Affin focuses on risk management and cost containment


AFFIN Bank Bhd will focus on its digital initiatives, strategic partnerships, risk management and cost containment measures to cushion the negative impact from the extended Covid-19 pandemic.

The local lender, which is majority owned by the Armed Forces Fund Board, is embarking on a transformation plan including building on a stable annuity income base and improving productivity.

Affin president and group CEO Datuk Wan Razly Abdullah Wan Ali (picture) said the group is mindful of the ongoing downside risks due to the pandemic.

“Prudent risk management practices and cost containment measures will remain on the group’s business strategy so that the group can continue to withstand the uncertainties and respond appropriately to any changes to the operating environment,” he said in a statement on Tuesday.

He said the group would also ensure its capital position is strong to safeguard it from any financial distress caused by the pandemic.

In a statement to Bursa Malaysia, the bank said it will focus on its digital initiatives and strategic partnerships that will bring new offerings and conveniences to its customers in line with the group’s tagline “Always About You”.

“As the group further strengthens its community and enterprise banking businesses, we will continue to monitor the overall asset quality,” Affin told Bursa Malaysia.

The lender with over RM50 billion deposits, recorded a 44.2% drop in net profit year-on-year (YoY) to RM68.9 million in its first quarter ended March 31, 2021 (1Q21), compared to RM123.6 million in 2020, pushed down by lower non-interest income and higher operating expenses (opex).

However, higher net interest income, lower allowance for impairment losses and higher income from Islamic banking cushioned from further financial impact.

Profit before tax (PBT) after zakat also fell to RM108.2 million compared to RM174.3 million in the corresponding quarter a year ago.

The lower PBT was largely attributed to lower gains from treasury assets than the previous year and additional provision overlays due to the prolonged Covid-19 pandemic. Revenue fell 14% to RM537.6 million from RM624.8 million in the same period last year.

Income from the Islamic banking business grew by 7.7% YoY to RM128.9 million, primarily due to higher net profit income and lower allowance for impairment losses. Opex however, rose 4.3 % YoY to RM340.5 million.

However, it was lower quarter-on-quarter as the bank embarked on cost-saving initiatives such as energy savings, reducing paper usage and controlling IT spend.

The cost to income ratio increased to 63.3% in 1Q21 against 52.3% in 1Q20 due to the lower revenue from capital markets.

As at March 31, 2021, the group’s total loans, advances and financing grew by 3.3% YoY to RM47 billion, contributed mainly by 7.4% growth in the community banking segment. Mortgages grew by 9%, while hire purchase loans rose by 4.9%.

As at March 31, 2021, the gross impaired loan ratio for the group was 3.41% against 3.11% as at March 31, 2020. Earnings per share for 1Q21 was 3.31 sen compared to 6.22 sen for 1Q20.

Affin shares ended one sen lower, or 0.58%, to RM1.70 a unit on Tuesday, valuing the bank RM3.61 billion.

The group said it intends to continue providing financial relief assistance to all its customers, who have been adversely impacted by the prolonged Covid-19 pandemic.