#1HSBC Amanah Malaysia Berhad Investor Presentation, 13 September 2018 HSBC Amanah#2Disclaimer 2 You must read the following before continuing. The following applies to this presentation, and you are therefore advised to read this carefully before reading, accessing or making any other use of this presentation. In accessing this presentation, you agree to be bound by the following obligations and limitations. This presentation has been prepared by HSBC Amanah Malaysia Berhad ("HSBC" or the "Issuer") solely for use at this presentation held in connection with the proposed offering and sale of securities of the Issuer (the "Offering"). The recipient agrees to keep confidential at all times this presentation and any information contained in it or made available by the Issuer in connection with it. It should be read in its entirety and shall not be photocopied, reproduced, distributed or disclosed in whole or in part to any person other than the recipient without the prior written consent of the Issuer, nor should any other person act on it. This presentation is proprietary to the Issuer and the recipient agrees on request to return or to destroy this presentation and all other materials received from the Issuer relating to the information contained herein. The information contained in this presentation has not been verified, approved or endorsed, or independently verified, by any independent third party. No responsibility or liability is accepted by the Issuer or by any of its directors, officers, employees, affiliates or agents in relation to the accuracy, completeness or sufficiency of any information contained herein or any other written or oral information made available by the Issuer in connection therewith or any data which any such information generates, or for any loss whatsoever arising from or in connection with the use of, or reliance on, this presentation and any such liability is expressly disclaimed. In particular, but without limitation, no representation or warranty, express or implied, is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects, returns or other forward-looking statements contained herein. Any such projections, estimates, forecasts, targets, prospects, returns or other forward-looking statements are not a reliable indicator of future performance. Nothing in this presentation should be relied upon as a promise or representation as to the future. The Issuer gives no undertaking, and is under no obligation, to provide the recipient with access to any additional information or to update this presentation or to correct any inaccuracies in it which may become apparent, and it reserves the right, without giving reasons, at any time and in any respect to amend or terminate the proposal(s) described herein. Certain information in this presentation was obtained from various external sources, and neither HSBC nor its affiliates, advisers or representatives has verified such information with independent sources. Such information involves risks and uncertainties and is subject to change based on various factors. This presentation is also not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation. In particular, this presentation and the information contained herein do not constitute an offer of securities for sale in the United States and are not for publication or distribution in or within the United States (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")). The securities proposed to be offered by the Issuer have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, US persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. In the United Kingdom, the Offering is only directed at: (i) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) high net worth entities falling within Article 49(2) of the Order or (iii) those persons to whom it may otherwise law fully be communicated, all such persons in (i), (ii) and (iii) being referred to as "Relevant Persons". If you have received this presentation in the United Kingdom, you confirm that you are a Relevant Person. This presentation must not be acted upon or relied upon in the United Kingdom by persons who are not Relevant Persons. Any investment or investment activity to which this presentation relates in the United Kingdom is available only to, and will be engaged in only with, Relevant Persons.#3Disclaimer In any European Economic Area Member State that has implemented Directive 2003/71/EC (such Directive and amendments thereto, including Directive 2010/73/EU together with any applicable implementing measures in the relevant home Member State, the "Prospectus Directive"), this communication is only addressed to and directed at qualified investors in that Member State within the meaning of the Prospectus Directive. In Malaysia, the Offering may only be directed to a person to whom an offer or invitation to subscribe the securities and to whom the securities are issued would fall within Schedule 6 (or Section 229(1)(b)) and Schedule 7 (or Section 230(1)(b)) read together with Schedule 9 (or Section 257(3)) of the Capital Markets and Services Act 2007 and which are not entities within the HSBC Group. After issuance, the securities may only be offered, sold, transferred or otherwise disposed of directly or indirectly to a person to whom an offer or invitation to purchase the securities would fall within Schedule 6 (or Section 229(1)(b)) read together with Schedule 9 (or Section 257(3)) of the Capital Markets and Services Act 2007 and which are not entities within the HSBC Group. This presentation is also not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation. This presentation does not constitute a prospectus or other offering document in whole or in part. Information contained in this presentation is a summary only. Under no circumstances shall this presentation constitute an invitation or offer for sale or subscription of, or a solicitation of any offer to buy or subscribe for, any securities of the Issuer nor should they or any part of them form the basis of, or be relied on in connection with, any contract or commitment whatsoever. If these presentation materials have been sent to you in an electronic form, you are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither the Issuer nor any of its directors, officers, employees, affiliates or agents accepts any liability or responsibility whatsoever in respect of any difference between the presentation materials distributed to you in electronic format and the hard copy version available to you on request from the Issuer. As used herein, “presentation" shall mean and include the slides that follow, any oral presentation of the slides, any question-and-answer session that follows any such oral presentation, hard copies of this presentation and any materials distributed at or in connection with, any such oral presentation. 3#4Agenda Overview of HSBC Amanah Malaysia Berhad Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC Sustainable Development Goals (SDG) Bond Framework Q&A Session 4#5Overview of HSBC Amanah Malaysia Berhad HSBC 5#6Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 6 Overview of HSBC Amanah Malaysia Berhad (“HSBC Amanah") ◆ The first locally incorporated foreign bank to be awarded an Islamic banking license in Malaysia and has been in operation since 2008 Largest subsidiary (by asset size) of a locally incorporated foreign bank and the 2nd most profitable foreign Islamic bank in Malaysia (by profit before tax)1 Both HSBC Amanah and its parent company, HSBC Malaysia have rating of AAA with stable outlook by RAM Rating Services Berhad (RAM), its highest rating ◆ Wholly owned by HSBC Bank Malaysia Berhad, which in tum is ultimately owned by HSBC Holdings plc, a leading global banking group One of the two global Islamic Banking hubs for HSBC Group Malaysia is among the Group's eight scale markets, a strategically important part of the HSBC Group HSBC Amanah has 26 branches nationwide, the largest Islamic Bank network among locally incorporated foreign banks in Malaysia, 6th largest among all Malaysian Islamic Banks2 ◆ HSBC Malaysia has a network of 68 branches in the country as at August 2018 1 Based on financial statements of the leading foreign Islamic financial institutions in Malaysia by profitability 2 http://aibim.com/ver2/index.php/industry-information/islamic-banking-resources/islamic-banking-branches#7Key Credit Highlights HSBC 7#8Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG 8 Bond Framework Key Credit Highlights STRATEGIC IMPORTANCE to HSBC Malaysia and HSBC Group1 -Given HSBC Amanah's strategic role as HSBC Malaysia's Islamic banking arm and one of the HSBC Group's two global Amanah hubs CLOSE INTEGRATION with parent company, HSBC Malaysia1 -Operationally integrated with HSBC Malaysia, sharing back-room operations, risk management capabilities and distribution channels, also benefitting from the HSBC Group's solid global franchise, international network and product expertise STRONG CAPITALISATION1 -HSBC Amanah's common equity tier-1 (CET-1) capital and total capital ratios remained strong at a respective 12.1% and 17.8% as at 31 December 2017 HIGHEST ISSUE RATING by RAM¹ - HSBC Amanah has a Financial Institution Rating of AAA, the highest on RAM's national scale 1. Source: HSBC Amanah Malaysia Berhad Credit Rating Rationale by RAM Rating Services Berhad (June 2018)#9Financial Highlights HSBC 9#10Overview of HSBC Amanah Key Credit Highlights Financial Highlights 2% CAGR Income (MYR'mil)1 469 487 514 479 472 247 264 HSBC Group Sustainability HSBC SDG Bond Framework Profit Before Tax (MYR'mil) 188 182 153 102 106 97 62 52 T 2013 2014 2015 2016 20171H17 1H18 2013 2014 2015 2016 20171H17 1H18 ■Total Income ■Profit Before Tax Disciplined Cost Management (MYRʼmil/Ratio %) Returns and Shareholders' Funds (MYR'mil/Ratio %) 12% 11% 8% 9% 51% 49% 49% 49% 45% 46% 47% 5% 5% 1.08% 0.92% 0.68% 0.46% 0.51% 5% 3% CAGR 8% CAGR 1,452 1,521 1,616 0.50% 0.84% 1,616 1,726 237 243 1,319 233 239 213 1,177 121 124 T 2013 2014 2015 T T 2017 1H17 1H18 CIR 2 2016 Expenses 1. Total income is the sum of 'Income derived from investment of depositors' funds and others', 'Income derived from investment of shareholder's funds' and 'Income attributable to depositors'. 