Kenanga Investment Bank logs RM30.57 mil Q2 profit

KUALA LUMPUR – Kenanga Investment Bank Bhd’s net profit for the second quarter ended June 30, 2021 rose to RM30.57 million from RM20.47 million a year ago.

Revenue increased to RM212.64 million from RM210.61 million previously, mainly due to higher interest income, management fee income and investment banking fees income, said the bank in a filing with Bursa Malaysia today.

On prospects, Kenanga said it foresees a strong resumption of economic recovery towards year-end, with the 2021 gross domestic product growth forecast expected to settle at 3.5% to 4.0% (2020: -5.6%).

“This is attributable to the progress of the Covid-19 vaccination campaign, deployment of the ongoing and sizeable fiscal stimulus, solid external demand, and unleashed pent-up demand.

“Nonetheless, our forecast remains subject to several downside risks, including the resurgence of new Covid-19 cases both domestically and globally amid fears of the new variant, domestic political uncertainty, and renewed United States-China tensions.”

On the monetary front, it said it expects Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) at 1.75% for the rest of the year, given the expected economic recovery on the back of a wider vaccine roll-out and the deployment of fiscal support.

“However, we believe BNM still has room to slash the OPR by another 25 to 50 basis points to support growth if the Covid-19 situation and political uncertainty worsen.”

The bank said the government’s fiscal policy stance is expected to remain expansionary, with a fiscal deficit projected at 6.3% of GDP in 2021 (2020: 6.2%), largely due to four stimulus packages announced so far this year amounting to RM26 billion, or 1.7% of GDP, while government expenditure recorded a 5.2% increase in the first five months of 2021.

“With the roll-out of the national vaccination programme gaining momentum, we are optimistic about the health of the overall economy for the second half of the year.

“While the Bursa Malaysia average daily trading value in July declined to 6.12 billion, we are hopeful for a rebound in Q4 and to sustain a profit momentum for the rest of the year.” – Bernama, August 26, 2021