KUALA LUMPUR (May 26): Affin Bank Bhd's net profit for the first quarter ended March 31, 2023 (1QFY2023) rose 4.41% to RM148.98 million from RM142.69 million a year ago.
Its earnings per share, however, slipped to 6.55 sen from 6.72 sen due to a larger share base and absence of discontinued operations, its Bursa Malaysia filing on Friday (May 26) showed.
Quarterly revenue fell 6.53% to RM494.29 million from RM528.82 million in 1QFY2022.
In a statement on Friday, the group said earnings were supported by the growth in its Islamic banking business which grew 3.5% to RM154.1 million in 1Q2023. Affin Group continues to see business growing at 14.3%, as reflected in its loan and financing portfolios reaching RM61.2 billion (1Q2023) from RM53.5 billion (1Q2022).
Total assets grew 12.7% y-o-y to RM94.1 billion in 1Q2023 from RM83.5 billion in 1Q2022.
Affin Bank Berhad president and group chief executive officer Datuk Wan Razly Abdullah said, “Affin Group continues to pursue its three-year strategy, the A25 Plan, which focuses on three strategic objectives — unrivalled customer service, digital leadership, and responsible banking with impact, with the aim to reach return on equity (ROE) of 10% by 2025.
The group said net interest income (NII) stood at RM233.6 million, an increase of 2.0% y-o-y as compared to the previous financial quarter of RM229.0 million, mainly due to higher asset base.
It added that Affin Islamic Bank Bhd was a significant contributor to the group as its net income recorded an increase of 3.5% due to strong financing growth at 14.3%. Affin Islamic Bank Berhad recorded a significant improvement in asset quality with its gross impaired financing closing at 0.92% in 1Q2023 as compared to 1.05% in 1Q2022.
Non-interest income for the period under review was RM106.6 million, a decrease of 29.4% or RM44.3 million from RM150.9 million registered in the previous corresponding quarter.
As at 31 March 2023, the GIL ratio for the group stood at 1.96% as compared to 2.43% on March 31, 2022 due to stronger recovery efforts. As a result, the group’s gross credit cost stood at 3bps in 1Q2023 from 26bps in 1Q2022.
The group continued to strengthen its reserves as evidenced by the increase in loan loss coverage (LLC)at 120.18% and loan loss reserve (LLR) at 160.25%, as compared to LLC of 74.54% and LLR of 130.00% in 1Q2022.
Operating expenses reduced slightly to RM330.0 million for the quarter ended March 31, 2023 as compared to RM340.4 million in the same quarter of the previous year. The cost-to-income ratio for the group was 66.76%.
“We are currently embarking on a group-wide Affin Cost Efficiency (ACE) initiative to further optimise our cost moving forward,” it said.
As at March 31, 2023, the group’s total loans, advances and financing grew by 14.3% y-o-y to RM61.2 billion, contributed mainly by the 22.4% growth in the community banking segment, of which housing loans grew by 23.3%, whilst auto finance loans rose by 16.8%.
On deposits, CASA (current account/ savings account) balances stood at RM14.7 billion for the quarter ended 31 March 2023 contributing to a CASA ratio of 22.33%. The group’s customer deposits increased by 5.8% y-o-y to RM65.9 billion as at March 31, 2023, as its CASA initiatives continued to deliver positive results.
As at March 31, 2023, the group’s total capital ratio stood at 18.64%, while Tier 1 capital ratio was at 15.97% and Common Equity Tier 1 (CET1) capital ratio at 14.64%. Its liquidity coverage ratio remained healthy at 208% as at 1Q2023, well above the regulatory requirement of 100%.