous learning mind-set and commitment to win methods, continuous learning mind-set and commitment to win)
Stage 2 (Review, difference applications and C-level approaches)
Training Programmes that supports NOM
-
41
Up-skilling and Re-skillingWeintroducedNOMtostrengthenoperations,whichincludedmovingnon-operationsstafftodifferentjobfunctions.
Our Redeployment Programme ensures that properlearning and development initiatives are provided toemployeesdeployedtobusinessoperationalfunctions.
Thetrainingisdeliveredbyinternaltrainerstoequipstaffwith the necessary skills and knowledge required forrelationship management job functions and generalintervention. We deliver the programme in batchesdependingon thenumberof traineesandnewfunctionscreated.Thisapproachensuresemployeesareequippedwith thenecessaryskillsandknowledge for thespecificfunctiontheyareassignedto.
Redeployment Programme - Job Familiarisation
Weupskillednon-operationsstafftoRelationshipManagersfrom3to5June2015atthePremiereHotel.30selectedemployees attended the programme. We also trainedexistingrelationshipmanagerstoimprovetheirskillsandknowledgebasedontheNOM.64employeeswereinvolvedinthisredeploymentprogramme.
Master Sales Professional OurMasterSalesProfessional(MSP)programmeinculcatedamentallytoughsalesachievingmindsettosustaingrowthandachievequantumhighperformance.Achievingsalestargetsisnolongerthesoleresponsibilityofthesalesandmarketingteam.Everysingleemployeemustworktogethertomeetthequantumsalestargetquickly.
MSPraisedthecommitmentoftheRelationshipManagementTeamtobelievethatmarketingcanmakeadifferenceandeverysmallcontributioncounts.326relationshipmanagersand30headsofdepartmenttookpartinthisprogramme.
MSPcoversfourstages:
Stage1.Professionalsellingmethods,continuouslearningmindsetandcommitmenttowin;
Stage2.Review, different applications and C-levelapproaches;
Stage3.Creative applications and high performancemotivation(MSPTransformation);and
Stage4.MSP,assessment,gradingofsalesprojectsandcertification.
MSPtaughtparticipantswaystostaymotivatedtoachieveextraordinary targets inacompetitiveenvironment.TheylearnedtheroleofRelationshipManagerssotheycouldfullysupporttheteams,applytheMSPQuantum-leapmindsetandsupporteachothertoachieveambitioustargets.
RelationshipmanagementstaffattendedthefirstStage1courseon28January2014atthePremiereHotel.Atotalof326employeesattendedStages1and2.Stage3isscheduledforcompletionin2015.
Project Wisdom
InJune2011,wedecidedtotransformintoanoperationallyefficientIslamicfinancialproviderunderProjectWisdom.All new conventional loan approvals ceased and werereplaced with Islamic financing following an internalcirculationon22February2011.
ProjectWisdomofficiallycommencedinMay2012withanIslamic financing and treasury portfolio. Our initiativesincluded identifying gaps and raising awareness of theprocess, people, product and system. Our learning anddevelopment training programmes focus on people.InitiativescarriedoutbyHumanCapitalDevelopmentwiththecooperationofCEDARand theShariahManagementDepartmentarehighlightedbelow.
Certified Islamic Development BankingOur Certified Islamic Development Banking (CIDB)programmeofferspracticalworkingknowledgeofIslamicfinanceandbankingwithanemphasisondevelopmentalroles.Itcaterstomiddleandupper-levelexecutiveswithindevelopmentfinancialinstitutions(DFIs).
Thescopeof Islamicfinancehasbroadenedsignificantlywith related products and their mode of transactionsgrowingrapidly.TheprogrammeincreasesDFIexecutivesunderstandingofIslamicfinanceanditsrelevancetoday-to-day banking operations. These executives acquiredfundamentalknowledge to incorporate Islamicfinancingproductsintheirbusinessoperations.
In2014,atotalof305hadcompletedCIDBtrainingand287passedtheexamination.
