Commission and trading income is up 32.6% at S$202.7 million

 

Revenue: S$353.2 million (+16.3%)

 

Net profit: S$110.3 million (+9.2%)

 

Final dividend: S$0.119

 

UOB Kay Hian&rsquo s : U10 +2.06% net profit rose 9.2 per cent year on year to S$110.3 million for the second half of the financial year 2024 ended December, the securities brokerage announced on Wednesday (Feb 26).

 

Revenue increased 16.3 per cent to S$353.2 million.

 

Commission and trading income improved by 32.6 per cent to S$202.7 million. Interest income and other operating income remained &ldquo relatively stable&rdquo at S$129.6 million and S$20.9 million, respectively.

 

Meanwhile, commission cost was up 38.8 per cent at S$47.9 million, in line with higher business volume, the brokerage said.

 

Staff costs rose 20 per cent to S$111.2 million.

 

Other operating costs were 39.7 per cent higher at S$62.6 million, largely due to a write-off of goodwill and additional allowance for impairment of trade and loan receivables.

 

Earnings per share stood at S$0.118 for the half-year, compared to S$0.109 for the year-ago period.

 

The board has proposed a first and final dividend of S$0.119 per share for FY2024, compared to S$0.092 for FY2023. Payment will be made on Jun 26 if shareholders approve it at the annual general meeting to be held on Apr 25.

 

The group&rsquo s net profit increased 31.6 per cent to S$224.2 million, while revenue was up 13.3 per cent at S$670.3 million for the full year.

 

The group &ndash which deals in securities and futures broking in Singapore, Hong Kong, Thailand, Malaysia and other markets &ndash pointed out that the continued recovery of US and major Asian equity markets have underpinned bullish investors sentiment and fuelled higher trading volumes in 2024.

 

Higher volatility and attractive yields have also encouraged significant activity in derivatives and structured products.

 

The upcoming economic policies of the new US administration are key developments to watch given their cascading impact on inflation, interest rates and currency movements, added UOB Kay Hian.

 

The continued momentum of technological innovation, impact of China&rsquo s various stimuli and resilience of the global large economies are also expected to impact the markets.

 

The counter closed 2.1 per cent or S$0.04 higher at S$1.98, before the financial results were published.

The fine is for breaches in business conduct and anti-money laundering rules.

The Monetary Authority of Singapore has fined UOB Kay Hian Private Limited $375k for its failure to comply with business conduct requirements under the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR) and anti-money laundering and countering the financing of terrorism (AML/CFT) requirements under MAS Notice SFA04-N02. 

Between September 2012 and June 2018, MAS said UOBKH failed to implement adequate control over its corporate finance business and failed to ensure that its CF business was subject to internal audit.

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Specifically, UOBKH&rsquo s internal policies failed to sufficiently involve its Compliance function in matters of compliance, thereby compromising its effectiveness. It also failed to meet the standards set out in the applicable Association of Banks in Singapore Listings Due Diligence Guidelines for internal policies and procedures on conducting due diligence for IPOs

Between December 2016 and August 2017, UOBKH also committed breaches of MAS&rsquo AML/CFT requirements, which were a result of material lapses in its control processes.

MAS said that UOBKH failed to verify customers&rsquo source of wealth (SOW) during onboarding, even though they were determined by the firm to be of higher money laundering (ML) risk. UOBKH&rsquo s practice of verifying the SOW of such customers only upon specific trigger events did not comply with AML/CFT requirements for performing enhanced customer due diligence on customers who pose higher ML risk.

UOBKH also accepted third-party receipts that represented a substantial amount of the value of an IPO without conducting adequate due diligence. As a result, UOBKH failed to detect and report suspicious transactions despite red flags of potential nominee arrangements, which may be abused to conceal beneficial ownership and facilitate market misconduct.  

&ldquo UOBKH&rsquo s breaches of AML/CFT requirements exposed it to the risk of being used as a conduit for financial crime. UOBKH has taken remedial measures to enhance its internal policies and controls. In addition, MAS has required UOBKH to appoint an independent external party to validate the implementation and effectiveness of its remediation measures and report the findings to MAS,&rdquo MAS said.

UOBKH has already paid the fine in full.