KENANGA ANNUAL REPORT 2019

O U R P E R F O RM A N C E 1 2 3 4 5 13 6 7 GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION & ANALYSIS To get closer to today’s digitally connected customers, an app-based instant messaging service, Telegram, was mobilised as a new touchpoint to disseminate trading ideas and opportunities, empowering its followers to make decisions on the go. Segmental Review: Investment Banking and Treasury The Investment Banking (“ IB ”) and Treasury divisions as a whole registered a PBT of RM24.7 million, an increase of 9.8% from the year before. Investment Banking Investment Banking registered a higher PBT of RM12.7 million in FYE2019, relative to the RM20.5 million the year before mainly attributable to higher interest income, and advisory fees income but partially negated by lower placement fees and fees on loans. Malaysian REIT for which the division played a significant role. Further to these, the Division continued to spearhead Redeemable Convertible Note (“ RCN ”) origination with four new issuances and completed several significant Merger and Acquisition (“ M&A ”) advisory transactions. Successful Islamic equity products that were launched included the Redeemable Convertible Cumulative Preference Shares (“ RCPS-i ”) and Redeemable Convertible Unsecured Islamic Debt Securities (“ RCUIDS ”). Treasury The Treasury division recorded a strong performance in FYE2019 with a PBT of RM12.0 million against PBT of RM2.0 million in the previous year. This was primarily driven by improved trading and investment income from its bond portfolio. The division proved resilient against volatile market conditions, boosted by the positive bond market performance, despite Malaysian bonds being retained on a FTSE Russell watch list for exclusion from the FTSE World Government Bond Index. The volume of retail Negotiable Instruments of Deposit rose to an average of RM52 million during the year, compared to RM45 million in 2018, increasing further our presence in the retail deposit market. Treasury was able to maintain a stable funding structure, enhancing the bank’s short term resilience, as well as resilience over a longer time horizon, resulting in our Liquidity Coverage Ratio remaining above 120%, well beyond the regulatory requirement of 100%, whilst Net Stable Funding Ratio averaged above 100% for the year. Nonetheless, the division achieved a feather in its cap with the listing of Supreme Consolidated Resources Berhad in January 2019 – the first Sarawak-based company to be listed on the LEAP Market. During the year, the IB division also participated as a Joint Underwriter for the Initial Public Offering (“ IPO ”) of Leong Hup International Berhad, which raised RM275 million from its re-listing on the Main Market. In the debt capital market, the IB Division launched a Medium-Term Note (“ MTN ”) Programme for Seri Mutiara Development Sdn Bhd. It also achieved another first with the launch of a Commercial Paper/ MTN Programme for Urban DNA Sdn Bhd, which were secured against residential property units. The Programme provides investors with the option to purchase the secured properties, which is unprecedented in the market. The launch of Sunway REIT’s Perpetual Note Programme, was another first-of-its-kind by a