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42 2014SUSTAINABILITYREPORT
Professional Islamic Development Banking
Professional Islamic Development Banking (PIDB) isadvancedlevelcertificationforbankofficersinIslamicdevelopmentbankingandfinance.Themodulescover: Financialmanagement and controls in SMEs and
developmentbanking BusinessprocessandbestpracticesofSMEsand
developmentbanking RiskmanagementinSMEsanddevelopmentbanking CreditanalysesandentrepreneurprofilinginSMEs
financing ContemporaryissuesofDFIsandentrepreneurships
PIDB was delivered to 10 groups and attended bycustomer-facing employees. Approximately 278employees have attended PIDB and 127 passed theexamination.
Structuring Job Training
The Learning and Development Section of HumanCapitalDevelopmentdepartmentsalsoworkwith theShariahManagement Department on structuring jobtraining.Thistrainingenrichesandincreasesemployeesunderstanding,competencyandknowledgeof Islamicbanking. It focuses on outcomes and translates intoapplicationandexecution.
Themodulescoveredinthisinitiativeinclude: ContinuousstructuredtrainingmodulesonIslamic
bankingoperationsand theapplicationofShariahrequirementson legalandsecuritydocumentsviaSOJT at our headquarters, enterprise centres,businesscentresorregionalcentres;
Islamicbankingfinancingpackagingandstructuring; The application and execution of standardised
transactiondocuments; Shariahapplicationsand requirementsof security
documentationsforallIslamicfinancingcontracts; Performingassessmentsofparticipantsandlearning
facilitators;and Developingresourcepersonsintheirworkplaces.
TALENT MANAGEMENT AND SUCCESSION PLANNING
Talent management and succession planning is theprocessofpinpointingkeyneedsforintellectualtalentandleadership.Itpreparesemployeesforpresentandfuture work responsibilities needed by the Bank.Itemphasisestheinternaldevelopmentofpeople.Talentmanagementandsuccessionplanning is treatedasabusinesscontinuityplanforoursustainability.
Each year, all heads of department name threeperformingemployeeswiththepotentialtorisetothenextlevel.
Candidatesareselectedobjectivelybasedonsetcriteria.Thepotentialsubordinateswillbeassessedforsuitabilityand will be provided with learning and developmentopportunitiesaswellasrelevantexposureonaprioritybasis.TherespectiveheadsofdepartmentsandHumanCapital Development jointly develop the career pathsanddevelopmentplansforthenamedsuccessors.
SUSTAINABILITY IN THEWORKPLACE CONTD
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43
COMPETENCY ASSESSMENT
Theongoingdevelopmentoftheemployeespersonalandprofessionalcompetenciesisessential.Eachpositionhasa defined set of core competencies and functionalcompetencieswhicharerequiredatspecificproficiencylevels.
Thecompetencyassessmentisperformedasandwhenrequired for specifically measuring and evaluating anemployees competencies. The outcomes of thecompetencyassessmenthelpinidentifyingthelearninganddevelopmentneeds.
Theassessmentprocessesmayincludemultiple-choicetests,structuredinterviews,profilingquestionnaires,job-knowledge tests, social skills inventories, executiveassessmentcentres,language-learningabilitytestsandprofessionalexaminationsformanagersandexecutives.
Theresultsofthecompetencyassessmentareanalysedtoidentify the learning and development requirements ofemployees. The employee competency assessment isconductedbyHumanCapitalDevelopmenttomeasuretheemployeescompetency.
MANAGING PERFORMANCE
We are committed to inculcating a high performancework culture. We provide each employee with clearperformance objectives, professional development,ongoing performance coaching and feedback. Werecogniseperformersandrehabilitateunder-performers.
PerformancemanagementisongoingandlinkedtotheBanksfinancialcycle.Therearethreemainactivitiesinperformancemanagement: Performanceplanning; Mid-yearperformancereview;and Year-endReview.
Employeesatexecutivelevelandaboveundertakeallthree activities; non-executive level employees onlyreceiveayear-endreview.
Management may adjust performance ratings forevaluationconsistency.Wemayalsouse informationfrom performance management forms in decisionsinvolvingpromotions,performance-baseddisciplinaryaction, performance-based salary increases and
workforceresizing.Performancemanagementformsbecomepermanentlyenteredonemployeespersonalfiles.
