KUALA LUMPUR (Nov 25): Kenanga Investment Bank Bhd reported a 56.48% drop in net profit for its third quarter ended Sept 30, 2021 (3QFY21) to RM21.44 million from RM49.27 million in the previous year, amid weaker trading volume on Bursa Malaysia, which resulted in lower net brokerage as well as trading and investment income.

The investment bank's quarterly revenue fell 36.87% to RM202.65 million from RM321.01 million, according to its bourse filing on Thursday.

Compared with its preceding quarter of 2QFY21, net profit declined 29.87% from RM30.57 million, as revenue dropped 4.7% from RM212.64 million.

Despite the drop in the latest quarterly earnings, its net profit for the cumulative nine months ended Sept 30, 2021 (9MFY21) was up 37.24% to RM86.17 million from RM62.79 million a year earlier, despite a 4.52% drop in revenue to RM665.41 million from RM696.95 million.

The stronger earnings were mainly due to higher contributions from stockbroking and investment management businesses, as well as the group's share of profit from its joint venture with Rakuten Trade Sdn Bhd.

It said its stockbroking division achieved a profit before tax (PBT) of RM68.8 million for 9MFY21 versus RM52.7 million in the same period last year, mainly due to higher net interest, improved net trading and investment income, and lower credit loss expenses.

"Net equity trading investment income increased to RM56 million, up 40.2% from the corresponding period. The division continued to grow its market share, particularly in the retail segment, from 21.9% to 23.5%, reinforcing its position as one of the largest retail brokers in the marketplace. During the same period, Rakuten Trade achieved yet another milestone, with the fast-growing online trading platform surpassing 200,000 registered accounts," it said.

It also noted that its investment and wealth management division registered a record high PBT, surging over three-fold to RM20.6 million in 9MFY21 from RM7.6 million in the same period last year. "The significant increase was attributed to higher performance fee and management fee income generated on the back of increased assets under administration (AUA) and sales agency force. AUA stood at RM16.3 billion, up 18.4% from the same period last year," said Kenanga.

With the gradual reopening of all economic sectors and lifting of restrictions, Kenanga is optimistic that it will benefit from a more positive economic outlook that will translate into higher Bursa volume as well as business activities, which will help it sustain its profit momentum for 4QFY21.

"Having said that, we are witnessing a deceleration in trading activities not just on Bursa Malaysia, but also on some of the other major bourses around the world. This will likely have some impact on our following quarter's revenue, but on the whole, benefitting from the strength of our diversified revenue streams, we are on track to conclude the year on a footing comparable to the performance last year.

"With our business model centred on digitalisation, and the continued practice of prudence throughout our operations, we are in a good position to continue growing the business and delivering long-term shareholder value," added Kenanga's group managing director Datuk Chay Wai Leong in a separate statement.

Shares of Kenanga were unchanged at RM1.24 on Thursday's market close, with some 304,000 shares done. This gives the group a market capitalisation of RM912.35 million.