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RAM Ratings reaffirms Kenanga Investment Bank's ratings

RAM Ratings reaffirmed the A3/Stable/P1 financial institution ratings of Kenanga Investment Bank Bhd.

The rating agency said the ratings reflect the bank's prominent stockbroking franchise, healthy asset quality and sound capitalization. These factors are offset by the lender's volatile earnings, constrained balance sheet, depositor-concentration risk and the challenging retail stockbroking scene.

RAM Ratings also noted that the lender's underwriting capacity is still limited compared to other investment banks with large balance sheets.

The bank's profitability also lag behind its peers, while its cost-to-income ratio remained high partly due to its loss-making asset management and wealth management business.

Despite these, the rating agency believes that the company's capitalization provides a good buffer against its volatile profit performance.