Performance Planning
Weperformallperformanceplanningatthebeginningofeachfinancialyear.ManagementcommunicatesandcascadesdowntheBanksKeyPerformanceIndicators(KPIs) to all heads of department who align theirrespective divisional or departmental KPIs with theBanks.TheapproveddivisionalanddepartmentalKPIsareraisedtothenextsupervisionlevel.Thisprocesstakesplaceforindividualemployeesineachrespectivedivision,department,sectionorunit.
Atthisstage,clearperformanceplanningisestablishedand communicated to employees. Expectationsregarding employees performance are established.Thecriteriabywhichemployeesactualperformancewill be measured and their success determined isspecified.Employeesarealsoclearabouthowmeetingtheseexpectationswillcontributetotheachievementofdivisional,departmentalandtheBanksKPIs.
Employeesandtheirimmediatesuperiorsmustagreewith theperformanceplanning. In theevent that thepartiesdonotagree,themanagersdecisionisfinal.
Mid-year Performance Review
Employees meet informally with their immediatesuperiorsthroughouttheperformancecycletodiscussa broad range of issues and resolve any problems.Employees are responsible for meeting theirperformance expectations. Immediate superiors useappropriate supervisory techniques that helpemployees meet or surpass their performanceexpectations.
Aformalmid-yearperformancereviewisheldduringaninformalsupervisionmeeting.Generally,thistakesplaceinthesixthmonthaftertheperformanceplanning.Performance expectations are measured, reported,discussedanddocumentedduringthisreview.
When expectations alter during the course of theperformance cycle, managers communicate thesechangesandmodifyperformanceplanningaccordingly.Modificationsmustbeagreedbybothparties.
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44 2014SUSTAINABILITYREPORT
SUSTAINABILITY IN THEWORKPLACE CONTD
Year-End Review
Superiors conduct year-end reviews to measureemployees performance against agreed KPIs. Theevaluationisperformedattheendofthefinancialyearandtheprocessisastransparentaspossible.
Supervisors use verifiable information collected anddocumentedthroughoutthecycle.Theydeterminetheextent to which actual performance has met theexpectationsdefinedintheperformanceplanning.
The evaluation is documented in the PerformanceManagement System. The annual performanceappraisal uses a six-level rating scale for reportingoverallperformance.
Performance Improvement Plan
Wearecommittedtofosteringanenvironmentinwhichemployeescanperformtothebestoftheirability.ThePerformance Improvement Plan (PIP) promotes anorganisational culture that educates and improvesunderperformers. We do not terminate employeesemployment contracts without first giving them achancetoimprove.
ThePIPspecificallyaddressesemployeesperformancethatrequiresimprovementincriticalareas.Weensureafairandconsistentapproachtoenforcingperformancestandardsacrossalldivisions.
The PIP does not apply to employees who are underprobation and periodic or temporary employees,outsourcedemployeesandcontractorswhoarenotunderourdirectemployment.
Employeesunderstandwhatisexpectedofthemandwaysthey can contribute to achieving organisational goals.Immediatesuperiorsguidetheiremployees inachievingtheirgoalsandobjectives.Theyensureemployeesknowwhatisexpectedofthemhowtomeetspecificgoalswithinareasonabletimeframe.
EMPLOYEE ENGAGEMENT
Weencouragecloserandstrongerrelationshipsbetweenemployees.Variouseventsareheld throughout theyearsuchasfamilydays,annualdinners,employeegatheringsduring the festive season, employee competitions andsports tournaments. These events increase employeeengagementandtheircommitmenttotheBank.
EmployeeeventmanagementisfacilitatedbytheEmployeeRelations Section. Annual events are aligned with thecorporatevisionandmission.Anannualemployeeeventcalendarispreparedbasedontheannualbudgetallocation.
