The Board of Directors, Bank’s Officers and Internal Audit continuously monitor the effectiveness of the overall Internal Control implementation.
Monitoring of major risks has been prioritized and serves as a part of daily activities, including regular evaluations. The Bank’s Board of Directors and Officers are committed to and have performed follow-ups of the monitoring results and the Internal Audit recommendations.
Within the framework of the Internal Control System, CIMB Niaga uses the Three Lines of Defence concept, the most recent control strategy under the COSO Internal Control Framework monitoring system, as disclosed in the Risk Management section of this Annual Report.
INTERNAL CONTROL ADEQUACY STATEMENT
The Internal Control System is a process carried out by the Bank’s Board of Directors and all Officers who provide direction, guidance, and supervision
to the Executive Committees, Internal Audit, and all employees. The Board of Directors and the Board of Commissioners are committed to ensuring that Good Corporate Governance is well implemented as the basis for achieving the goal of maintaining and increasing the value of the Bank. One of the elements of Good Corporate Governance is to ensure that the Internal Control System has been implemented adequately.
The Board of Directors is responsible for implementing a sound Internal Control System to achieve the Bank’s objectives.
The Board of Commissioners, assisted by the Audit Committee, is responsible for oversight to ensure the overall implementation of Internal Controls, including the Board of Directors policies related to Internal Controls. The Internal Control System is designed to properly manage and control risks and not to eliminate the risks. This Internal Control statement describes the key elements adopted to achieve the Bank’s Internal Control objectives, which include:
1. Effective and efficient operations;
2. Accurate and reliable financial statements;
3. Compliance with all applicable laws and regulations;
4. Security of Bank assets.
INTERNAL CONTROL EFFECTIVENESS EVALUATION During 2018, CIMB Niaga’s Internal Control was implemented in accordance with the principles of control, and the overall quality of the Internal Control System ran properly. Issues related to the adequacy of Internal Control were reported to the Board of Directors and follow-up measures were taken to minimize risks. Reports were also submitted to the Board of Commissioners through the Committees at the Board of Commissioners level.
Internal Control System
LEGAL ISSUES
In 2018, the Bank’s legal issues (excluding Sharia cases to be disclosed in the Sharia Business Unit Governance Report) consisted of both civil and criminal cases. In the civil cases the Bank’s role was as a Defendant, whereas in the criminal cases the Bank’s role was as the Reported Party.
Civil
Legal Issues
Civil (Bank as Defendant)
2018 2017 2016
Total Cases 214 220 134
Settled Cases (Legally Binding) 60 82 13
Cases in Settlement Process (as of December) 154 138 121
Related to the civil cases, litigation handled by the Bank was caused by:
1. Lawsuits from the borrowers or third parties concerning the collateral pledged by the Bank.
2. Lawsuits related to Bank Guarantees, Cessie, Credit Agreements, requests for Cancellation of Loan Agreements, blocking of accounts or customer accounts, notification of customer collectability, Issuance of Bonds where the Bank acted as the trustee.
3. Lawsuits regarding Tax disputes.
4. Lawsuits from the borrowers regarding Go Mobile application transactions, use of credit cards, denial of insurance claims, and loss of customer funds.
5. Lawsuits for fraudulent investments by third parties whose deposit process was carried out at the Bank.
6. Lawsuits for inheritance disputes against auctioned objects and guarantees at the Bank.
7. Lawsuits for rehiring from ex-Bank employees in the Industrial Relations Court.
8. Lawsuits from third parties related to internal conflicts of borrowers shareholders.
Criminal
Legal Issues
Criminal (Bank as Defendant)
2018 2017 2016
Total Cases 11 8 6
Settled Cases (Legally Binding) 3 2 1
Cases in Settlement Process (as of December) 8 6 5
Related to the criminal cases, litigation handled by the Bank was caused by:
1. Reports from customers or third parties concerning alleged banking crimes.
2. Reports from customers or third parties related to alleged criminal acts regarding counterfeit letters, alleged criminal acts regarding fraud and the misappropriation of funds, and alleged use of land without permission from the owner or their authorized attorney.
