KUALA LUMPUR (Nov 29): Kenanga Investment Bank Bhd (KL:KENANGA) posted a 38.1% fall in its third quarter net profit to RM14.61 million, from RM23.61 million a year earlier, as most of its business segments saw a weaker performance.  

Earnings per share for the quarter ended Sept 30, 2024 (3QFY2024) dropped to 2.01 sen, from 3.26 sen previously.

Net interest income fell 29% year-on-year to RM18.3 million from RM25.8 million, according to the group's stock exchange filing.

Quarterly revenue, however, rose 4.7% to RM229.97 million from RM219.71 million in 3QFY2023, mainly due to higher brokerage fee income, partially offset by higher overheads and credit loss expenses.

The stockbroking business posted a loss before tax of RM2.59 million in 3QFY2024, against a profit before tax of RM1.03 million a year ago, hit by the credit loss expenses. However, the segment’s revenue was 9.9% higher at RM87.12 million from RM79.25 million on higher brokerage income amid improved Bursa Malaysia trading volume.

The asset and wealth management business also saw its pre-tax profit fall 39.6% to RM8.1 million from RM13.42 million as revenue declined 3.6% to RM68.82 million from RM71.38 million. The segment's lower profit was due to a lower one-off income from alternatives investments and higher costs due to expansion.

Kenanga's listed derivates business also saw its pre-tax profit fall 21.7% year-on-year to RM1.52 million from RM1.95 million, despite revenue rising marginally to RM6.39 million from RM6.29 million.

The corporate and others segment, meanwhile, incurred a loss before tax of RM3.5 million, against a profit before tax of RM6.09 million in 3QFY2024, hurt by valuation loss on investment and disposal of a joint venture.

In contrast, Kenanga's investment banking posted a 57.9% increase in quarterly profit before tax to RM8.18 million from RM5.18 million previously. Revenue inched up 2.3% to RM63.57 million from RM62.14 million due to higher investment banking fee income and trading and investment income.  

No dividend was proposed for the latest financial quarter.

For the first nine months of FY2024, Kenanga's net profit dropped 7.4% year-on-year to RM46.81 million from RM50.56 million, despite revenue growing 13.3% to RM677.3 million from RM597.76 million.

The weaker nine-month net profit was mainly due to higher overheads and the recognition of impairment provisions totalling RM19.8 million.

The higher cumulative revenue, meanwhile, was attributed to higher brokerage and trading income on the back of increased trading volumes on Bursa Malaysia.  

Looking ahead, Kenanga said it is on track to close the year with higher operating profit compared to the previous year despite the mixed market sentiments.

“Despite recent volatility, we remain optimistic about the Malaysian equities market, given the FBM KLCI's double-digit growth this year. The economic outlook for the rest of 2024 remains positive, bolstered by strong domestic demand, stable employment, increased tourist arrivals, and ongoing infrastructure projects,” said its group managing director Datuk Chay Wai Leong in a statement.  

Kenanga’s share price fell two sen or 2.2% to 93 sen on Friday, bringing the group a market capitalisation of RM684 million.