KENANGA ANNUAL REPORT 2019

K E N A N G A I N V E S T M E N T B A N K B E R H A D A n n u a l R e p o r t 2 0 1 9 10 GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION & ANALYSIS DATUK CHAY WAI LEONG Group Managing Director DEAR SHAREHOLDERS, 2019 was a demanding year for the Malaysian capital markets, weighed down by prevailing macro geopolitical uncertainties, the lacklustre Ringgit, scale-back in public spending and muted business sentiments. The FBM KLCI fell below the 1,600-point mark to end at 1,588.76 points for the year, while trading value on the local bourse dipped by over 15%. Despite these headwinds, Kenanga Investment Bank Berhad continued to make progress against our business priorities and delivered a strong financial performance in 2019. Profit Before Tax (“ PBT ”) rose to RM43.0 million, 49% higher relative to same period last year, largely due to higher management fee income and a RM15 million reversal of impairments incurred in FYE2018. Throughout the year, our priority was anchored on strengthening the business through innovations and technology, expansion of product mix, and enhanced operational productivity – all of which were aimed at driving sustainable enterprise growth, and the creation of long-term shareholder value. It is encouraging to note a growing sense of shared responsibility and enthusiasm demonstrated across the organisation in accelerating cross-divisional collaboration, which has become the bedrock for our product innovations. Last year, we saw our key businesses – Asset Management, Equity Broking, Listed Derivatives – joined forces to successfully launch the first Leveraged and Inverse Exchange Traded Funds (“ ETF ”) in Malaysia that is benchmarked against the FBM KLCI. This product, a result of concerted efforts across the diverse disciplines within the Group, created a multiplier effect on our revenue stream, boosting both trading income and brokerage income. Organisational agility, speed and out- of-the-box solutions have become prized commodities, in a marketplace characterised by rapidly changing customer demands. To this end, our ability to pool our resources, leverage partnerships, as well as, harness synergies within the Group, will help to further differentiate us in the marketplace.