VALUE OF CLAIMS/DAMAGES AND QUANTITATIVE RISKS FACED
Cases with lawsuit values of more than Rp10 billion together with the quantitative risk information faced by the Bank during 2018 were as follows:
1. Lawsuit of Civil Court registered under No. 255/PDT.G/2008/PN.Jkt.Pst
Parties II (Plaintiff I)
IIM (Plaintiff II) DPP (Plaintiff III) DPKS (Plaintiff IV) BGI (Defendant I) IS (Defendant II) RHIS (Defendant III) B (Defendant IV) ISB (Defendant V) RS (Defendant VI) HS (Defendant VII) S (Defendant VIII) KAP TTHR (Defendant IX) TI (Defendant X) JS (Defendant XI)
KCRI now named as MI (Defendant XII) KKH S&T (Defendant XIII)
HT (Defendant XIV) FH (Defendant XV) APS (Defendant XVI) Bank (Defendant XVII)
Subject The Plaintiffs motioned a lawsuit claiming that the Bank as the
trustee agent in the issuance of the subordinated Bonds I BGI has committed an illegal act
Value Material: Rp10,637,083,332
Immaterial: Rp400,000,000,000
Status At Reconsideration
Risk Encountered by the Bank Indemnity for the value of the lawsuit together with the other Defendants
2. Lawsuit of Tax Court registered under No. 50358/PP/M.IB/16/2014
Parties DGT (Suppliant)
Bank (Respondent)
Subject The DGT filed a Review of the Supreme Court’s decision
concerning a Tax Underpayment Assessment Letter (SKPKB) issued by the DGT for the Bank
Value Material: Rp54,822,422,481
Immaterial:
Status At Reconsideration
Risk Encountered by the Bank Indemnity for the value of the lawsuit 3. Lawsuit of Tax Court registered under No. 57057/PP/M.IIIA/15/2014
Parties DGT (Suppliant)
Bank (Respondent)
Subject The DGT filed a Review of the Supreme Court’s decision regarding
the Letter of Tax Underpayment Assessment (SKPKB) issued by the DGT for the Bank
Value Material: Rp204,760,659,708
Immaterial:
Status At Reconsideration
Risk Encountered by the Bank Indemnity for the value of the lawsuit
Legal/Litigation Issues of the Bank and its Subsidiaries
4. Lawsuit of Civil Court registered under No. 253/PDT.G/2016/PN.Jkt.Ut
Parties JMS (Plaintiff I)
RVS (Plaintiff II) AJS (Plaintiff III) SGI (Defendant I) ENA (Defendant II) MCR (Defendant III) CCR (Defendant IV) SS (Defendant V) YPK (Defendant VI) RFW (Defendant VII) IY (Defendant VIII) BDI (Defendant IX) Bank (Defendant X) BBS (Defendant XI) BK (Co-Defendant I) DJAHU (Co-Defendant II)
Subject Customer’s internal shareholder conflict (inheritance dispute)
Value Material: Rp291,500,000,000
Immaterial: Rp300,000,000,000
Status In appeal process
Risk Encountered by the Bank Risks Encountered by the Bank is loss of guarantee 5. Lawsuit of Civil Court registered under No. 176/PDT.G/2017/PN.DPK
Parties SA (Plaintiff I)
SP (Plaintiff II) BUG (Plaintiff III) SBP (Plaintiff IV) SPP (Plaintiff V)
BMI formerly BII (Defendant I) Bank (Defendant II)
KD (Defendant III) KK RI (Defendant IV) EG (Co-Defendant I) MP (Co-Defendant II)
Subject Granting of rights to shareholders to buy back shares
Value Material: Rp2,100,000,000,000
Immaterial: Rp2,200,000,000,000
Status At the Cassation level
Risk Encountered by the Bank Indemnity for the value of the lawsuit together with the other Defendants
6. Lawsuit of Civil Court registered under No. 572/PDT.G/2018/PN.JKT.SEL
Parties BKPL (Plaintiff I)
Bank (Defendant)
Subject Cancellation of Credit Agreement Addendum
Value Materiil: Rp34,818,314,000
Immateriil: Rp50,000,000
Status At the District Court level
Risk Encountered by the Bank Indemnity for the value of the lawsuit
MATERIAL CASES INVOLVING INCUMBENT MEMBERS OF THE BOARDS OF DIRECTORS AND BOARDS OF COMMISSIONERS
During 2018, no members of the Bank’s Board of Directors and/or Board of Commissioners were involved in cases and/or civil and/or criminal disputes.
MATERIAL CASES INVOLVING SUBSIDIARIES CIMB Niaga Auto Finance (CNAF)
CNAF’s legal cases in 2018 consisted of civil and criminal cases. In the civil cases CNAF’s role was as a Defendant whereas in the criminal cases CNAF’s role was as the Reporting Party.
