Thursday 28 Mar 2024
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KUALA LUMPUR (May 20): Affin Holdings Bhd, the country's seventh-largest lender by assets, posted a 78.9% drop in first-quarter net profit as higher loan impairment and overhead expenses eroded earnings.

Net profit fell to RM30.09 million or 1.55 sen per share for the first quarter ended March 31, 2015 (1QFY15) from RM142.73 million or 9.55 sen per share a year ago, mainly dragged by the commercial banking segment, but its investment banking and insurance segments performed well.

Revenue for 1QFY15 rose 21% to RM448.93 million from RM317.1 million in 1QFY14.

The group's ratio of loan to deposits from customers stood at 83.3% as at March 31, 2015, while the consumer deposits to total deposits ratio stood at 29%.

In a statement today, Affin (fundamental: 1.1; valuation: 2.25 ) said the higher allowance for loan impairment was a result of a one-off provisioning attributable to the commercial banking arm, which recorded a pre-tax profit of RM23.3 million in 1QFY15.

"The commercial banking arm is expected to be back on track in the subsequent quarters of the financial year," it said.

As anticipated, Affin said the first quarter of 2015 has been very challenging and the remaining nine months are expected to be equally challenging.

"Global issues such as volatility in the oil price and depreciation in currency is creating uncertainties among businesses," it said.

Affin added that its commercial banking sector is expected to face stiff competition in the retail and fixed deposits market, from existing competitors as well as players from the non-financial services sector.

"The sector will focus on transactional banking as major source of fee income and further enhance its brand value and visibility by increasing its domestic footprint.

"The sector aims to continue focussing on retaining the bank’s competitive edge through improved efficiency, productivity and synergies as well as growing its business within well-defined risk parameters," it said.

In terms of its life and general insurance businesses, the group aims to continue leveraging on its network and client base for sustainable growth amidst an increasingly challenging and competitive environment.

Affin’s share price closed unchanged at RM2.90 today, giving it a market capitalisation of RM5.64 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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