Brokerages find relief where they can in Q3
Singapore
SINGAPORE brokerages had a mixed third quarter, with some players finding relief from a mix of channels after a weak first half of the year.
UOB-Kay Hian Holdings got some respite from its overseas business. The broker returned to growth as overseas trading volumes helped to lift net profit by 21.1 per cent despite a weak Singapore market in the third quarter.
The broker earned S$20.4 million, or 2.73 Singapore cents per share, in the three months to September. That was the first quarter this year to experience year-on-year growth.
Under the weight of the first half of the year, net profit in the first nine months of 2014 fell 26.9 per cent to S$55.2 million.
Market volumes in Singapore were low, but more activity in Thailand and Hong Kong helped to mitigate the decline in third-quarter commission incomes to just a 1.5 per cent decrease, to S$62.7 million. Higher lending activities raised interest income by 70.9 per cent to S$34.3 million.
UOB-Kay Hian shares closed flat at S$1.505 on Wednesday before the results were announced.
At GK Goh Holdings, which owns a diversified portfolio of investments, cost-cutting helped to manage the pain.
The company said its futures and foreign exchange brokerage managed to reduce its third-quarter losses to about S$0.5 million in the third quarter, from S$1.2 million in the second quarter. The unit returned to break-even levels in September as management cut overheads and grew new business lines.
Shares of GK Goh were not traded on Wednesday. They last changed hands at 87 Singapore cents on Tuesday.
The scene was uneven in the other major players.
DBS Group Holdings reported in October that brokerage income for the third quarter fell 12 per cent to S$43 million.
OCBC Bank's third-quarter brokerage fees, however, improved by a modest 2 per cent to S$18 million.
Expectations of activity in the Singapore market remain low for the rest of the year.
"Unless investment sentiment improves significantly, we expect market activity to be muted for the remainder of 2014," UOB-Kay Hian said. "The continued absence of a strong catalyst for global business growth could see low trading activity in 2015."