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45
Methods of Engagement in 2014
Regular Engagement
Details Frequency
KnowledgeSharingTalk Monthly
RamadhanGiftGivingtoAllEmployees Annually
IftarRamadhan:DistributionofIftarforThoseDoingOvertimeDuringRamadhan
AnnuallyduringRamadhan
QuarterlyAssembly:GMDDisseminatingInformationtoEmployees Quarterly
GroupMDWalkabouttoBranches Monthlyandwhenrequired
EmployeeEngagementSurvey Annually
GrievanceProcess Asandwhenrequired
DonationDrivesuchasFiresorFloods Asandwhenrequired
Table Get Togethers
Details Frequency
FamilyDayorAnnualDinner Annually
ChineseNewYearLunchwiththeSeniorManagementCommittee(SMC) Annually
DeepavaliLunchwiththeSMC Annually
KuliahZohor Monthly
KuliahMuslimat Monthly
HariRayaCelebration Annually
MITIGatheringinSMEBank Annually
Recognition
Details Frequency
EducationIncentivestoEmployeesorTheirChildrenAccordingtotheGuidelines
Annually
TaskaPintarGraduationDayforChildren Annually
RetirementEvent Asandwhenrequired
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46 2014SUSTAINABILITYREPORT
PROMOTING EMPLOYEES WELLBEING
Weare committed to helping our employeesachievewell-beinginmanyfacetsoftheirlives.Whetherhealth,financial, personal or professional well-being, weconductnumerousprogrammesthathelpthemachievetheirpersonalgoals.SomeofthemanyprogrammesprovidedattheBankarehighlightedbelow.
Childcare Centre (Taska Pintar)
Our childcare centre provides a family-orientatedworkplace environment to employees with youngchildren.Thechildcarecentre ismanagedefficientlywithsetrulesandregulationsforchildrenssafetyandsecurity.
Employeesmayenrol theirchildrenonafirst-come,first-servedbasisattheBanksdiscretion.Thecentredeliversanaccreditedchilddevelopmentcurriculumand programme. It is regulated by requirementsstipulated in the Child Care Centre Act 1984 andDepartmentofSocialWelfarepolicies.
Thecentreisopentoallemployeeswithchildrenagedbetween two and four years old. It has amaximumcapacityof25children.
Flexi Hours
AtSMEBank,weunderstandthatindividualswhoareabletobalancetheneedsofworkandhomearemoreeffective employees andmore successful family andcommunitymembers.Werecogniseblendingpersonalandprofessionallivesisdifferentforeachpersonandcan also vary over time. We strive to provide ouremployeeswithasupportiveworkenvironmentandachoiceofflexibleworkhoursfrom8.30amto5.30pmor9.00amto6.00pm.
EMPLOYEES PERSONAL DATA PROTECTION
Ouremployeespersonaldata issubject toapplicabledataprotectionandprivacyrequirementsasmandatedby the PDPA. We only process employees personaldataif: It is for a lawful purpose directly related to
employment; Necessary and directly related to managing the
employee; It is adequatebut not excessive in relation to the
employmentpurpose; Theemployeesconsentisobtainedtouseit;and Explicit consent of the employee is obtained to
processsensitivepersonaldata.
Wewillnotdisclosetheemployeespersonaldataforotherpurposesortothirdpartieswithouttheemployeesconsent.
EMPLOYEES RIGHTS AT WORKWe acknowledge our responsibility to respectemployeesrightsinaccordancetotheHumanRightsCommissionofMalaysia(SUHAKAM).Wedonottolerateanyformofworkplaceharassment,discriminationorviolence. We are governed by our own Terms andConditionsofServicebutalsocomplywiththelabourpracticeandlegislationsuchasEmploymentAct1955andCodeofConductofIndustrialHarmony.
We respect employees rights to bargain collectivelyunder the National Union Commercial Workers(NUCW). 20% of our non-executive workforce wasrepresented by NUCW as at 31 December 2014.Weconductregularmeetingsandenjoygoodrelationswiththeunionanditsrepresentatives.In2014,issuesraisedincludedpromotionandworkinghours.Theseissueswereresolvedwithmutualunderstandingbetweentheparties.
