Affin Bank’s net profit falls to RM123.5m in Q1

KUALA LUMPUR, May 29 — Affin Bank Bhd recorded a lower net profit of RM123.57 million in the first quarter ended March 31, 2020 (Q1 2020) from RM137.23 million in the same period last year.

The decline was mainly due to additional allowance for credit impairment losses of RM117.1 million as compared to a write-back of RM9.9 million in the preceding year’s corresponding quarter, as well as higher overhead expenses of RM27.7 million.

“However, these were cushioned by higher net gain on sales of financial instruments of RM136.1 million and higher net fee and commission income of RM13.7 million,” it said in a filing with Bursa Malaysia today.

Revenue in the quarter, however, rose to RM630.37 million from RM472.52 million previously.

Meanwhile, in a separate statement, Affin Bank said its net interest income for the period under review was reduced by RM15 million, or 7.9 per cent, as compared to the same quarter in 2019 in line with the reduction in financial investments by RM692.2 million, as well as the gross loans, advances and financing by RM477.5 million.

“For Q1 2020, the group’s total gross loans, advances and financing was reduced by 6.2 per cent year-on-year (y-o-y) to RM45.5 billion due to the restructuring of loan portfolio, focusing on consumer and Small and Medium Enterprise Banking business,” it said.

In line with the reduction in gross loans, advances and financing, the bank’s customer deposits has also been rebalanced by 16 per cent y-o-y to RM48 billion as of Q1 2020, shifting away from high cost fixed deposit and focusing on retail deposits.

“The bank has recorded steady growth in current account savings account (CASA) of 3.4 per cent y-o-y to RM9.1 billion,” it said.

Affin Bank said the group also posted a higher other operating income of RM337.3 million in Q1 2020, an increase of RM150.5 million, or 80.6 per cent quarter-on-quarter, amidst the challenging external environment.

The bank’s earnings per share for the quarter was down to 6.22 sen versus 6.94 sen in the same quarter in 2019.

On outlook, the bank said it expected this year to be an exceptionally challenging year for the banking sector due to the global economic environment and the ongoing Covid-19 pandemic with the risk of contraction in credit growth and deteriorating asset quality.

“The sector is likely to record lower loan growth this year as compared to 3.9 per cent recorded in 2019.”

Affin Bank said the weak domestic and global economy, the Covid-19 pandemic, loan moratorium and prolonged movement control order (MCO) would cause the banks’ loan growth to decline and non-performing loans to spike.

The banking sector loan growth would also be impacted by the negative sector outlook mainly in the residential and commercial properties, automotive, trade financing, oil and gas, as well as retail sectors, it added.

“A few key banks’ exposure to the oil and gas sector may also pose downside risks, as the oil price stays low. Banks are more likely to focus on active restructuring and rescheduling borrowers’ loans impacted by the Covid-19 pandemic,” it said. — Bernama