KENANGA INVESTMENT BANK BERHAD INTEGRATED ANNUAL REPORT 2024 WE ARE KENANGA OUR SUSTAINABILITY APPROACH LEADERSHIP STATEMENT HOW WE ARE GOVERNED SHAREHOLDERS’ INFORMATION NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2024 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2024 FINANCIAL STATEMENTS ADDITIONAL INFORMATION OUR VALUE CREATION APPROACH 275 274 48. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY Capital management The Group and the Bank maintain an actively managed capital base to cover risks inherent in the business. The adequacy of the Group’s and of the Bank’s capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision and adopted by BNM in supervising the Bank. The primary objectives of the Group’s and of the Bank’s capital management are to ensure that the Group and the Bank comply with regulatory capital requirements and the Group and the Bank maintain strong credit ratings and healthy capital ratios in order to support its business and to maximise shareholders’ value. The Group and the Bank manage its capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Group and the Bank may adjust the amount of dividend payments to its shareholders, return capital to its shareholders or issue capital securities. Nevertheless, it is under constant scrutiny of the Board. Capital adequacy The capital adequacy ratios of the Group and of the Bank are computed in accordance with BNM’s revised Risk-Weighted Capital Adequacy Framework. The Bank has adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk (Basel II). The minimum regulatory capital adequacy requirements for Common Equity Tier 1 (“CET 1”), Tier 1 and Total Capital are 4.5%, 6.0% and 8.0% of total risk weighted assets. (i) Components of Tier 1 and Tier 2 capital: The capital adequacy ratios of the Group and of the Bank are as follows: Group Bank 2024 2023 2024 2023 Before deducting interim dividends * CET 1 capital ratio 16.671% 21.543% 17.264% 22.474% Tier 1 capital ratio 16.671% 21.543% 17.264% 22.474% Total capital ratio 22.967% 29.433% 24.736% 31.565% 48. CAPITAL MANAGEMENT AND CAPITAL ADEQUACY (CONT’D.) Capital adequacy (cont’d.) (i) Components of Tier 1 and Tier 2 capital (cont’d.): Group Bank 2024 2023 2024 2023 After deducting interim dividends * CET 1 capital ratio 14.892% 19.570% 15.164% 20.201% Tier 1 capital ratio 14.892% 19.570% 15.164% 20.201% Total capital ratio 21.211% 27.487% 22.662% 29.330% * Refer to interim dividends declared subsequent to the financial year end. Group Bank 2024 RM’000 2023 RM’000 2024 RM’000 2023 RM’000 CET 1 capital/Tier 1 capital Paid-up share capital 253,834 253,834 253,834 253,834 Retained profits 730,701 686,876 628,109 609,024 Other reserves 140,748 142,004 171,368 174,100 Less: Goodwill (241,027) (241,027) (252,909) (252,909) 55% of cumulative gains on financial investments at FVOCI (5,254) (3,767) (170) (1,571) Deferred tax assets (32,949) (25,500) (11,169) (6,807) Other intangibles (100,013) (92,582) (80,667) (83,011) Regulatory reserve (16,748) (16,064) (16,748) (16,064) Treasury shares (7,441) (11,739) (7,441) (11,739) Other CET 1 regulatory adjustments specified by BNM - 1,547 - 1,006 Investment in ordinary shares of unconsolidated financial entities (186,706) (153,268) (215,162) (177,112) Total CET 1/Tier 1 capital 535,145 540,314 469,045 488,751 Tier 2 Capital Subordinated obligations capital 180,500 180,500 180,500 180,500 General provisions ^ 21,628 17,380 22,478 17,212 Total Tier 2 capital * 202,128 197,880 202,978 197,712 Total Capital 737,273 738,194 672,023 686,463
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