KENANGA ANNUAL REPORT 2019

O U R P E R F O RM A N C E 1 2 3 4 5 15 6 7 RISK MANAGEMENT The Group continued to strengthen our risk resilience and risk mitigation, through constant reviews to tighten controls and enhance governance framework. As an investment bank, the primary risks are predicated on credit and market risks. These risks are managed via a risk management governance oversight, and a management process which encompasses the establishment and enforcement of policies and procedures, the conduct of comprehensive risk assessments, the establishment of the appropriate trading and facility limits for the respective exposures. During the year a Group Operational Risk Management workshop was conducted to promote a better understanding of risk governance and risk management amongst employees. It also served to instil the importance of employee participation in operational risk mitigation. Additionally, we enhanced our technology risk management by aligning our technology risk management framework and cyber resilience framework, with industry best practices. On the back of that, we have established a new Board-appointed committee dedicated to drive digital-related matters and technology governance for the Group. Following the outbreak of the COVID-19 at the start of 2020, we took immediate measures via our established Business Continuity Management Committee to keep employees apprised of updates and precautionary measures, as well as, carry out contingency drills and disaster recovery preparation. In tandem with that, we have heightened monitoring of our market and credit exposure to the sectors likely affected by this pandemic, with the view of managing the related risks. 2020 OUTLOOK At the time of this statement, the COVID-19 pandemic which started at the end of last year in China, has significantly disrupted economic activities worldwide. This together with the significant drop in oil prices have impacted global capital markets causing huge volatility. Governments in many countries including Malaysia, have sought to counter the negative impact on economic growth from the pandemic through various stimulus packages. This has brought about some stability to the global capital markets but the uncertainty still remains on when the pandemic can be overcome. Given these uncertainties, we are taking a cautious stance on the market outlook for this year. Our Research Department expects Gross Domestic Product growth to slow down to negative 1.9% in 2020. Inflationary pressure is expected to remain mild, in the wake of weak prices in commodities and soft domestic demand. While these are unprecedented times, I am confident Kenanga has the resources, experience and fortitude to weather this storm, having grown from strength to strength in Malaysia for almost 50 years. We will continue to exercise prudence in our day to day management of the business, while capitalising on the pockets of opportunities that arise. As we brace for what is likely to be, one of the most challenging years for the global capital markets, we will be guided by the discipline of maintaining a strong balance sheet, ensuring our core businesses remain resilient, as well as, strengthening and diversifying our revenue stream. Above and beyond that, we will continue to build a robust talent pipeline by developing our people, and enabling them to navigate and shape the future growth of the Company. APPRECIATION Allow me to convey my gratitude to our Founder and Adviser, YM Tan Sri Dato’ Paduka Tengku Noor Zakiah Tengku Ismail, who remains a beacon of leadership for our Group. I would also like to thank our Chairman, Encik Izlan Izhab and the Board of Directors for their stewardship. I am especially thankful to the staff of Kenanga Group for their continued diligence and dedication in achieving our goals. Additionally, I would like to express my appreciation to our business partners, valued clients, suppliers and stakeholders for their unwavering support. Our gratitude is also owed to Bank Negara Malaysia, Securities Commission Malaysia and Bursa Malaysia Berhad for their guidance. We also extend our appreciation to our valued shareholders for their continued trust and support. DATUK CHAY WAI LEONG Group Managing Director GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION & ANALYSIS