Bursa Malaysia net profit down 26% in first quarter

PETALING JAYA: Bursa Malaysia Bhd’s net profit fell 26.5% to RM46.85mil in the first quarter ended March 31, 2019 from RM63.78mil in the same period a year ago, mainly due to lower operating revenue.

The stock exchange operator said the drop was mainly due to lower operating revenue by 16.2% to RM121.4mil from the previous corresponding quarter.

Revenue in the first quarter stood at RM126.52mil, down 16% from RM150.71mil a year ago. Earnings per share stood at 5.80 sen against 7.90 sen previously.

In a statement, Bursa Malaysia said total operating expenses in the first quarter, which saw a marginal decrease by 1.4% to RM62mil from RM62.9mil a year ago, continued to be well managed despite an increase in developmental expense.

The marketing and development expenses increased mainly due to higher activities carried out by the Securities and Derivatives Markets.

While first-quarter 2019 was a weak quarter for the exchange, this was consistent with the prevailing domestic and global developments, which include concerns of slower economic growth as well as weaker corporate earnings and palm oil prices.

However, market sentiment is seen to be improving, as reflected by the positive momentum in the monthly average daily trading value (ADV) and monthly average daily contracts (ADC) that have been trending upwards through the quarter under review.

“A bourse is a reflection of wider conditions. The first quarter of the year remained challenging on the back of weaker sentiment largely influenced by external concerns.

“These concerns are wide-ranging, and are driving uncertainty in the global economy. The spillover of this impact is also affecting businesses of all sizes in our local economy,” CEO Datuk Muhamad Umar Swift said.

“While the FBM KLCI weakened in the first quarter, it is important to note that the small and mid-cap indices continue to show a positive trend, with the FTSE Bursa Malaysia Small Cap Index and FTSE Bursa Malaysia Mid-70 Index recording a year-to-date growth of 13% and 9%, respectively, as at end-March,” he said.

In the first quarter, the securities market registered a trading revenue of RM59mil compared to RM76.3mil in the previous corresponding quarter, down 22.6% as a result of lower ADV for the securities market’s on-market trades.

Total non-trading revenue decreased by 7.6% to RM42.1mil in the first quarter from RM45.6mil in the same quarter a year ago mainly due to the decline in listing and issuer services revenue.

However, this was partly offset by improved market data revenue mainly due to a higher number of subscribers.

The derivatives market trading revenue dropped by 13.8% to RM16.4mil in the first quarter from RM19mil in the corresponding period a year ago, mainly due to lower number of contracts traded for crude palm oil futures and FTSE Bursa Malaysia KLCI Futures, as well as higher market incentives incurred.

Bursa Suq Al-Sila’ registered a trading revenue of RM3.9mil despite the growth in ADV by 39.6% to RM31.6bil in the first quarter.

“Looking beyond the general analysis, we believe these temporary challenges are the impetus that can drive positive transformation among more agile participants across the broad economy.

“The fundamentals of the Malaysian economy are strong and robust, and we remain confident of the country’s resilient growth trajectory.

“The recent positive announcements such as the revival of the East Coast Rail Link and Bandar Malaysia projects will have a positive impact and act as a catalyst that will stimulate the broader market,” Umar said.

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