KENANGA INVESTMENT BANK BERHAD 30 INTEGRATED ANNUAL REPORT 2025 KEY RISKS, MITIGATION AND OPPORTUNITIES The risk of insufficient financial resources to meet payment obligations, or the inability to efficiently meet the present and future funding needs or regulatory obligations as they come due, or access to these resources only at excessive costs. Mitigation Measures • Guided by the Asset & Liability Management policy, liquidity and funding risks are managed to ensure sufficient liquidity and stable funding sources under stressed economic and financial conditions. Additionally, these measures aim to prevent over-dependence or excessive exposure to a single depositor, group of depositors, or sector. • The LCR aims to enhance the Group’s short-term liquidity resilience by ensuring sufficient High Quality Liquid Assets (HQLA) to withstand a significant stress scenario lasting 30 days. • The NSFR aims to reduce funding risk over a longer time horizon by requiring the Group to fund its activities with sufficiently stable sources of funding to mitigate the risk of future funding stress. • Early warning indicators to facilitate timely management actions, while ongoing monitoring of asset-liability mismatches and funding concentrations supports proactive balance sheet management. • Liquidity and funding stress tests are conducted regularly to identify and address plausible vulnerabilities and areas of concern. • The Group has set its compliance ratio for both LCR and NSFR in accordance with the prescribed regulatory limits. Opportunities • Proactive assessment of liquidity and funding risks strengthen liquidity management and enhance the effectiveness of funding strategies, ensuring financial stability and resilience, even in challenging market conditions. • Effective management anticipates potential shifts in liquidity and funding risk, enabling a strategic response aligned with business objectives. • Optimised funding structure and costs through proactive liquidity planning and diversification lead to improved financial efficiency and long-term sustainability. Our Approach To preserve sustainable liquidity and funding condition of the Group, two minimum standards were adopted i.e. a) Liquidity Coverage Ratio (“LCR”), and b) Net Stable Funding Ratio (“NSFR”). Additionally, there is a strong focus on diversifying funding sources. Impact to Kenanga Such risks may adversely impact business operations and continuity, potentially leading to unacceptable losses, in the short and medium-term horizon. R3 Liquidity and Funding Risk
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