SUSTAINABILITY IN THEWORKPLACE CONTD
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47
We also protect supply-chain personnel and localcommunitymembers. The Human Resources Policyrecognises that while governments are primarilyresponsibleforhumanrightsprotection,therightsofindividuals may be affected by company activities.Alloperations: Provideasafeandhealthyworkplaceforassociates; Donotusechild,forced,prison,indentured,bonded
orinvoluntarylabour; Prohibitdiscriminationintheirhiringand
employmentpractices; Forbidactualandthreatsofphysicalabuseand
harassmentofassociates;and Supportfreedomofassociationandtherightsof
workersandemployerstobargaincollectively.
All employees are governed by their Terms andConditions of Service; contractors and vendors aregovernedbytheirgeneralcontractwiththeBank.Allstandardagreementsprotectallparties.
Everyoneshouldbetreatedwithdignityandrespectandweconductbusinessinamannerconsistentwiththisprinciple.Wecomplywithallapplicableemploymentandhumanrightslawsandregulationswherewehaveoperations and our suppliersmust do the same.Allemployees, including security personnel, are issuedwith an Employee Handbook and Code of Conduct.Thesedocumentsclearlydefinethescopeofourethicalresponsibilities.
We comply with the Children and Young Persons(Employment)Act1966.Individualsagedbelow18yearscannot be employed as mandated in the MalaysianEmployment Act 1955. Although we do not have adedicated non-discrimination policy, there is ampleprotectionintheEmployeeCodeofConduct.Thiscodegoverns all aspects of employment includingdiscrimination.
Wehavehadnoincidentsofdiscriminationorrisktofreedomofassociationandcollectivebargaining.Therehavebeennoreportedincidentsofrisksofchild,forcedorcompulsory labour.NoviolationsofhumanrightsinvolvingtherightsofindigenouspeoplehaveoccurredatanytimeintheCompanyshistory.
EMPLOYEE GRIEVANCE HANDLING
A grievance is defined as reasonable and legitimatedissatisfaction by an employee in his or her workenvironment.Grievancehandlingisperformedasandwhenissuesoccur.Problemsareresolvedpromptlyandemployeeshavetheoptiontoelevatetheirgrievancestohigherlevelsofauthorityifnecessary.
Itiseachandeveryemployeesrighttoairemploymentgrievances or raise complaints about workingconditions. The employees future employmentprospectsarenotaffectedinanyway.
Anemployeewhohasagrievanceorcomplaintmaywrite or complete the Grievance Information Form.The complaint must be submitted to an immediatesuperior, head of department or Human CapitalRelations.
We try to resolve grievanceswithin the department.Theemployeesimmediatesuperiororheadwillreviewandrespondtothecomplainant.
If a grievance cannot be resolved, it is escalated toHumanCapitalRelationswhowillassessthecaseandleadtheinvestigation.Ifthereisacase,HumanCapitalRelations will take necessary disciplinary action inaccordancewiththeIndustrialRelationsprocess.Ifnot,HumanCapitalRelationswillrespondtothecomplainanttoresolvethecaseamicably.
Year No. of Grievances Received
No. of Grievances Solved
2012 0 0
2013 0 0
2014 4 4
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48 2014SUSTAINABILITYREPORT
OCCUPATIONAL SAFETY AND HEALTH (OSH)
Wearecommittedtoprovidingasafe,healthyandsecureworkplace forallemployees, contractors, visitorsandcustomers.Ourcommitmenttoimplementingasafetyandhealthpolicyisintegratedintothedailyactivitiesofallpeoplefrequentingourplacesofworkeffectively.
Wemeetoursafetyandhealthcommitmentsby: Acknowledging our legislative requirement and
ensuring compliance as the minimum acceptablestandard.
Holdingalllevelsofmanagementaccountableforthesafetyandhealthofemployeesundertheirleadership.
Establishingacontinuousandorganisedoccupationalsafetyandhealthmanagementsysteminaccordancewiththelaw.
Creating safe and healthy working conditions andprovidingappropriatesafetyequipment.
Providing our people with information, training,instructionandsupervisionsotheyhavetherequiredskillsandcompetenciesfortheirroles.
