KENANGA ANNUAL REPORT 2020

13 ANNUAL REPORT 2020 // KENANGA INVESTMENT BANK BERHAD SEGMENTAL REVIEW Stockbroking page 15 Investment Banking page 16 Investment and Wealth Management page 17 Futures Broking page 17 Money Lending and Financing page 18 The situation in Malaysia was no exception: full year Gross Domestic Product ( “GDP” ) contracted by 5.6% - the greatest extent since the Asian Financial Crisis in 1998. In an effort to stimulate the Malaysian economy, Bank Negara Malaysia had lowered the Statutory Reserve Ratio from 3.00% to 2.00% in March, while the Overnight Policy Rate was lowered to 1.75% in July which was then maintained into 2021. In contrast to the negative impact of the pandemic on global economies, most stock markets around the world experienced a remarkable and protracted surge in trading volumes, primarily in the technology, healthcare and pharmaceutical sectors. Trading volumes in Malaysia was also concentrated in healthcare and technology sectors with record volume in gloves stocks as global demand for healthcare gloves rose significantly due to the pandemic. Local retail and institutional investors drove trading volumes to record highs during the year, peaking at 27.8 billion shares traded on 11 August. Retail investors dominated the trading ground, with many first-time millennial traders making an entrance to the local bourse, enabled by the ease of online trading platforms such as Rakuten Trade. Average Daily Trading Value ( “ADV” ) of securities on Bursa Malaysia Securities Berhad ( “Bursa Securities” ) for the year doubled to RM4.2 billion. Kenanga Investment Bank Berhad was buoyed by this intense surge of interest in the stock market. Profit Before Tax ( “PBT” ) rose to a high of RM134.7 million in 2020, vis-à-vis RM43.0 million in 2019. Net profit stood at RM102.3 million, almost five-fold over the previous year. As Chairman YAM Tan Sri Dato’ Seri Syed Anwar Jamalullail mentioned in his statement, this performance is unprecedented in Kenanga Group’s history as an investment bank. This was driven by positive results from all our core businesses, particularly the outstanding contribution from our stockbroking and investment banking divisions, as well as, a share of profits from our joint venture, Rakuten Trade, which turned black during the year, ahead of its third anniversary. NAVIGATING THROUGH CRISIS Amidst the turmoil brought about by the pandemic, our operational goals during the year, centred on managing the surge in trading volumes coupled with the increase in account related services, while simultaneously transitioning swiftly and seamlessly to work from home arrangements. This would not have been possible if not for the decision made several years ago, to digitalise and automate our key operations and processes through our Digital Transformation journey. I cannot overemphasise the significance of our efforts and investments in this area that had prepared the necessary systems and pathways to allow our employees and remisiers to operate remotely throughout the intermittent Movement Control Order periods without compromising delivery and performance.