UOB-Kay Hian cuts dividend by 23%, in line with full-year earnings fall

SINGAPORE - Stockbroker UOB-Kay Hian Holdings chalked up a 7.4 per cent rise in fourth quarter net profit to $19.2 million.

Revenue for the three months to Dec 31 rose by 1.4 per cent to $$102.7 million.

While market volumes increased significantly in Hong Kong and Thailand, volume continued to be flat in its main market in Singapore.

The increase in commission from these two markets partially offset the decrease in Singapore.

The group recorded a decrease of 6.5 per cent in commission income to $59 million.

Interest income rose from $25.2 million to $32.5 million with higher lending activities. Other operating income, however, declined by 34 per cent to $8.1 million on the back of less corporate finance activities.

Total costs and expenses fell 3.3 per cent to $79.8 million.

Commissions paid to commission agents increased by 12.7 per cent to $15.3 million as their contribution to commission income was proportionately higher.

Personnel expenses, which included incentives paid to employed dealers, fell 26.7 per cent to $30.1 million, in line with lower brokerage from this channel.

For the full year, earnings fell by 20.3 per cent to $74.4 million on the back of a 13.4 per cent drop in revenue to $369.6 million.

Commission income fell 19.7 per cent to $234.7 million. Interest income grew by 12.6 per cent to $99.9 million, with more financing activities.

Other operating income fell 26.6 per cent to $26.7 million due to a decrease in corporate finance and related activities.

Total costs and expenses decreased 10.4 per cent to $280.4 million, in line with lower business volumes while commission and personnel expenses shrank 20.5 per cent to $55.5 million and 16 per cent to $113.9 million, respectively, with lower commission income.

Finance expenses rose 18.8 per cent to $36.8 million mainly due to higher lending activities.

Quarterly earnings per share rose to 2.56 cents from 2.47 cents previously while net asset value per share climbed by 5.54 cents to 163.96 cents.

A first and final dividend of five cents a share was recommended, down from 6.5 cents last year.

On its prospects for this year, the stockbroker noted that global market sentiments remain cautious, with ongoing concerns of the geopolitical and macroeconomic nature. "We expect subdued conditions in Asia for at least the first half of 2015."

Given that regional stock prices especially for the companies exposed to the oil and gas, property and commodities sectors are at historically low valuations, any improvement in investor sentiment could spur transactions volumes.

UOB-Kay Hian is hopeful that this could occur in second half year.