Investigatingallaccidents,illnesses,injuries,poisoningand dangerous occurrences and taking preventativemeasurestoensureincidentsdonotrecur.
Raisingstaffawarenessofoccupationalsafetyandhealth awareness so they view good health ascommonpracticeinworkorsociety.
Providingemployeeswithbasicwelfarefacilities. Reviewingandrevisingthepolicywhennecessary.
TheOccupationalSafetyandHealthAct,1994requirestheappointmentofasafetyandhealthcommittee(SHC).OurSHCisrepresentedby0.9%of theworkforceandwasestablishedto: Assistinthedevelopmentofsafetyandhealthrules
andsafesystemsofwork. Review theeffectivenessof theexistingsafetyand
healthprogramme. Conductstudiesontrendsofaccidents,near-misses,
dangerousoccurrences,occupationalpoisoninganddiseasethatoccurintheworkplace.
Report any unsafe or unhealthy conditions orpracticesintheworkplacewithrecommendationsforcorrectiveaction.
Review workplace safety and health policies andrecommendanyrevisions.
SUSTAINABILITY IN THEWORKPLACE CONTD
Health Safety and Environment (HSE) Committee
Dato Mohd Rizal Mohd JaafarChairman(COO,Finance&CorporateServices)
EMPLOYER REPRESENTATIVES EMPLOYEE REPRESENTATIVES
Zainal OsmanPresident,KSRSME
Yoshran ZaidonBusiness,Continuity
Management
Saipul MD RamliInhouseCommitteeChairmanofNUCW
Mohamad Ridzuan Mansor
Head,GeneralServices
Mustafar MaarofHead,EmployeesRelations
Mohamed Khairil Mohamed Khalid
Head,FacilityManagement
Zaihani Abdul HamidDirector,Operations
Noor Nazmi AhmadHead,OperationalRisk
Shahrir AmranActingDirector,GroupHumanCapitalManagementMohd Zuhar Mohamed Nor/Mohd Tarmizi Mohamad
SecretarySHO
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49
SHCmeetingsareheldatleastquarterlyorasrequiredbytheOccupationalSafetyandHealthAct,1994.Minutesof eachmeeting are recorded to document problems, issues, proposed corrective action and actions taken.Attendanceiscompulsoryandcommitteemembersfailingtoattendareremoved.
Safetyandhealthinspectionsofindividualdepartmentsareconductedperiodicallyto: Identifyhazardsandunsafeactsforcorrection; Evaluateprogrammeeffectiveness;and Assigncorrectiveresponsibility; Reportidentifiedproblemsandprogresstoimprove
workplacesafetyandhealth.
SafetyandHealthCommitteeresponsibilitiesareguidedbytheOccupationalSafetyandHealthAct,1994to Identifypotentialhazards; Recommendcorrectiveaction;and Evaluatethesehazards; Followuponimplementedrecommendations
Occupational Safety and Health (OSH) 2012 2013 2014
AbsenteeRate(AR)forTotalWorkforce* 957 631 1.833
InjuryRate 0 0 0
FatalityRate 0 0 0
*SickLeaveTaken
Safety and Health Training
Wecollaboratewith theNational InstituteofOSH Indicator indeliveringemployeesafetyandhealth trainingmodules.Wehavedevelopedcomprehensivehealthandsafetyproceduresthatareupdatedregularlytocomplywithgovernmentalregulations,standardsandbusinessbestpractice.Jobsafetyanalysesandriskassessmentssupportthesepoliciesandprocedures.Weconductauditsandinspectionstodeterminetheeffectivenessofthesemeasures.
