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 299 298 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (a) Credit risk (cont’d.) Industry analysis as at 31 December 2023 Bank 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 - - - - - - 974,727 - - 974,727 Statutory deposit with Bank Negara Malaysia - - - - - - 60,620 - - 60,620 Balances due from clients and brokers - 5,150 - 6,725 3,868 - 257,504 278,257 19,132 570,636 Financial assets at FVTPL Unquoted shares and funds in Malaysia - - 26,662 - - - 44,541 - 100,000 171,203 Derivative financial assets - - - - 24,433 15 - 2,181 49,309 75,938 Net loans, advances and financing Term loans - - - 51,112 - 4,009 18,026 49,110 335,191 457,448 Islamic term loans - - - - 30,087 - - 54,070 54,103 138,260 Share margin financing 4,787 - - 24,767 29,991 - 955 907,436 162,169 1,130,105 Islamic share margin financing - - - - - - - 834 - 834 Financial investments at FVOCI Malaysian Government Securities - - - - - - 177,379 - - 177,379 Malaysian Government Investment Certificates - - - - - - 331,282 - - 331,282 Islamic Negotiable Instruments of Deposits - - - - - - 159,644 - - 159,644 Corporate Bonds - - 25,639 - - - - - 14,808 40,447 Islamic Corporate Sukuk - - 54,081 - 37,173 30,423 45,510 - - 167,187 Unquoted equities - - - - - - - - 1,343 1,343 Financial investments at AC Malaysian Government Securities - - - - - - 125,853 - - 125,853 Malaysian Government Investment Certificates - - - - - - 228,204 - - 228,204 Islamic Corporate Sukuk - - 5,000 - 14,997 9,245 87,497 - - 116,739 Other assets, excluding prepayments and deposits - - - - - - - - 159,712 159,712 4,787 5,150 111,382 82,604 140,549 43,692 2,511,742 1,291,888 895,767 5,087,561 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (a) Credit risk (cont’d.) Collateral and other credit enhancements The amount and type of collateral required depend on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of collateral and valuation parameters. The main types of collateral obtained are as follows: (i) Cash; (ii) Charges over financial instruments; (iii) Securities; (iv) Charges over real estate properties, inventory and trade receivables; (v) Mortgages over properties; or (vi) Financial guarantees. Management monitors the market value of collateral, requests additional collateral in accordance with the underlying agreement, and monitors the market value of collateral obtained during its review of the adequacy of the allowance for impairment losses. (i) Internal Credit Risk Ratings The table below provides a mapping of the Group’s and of the Bank's internal credit risk grades to external ratings: Notches KIBB Obligor Rating External Rating Classification of Credit Risk Grade Description 1 AAA AAA Investment Grade Superior capacity to meet its financial obligation. 2 3 4 AA1 AA2 AA3 AA Strong capacity to meet its financial obligations. The entity is resilient against adverse changes in circumstances, economic conditions and/or operating environments. 5 6 7 A1 A2 A3 A Adequate capacity to meet its financial obligations. The entity is more susceptible to adverse changes in circumstances, economic and/or operating environments. 8 9 10 BBB1 BBB2 BBB3 BBB Moderate capacity to meet its financial obligations. The entity is more likely to be weakened by adverse changes in circumstances, economic conditions and/or operating environments than those in higher-rated categories.
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