KENANGA ANNUAL REPORT 2020

16 2 1 3 4 5 6 7 OUR PERFORMANCE GROUP MANAGING DIRECTOR’ S MANAGEMENT DI SCUSS ION & ANALYS I S We are also in the process of further digitalising workflows and operational processes affecting remisiers and dealers, integrating mobility with service workflows, digital knowledge centre and business dashboards that will optimise productivity and efficiency for remote work. When this process is completed, our client reach will expand beyond traditional branch network, propelling growth through convenient, seamless and personalised client experience. As with the years before, investor literacy remains a key priority for the Stockbroking division. We look forward to providing enhanced outreach to clients in 2021 via webinars and social media. The year in review saw the Stockbroking division continuing to receive a host of awards and accolades. At the prestigious annual Bursa Excellence Awards, the division was awarded under the Best Overall Equities Participating Organisation, Best Structured Warrant Issuer, Best Retail Equities Participating Organisation and Best Institutional Equities Participating Organisation Investment Bank. The recent Bursa Malaysia Salesforce Retail Investor Campaign 2020 also witnessed the division clinching awards under the Top Dealer Category for Highest Traded Value for ETFs and Highest Traded Value for L&I ETFs. It also won under the Top Remisier Category for Highest Traded Value – New Accounts (Conventional), Highest Traded Value for ETFs and Highest Reactivation of – Inactive & Dormant Accounts. Against the backdrop of the global COVID-19 pandemic, the Investment Banking ( “IB” ) division as a whole recorded PBT of RM34.0 million over RM24.7 million in 2019, which was attributable to strong performance from the Treasury business, higher net income and reversal of provision for credit loss, which partially offset lower investment banking fee income. In the equity capital market, the division participated in the listing of Reservoir Link Energy Berhad on the ACE Market - the first O&G listing since 2017. During the year, it also advised on the transfer listing of Nova Wellness Group Berhad from the ACE Market to the Main Market and participated in the biggest Initial Public Offering of 2020, as a Joint Underwriter to the listing of Mr D.I.Y Group (M) Berhad on the Main Market. Towards the end of the year, it further advised and acted as the principal adviser, managing and joint underwriter for the largest underwritten rights issue in 2020 by JAKS Resources Berhad raising a total of RM238 million, of which RM100 million was underwritten by the IB division. For equity private placement, it acted as the placement agent/manager and sole bookrunner to Komarkcorp Berhad and joint placement agent/manager to KNM Group Berhad. On the fixed income front, its Debt Capital Markets team was actively involved in various government-guaranteed Sukuk issuances and advised on the maiden issuance of RM3.5 billion Sukuk Murabahah Programme, followed by another issuance of RM1.35 billion and RM1.5 billion respectively by Prasarana Malaysia Berhad. It also advised Malaysia Rail Link Sdn Bhd for its inaugural issuance of RM2.0 billion Sukuk Murabahah Programme. On the corporate side, it advised on a Sukuk Wakalah Programme of RM200 million by SHC Capital Sdn Bhd, with the successful issuance of the first tranche of Islamic medium-term notes of RM80 million. On our loan assets portfolio, the Corporate Banking team has been actively managing and monitoring our exposure and cautiously growing our portfolio by selectively pursuing lending pipelines generated through our IB channels such as the Merger & Acquisition advisory leads. The team is currently managing a loan portfolio of circa RM655 million as at 31 December 2020 and hoping to grow cautiously in 2021. As for Islamic Capital Markets, the division will continue exploring innovative Islamic instruments for suitable clients, be it in the form of hybrid debt securities such as Islamic convertible sukuk or equity offerings such as Islamic Redeemable Convertible Preference Shares. With the presence of more fintech players in industry shaping the future of our capital markets, it will also explore the alternative fundraising mode for clients such as the issuance of Shariah-compliant tokenised securities, which is now made possible under the Guidelines on Digital Assets launched by the Securities Commission Malaysia during the year. The Treasury business achieved outstanding performance in FYE2020 with PBT doubling to RM25.9 million over RM12.0 million in the previous year. This was due to higher revenue from improved trading and investment income, as well as, higher income from foreign exchange and structured product offerings. In the first quarter of 2020, Bank Negara Malaysia had announced several prudential measures aimed at ensuring that banking institutions remain focused on supporting the economy during exceptional circumstances of the COVID-19 outbreak. In the midst of such challenging environment, the Treasury division was able to maintain stable funding throughout the year with both our Liquidity Coverage Ratio and Net Stable Funding Ratio remaining above 100%. The division also gained tremendous traction with the Wealth Management division within the Group, in efforts to increase transaction volumes on products across different asset classes. We anticipate that the division will continue providing this support in the near term with the shared goal of raising business volumes and profitability for the Group. Investment Banking