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 295 294 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (a) Credit risk (cont’d.) Impairment assessment (cont’d.) Expert judgement Expert credit judgement is used to complement the assumptions made in the absence of sufficient data during the model development process and incorporation of forward-looking element over a range of possible scenarios into the ECL. The exercise of such judgement, together with any separately-calculated adjustments to the results to address limitations in the core modelling approach - will require particular attention in the governance process. Therefore, the use of expert judgement shall be applied as and when necessary and shall be governed by the following: I. All expert judgements need to be properly documented and backed by reasonable and supportable information that is available without undue cost or effort. II. Any expert judgement including new proposal, changes or updates, is required to be endorsed in accordance with the governance process as stipulated in this Framework. III. The Group and the Bank intend to apply expert judgement including but not limited to below areas: a. Definition of macroeconomic scenario and its probability for ECL measurement; b. Assumptions made during modelling process in relation to ECL due to data limitations; and c. Others as decided by relevant committee. IV. Any management adjustment made shall be tabled to Group Credit Committee for concurrence. Risk concentration: maximum exposure to credit risk without taking account of any collateral and other credit enhancement The Group's and the Bank's concentration risk is managed by counterparty and by industry sector. The Group and the Bank apply single counterparty exposure limits to protect against unacceptably large exposures to single counterparty risk. The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including derivatives, by industry before the effect of mitigation through the use of master netting and collateral agreements. Where financial instruments are recorded at fair value, the amounts shown represent the current credit risk exposure but not the maximum risk exposure that could arise in the future as a result of changes in values. The maximum exposure to credit risk for the components of the statement of financial position, including derivatives, by geography before the effect of mitigation through the use of master netting and collateral agreements is not presented as the Group's and the Bank's activities are principally conducted in Malaysia. 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (a) Credit risk (cont’d.) Industry analysis as at 31 December 2024 Group Primary agriculture RM'000 Manufacturing (incl. agribased) RM'000 Electricity, gas & water supply RM'000 Wholesale & retail trade, and hotel & restaurant RM'000 Real estate RM'000 Transport, storage and communications RM'000 Finance and insurance RM'000 Household RM'000 Others RM'000 Total RM’000 Financial assets Cash and bank balances - - - - - - 2,098,059 - - 2,098,059 Statutory deposit with Bank Negara Malaysia - - - - - - 73,768 - - 73,768 Balances due from clients and brokers 1,112 - - 2,535 5,301 15 210,206 226,682 9,096 454,947 Financial assets at FVTPL Unquoted shares and funds in Malaysia - - 26,662 - - - 130,558 - 97,797 255,017 Derivative financial assets - 59 - 2 - - 142 7,943 41,551 49,697 Net loans, advances and financing Term loans - - - 30,136 45,021 - - 141,743 310,624 527,524 Islamic term loans - - - - 26,076 - - 48,986 47,014 122,076 Share margin financing 3,562 1,826 4,146 27,025 27,064 - 999 916,116 161,725 1,142,463 Islamic share margin financing - - - - - - - 416 - 416 Others 12,506 - - - - - 2,012 16,855 - 31,373 Financial investments at FVOCI Malaysian Government Securities - - - - - - 291,869 - - 291,869 Malaysian Government Investment Certificates - - - - - - 402,651 - - 402,651 Corporate Bonds - - 15,532 - - - 5,036 - 14,826 35,394 Islamic Corporate Sukuk - - 34,775 - 51,824 15,209 35,430 - - 137,238 Unquoted equities - - - - - - - - 1,421 1,421 Financial investments at AC Malaysian Government Securities - - - - - - 125,560 - - 125,560 Malaysian Government Investment Certificates - - - - - - 260,201 - - 260,201 Islamic Corporate Sukuk - - 5,000 - 14,996 9,300 67,115 - 38,846 135,257 Other assets, excluding prepayments and deposits - - - - - - 17,948 - 401,765 419,713 17,180 1,885 86,115 59,698 170,282 24,524 3,721,554 1,358,741 1,124,665 6,564,644
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