KENANGA ANNUAL REPORT 2020

272 5 1 2 3 4 6 7 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 December 2020 50. FINANCIAL RISK MANAGEMENT (CONT’D.) (a) Credit risk (cont’d.) (i) Internal Credit Risk Ratings The table below provides a mapping of the Group’s and 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. 11 12 13 BB1 BB2 BB3 BB Non- Investment Grade Weak capacity to meet its financial obligations. The entity is highly vulnerable to adverse changes in circumstances, economic conditions and/or operating environments. 14 15 16 B1 B2 B2 B Very weak capacity to meet its financial obligations. The entity has a limited ability to withstand adverse changes in circumstances, economic conditions and/or operating environments. 17 18 19 C1 C2 C3 C High likelihood of defaulting on its financial obligations. The entity is highly dependent on favourable changes in circumstances, economic conditions and/or operating environments, the lack of which would likely result in it defaulting on its financial obligations. 20 D D Default Currently in default on either all or a substantial portion of its financial obligations, whether or not formally declared. The D rating may also reflect the filing of bankruptcy and/or other actions pertaining to the entity that could jeopardize the payment of financial obligations.