02 / LEADERSHIP STATEMENT 01 03 04 05 06 07 08 09 21 Risk Management Malaysia and Southeast Asia by and large, fared relatively well economically in 2025, supported by comparatively strong and resilient domestic consumption, export growth, foreign direct investments due to supply chain repositioning and strategic technology-related investments, such as the building of data centres. Notwithstanding these positive developments, 2025 presented its fair share of risks and challenges. These included increased market volatility, geopolitical uncertainties and trade tensions; a global environment seemingly hanging on by a thread and clouded by protectionism, unilateralism and hegemonism; intensified cyber threats and third-party vulnerabilities causing disruptions to banking services; and varying Environmental, Social and Governance (“ESG”) prioritisation across markets. Driven by the increasing digitalisation and interconnectedness of the world, fortifying the Group’s operational agility, resilience and versatility remained a top priority. This principle-led approach guides how we manage risk, while maintaining vigilance and engaging in strategic, measured and purposeful risk-taking. Over the past year, the Group maintained strong asset quality and portfolio performance despite the challenging macro and micro-economic and financial market conditions. We continued to focus on our strategic business niches and maintain diversified risk-taking portfolios to strengthen resilience and support sustainable long-term growth. Notwithstanding financial risks, it remains imperative to invest in resources that enhance operational and technological resilience. Amongst others, cyber threats emerged as a critical operational and technology risk, prompting targeted investments to reinforce our cyber posture, modernise technology solutions, improve business continuity capabilities and mitigate third-party vendor risks. Given the speed at which risks can materialise, establishing risk appetites and tolerances, developing leading indicators, avoiding over-concentration, stress testing our business and operating models and maintaining adequate buffers remain essential. In parallel, advancements in AI present new opportunities to strengthen internal controls and risk management capabilities. Managing climate change risk is also core to our sustainability efforts. As part of our decarbonisation initiatives, the Group has taken proactive steps to manage climate and sustainability risks, ensuring we deliver on our sustainability commitments and create positive impact and value for stakeholders. In 2025, we developed the Sustainability Risk Management Framework and continued to enhance the Climate Change Risk Management Framework, strengthening risk governance and practices supported by relevant policies, procedures, and methodologies. Moving forward, the Group will continue to invest in talent and technology to support its objectives. We remain confident that our team is well-equipped to address future challenges, backed by a strong capital and funding structure, a robust risk culture focused on fundamentals and enhanced operational and technological resilience. Outlook for 2026 After a stronger-than-expected 2025 gross domestic product (“GDP”) growth of 5.2%, Malaysia’s economy is projected to grow at 4.5% in 2026, at the midpoint of the latest BNM’s projection of between 4.0% and 5.0%. Demand for electrical & electronic and AI-related exports, steady tourism activity, and domestic demand will continue to provide support to overall growth despite uncertainties surrounding the ongoing conflict in the Middle East and higher tariffs. The first year under the 13th Malaysia Plan is pivotal, as effective execution will be crucial to transforming the country into a high-income nation. Beyond attracting high-value industries, emphasis is placed on strategic spending to support innovation and growth, including initiatives in AI as highlighted in Budget 2026. A steadier Ringgit is expected to partially support consumer sentiment. Coupled with efforts under Visit Malaysia 2026, following a record 42.2 million visitors in 2025, domestic consumption is anticipated to remain resilient, notwithstanding potential inflationary pressures arising from geopolitical developments in the Middle East. On the investment front, Malaysia is well-positioned to capitalise on a record-high approved investments pipeline in 2025 and robust foreign direct investment interest. GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION AND ANALYSIS More information on Risk Management and Internal Controls can be found on pages 139 to 143 of this Integrated Annual Report 2025.
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