Stockbroker UOB-Kay Hian Holdings reports 31.9% drop in earnings to $16 million

SINGAPORE - Stockbroker UOB-Kay Hian Holdings has reported a 31.9 per cent drop in second quarter earnings to $16 million.

Revenue for the three months to June 30 fell by 17.8 per cent to $89 million.

The stockbroker noted that trading volumes in major regional markets in which it operated were much lower compared to an active corresponding period.

It was against this challenging environment that the group recorded a pre-tax profit of 19.4 million and after tax profit of $16.2 million, a decrease of 31.6 per cent," it said.

Commission income fell from $66.3 million to $44.9 million, reflecting a decrease of 32.3 per cent.

Interest income grew 8.2 per cent to $38.4 million with higher financing activities.

On the other hand, other operating revenue decreased 12.2 per cent to $5.7 million,with lower corporate finance activities.

Overall commission and personnel expenses fell due to lower business volume, it noted.

Commission rose by 6.3 per cent to $10.7million as a result of converting employee-dealers to remisiers.

Personnel expenses fell by 19.8 per cent to $25.4 million.

Other operating expenses eased with lower trading volumes.

Earnings per share shrank to 2.07 cents from 3.12 cents previously while net asset value per share eased to 165.88 cents compared to 169.69 cents as at Dec 31.

On outlook, UOB-Kay Hian noted that the unexpected result of the Brexit referendum has given rise to greater investor risk aversion. Investor sentiment has been further dampened by the default of offshore and marine (O&M) firm Swiber.

"This has not only caused a further downgrading of an already battered O&M sector but also the banking stocks which are exposed to the sector," it said.

"We see a shift of investor interest towards yield securities which generally have slower trading velocity. Corporate earnings prospect remains cloudy and we therefore expect a rather subdued market for the rest of 2016 with sporadic burst of liquidity triggered by macro economic events."