KENANGA ANNUAL REPORT 2018

14 KENANGA INVESTMENT BANK BERHAD These platforms which involve the participation of regulators, external speakers and interactive games, not only work to raise awareness and understanding amongst employees, but more importantly to reinforce integrity values throughout the organisation. Within the Regulatory division, a Group Business Ethics and Integrity unit was set up effective 1 March 2019, to deliver on the Ethics Blueprint. The Blueprint underlines a three (3)-year plan to establish a proper structure for effective management of ethics and integrity practices. More information on Compliance and Governance are set out on pages 42 to 62 of this annual report. Healthy Liquidity and Capital Ratios As with previous years, we have maintained healthy liquidity and capital ratios within the Group. As of 31 December 2018, our capital adequacy ratios are 25.26% and 23.87% at the Group and Company levels respectively. These ratios are significantly higher than Bank Negara Malaysia’s (“ BNM ”) minimum capital adequacy ratio and buffer requirement of 9.875%. As part of capital management, we have put in place a subordinated debt programme of RM250 million. To date, we have issued RM25 million from this programme. The Liquidity Coverage Ratio (“ LCR ”), which stood at 189.23% as at 31 December 2018 has been consistently above BNM’s minimum requirement of 90% throughout the year. Going into 2019, Kenanga Investment Bank Berhad (“ KIBB ” or “ the Company ”) is also in a comfortable position to meet the new minimum LCR requirements of 100%. GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION AND ANALYSIS Collaboration to Accelerate Innovation In May 2018, KIB entered into a strategic partnership with the largest securities firm in Taiwan, Yuanta Securities Investment Trust Co., Ltd. (“ Yuanta ”) to develop innovative products that will broaden options for local retail investors who are interested in diversifying their portfolio at affordable entry points. Having played an instrumental role for the launch of exchange-traded funds (“ ETF ”) in Taiwan, Thailand, Korea, Hong Kong and China, Yuanta has immense experience in this area and this collaboration has placed us in a good position to support the call to develop a more vibrant ETF market in Malaysia. Joining forces, we expect to introduce the first (1 st ) Leveraged and Inverse ETF in the country during the later part of 2019. Capitalising Innovation and Technology We continue to push our innovation and technology agenda to remain relevant in an increasingly disrupted landscape. In an era of rapidly evolving technology and increasing customer expectations, we have adopted a customer-centric innovation model where our products and ideas are centred on delivering reliable, personalised and exciting customer experiences. We are pleased that our joint venture with Japan-based Rakuten Securities Inc. to establish Malaysia’s first (1 st ) full-fledged online broker, Rakuten Trade Sdn Bhd (“ Rakuten Trade ”) has been swiftly gaining traction in the marketplace and was recognised as Malaysia’s FinTech Company of the Year 2018, an award endorsed by the Malaysian Communications and Multimedia Commission. In less than two (2) years, Rakuten Trade closed 2018 with twenty four thousand (24,000) accounts – almost half of which were made up of first-time traders. It also registered over RM3 billion in trading value on Bursa Malaysia – a notable feat for a start-up. With plans to roll out more exciting offerings through this platform, we expect this business to continue to grow. For traders of structured warrants, we had in January 2019, launched Live Matrix, an online tool that channels the live feed of market data to enable better trading decisions. Live Matrix that is accessible on www.nagawarrants.com, gives exibility to trade on-the-go and is targeted especially at younger traders with bigger risk appetite and limited capital. We have also capitalised technology to enhance efficiencies within the Group which include the automation of our client on-boarding process. This year, we will deploy further technology automation to enable greater dealer and remisier efficiency, and to deliver improvements to customer experience. Promoting Ethics and Good Corporate Governance We continue to place emphasis on integrating strong ethics and a compliance culture in the day-to-day management of our business. Our annual Fraud Awareness Campaign and Regulatory Seminar are continuing efforts to promote compliance and governance awareness.