KUALA LUMPUR (Feb 29): Affin Bank Bhd, the financial services arm of Lembaga Tabung Angkatan Tentera, said on Thursday its net profit more than doubled in the fourth quarter from a year earlier thanks to a sharp decline in provisions and lower taxes.

The company however, missed some of its own targets for 2023, with profit-before-tax, net interest margin and cost-to-income ratio coming in lower than expected.

Net profit for the three months ended Dec 31, 2023 stood at RM39.54 million, compared to RM16.56 million over the same period a year earlier, Affin said in an exchange filing. Net interest income fell 24% year-on-year to RM177.27 million while non-interest income was tad lower at RM62.22 million. Allowances for credit impairment losses fell to RM11.10 million from over RM170 million.

“Strategic priorities into 2025” include accelerating current-account-savings-account growth through branch expansion “and strategic collaborations,” Affin said. The lender will also continue to prioritise high margin products, maintain steady loan growth and adopt a “selective segmental strategy,” it said.

For 2024, the company is targeting RM1 billion in profit before tax and return on equity of 7%. Net interest margin, a measure of profitability from lending, could come in at 1.60% this year while cost-to-income ratio could fall to 64%.

For the full year of 2023, net profit was down 66% to RM402.19 million from RM1.18 billion, largely due to lower dividends from subsidiaries. The company booked RM1.3 billion in dividends from the divestment of its asset management arm.

Net interest income meanwhile dropped 23% to RM782.88 million due to a disproportionate increase in interest expense throughout the year owing to market competition. Non-interest income surged 77% to RM607.3 million thanks to gains on financial instruments and foreign exchange.

Allowances for credit impairment losses fell to RM75.01 million from RM438.53 million.

Profit before tax was RM518.3 million, below RM1 billion guided while net interest margin narrowed to 1.42% and sharply below its own target of 2.11%. Cost-to-income ratio was 71.57%, above its 60% budgeted for the year.

In terms of asset quality, gross impaired loan decreased to 1.90% from 1.97% while loan loss coverage was 123.80%.

Affin proposed a dividend of 5.76 sen per share for FY2023, presenting a total dividend payout of RM135.3 million or 33.6% of net profit for the year.

Shares of Affin Bank turned lower following the results’ announcement, down 1.6% to RM2.51 at 2.35pm after more than 2.2 million shares changed hands.