KENANGA ANNUAL REPORT 2018

95 ANNUAL REPORT 2018 INVESTMENT BANKING Investment Banking registered a higher PBT of RM22.5 million in FYE18 (FYE17: PBT of RM19.7 million) mainly due to higher interest income, trading and investment income, placement fees, underwriting fee income and fees on loans and advances but partially negated by lower advisory fee income recorded for FYE18. INVESTMENT AND WEALTH MANAGEMENT Investment and Wealth Management registered a PBT of RM33,000 (FYE17: LBT of RM1.9 million) mainly due to contributions from new products and improved performance in the private wealth segment. FUTURES The futures segment recorded higher LBT of RM2.8 million in FYE18 compared to LBT of RM1.1 million in FYE17 mainly due to lower commission income and interest income earned during the year. Income decreased mainly due to lower levels of client activities amid sluggish market conditions. MONEY LENDING AND FINANCING This segment reported a PBT of RM0.5 million in FYE18 compared to PBT of RM0.4 million in FYE17 mainly due to higher other incidental income during the current year. CAPITAL RATIOS The Group and the Bank remain on a strong financial footing with total capital ratios of 25.257% and 23.869% respectively, well above the minimum prescribed by BNM of 10.5% including capital conservation buffer of up to 2.50%. OUTLOOK AND PROSPECT FOR 2019 The global economy is expected to slow further in 2019 due to a worsening set of factors ranging from trade tensions, to financial market instability and currency challenges in the emerging markets as well as a decline in commodity prices, in particular oil and gas. Consequently, Malaysia’s economic growth prospect is expected to be less favourable in 2019, with projected growth of 4.7% in 2019, after an estimated 4.8% growth in 2018 and 5.7% in 2017. On the monetary policy outlook, the US Fed’s less hawkish stance and pause signal of its planned rate hikes would provide more room for BNM to maintain its accommodative monetary policy stance in 2019. With loan growth expected to ease further to 4.2% in 2019 from 5.6% in 2018, along with the subdued inflationary trend (1.0-1.5%) and prospects of moderating global growth, we believe BNM will hold the overnight policy rate (“OPR”) steady at 3.25% this year, supporting its tenet of upholding growth and price stability. With the above in mind, the Bank is of the view that the current financial year will be challenging. DIRECTORS’ REPORT