2. CIR Cost income ratio 3. ROTE - Return on tangible equity calculated as profit after tax divided by average tangible equity. Tangible equity is equal to total equity attributable to the owner of the Bank. T 2013 2014 2015 2016 2017 1H17 1H18 Shareholders' Funds ROTE 3 ROA 4 4. ROA Return on assets calculated as profit after tax divided by average total assets (two point average) Source: HSBC Amanah financial statements Note: 1H18 financial figures are yet to be audited 10#11HSBC Group Sustainability HSBC 11#12Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 12 HSBC's Commitment on Sustainability ■ HSBC is fully committed to its own sustainability approach and compliance with the sustainability commitments that we have made in the public domain ■ HSBC recognises that we have responsibilities not only towards our customers, employees and shareholders, but also the countries and communities in which we operate. This means understanding and managing the impact we have on society and the environment, and investing in the future of our employees and the communities we serve ■ HSBC Group Sustainability's mandate is to ensure that the business translates this recognition into practice. Context Climate change represents an urgent and irreversible threat to human society, as recognised by the almost 200 countries that have signed the 2015 Paris Agreement on climate change. An estimated USD90 trillion of investment is needed in new green infrastructure over the next 15 years double the current annual rate of spending just to keep the global temperature increase below two degrees. - Major injections of capital are needed to pay for more efficient and less carbon- intensive technologies and infrastructure, to reduce the carbon footprint of established companies and industries, and to cover the costs of climate adaptation. HSBC's Commitments Provide USD100bn of sustainable financing and investment by 2025 Source 100% of our electricity from renewables sources by 2030 (90% by 2025) Reduce our exposure to thermal coal and actively manage the transition for other high carbon sectors Adopt recommendations of Task Force on Climate- related Financial Disclosures Lead and shape the debate around sustainable finance and investment Provide USD 100bn of financing/investment to develop dean energy, lower-carbon technologies, and projects that contribute to the delivery of the Paris Agreement and the UN Sustainable Development Goals Lead the development of sustainable capital markets, support corporate and institutional clients in managing risks and promote sustainable investment products for retail and private banking clients Use direct investment and direct purchases via PPAs and similar mechanisms that directly help the financing of new renewable electricity assets. Collaborate with RE100, governments and regulators to open up renewable energy markets where PPAs¹ or similar are not currently available Reduce electricity per FTE by 20% by 2020 Discontinue financing of new thermal coal mines (including new customers dependent on it) and new coal-fired power plants in developed countries and continuously reinforce lending criteria in developing countries Engage with clients in high carbon sectors to influence their transition strategies Continuously review our risk policies on low carbon technologies Report according to governance/ strategy/ risk management recommendations of the task force Engage with academia/ industry associations/ civil society networks to support robust climate scenario analysis to price transition and physical risk. Promote uptake of these recommendations across our global network Establish a Centre of Sustainable Finance to provide thought leadership about climate change and the role of the financial services sector. Promote the development of industry-wide definitions, standards, tools and metrics to enhance market analysis of Environmental Social Governance (ESG) issues and impacts. 