KUALA LUMPUR (Aug 29): Kenanga Investment Bank Bhd (KL:KENANGA) reported on Thursday a 43.9% fall in second-quarter net profit, immediately sending its shares to their lowest in more than six months.

The stock fell as much as 15% or 18 sen to RM1, its lowest since Feb 7, 2024. The sharp decline in the share price also prompted a suspension of intraday short-selling activities on the stock. Kenanga shares closed at RM1.05, valuing the company at RM772.55 million.

Net profit for the quarter ended June 30, 2024 (2QFY2024) was RM9.37 million compared with RM16.7 million a year earlier due to impairment provisions on its fees receivables amounting to RM6.6 million for the quarter.

This led to lower earnings per share of 1.29 sen for 2QFY2024, compared with 2.31 sen for 2QFY2023.

Quarterly revenue, however, rose 22.6% to RM243.13 million from RM198.26 million a year earlier, mainly due to higher brokerage fee income, and trading and investment income. This was partially offset by higher total overheads and credit loss of RM6 million in 2QFY2024, versus credit loss reversal of RM12.3 million recorded in 2QFY2023.

In a filing with Bursa Malaysia on Thursday, Kenanga said its investment banking segment registered higher revenue for 2QFY2024, mainly attributed to higher investment banking fee income and trading and investment income. However, the segment recorded a pre-tax loss for 2QFY2024, due to lower net interest income and higher credit loss expense.

Higher revenue and pre-tax profit were recorded by the stockbroking segment for 2QFY2024 on higher trading and investment income and brokerage fee income as a result of higher trading volume on Bursa.

As for Kenanga's asset and wealth management segment, it recorded lower pre-tax profit for 2QFY2024, due to lower management and performance fee income, and higher credit loss expense.

No dividend was proposed for the latest financial quarter.

For the first half ended June 30, 2024 (1HFY2024), net profit rose 19% to RM32.2 million from RM26.95 million a year earlier, while revenue grew 18.3% to RM447.33 million from RM378.05 million.

Kenanga attributed the improved performance to higher operating income and share of profit from associates — partially offset by credit loss expense.

It added that it made impairment provisions on its fees receivables amounting to RM7.9 million in 1HFY2024.

"Barring unforeseen circumstances, the group expects to make recovery on the provisions in 2HFY2024," it said.

“We anticipate surpassing last year’s performance, driven by improving economic conditions and increased volume on Bursa,” said Kenanga group managing director Datuk Chay Wai Leong in a separate statement.

"With over five decades of capital market expertise and experience behind us, we are well positioned to navigate challenges, capitalise on emerging opportunities, and sustain our growth momentum to continue delivering long-term shareholder value,” he added.