21 KENANGA INVESTMENT BANK BERHAD Annual Report 2022 GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION AND ANALYSIS RISK MANAGEMENT Despite the gradual global recovery, ripple effects of the COVID-19 pandemic continued to be felt throughout of FY2022 with uneven trajectories caused by prolonged domestic political uncertainty, ongoing geo-political conflict, especially between Russia and Ukraine, persistent supply chain disruptions, as well as rising inflationary pressures induced by higher costs of energy, food, commodities and labour around the world. Against this unwelcoming macroeconomic backdrop and volatile market conditions, the Group resolved to chart a path of prudence and diligence in our risk management practices for the year. Two (2) key motivating factors— resilience and agility—guided our actions in managing key risks in the increasingly complex and dynamic trading, financing, and digital services ecosystem. For FY2022, Kenanga committed to a strategy designed to safeguard portfolio asset quality with robust risk controls and measures. The Group continued to take a defensive risk posture with a conservative risk-based approach to vulnerable accounts and sectors. We also intensified portfolio review assessment, providing close scrutiny of targeted portfolios with rigorous stress tests and scenario analyses while also pursuing a highly selective credit lending strategy to maximise sustainable growth and performance. The Group remains committed to sustaining risk resilience throughout our business operations. As such, all risk management processes, policies and procedures are constantly reviewed and enhanced, supported by a transparent and robust governance structure. Key activities in FY2022 included the provision of sustainable operational resilience from digital technology adoption and the significant decentralisation of our working environment. With greater interdependence through digital networks, cybersecurity remained an important emerging operational risk area for the Group. The Group continued to enhance our cyber-resilience through new technologies and solutions as well as more robust systems and infrastructure. More information on Risk Management and Internal Controls can be found on pages 110 to 114 of this Annual Report. 2023 OUTLOOK The domestic economy is expected to continue growing, albeit at a moderate pace, due to the normalisation of economic activity after the pandemic and the prospect of a global economic slowdown. For FY2023, we forecast a GDP growth of 4.7% from 8.7% in 2022, supported mainly by resilient domestic demand due to an increase in household income and a decrease in unemployment rate. Additionally, growth drivers include the expected rise in tourist arrivals and spending after China lifted its COVID-19 restrictions at the beginning of 2023, and ongoing multi-year infrastructure and development projects under the 12th Malaysia Plan. Furthermore, the unity government with a majority in Parliament will help reduce political uncertainty and boost investor confidence, as reflected by recent announcements on investments. The unity government led by Prime Minister Dato’ Seri Anwar Ibrahim remains in favour of an expansionary policy as reflected in the revised 2023 Federal Budget, which is expected to mitigate the looming global economic slowdown following the impact of rapid increase in interest rates by major central banks and the ongoing banking crisis in the US. This will include the continuation of various subsidies as well as a record-high allocation for development expenditure to boost infrastructure development and cushion the economy from any sharp slowdown. On our business front, the Group is cautiously optimistic of our 2023 outlook, given we are still vulnerable to downside risks mainly from the ongoing volatility of the capital markets as a result of geopolitical events and recessionary risks in major economies. Nevertheless, we remain resolute in our efforts to continue driving innovation, digitalisation, and sustainability in the marketplace. APPRECIATION Once again, I would like to express my appreciation to our Founder Emeritus and Adviser, YM Tan Sri Dato’ Paduka Tengku Noor Zakiah Tengku Ismail, whose advice, guidance and leadership is an utmost source of inspiration in these turbulent days. I thank the Board of Directors, especially the Chairman, YAM Tan Sri Dato’ Seri Syed Anwar Jamalullail whose care, diligence and uncompromising commitment to the highest standards of good governance and integrity continue to reinforce who we are and what Kenanga Group stands for. I also wish to record my gratitude to all employees of Kenanga for their commitment and hard work as well as all our business partners, clients, suppliers and all stakeholders who have stayed the course with us through 2022. Finally, I would also like to register my appreciation to Bank Negara Malaysia, the Securities Commission Malaysia, and Bursa Malaysia Berhad for their guidance, and I also extend my appreciation to our valued shareholders for their continued trust and support. DATUK CHAY WAI LEONG Group Managing Director
RkJQdWJsaXNoZXIy NDgzMzc=