1. PPA Power purchase agreement 2. FTE Full time equivalent#13Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 13 An Overview of Sustainability at HSBC At HSBC, it is important how business is conducted and sustainability sits at the core of HSBC strategic priorities where we rely on integrated approach to climate business and sustainability leveraging on HSBC's unique global presence and capabilities Future skills Entrepreneurship and sustainable networks Corporate Sustainability Sustainable Finance Sustainable Finance Refers to any form of financial service integrating ESG criteria into the business or investment decisions for the lasting benefit of both clients and society at large Corporate sustainability is an approach that creates long term stakeholder value by implementing a business strategy that considers every dimension of how a business operates in the ethical, social, environmental, cultural and economic spheres Sustainable Investment Sustainable financing Green Bond Framework SDG Bond framework#14Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 14 HSBC Amanah and Sustainability Guided by HSBC Group sustainability agenda, HSBC Amanah aspires to lead by example through implementation of the group sustainability direction which is also in line with Bank Negara's Value Based Intermediation (VBI) initiative. VBI is a new initiative driven by Bank Negara Malaysia that was first introduced in July 2017 with an aim to generate positive and sustainable impacts on the economy, community and environment through the Islamic financial institutions' practices, conduct and offerings consistent with shareholder's sustainable returns and long term interests¹ VBI is not a completely new concept as VBI shares similarities with several well-established concepts such as ESG, Sustainable, Responsible, Impact Investing (SRI), Ethical/Sustainable Finance and faith based banking A self assessment tool, the VBI scorecard covering both elements of business performance and overall bank's culture and practices will be used to measure how well banks adopt VBI The Two Angles of VBI 1 2 Quantitative factors² Social Empowerment People Business Model Planet Environmental Regeneration Triple Bottom Line (TBL) Real Economy Society Meeting financial needs of communities i.e enterprises and individuals in productive and sustainable economies Serving local communities 1 Bank Negara Malaysia, Strategy Paper- Value Based Intermediation, March 2018 2 Scorecard, Global Alliance Banking for Values Economic Resilience Leadership Prosperity Qualitative elements Governance Strategic direction Conduct Talent Development#15HSBC Sustainable Development Goals (SDG) Framework HSBC 15#16Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 16 Background to UN SDGs In September 2015, the United Nations Sustainable Development Goals, known as the SDGs, were launched. A framework to end poverty and reverse human impacts for a more sustainable planet by 2050. The SDGs call for collaboration between all sectors: private, public, grass roots and governments. The HSBC SDG Framework is an example of our strategic commitment to sustainability and support for our customers and clients in this important area. ■ Proceeds from the issuance of bonds which comply with the SDG Bond Framework will be used in defined Eligible Sectors relating to the SDGs as specified, further information on governance, reporting and indicative portfolio is provided on the following pages The defined Eligible Sectors under the HSBC SDG Framework are outlined in red as per below: 1 NO POVERTY 2 ZERO HUNGER 3 GOOD HEALTH AND WELL-BEING SSS 4 QUALITY EDUCATION 5 GENDER EQUALITY 6 CLEAN WATER AND SANITATION 7 AFFORDABLE AND CLEAN ENERGY 8 DECENT WORK AND ECONOMIC GROWTH 9 INDUSTRY, INNOVATION AND INFRASTRUCTURE 10 REDUCED INEQUALITIES 11 SUSTAINABLE CITIES AND COMMUNITIES 12 13 CLIMATE ACTION 14 LIFE BELOW WATER 15 LIFE ON LAND 16 RESPONSIBLE CONSUMPTION AND PRODUCTION QO PEACE, JUSTICE AND STRONG INSTITUTIONS PARTNERSHIPS 17 FOR THE GOALS SUSTAINABLE DEVELOPMENT GOALS#17Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 17 Summary Eligible Sectors (1/2) The full framework is available on our website 3 GOOD HEALTH AND WELL-BEING 4 QUALITY EDUCATION 6 CLEAN WATER AND SANITATION AFFORDABLE AND 7 CLEAN ENERGY Eligibility criteria: Activities that strengthen the capacity of all countries, in particular developing countries, for provisions of free or subsidized healthcare, and early warning, risk reduction and management of health crises Examples: Hospitals; Healthcare centres; Training for medical professionals; Vaccines / medicines; Provision / distribution of healthcare equipment and services Eligibility criteria: Activities that expand access to primary, secondary, adult and vocational education; Activities that target women and minority inclusion in education; Activities that improve educational infrastructure Examples: Construction of