Civil
Legal Issues
Civil (Bank as Defendant)
2018 2017 2016
Total Cases 9 23 22
Settled Cases (Legally Binding) 4 12 7
Cases in Settlement Process (as of December) 5 11 15
Criminal
Legal Issues
Criminal (Bank as Defendant)
2018 2017 2016
Total Cases 76 53 20
Settled Cases (Legally Binding) 23 14 1
Cases in Settlement Process (as of December) 53 39 19
MATERIAL CASES INVOLVING INCUMBENT MEMBERS OF CNAF’S BOARDS OF DIRECTORS AND BOARD OF COMMISSIONERS
No members of CNAF’s Board of Directors and Board of Commissioners were involved in cases and/or civil and/or criminal disputes.
IMPACT OF LEGAL ISSUES FOR THE BANK AND ITS SUBSIDIARIES
Litigation involving the Bank in 2018 did not materially affect the status, position and/or business continuity of the Bank and its subsidiaries.
Administrative Sanction from Relevant Authorities
Throughout 2018, there were no material administrative sanctions that affected business sustainability and there were no administrative sanctions imposed on
members of the Board of Directors and/or members of the Board of Commissioners from the relevant authorities.
Legal/Litigation Issues of the Bank and its Subsidiaries
CIMB Niaga regularly updates information and provides easy access for its stakeholders to information regarding the Bank’s activities and performance so they may understand the Bank’s conditions in a transparent manner. CIMB Niaga provides several facilities as information disclosure channels through various media, including its website (in two languages), mass media, mailing lists, newsletters, analyst meetings, IDX website, and others. In this regard, the Bank has an Investor Relations unit for building a good image of the Bank through interactive relationship development with investors/analysts, and also regularly delivers information, particularly related to the Bank’s performance.
CORPORATE DATA AND INFORMATION ACCESS Access to the Company’s Data and Information is facilitated through:
• Website:
www.cimbniaga.com
• Call Center:
14041; (021) 29978888
• Customer Care:
• e-mail Investor Relations:
[email protected] INVESTOR RELATIONS
CIMB Niaga has established an Investor Relations unit to foster good relations and to interact with the Investors, the Capital Market, and the Shareholders that includes:
1. Developing strategic communication, mainly with investors, prospective potential investors, analysts, fund managers, securities firms, and the general Capital Market community.
2. Preparing financial performance presentation material for the purpose of analyst meetings and teleconferences while ensuring transparency.
3. Developing company information transparency, both financial and non-financial as well as the Bank’s strategies.
4. Communicating the Bank’s performance to external parties including investors, fund managers, and potential investors.
5. Maintaining good relationships and acting as mediator between the Bank and stakeholders by managing communication and correspondence with investors, fund manager, analysts, securities firms, and rating agencies.
6. Maintaining the Bank’s or its customers’ confidential information in a proper manner and avoiding making use of this confidential information for personal interest or the benefit of any other party.
7. Coordinating the preparation, publication, and distribution of Annual Reports to all stakeholders.
8. Providing data and information related to the Bank’s performance through the website to provide easier and broader access, where the information provided includes:
a. Monthly and quarterly reports publication, LCR
& NCFR information, quantitative risk exposure information, capital disclosure reports, and financial statements of the legal primary entity in accordance with OJK requirements as a banking company in Indonesia.
b. Consolidated quarterly and year-end audited financial statements publication in accordance with OJK requirements as a public company.
c. Annual Reports, a comprehensive report to the public and stakeholders concerning CIMB Niaga’s performance achievement, business and other activities.
INVESTOR RELATIONS ACTIVITIES
A activities with investors and analysts conducted by the Investor Relations Division during 2018, included:
1. Organised 4 (four) Analyst Presentations.
Date Topic Description
25 April 2018 CIMB Niaga 1Q18 Results Conference Call
14 August 2018 CIMB Niaga 1H18 Results Conference Call
31 October 2018 CIMB Niaga 9M18 Results Conference Call
20 February 2019 CIMB Niaga FY18 Results Conference Call
2. Communicated with analysts in 16 (sixteen) meetings/teleconferences involving 54 (fifty four) capital market managers/analysts.
In-House Meetings 2018
Meeting FM/Analysts
One on one Meetings 9 15
Group Meetings 4 36
Teleconference 3 3
3. Organised the Annual Rating Review for Fitch Indonesia, Pefindo, Moody’s, and RAM.
Rating Agency Date
Fitch Rating Indonesia 13 March 2018
Moody’s 29 March 2018
Pefindo 9 July 2018
RAM 5 October 2018 (concall)
4. Organised a Public Expose regarding the Bank’s performance and strategies to the media, analysts, as well as investors on 15 October 2018, at the Financial Hall, 2nd Floor of Graha CIMB Niaga, Jl. Jend. Sudirman Kav. 58, Jakarta.
