KUALA LUMPUR (Aug 14): Affin Bank Bhd (KL:AFFIN) reported an 11% decline in second-quarter net profit as provisions for bad debts rose.
Net profit for the three months ended June 30, 2026 (2QFY2026) was RM127.52 million compared to RM143.49 million in the same quarter of 2025, Affin said in an exchange filing. Allowances for credit impairment losses more than doubled year-on-year to RM78.8 million during the quarter.
“The US-Iran conflict has extended beyond the earlier ceasefire expectations, intensifying cost-of-living pressures in Malaysia and placing greater strain on consumer sentiment and spending,” said Affin president Datuk Wan Razly Abdullah. “In response, the group has further tightened its underwriting standards.”
No dividend was declared for the quarter.
Earnings at the bank, now backed by the Sarawak state government, have been volatile in recent quarters in part due to erratic credit costs and macroeconomic stress on borrowers.
Net interest margin, which measures the difference between the interest earned on loans and the interest paid out to depositors, shrank two basis points to 1.52%.
For the first six months, net profit totalled RM263.02 million, a decline of nearly 2% from the first half of 2025. Net interest income rose 12% year-on-year to RM468.5 million while non-interest income, such as fees and commissions, increased 7.3% to RM348.7 million.
Total loans, advances and financing rose 13.6% year-on-year while customer deposits expanded 3.0%.
“Deposit pipeline remains strong, supported by healthy new payroll onboarding opportunities,” Wan Razly said, noting that new deposit customers continue to show strong prospects, with term investment account more than doubling to RM1.37 billion.
“The adoption of the new Basel III requirements for credit risk in December 2026 is expected to enhance the group’s capital position by 30 basis points,” he added.
The group's common equity Tier-1 (CET1) ratio — a key measure of a bank’s financial strength and ability to absorb losses — declined to 12.62% at the end of June.