20 WE ARE KENANGA LEADERSHIP MESSAGE VALUE CREATION MODEL KENANGA INVESTMENT BANK BERHAD ANNUAL REPORT 2023 GROUP MANAGING DIRECTOR’S MANAGEMENT DISCUSSION AND ANALYSIS Listed Derivatives Business In the year under review, our Listed Derivatives Business arm, Kenanga Futures Sdn Bhd (“KFSB”) recorded remarkable achievements across the business, including a new record high in revenue, securing the number one market position in terms of execution market share on Bursa Malaysia Derivatives Berhad (“BMD”), and achieving unprecedented profitability numbers that were the highest in more than a decade. The year 2023 also marked the completion of KFSB’s three (3)-year ASCENT 2021 – 2023 Blueprint which had been the driving force behind its achievements this year. KFSB’s achievement in 2023 was also significant as it achieved a record high of 9.7 million contracts (2022: 9 million) despite the moderation in the overall BMD contract volume which declined by 6.8% to 17.8 million contracts (2022: 19.1 million). In line with this performance, KFSB recorded a PBT of RM6.2 million compared to RM2.1 million in the previous year. This year also saw KFSB launch a new Order Management System and planned for new access into other global exchanges, underscoring its commitment to business growth and operational excellence. In 2023, KFSB further strengthened its relationships with its counterparts in the US America, Europe, Singapore, and Hong Kong. KFSB also proudly served as a main co-sponsor for the Women in Finance Asia Awards 2023, alongside esteemed companies such as Blackrock, Instinet, and Citadel, that was held in Singapore and hosted by Markets Media. Back home, KFSB continued to build on its retail client base, in line with its objective of Building A Smart Derivatives Trading Community. Through its annual nationwide retail campaigns - Gateway to the Futures, Passport to the Futures and Grow Your Futures - KFSB sought to encourage greater retail participation in the trading of CME Group and BMD products. Separately, KFSB had also continued with its popular online and offline public outreach and education efforts. Building upon its commitment to excellence and industry leadership, KFSB has also garnered recognition at the prestigious Bursa Excellence Awards 2023. Among the accolades received were ‘Best Overall Derivatives Trading Participant (Champion)’, ‘Best Trading Participant Commodity Derivatives (Champion)’, and ‘Best Institutional Derivatives Trading Participant (Champion)’. In 2024, KFSB is set to embark on a new strategic journey with a new three (3) year business Blueprint, THRIVE 2024 – 2026. In the coming years, KFSB will continue to strive to achieve More information on Risk Management and Internal Controls can be found on pages 111 to 115 of this Annual Report. its business vision and objectives, with a specific emphasis on diversifying the sales and marketing approach, boosting the scalability of current product offerings, refining its infrastructure and exploring potential opportunities in the derivatives market. RISK MANAGEMENT Building business versatility, operational agility and resilience continues to be the core fundamentals that drive our risk management approach in this increasingly sophisticated and dynamic trading, financing, and digitalised financial services environment. Operating in this highly uncertain and volatile recovery post-pandemic phase, we remained well-prepared and positioned to navigate through the challenging risk landscape, seizing every opportunity that presents prospects for a sustainable operation and growth. We adopted a disciplined risk management approach in FY2023 by remaining highly selective in our credit lending strategy, and maximising sustainable growth and performance. In light of the greater interdependence of digital networks, cybersecurity is an integral emerging operational risk area for the Group. Kenanga Group continued to invest in risk infrastructure and digital technologies, aimed at improving the governance and risk management capabilities, enhancing cyber-resilience through modern technologies and solutions, and meeting regulatory expectations. Managing ‘Climate Change Risk’ is core to our sustainability practices. We take a holistic and integrated risk-based approach in addressing the multi-dimensional implications of climate change risk, including incorporating climate change risk drivers across credit, market, liquidity, operational and reputational risks. We ensured that we continue to deliver on our sustainability commitments to create a positive impact and value for all stakeholders. Considering these wide-ranging and significant implications of climate change risks on our portfolio, we strive to develop and enhance our Climate Change Risk Management Framework to maintain robust risk governance and practices supported with relevant and effective policies, procedures and methodologies. This includes integrating climate change risk management within the responsibilities of the relevant risk board and committees, driving capacity building for climate risk scenario analysis and stress testing, and building capability to facilitate quantification of financed emissions of carbon-intensive sectors in our lending portfolios.
RkJQdWJsaXNoZXIy NDgzMzc=