Kuala Lumpur, 31 May 2023: Kenanga Investment Bank Berhad (“Kenanga” or “The Group”) today announced its financial results for the first quarter ended on 31 March 2023 (“1Q23”).
The Group reported revenue of RM179.8 million and profit before tax (“PBT”) of RM12.4 for 1Q23 compared to the corresponding period in the previous year (“1Q22”) when revenue and PBT were RM184.9 million and RM21.5 million respectively. Net profit for the period stood at RM10.4 million vis a vis RM16.9 million in the same period last year. The results were primarily influenced by lower brokerage fee income, management fee income and higher information technology expenses.
Kenanga’s Stockbroking division recorded revenue of RM70.7 million against RM84.8 million in 1Q22, while it registered loss before tax (“LBT”) of RM5.3 million against PBT of RM8.2 million in the same period last year. The decrease is attributed to a decline in net brokerage, interest income and other income resulting from lower trading volumes on the local bourse. Bursa Malaysia’s Average Daily Value dropped by 15% year-on-year due to lower trading activities by retail and domestic institutional investors. Despite these challenges, Kenanga continues to reinforce its position as one of the largest retail stockbrokers in the market by maintaining a retail segment market share of 25.9% as of 31 March 2023, similar to the previous corresponding quarter.
The Group’s Investment Banking division registered an increase in revenue of RM52.5 million in 1Q23, in comparison to the revenue of RM40.5 million in 1Q22, while PBT dipped to RM1.2 million against RM2.3 million in the previous corresponding period as a result of higher interest expense with partial mitigation from higher fee income and trading income. Notwithstanding, the division took a step forward by filing for the listing of an Initial Public Offering in 1Q23 and anticipates improved income from its pipeline.
Its Investment and Wealth Management division recorded revenue of RM50.9 million and PBT of RM8.8 million, compared to the revenue and PBT of RM59.6 million and RM14.5 million respectively in 1Q22 due to lower performance fee income and other income from alternative investment products, along with higher marketing expenses. Nevertheless, the division registered a net growth of RM1.3 billion in Asset Under Administration, closing at RM20.8 billion, up 6.6% from 1Q22.
The Group’s Listed Derivatives division reported higher revenue of RM6.1 million and PBT of RM1.7 million compared to the revenue and LBT of RM4.5 million and RM0.1 million respectively from the same period last year. The improvement was primarily due to higher interest income generated.
The Money Lending and Financing division recorded revenue of RM1.6 million in 1Q23 compared to the revenue of RM2.2 million in 1Q22 due to lower interest income and fees income subsequent to the disposal of a partial interest in its subsidiary, Kenanga Capital Islamic. However, the division recorded higher PBT of RM6.6 million in 1Q23 compared to RM0.3 million in 1Q22 mainly driven by dividend income and gains on the disposal of the subsidiary.
“Our economy has been impacted by the global economic slowdown and the adoption of more stringent global monetary measures aimed at tackling inflationary pressures. Despite the potential risks to growth posed by external factors, our expectations of lower political risk premiums, robust domestic demand, a projected rise in tourist arrivals, and increased investments will help mitigate any adverse effects. The unity government’s expansionary fiscal policy and clear policy direction, as seen in the revised Budget 2023 will also continue to support growth,” said Datuk Chay Wai Leong, Group Managing Director of Kenanga Investment Bank Berhad.
“Although our growth outlook for the Group remains vulnerable to external risks, we maintain cautious optimism in 2023. Our Equity Broking business is focused on the retail market and continues to introduce new products to the market, the latest being fractional shares trading via Rakuten Trade,” added Datuk Chay.
“Additionally, our Investment Banking division is actively completing its mandates, which is expected to increase its revenue compared to the previous year. We also anticipate our Asset Management business to perform well, supported by higher Asset Under Management and an expanded sales network,” concluded Datuk Chay.
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