Kenanga Investment Bank Berhad Annual Report 2021 136 Our Sustainability Approach About This Report We Are Kenanga Message From Chairman and GMD INVESTMENT BANKING Investment Banking registered a lower PBT of RM20.6 million for FYE21 (FYE20: PBT of RM34.0 million) mainly due to net trading and investment loss from treasury activities. However, this was partially mitigated by higher net interest income and IB fees income earned. INVESTMENT AND WEALTH MANAGEMENT Investment and Wealth Management registered a PBT of RM34.9 million for FYE21 (FYE20: PBT of RM13.6 million) mainly due to the higher management fee and performance fee income generated on the back of increased asset under administration and sales agency force. FUTURES The Futures segment recorded lower loss before tax (“LBT”) of RM1.8 million for FYE21 compared to LBT of RM2.8 million for FYE20 as a result of improved net interest income and commission generated. MONEY LENDING AND FINANCING This segment reported a PBT of RM1.6 million for FYE21 compared to PBT of RM1.9 million for FYE20 mainly due to decrease in net income from lower lending and factoring activities. CAPITAL RATIOS The Group and the Bank remain on strong financial footing with total capital ratios of 28.291% (FYE20: 24.037%) and 29.827% (FYE20: 24.075%) respectively, well above the minimum prescribed by Bank Negara Malaysia (“BNM”) of 10.5% including capital conservation buffer of up to 2.50%. OUTLOOK AND PROSPECTS FOR 2022 The Malaysian economy is expected to continue its path towards a sustainable and steadier growth recovery this year. The gross domestic product (“GDP”) is projected to expand to 5.5%-6.0% (2021 forecast: 3.5%-4.0%), mainly driven by the positive impact from the higher COVID-19 vaccination rate and the rollout of vaccine boosters, paving the way for the final phase of the National Recovery Plan (“NRP”). In addition, the domestic economy will be supported by continued expansionary fiscal policy, a low interest rate environment in the first half year of 2022, various ongoing policy measures, and partly due to base effect following the impact of nationwide movement restriction under the NRP in second half year of 2021. Nonetheless, the growth projection is subjected to several downside risks, such as the unabated surge in COVID-19 infections due to the emergence of new variants, as well as the lingering uncertainties ahead of a possible snap general election in the second half year of 2022 and the continued geopolitical tensions between Russia and Ukraine. On the monetary policy front, BNM is expected to keep the overnight policy rate (“OPR”) at 1.75% until at least third quarter of 2022 to secure growth recovery amid a stable inflation outlook. Hence, the timeline for BNM to begin its rate hike cycle could possibly start at the Monetary Policy Committee (“MPC”) meeting in September, assuming a stronger pick up in economic growth along with a steady build-up of inflationary pressure. This may prompt BNM to raise the OPR by a total of 50 bps to 2.25% by the end of 2022. Directors’ Report
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