5. Redesigned the Bank’s website, particularly in relationship with GCG and Investor Relations disclosure. The Bank is committed to continually improving the Transparency Principle as mandated in the Capital Market Law, as well as improving Good Corporate Governance, especially to shareholders, customers, the public, the government, and other stakeholders through the investor.cimbniaga.co.id microsite that is integrated with the main website www.cimbniaga.com
SOCIAL MEDIA
Throughout 2018, CIMB Niaga maintained and managed 6 (six) social media accounts, as follows:
1. Facebook CIMB Niaga 2. Instagram CIMB Niaga 3. YouTube CIMB Niaga 4. Google+ CIMB Niaga 5. Twitter @CIMBNiaga 6. LinkedIn CIMB Niaga
These accounts serve as media for delivering information on the Bank’s activities including brands, product offers, tips, and other information. In addition, 3 (three) of these 6 (six) accounts respond to fans/
follower inquiries regardless of whether they are CIMB Niaga customers or not. The Bank also uses social media as a communication channel to convey information related to the Bank’s activities. This is for the purpose of assisting customers in obtaining clear information and assistance when facing problems with banking transactions.
In 2018 the Bank held various communication campaigns using social media as the communication channel. Some of the large-scale social media communication activities carried out during 2018 included:
• Konser Kejar Mimpi communication campaign
• Seasonal communication campaigns (Chinese New Year, Nyepi, Waisak, Idul Fitri, Independence Day, and Christmas)
• MASA? communication campaign
Access to Corporate Data and Information
The Konser Kejar Mimpi communication campaign is a campaign carried out to support one of the Bank’s major events of the same name. The concerts were held in 3 cities, Medan, Surabaya, and Bandung, featuring Noah and Mady Ayunda as the main performers.
The seasonal communication campaigns are activities to celebrate the seasonal momentum in Indonesia and includes Chinese New Year, Idul Fitri, Independence Day, Christmas and New Year. For each seasonal momentum, the Bank launches communication material videos on its official Facebook and Instagram accounts.
In 2018, CIMB Niaga also continued the MASA?
communications campaign to introduce the various advantages of CIMB Niaga’s retail banking products.
This campaign is specially designed in the form of a video series featuring prominent social media influencers and stand-up comedians in Indonesia.
Each video conveys a message about the benefits of CIMB Niaga’s retail products, including Savings, Mortgages, Credit Cards, and Branchless Banking of CIMB Niaga.
In 2018, CIMB Niaga continued its initiatives and activities involving its employees to become CIMB
Niaga’s brand ambassadors on social media, known as CIMB Niaga Onliner. To support this activity, the Bank uses an application that serves as library content, as well as a tool to measure the performance of each CIMB Niaga onliner.
Through the Bank’s social media programs and activities, the number of followers on Facebook CIMB Niaga at the end of December 2018 reached 1,159,443 people, an increase of 27%, compared to 2017. While @ CIMBNiaga Twitter followers reached 67,661 followers, an increase of 19% compared to 2017. While the @ CIMB_ Niaga Instagram followers reached 194,695 people, an increase of 60% since the end of 2017.
CIMB Niaga is aware that the role of social media is very effective as a communication tool to convey information regarding the Bank’s performance.
Therefore, CIMB Niaga continues to increase social media’s role in conveying the Bank’s messages, or for receiving input from the general public. The Bank’s social media activities run 24 hours, 7 days a week with a response time below 5 minutes after a comment is made, making CIMB Niaga one of the best companies in the banking industry in terms of social media response time.