Training Programme Relevant to Safety and Health Conducted in 2014
Programme Title Organiser No. of Participants
ErgonomicsandManualHandlingintheWorkplace NIOSH 1
OccupationalSafetyandHealthinOffices NIOSH 1
FireSafetySeminar2014 BOMBA 1
EmergencyPreparednessandResponsePlan NIOSH 3
OilandGasSafetyPassport NIOSH 1
OSHManagementSystem:MS1722&OHSAS18001Interpretation&Implementation:Module1of2(LeadAuditor)
NIOSHCertificationSdnBhd
2
Understanding,EvaluatingandImplementinganEffectiveHIRARCatWork NIOSH 1
ConstructionSafety&HealthOfficer(CSHO) CIDB 1
EffectiveSecurityManagementA21stCenturyPerspective UPerformaResources
1
SafetyandHealthOfficerCourse CONSIST 1
OccupantSafetyBriefingandIndoorEvacuationProceduresattheSMEBankTower BOMBA 21
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50 2014SUSTAINABILITYREPORT
DIVERSITY AT THE WORKPLACE
Webelievediversityandinclusionareessentialtolivingourvalues,achievingourbusinessgoalsandbuildingastrongerSMEBank.Webelievethatdiversityandan
inclusivecompanyculturearekeydriversofcreativityand innovation.Embeddingdiversityand inclusion inourcorporateculturehelpsusdeliverexcellentresults.
SUSTAINABILITY IN THEWORKPLACE CONTD
Executive
NonExecutive
Total
PermanentStaff
NonPermanent
Staff
Female
Male
Malay
Chinese
Indian
Others
< 3030-50
> 50
Workforce by Employment Type
Workforce by Gender
Workforce by Ethnicity
Workforce by Employment Contract
Workforce by Age Group
No. of Employees
No. of Employees
No. of Employees
No. of Employees
No. of Employees
1,200
1,000
800
600
400
200
0
1,200
1,000
800
600
400
200
0
1,200
1,000
800
600
400
200
0
1,0601,0401,0201,000980960940920900880
1,100
1,050
1,000
950
900
850
2012
2012
2012
2012
2012
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
935
964 1,024 1,044
1,00
816
1,02
227
422
694
76
29
488
920
476
634
0
542
982
482
60
31
488
627
055
61,00
5
731
777
247
809
235
233
245
657
62
278
676
70
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51
Employee Turnover 2012 2013 2014
EmployeeTurnoverRate 4.90% 6.60% 7.90%
Male 27 34 43
Female 18 34 39
AgeGroup
< 30 16 26 2830-50 28 41 50
> 50 1 1 4
Women in Management
%WomeninManagement 12.50% 11.30% 13.30%
%WomeninTopManagement 0 0.40% 0.40%
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FINANCING PROGRAMMEFOR WOMAN ENTREPRENEUR
SUSTAINABILITY IN THEMARKETPLACE
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54 2014SUSTAINABILITYREPORT
Weengageregularlywithourcustomersthroughavarietyofprogrammesandinitiatives.Weprovidethenecessarysupportsoentrepreneurscanconcentrateoninnovationand running their businesses. Our client charterdemonstratesourdesiretoprovideefficientandeffectiveservicestoallourcustomers.Ourstand-alonecoachingcentre,CEDAR,buildsthecapacityandcapabilityofbothSMEandDFIemployees.
PRIORITISING OUR CUSTOMERS
Maximisingcustomerlifetimevaluehelpsuscompeteina competitive environment. We develop long-termrelationships with customers through our products.Providing the right information at all times ensurescustomersareabletomakeinformeddecisions.Two-waycommunicationsallowustoserveallmarketsegmentseffectively. We prioritise relationships over buildingbrandstoremaincompetitiveinthemarketplace.
Close to the Customer: Competent Contacts, Comprehensive Services
Wesupportourcustomersanddealwithanyconcernsorcomplaints they may have. Our customer servicedepartmentwelcomesfeedbackinperson,bytelephone,postoremail.Wehandlerequestspromptlyandreliablywithout any unnecessary bureaucracy. Complaintshandlingisalearningprocess.Wetrytomeetcustomersexpectationsthebestaswecansotheycanbeinspiredandcontinueinnovating.