schools; Construction of Campus; Construction of student housing; Educational grants; Training for educational professionals Eligibility criteria: Activities that expand public access to safe and affordable drinking water; Activities that provide access to adequate sanitation facilities; Activities that improve water quality; Activities that increase water-use efficiency through water recycling, treatment and reuse Examples: Water supply & distribution; Water treatment facilities; Water saving systems, technologies and water metering; Training sessions / workshops to improve sanitation knowledge of less well off populations Eligibility criteria: Generation of energy from renewable sources; Construction / maintenance / expansion of associated distribution networks; Manufacture of components of renewable energy technology; Development and implementation of products or technology that reduces energy consumption; Examples: Renewable energy projects including wind, solar, small scale hydro and biomass and their associated components; Grid expansion / development that carries a minimum of 85% renewable Energy; Smart grids; Smart meters#18Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 18 Summary Eligible Sectors (2/2) ☐ 9 INDUSTRY, INNOVATION 11 SUSTAINABLE CITIES AND COMMUNITIES Eligibility criteria: Develop quality, reliable, sustainable infrastructure, to support affordable and equitable access for all that will also benefit economic development and human well-being; Upgrade and retrofit infrastructure to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes Examples: Rail transportation projects for public use; Development of roads in areas that lack connectivity, or in areas lacking infrastructure; Communication projects including internet coverage and mobile phone usage Eligibility criteria: Activities that expand or maintain the supply of affordable housing; Activities that expand or maintain access to sustainable transport systems Examples: Rail transportation projects for public use; Development of roads in areas that lack connectivity, or in areas lacking infrastructure; Construction of Social Housing; Right to Buy schemes 13 CLIMATE ACTION " Eligibility criteria: Adaptation projects that demonstrably contribute to reducing vulnerability to climate change identified in the project area and do not increase carbon emissions Examples: Natural disaster prevention infrastructure; Education programmes to increase awareness and knowledge on climate related issues Excluded sectors: Nuclear power generation; Weapons; Alcohol; Gambling / adult entertainment; Palm oil#19Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG Bond Framework 19 HSBC is a committed sustainable finance partner HSBC has committed to provide USD100bn of sustainable financing and investment by 2025 to develop clean energy, lower-carbon technologies and projects that contribute to the delivery of the Paris Agreement and the UN Sustainable Development Goals ■ HSBC ranked by Global Capital as #1 Most Impressive Bank in Asia Pacific Green/SRI Capital Markets, #2 for EMEA, #3 for Americas the only bank to be ranked in the top 3 for all global markets in 2017 (awarded Sept 2017) - ■ HSBC awarded Best Underwriter in the Environmental Finance Green Bond Awards 2017 (awarded April 2017) ■ HSBC is a longstanding member of the ICMA¹ Green Bond Principles Executive Committee ■ HSBC was one of the founding writers of the Social Bond Principles and continues to work closely with ICMA on their development ■ ICMA have also launched new Sustainability Bond Guidelines to provide guidance for bonds combining green and social projects, which HSBC supported ■ HSBC France issued its inaugural EUR500m Green Bond in 2015 In September 2016, the first related progress report was published; proceeds were used across 20 projects/clients, of which 81% in Renewable Energy, 16% in Sustainable Waste Management and 2% in Energy Efficiency² ■ Group-wide information on HBSC's green and sustainability bonds, including annual progress reports, may be found here: https://www.hsbc.com/investor- relations/fixed-income-investors/green-and-sustainability-bonds 1. ICMA International Capital Markets Association 2. 1% unallocated#20Overview of HSBC Amanah Key Credit Highlights Financial Highlights HSBC Group Sustainability HSBC SDG 20 20 Bond Framework Rationale of the Proposed SDG Sukuk Issuance Setting a landmark Sukuk transaction the MYR & Global Sukuk Markets Demonstrating Our Commitment to the HSBC Group's Sustainability Agenda Supporting the 2030 United Nation SDGs Our Rationale Supporting HSBC's SDG Bond Framework Supporting the 11th Malaysia Plan Sustainability Agenda Supporting Central Bank of Malaysia VBI1 initiatives 1. VBI - Value-Based Intermediation#21Q & A Session HSBC 2 21#22Empty