Bursa Malaysia 1Q22 earnings fall on lower trading volumes

Its 1Q22 net profit is 4.6% higher than 4Q21 of RM65m, mainly contributed by a 2.8% higher average daily trading value registered in the quarter 


BURSA Malaysia Bhd stated a decline in trading activity on the exchange resulted in its net profit for the first quarter ended March 31, 2022 (1Q22), falling 44% to RM67.97 million from RM121.39 million in 1Q21. 

The bourse operator also reported a decline in revenue of 28.83% year-on-year in the quarter to RM165.3 million. 

Earnings per share declined to 8.4 sen, according to its exchange filing yesterday. 

Bursa CEO Datuk Muhamad Umar Swift stated the average daily trading value of securities continued to normalise to pre-pandemic levels which contributed to the decline in profit for the 1Q22. 

He added Bursa’s 1Q22 net profit was 4.6% higher than 4Q21 of RM65 million, mainly contributed by a 2.8% higher average daily trading value registered in the quarter. 

“However, with the reopening of the economy and international borders, Bank Negara Malaysia expects Malaysia’s growth forecast to be between 5.3% to 6.3%. 

“As such, better economic growth can be expected as the nation moves towards the endemic phase, and we anticipate more trading opportunities for investors due to movements in crude palm oil prices, interest rate policies and the FTSE Bursa Malaysia KLCI,” he noted in a separate statement yesterday. 

Bursa’s securities market registered a trading revenue of RM80.4 million, a 46.7% decrease compared to RM150.9 million in 1Q21, owing to the lower average daily trading value for the securities market’s on-market trades and direct business trades. 

Trading velocity in 1Q22 was lower by 34 percentage points to 36% compared to 70% in 1Q21. 

Funds raised through IPOs in this quarter totalled RM1.5 billion, much higher than the RM0.2 billion raised in 1Q21. 

The derivatives market’s average daily contracts volume fell 3.5% to 77,513 contracts traded in the 1Q22 compared to 80,338 contracts traded in the 1Q21. 

Total derivatives trading revenue increased by 3.4% to RM23.3 million in the 1Q22 from RM22.6 million in 1Q21, mainly due to higher collateral management fees earned in 1Q22. 

As for its Islamic market, higher trading activity on Bursa Suq Al-Sila’ resulted in an increase in trading revenue by 12.2% to RM3.8 million in the 1Q22 from RM3.4 million in 1Q21. 

“The exchange will continue to actively engage with its participants and develop new Shariah-compliant products, such as the Digital Gold Dinar, aimed to meet the demand of the investors,” Bursa added. 

Listing and issuer services rose 7.2% to close 1Q22 at RM16.9 million, compared to RM15.8 million for the corresponding period a year ago. 

The market data business also showed a 4.8% increase in revenue, closing 1Q22 with a total of RM14.8 million earned compared to RM14.1 million in 1Q21. 

Bursa added its total operating expenses rose 4.6% to RM72.5 million in 1Q22, compared to RM69.4 million in 1Q21, due to higher provisions for depreciation and amortisation as well as increased technology, marketing and administrative expenses. 

“To ensure we sustain the interest of global investors, we will continue to enhance the attractiveness of listed issuers through initiatives such as the PLC Transformation programme launched earlier this year. 

“Further, and in line with the Sustainable and Responsible Investment and Environmental Social Governance agendas, the exchange will continue to deliver new pro- duct and service offerings as well as the new voluntary carbon trading platform, which will enhance the breadth and depth of the ecosystem,” Muhamad Umar said. 

Moving forward, the exchange anticipates a more challenging and competitive environment ahead, in light of tightening liquidity and normalisation of trading volumes. 

Hence, it expects to register a moderate performance compared to the preceding year. 

Nonetheless, the company will strive to deliver the planned initiatives to enhance the breadth and depth of the ecosystem through new product and service offerings, as well as the new voluntary carbon trading platform. 

Shares of Bursa Malaysia closed two sen or 0.29% higher at RM6.95 yesterday, giving it a market capitalisation of RM5.62 billion.