Keeping the Customer Happy: Our Complaints Management
Complaintsreceiveapromptandsympatheticresponse.Ourdetailedguidelinesstatethatcomplaintsmustbedealtwithpolitelyandcompetently.Goodwillmustbeshown to customers. Our up-to-date database is
SUSTAINABILITY IN THEMARKETPLACE
ClientCharter
We strive to provide efficientand effective services tocustomers based oncharter as follows:
with
in 30 working days f
rom rec
eipt
of com
plete docum
entation
.
as possible and a decision sh
all be
given
All finan
cing
app
lications will be pr
ocess
ed as s
oon
conditions will be processed
within working days.
complete and fulfil the predisbursement
All financing disbursement applications that are
related to ank financing w
ill be
ischarge and release of guara
ntors
completed within 0 working da
ys
from full settlement date.
Theclientscharterwillbereviewedfromtimetotimetoim
proveit
seffectivene
ss.
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55
analysedandmanagementupdatesseniormanagementregularly. This analysis helps identify problems socorrectiveactioncanbetaken.Itisalsousefulinthedevelopmentofnewconcepts.
Customercomplaintsorimprovementsuggestionsarevaluable to us. Customers who highlight potentialweaknessesareanasset.Theypresentanopportunityfor us to improve our service quality and makecustomershappyoncemore.
How to keep in touch with us
Type Details
1-800-88-3131
www.smebank.com.my
AllnearestSMEBanksbranches
Allfeedbackrelatedtoproducts,financingfacilitiesandservicesare: SubmittedtotheHeadofCustomerRelationsand
Liaison; Treatedasconfidentialandcannotbeaccessedby
unauthorisedemployees; Recordedordocumented;and Handledinaccordancewiththetimelinesetinthe
procedures.
Customersareinformedtheyhaveanoptiontoescalatetheir complaints, suggestions or appeals within theorganisation.TheyalsohaveanalternativeforumiftheyarenotfullysatisfiedwiththeBanksresponse.
Customer Service Management works to resolvecomplaints,suggestionsandappealsoncetheybecomeawareofthem.Complaintsrootcauseanalysisisalsoperformedperiodically.
Innormalcases,weaimtoprovideasolutionwithin10workingdays.Solutionsandstatusupdatesmustbesubmitted to customers within 30 working days forcomplexcases.
ENSURING CUSTOMER SATISFACTION
Wework to improveourservicestandard.An internaldeliverycharterandclientcharterguideemployeesinmonitoringcustomersatisfaction.Datafromourinternalandexternalcustomersatisfactionsurveysareusedasayardstick for our Customer Satisfaction Index (CSI).The surveys measure the overall customer servicesatisfaction performance we provide to externalcustomersandinternalservicedeliverytoemployees.
External customer satisfaction survey respondentsconsistofbothexistingandpotentialnewcustomers.Results for thepast threeyearsshowthatcustomersatisfactionhas increasedeach year: 87.2% in2012,92.2%in2013and93.3%in2014.Whilerespondentsaregenerallysatisfiedwithouroverallservices,theyalsooffer suggestions for further improvement. Thesesuggestions help us understand and respond toemerginginternalandexternalissuessuchaspolicies,process,systemsandservicedelivery.
Internal Customer Satisfaction Survey (ICSS) and External Customer Satisfaction Survey (ECSS)
The biannual ICSS solicits feedback from internalcustomers. It gauges satisfaction levels of servicesprovidedbythevariousdepartmentswithinSMEBank.
The quarterly ECSS solicits feedback from externalcustomerstodeterminetheirsatisfactionlevelsoftheBanksservices.Thissurveymeasurestheeffectivenessoftheoverallcustomerservicesatisfactionperformanceprovided.Thesurveycoversnewandexistingwalk-incustomersexperiences at the point of entry and EPC tenantfeedback.
Customer Service Management is responsible forpreparingbothsurveysandpresentingthefindingstoseniormanagement. Periodically, Customer ServiceManagementreviewsthequestionnairebasedon: Feedbackfromstakeholders; Managementrequirements; Theobjective;and Thenatureofthesurvey.
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56 2014SUSTAINABILITYREPORT
SUSTAINABILITY IN THEMARKETPLACE CONTD
Customerserviceisatthecoreofeverythingwedoandgoes beyond simply listening to customer feedback.Itbeginswithunderstandingcustomersneedsclearlyandidentifyingtheirexpectations.Wepropo