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 287 286 50. SEGMENTAL REPORTING (CONT’D.) Notes A Additions to non-current assets consist of: 2024 RM’000 2023 RM’000 Property, plant and equipment - Additions during the financial year (Note 16) 12,714 7,786 Intangible assets - Additions during the financial year (Note 17) 23,707 12,325 36,421 20,111 B The following items are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position: 2024 RM’000 2023 RM’000 Investments in subsidiaries (96,100) (79,250) Investments in associates and joint ventures 46,906 34,517 Intangible assets (39,650) (39,617) Inter-segment assets (274,918) (292,559) (363,762) (376,909) C The following items are deducted from segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position: 2024 RM’000 2023 RM’000 Deposits accepted from subsidiaries (142,222) (154,119) Inter-segment liabilities (131,601) (137,943) (273,823) (292,062) 51. FINANCIAL RISK MANAGEMENT The Group and the Bank adopt a proactive and continuous approach in managing risks and have established a risk management framework to ensure that adequate policies and processes are in place to identify and manage the risks within the defined policies and guidelines as approved by the Board of Directors. The Group's and the Bank's financial risks are centrally managed by the various committees within the delegated authority by the Board of Directors. These committees formulate, review and approve policies and limits to monitor and manage risk exposures under their respective supervision. The major policy decisions and proposals approved by these committees are subject to further review by the Group Board Risk Committee and the Board of Directors. The Group Risk Management assumes the independent oversight of risks undertaken by the Group and the Bank, and takes the lead in the formulation of risk policies, controls and processes. This is further enhanced by the periodic risk assessment audit carried out by the Group's and the Bank's Internal Audit. The main risk areas faced by the Group and the Bank and the guidelines and policies adopted to manage them are as follows: (a) Credit risk Credit risk or the risk of counterparties defaulting, are minimised by the application of credit approvals, limits, and monitoring procedures. Balance due from clients and brokers are monitored on an ongoing basis via periodic management reporting. The Group and the Bank through their directors and management, review all significant exposures to customers and counterparties as well as any major concentration of credit risk related to any financial instruments. The Group and the Bank have risk management procedures in place to manage these risks to ensure that all the procedures and principles relating to risk management are adhered to. Credit-related commitments risks The Group and the Bank enter into various commitments which include commitments to extend credit lines and obligations under underwriting agreements. Such commitments expose the Group and the Bank to similar risks to loans and financing and are mitigated by the same processes and policies. Impairment assessment For the purpose of determining the risk of default occurring, default is defined based on the credit risk management practices. Portfolio Default Loans, advances and financing Declaration of event of default with rating “D” and below Share margin financing Margin of financing below 100% or declaration of event of default Trade receivables- stockbroking More than 30 days past due from contra losses Other receivables- asset management More than 30 days past due Other receivables- advisory fees More than 30 days past due Other receivables- securities lending Value of Loaned Securities including fee due > collateral value or declaration of event of default Debt securities at amortised cost or FVOCI Declaration of event of default with rating “D” and below In the context of the Group and of the Bank, two approaches as specified in MFRS 9 shall be applied in the measurement of ECL i.e. general approach and simplified approach. General approach recognises impairment based on a three-stages approach which is intended to reflect the deterioration in credit quality of a financial instrument.
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