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 323 322 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (b) Market risk (cont’d.) (iii) Equity price sensitivity analysis Equity price risk is the risk of financial loss arising from adverse changes in prices of equities and equity derivatives. The following table demonstrates the impact of a +/- 30% change in equity prices across the board on the Group's profit or loss and equity. Change in equity price 2024 Impact on profit or loss 2024 RM'000 Impact on equity 2024 RM'000 Change in equity price 2023 Impact on profit or loss 2023 RM'000 Impact on equity 2023 RM'000 Equity -investments +30% (32,331) - +30% 23,781 - -30% (45,968) - -30% (90,578) - From risk management perspective, a risk limits framework governing the activities of equity and equity derivatives trading has been established, primarily intended to: 1) Prevent excessive exposures to a single risk factor or a group of risk factors; and 2) Constrain the general level of risk taking for a business. Additionally, other components of limit framework including stop-loss trigger, issuance size, permitted products, management oversights etc. were put in place for better governance as well as to embrace best practices of market risk management. The risk framework was designed in accordance to the Group's and the Bank’s risk appetite and a closely controlled risk parameter, e.g. stop-loss trigger, will ensure losses arising from the course of trading are limited. In addition, the Group's associate company has made some equity investments in Saudi Arabia. The impact of a +/- 30% change in equity prices on the Group arising from these investments are shown as follows: Change in equity price 2024 Impact on profit or loss 2024 RM'000 Impact on equity 2024 RM'000 Change in equity price 2023 Impact on profit or loss 2023 RM'000 Impact on equity 2023 RM'000 Equity -investments +30% - 28,869 +30% - 19,951 -30% - (28,869) -30% - (19,951) 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (c) Liquidity risk Liquidity risk is the risk of loss as a result of the Group’s or of the Bank’s inability to meet cash flow obligations on a timely and cost effective manner. Liquidity risk is managed through the Liquidity Coverage Ratio Framework issued by BNM, internal policies and management oversight by Group Risk Committee. A Contingency Funding Plan has been formulated covering across the policies, procedures, roles and responsibilities, funding strategies and notwithstanding, the deployment of such in a liquidity event. The Group and the Bank actively manage their operating cash flows and the availability of funding so as to ensure that all funding needs are being met. As part of its overall prudent liquidity management, the Group and the Bank maintain sufficient levels of cash or cash convertible investments to meet its working capital requirements in addition to maintaining available banking facilities, to meet any immediate operating cash flow requirements. In accordance with BNM’s Liquidity Coverage Ratio guideline, the Group and the Bank maintain a portfolio of highly marketable and diverse assets which are assumed to be easily liquidated in the event of an unforeseen interruption of cash flow. In addition, the Group and the Bank maintain a statutory deposit with BNM equal to 2.0% of net eligible liabilities. Both the Group and the Bank have been consistently maintaining sufficient level of liquidity with an average of LCR of 255% and 286% for the past 12 months. (i) Analysis of assets and liabilities by remaining contractual maturities The table below summarises the contractual maturity profile of the Group’s assets and liabilities as at 31 December 2024. The contractual maturity profile often may not reflect the actual behavioural patterns. Group 2024 On demand RM’000 Up to 1 month RM’000 >1 to 3 months RM’000 >3 to 6 months RM’000 >6 to 12 months RM’000 >1 year RM’000 Non specific maturity RM’000 Total RM’000 Assets Cash and bank balances 822,675 1,069,817 205,467 100 - - - 2,098,059 Financial assets at FVTPL - - - - - - 552,301 552,301 Financial instruments at FVOCI - - - - 10,000 857,152 1,421 868,573 Financial instruments at AC - - 14,996 10,902 40,675 454,445 - 521,018 Derivative financial assets - 41,768 962 3,095 3,872 - - 49,697 Loans, advances and financing 290,489 1,155,968 - 4,265 22,416 350,714 - 1,823,852 Balances due from clients and brokers - 454,947 - - - - - 454,947 Other assets 6,682 294,555 3,769 5,749 - - 129,013 439,768 Others - 1,672 1,221 1,831 3,659 14,159 826,156 848,698 Total assets 1,119,846 3,018,727 226,415 25,942 80,622 1,676,470 1,508,891 7,656,913
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