RAM Ratings Reaffirms Kenanga Investment Bank's A3/Stable/P1 Ratings
RAM Ratings Reaffirms Kenanga Investment Bank's A3/Stable/P1 Ratings
Mal
Mal
Transcription
- 12 /19/2016 Latest Announcement (News ID : 2016121900010) Latest Announcement News ID : 2016121900010 Subject : Kenanga Investment Bank Berhad Kenanga Investment Bank Berhad Organisation Name: RAM RATING SERVICES BERHAD News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 19/12/2016 Embargo Time: 10:18 AM Expiry Date: 18/01/2017 Priority: Medium Summary: RAM Ratings reaffirms Kenanga Investment Bank's A3/Stable/P1 ratings Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content RAM Ratings has reaffirmed Kenanga Investment Bank Berhad's (Kenanga IB or the Bank) A3/Stable/P1 financial institution ratings. The ratings continue to reflect Kenanga IB's prominent stockbroking franchise, healthy asset quality and sound capitalisation. These factors are counterbalanced by the Bank's volatile earnings, constrained balance sheet, depositorconcentration risk and the increasingly more challenging retail stockbroking scene. Kenanga IB is one of the top retail stockbrokers in Malaysia, ranking a respective second and fourth by total trading volume and value in 10M 2016 (with respective market shares of 13% and 8% by volume and value). The Bank's notable standing is underpinned by its large base of remisiers. Nonetheless, we note that the retail stockbroking sector faces challenges such as weak retail participation and mounting competition. While we acknowledge that Kenanga IB has been doing noticeably better in investment banking since 2011, its underwriting capacity is still limited compared to investment banks that are part of universal banking groups with large balance sheets. In 9M FY Dec 2016, Kenanga IB posted a pretax profit of RM33.1 million (excluding a oneoff RM6 million impairment on assets and costs related to the relocation of its headquarters), turning around from its lossmaking position the previous corresponding period. This was mainly due to its improved investmentbanking division, coupled with the timing effect in the recognition of premium for its structured warrants (recognised this year) and the related marktomarket losses and hedging costs (both recognised the year before). All said, however, the Bank's profitability lag behind those of its peers while its costtoincome ratio remained high, partly attributable to its lossmaking assetmanagement and wealthmanagement businesses. Nonetheless, Kenanga IB's stillsound capitalisation, as reflected by its commonequity tier1 capital ratio of 30.4% as at endSeptember 2016, provides a good buffer against its volatile profit performance. The Bank also displays healthy asset quality. Its gross impairedloan ratio only came up to 0.1% as at the same date while its securities portfolio is of high credit quality. On the other hand, Kenanga IB still faces depositorconcentration risk due to its heavier reliance on lumpy institutional deposits. Analytical contact Media contact Ben Inn Padthma Subbiah (603) 7628 1024 (603) 7628 1162 ben@ram.com.my padthma@ram.com.my The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security's market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations. RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings' credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications. Similarly, the disclaimers above also apply to RAM Ratings' creditrelated analyses and commentaries, where relevant. Published by RAM Rating Services Berhad © Copyright 2016 by RAM Rating Services Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016121900010&mode=DISPLAY&info=NEWS&screenId=PB010400 1/1
Create FREE account or Login to add your comment