Kenanga Investment Bank’s net profit doubles to RM26.7m in Q1

But the stockbroking and investment banking divisions reported losses before tax.

Malaysian financial services firm Kenanga Investment Bank saw its net profit before tax (PBT) more than double in Q1, to RM26.7m– 115.3% higher than in Q1 2023.

Net profit stood at RM22.8m, 119.2% higher than in the first three months of 2023.

Higher trading and investment income, management fee income, and a significant contribution in share of profit from its Saudi Arabia-based associate company Al Wasatah Al Maliah lifted Kenanga's profits.

Kenanga’s investment and wealth management business reported a 6% year-on-year increase to RM54m, driven by higher income from management fees.

Assets under administration expanded by 9.6% to RM22.8b in Q1 compared to the same quarter in 2023.

Its listed derivatives business registered a 3.3% growth in revenue to RM6.3m, largely attributed to higher commission and interest income generated as a result of higher trading activities.

The stockbroking division, which has a retail market share of 25%, delivered a 20% increase in revenue to RM84.8m for the quarter. Kenanga attributed this to increased trading and investment income, alongside brokerage fee income, buoyed by increased trading volume on the local bourse. 

However, the division still registered a marginal loss before tax of RM1.2m due to impairment provisions on the “abnormal” sell-down on selected counters in January. 

“We do not expect further credit provisions that would significantly impact equity broking's financial performance for the rest of the year,” Kenanga said in a press release.

The investment banking division recorded a revenue of RM56.3m, a slight increase from RM52.5m a year earlier, due to higher foreign exchange game. However, it also reported a loss before tax of RM2.1 for Q1 on the back of lower net interest income and credit loss expense.

Malaysia's banks are expected to maintain strong asset qualities and enjoy robust retail credit demand in in 2024. However, analysts warned that there is limited upside for their profitability moving forward and return on assets is expected to remain flat at 1.2% in 2024.