BIMB Integrated Annual Report 2019

MANAGEMENT DISCUSSION & ANALYSIS SUBSIDIARIES’ OPERATIONAL REVIEW BIMB SECURITIES: FOCUSED ON DRIVING GROWTH Muted Financial Performance for 2019 Given the challenges the market faced in 2019, BIMB Securities reflected the muted trading activity and charted a Loss Before Zakat and Taxation (“LBZT”) of RM3.2 million for 2019. BIMB Securities experienced a sharp 47% drop in gross brokerage revenue contribution from the Institutional Business segment in 2019 compared to 2018. This was because most of the institutional investors, including government linked investment companies (“GLICs”) and government linked companies (“GLCs”), moved their portfolios to overseas markets to seek better returns as well as reduced their portfolios in equity to fixed income instruments that offered higher yields/ returns. Economic Challenges Impacted Trading Market sentiment for 2019 was challenging and was reflected in the trading activities conducted by investors, in which the benchmark index FBMKLCI ended the year down 6.0% from 2018’s close. A combination of soft domestic corporate earnings and risk aversion among some investors dampened trading activity. While the benchmark FBMKLCI did not fare as well as the other benchmark indices in the region, the FBM Hijrah Shariah Index and the FBM Emas Shariah Index recorded positive growth of 0.8% and 3.9% respectively. The reduction in Malaysia’s weightage in the MSCI Emerging Markets Index had an impact to the overall foreign portfolio flows, as investors tracked the index shift allocations to other global markets which contributed to the significant outflow of foreign funds of USD2.7 billion in 2019. 118 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance