UOB Kay Hian’s net profit plummets 34% to $93.2m in 2011

With the rising uncertainty of the global economic outlook, retail investors exited the markets and stayed on the sidelines last year.

According to a financial statement, the group’s total revenue fell 37.2% largely contributed by a 45.1% decrease in commission income from $102.1m to $56.0m. Other operating income also declined 40.8% from $9.1m to $5.4m with less corporate finance and related transactions.

However interest income grew by 21.5% from $18.8m to $22.9m on the back of expansion in lending activities in previous quarters.

Total costs and expenses decreased by 20.9%. Commission and personnel expenses decreased by 52.2% and 29.8% respectively, in line with the decrease in commission income of 45.1%. A further allowance of $1.2m was made for trade receivables in our Hong Kong subsidiary. The increase in finance expenses is due to the debts issued last year.

The Group recorded pre-tax profit of $16.8m and after-tax profit of $17.6m, a decrease of 66.4% and 59.9% respectively.

2011 vs 2010
Global economy was fraught with uncertainties in 2011. Market volumes in regional markets were low especially in 2nd half of the year when retail investors exited the markets and stayed on the sidelines.

The Group recorded a 15.0% decline in total revenue from $454.2m to $386.2m and commission income fell by 21.9% from $354.7m to $277.0m. Interest income rose 38.4% from $60.7m to $84.0m. Other operating income decreased 34.0% from $23.6m to $15.5m due to a decline in corporate finance and related activities.

Total costs and expenses decreased by 3.6% to $277.3m. Commission and personnel expenses decreased by 25.6% and 13.6% respectively, generally in line with the decrease in business activities. A total allowance of $3.9m was made in our Hong Kong subsidiary for trade receivables.

Finance expenses increased from $9.7m to $31.3m mainly due to the full year effect in 2011 of debts issued in late 2010.

The Group recorded pre-tax profit of $108.9m and after-tax profit of $93.2m for the year 2011, a decline of 34.5% and 33.8% respectively.