2018 PRESS RELEASE
No. Title Date
1 Improve Financial Literacy, CIMB Niaga Runs the AMDB Program 2 February 2018
2 CIMB Niaga Supports Maudy Ayunda #KejarMimpi Launches the Album “Oxygen” 15 February 2018
3 CIMB Niaga Reports Rp3.0 Trillion Consolidated Net Profit in 2017 26 February 2018
4 To Increase Mortgage, CIMB Niaga Offers Competitive Interest 28 February 2018
5 Realizing the Dream, 100 Students Granted Scholarships from CIMB Niaga 5 March 2018
6 The President Director of CIMB Niaga as the Most Inspiring CEO 7 March 2018
7 Launching the 2018 AMDB Program, CIMB Niaga Educates Millennials in Mataram 12 March 2018
8 CIMB Niaga Syariah Posted Positive Performance Throughout 2017 26 March 2018
9 CIMB Niaga Appreciates Mortgage Business Partners 27 March 2018
10 CIMB Niaga Syariah Acknowledged as the Best Islamic Bank in Indonesia 28 March 2018 11 Supporting the 2018 IndoBuildTech Expo, CIMB Niaga Presents One Stop Financial Solution 3 April 2018 12 Motivating Students to Develop Social Business, CIMB Niaga Held #KejarMimpi Leaders Camp 9 April 2018
No. Title Date 13 Expanding the Market, CIMB Niaga Syariah Holds the 2018 Mortgage Syariah Mini Expo in Yogyakarta 17 April 2018 14 Encouraging Mortgage Growth, CIMB Niaga Collaborates with PT Astra Modern Land 18 April 2018 15 Launching “CIMB Niaga Indosat Ooredoo Card”, CIMB Niaga Targets the Millennial Community 19 April 2018
16 CIMB Niaga Wins its Fourth Global CSR Award 20 April 2018
17 CIMB Niaga’s AGM Approves the Distribution of Cash Dividends 24 April 2018
18 CIMB Niaga Reports Consolidated Net Profit of Rp877 Billion in the First Quarter of 2018 25 April 2018
19 First in Indonesia, CIMB Niaga Implements E-Voting at the AGM 26 April 2018
20 CIMB Niaga Presents “Kejar Mimpi“ Concert for Indonesia 27 April 2018
21 CIMB Niaga is the Main Partner of the 2018 IndoBuildTech Expo 2 May 2018
22 CIMB Niaga Syariah Wins Two Awards 3 May 2018
23 Supporting a Healthy Lifestyle, CIMB Niaga Organizes Car Free Day Event 6 May 2018 24 Targeting Teen Gamers, CIMB Niaga Presents Indie Account x AOV Savings 8 May 2018 25 Safari Ramadhan 1439 H, CIMB Niaga Distributes CSR in Various Regions 31 May 2018
26 CIMB Niaga Appreciates Employees with a Victory Concert 4 July 2018
27 Strengthening Relationships, CIMB Niaga Holds Customer Gathering 16 July 2018
28 Commemorating National Children’s Day, CIMB Niaga Holds Tour De Bank in Padang 22 July 2018 29 The Color Run presented by CIMB Niaga Encourages People to Live Healthy and Discover the “Hero in
You” 30 July 2018
30 CIMB Niaga Supports the 2018 Cathay Pacific Travel Fair 2 August 2018
31 CIMB Niaga Encourages Customers to Use GPN Debit Cards 6 August 2018
32 Celebrating the 73rd Indonesian Independence Day, CIMB Niaga Offers KPR Bebas Merdeka 9 August 2018 33 Launching the 2018 Community Link, CIMB Niaga Invites Customers to Realize CSR Ideas 11 August 2018 34 CIMB Niaga Reports Consolidated Net Profit of Rp1.8 Trillion in the First Semester of 2018 14 August 2018 35 CIMB Niaga Syariah Distributes Donations for Victims of the Lombok Earthquake 15 August 2018 36 Developing Digital Banking, CIMB Niaga Syariah Optimizes Technology 20 August 2018 37 Garuda Indonesia Teams Up with CIMB Niaga for “Garuda Online Travel Fair”, Targets to Achive Rp185
billion 23 August 2018
38 CIMB Niaga Holds “Kejar Mimpi untuk Indonesia” Concert in Surabaya 25 August 2018
39 CIMB Niaga Organizes Road to the 2018 CIMB Niaga Namaste Festival in Bandung 31 August 2018
40 CIMB Niaga Syariah and HIJUP Launch “HIJUP Membership Card” 3 September 2018
41 CIMB Niaga Appreciates Customers at the 2018 National Customer Day 4 September 2018
42 CIMB Niaga Holds “Kejar Mimpi untuk Indonesia” Concert in Bandung 7 September 2018
43 Kompas Travel Fair 2018 is Ready to Realize Your Holiday Dream 7 September 2018
44 Go Mobile CIMB Niaga Wins Two Asian Banker Awards 11 September 2018
45 Supporting the JKN-KIS Program, CIMB Niaga Collaborates with BPJS Kesehatan 12 September 2018 46 The Color Run presented by CIMB Niaga Brightens Jakarta and Invites 13,000 Participants to Find the
“Hero in You” 16 September 2018
47 CIMB Niaga Syariah Supports the Development of Hasyim Asy’ari Hospital 19 September 2018 48 2018 CIMB Niaga Namaste Festival Invites to Cultivate a Healthy and Environmentally Friendly Lifestyle 20 September 2018 49 Celebrating the 63rd Anniversary, CIMB Niaga Delivers Double Decker Bus to Semarang City
Government 26 September 2018
50 CIMB Niaga Syariah Wins Two Awards 4 October 2018