Affin Bank 2Q net profit rises to RM147m on higher NII

by S BIRRUNTHA / TMRpic

AFFIN Bank Bhd’s net profit rose 24.6% to RM146.91 million in the second quarter for the financial year ended June 30, 2022 (2Q22), compared to RM117.95 million posted a year ago, underpinned by higher net interest income (NII).

The bank said the higher net profit was further supported by Islamic banking income due to stronger loans, financing growth and lower allowance for impairment losses.

“These were offset by lower gain on sales from financial instruments and share of profits from joint ventures,” it noted.

Quarterly revenue increased marginally to RM579.19 million from RM578.9 million in 2Q21.

Earnings per share rose to 6.92 sen from 5.62 sen previously, according to the bank’s Bursa Malaysia filing yesterday.

For the cumulative period of six-month, Affin Bank posted a net profit of RM289.59 million, up 55% from RM186.89 million.

Revenue, however, was lower at RM1.11 billion against RM1.12 billion last year.

The bank’s NII recorded an increase of 16.7% to RM488.1 million, mainly due to loan growth in the first half of 2022 (1H22).

Affin Islamic Bank recorded an increase of 70.5% in profit before tax (PBT) to RM147.9 million due to financing growth and lower impairment allowances.

The higher PBT was also due to more robust financing growth which grew 18.6% year-on-year (YoY) and lower impairment allowances.

Meanwhile, Affin Bank’s non-interest income for the period decreased 30.8% to RM306.6 million from RM442.8 million registered in the previous corresponding period, due to lower net gain on sales of financial instruments, other income and net fee and commission income.

Operating expenses increased slightly to RM690.8 million for the period ended June 30, 2022, compared to RM681 million in the same period of previous year.

“As of June 30, 2022, the bank’s total loans, advances and financing grew by 15% YoY to RM55.4 billion contributed mainly by the 21.6% growth in the community banking segment.

“Housing loans grew by 22.5%, while auto finance loans rose by 11.4%.

“On the deposits, current account savings account (CASA) was at RM13.9 billion for the period ended June 30, 2022, and CASA ratio stood at 21.5%,” the group noted.

The group’s customer deposits increased by 19.8% YoY to RM64.5 billion as of June 30, 2022, as its CASA initiatives continued to deliver positive results.

As of June 30, 2022, the gross impaired loan ratio for the group recorded a significant improvement of 2.28% compared to 3.27% previously.

“The group continues to offer repayment assistance to customers who have been impacted by the Covid-19 pandemic,” it said.

On capital adequacy ratios, the group’s total capital ratio was at 18.2%, Tier 1 capital ratio at 14.93% and common equity Tier 1 capital ratio at 13.44% as at June 30, 2022, which is a testament to the group’s capital strength.

Looking forward, Affin Bank said banks will need to remain vigilant over their asset portfolios as customers’ instalments increase with the increasing Overnight Policy Rate (OPR).

Going forward into 2H22, it said the strategic focus remains on sustaining stable profitability through strong asset growth, preservation of asset quality and maintaining effective cost structures.

The group added that it will continue to emphasise on improving overall productivity and building its core earnings through the various initiatives implemented as part of the overall “Affinity in Motion” (AIM22) strategic plan.

According to Wan Razly, the bank will be introducing new and enhanced services including a new mobile banking app scheduled to be launched in October 2022

In a separate statement, Affin Bank president and group CEO Datuk Wan Razly Abdullah said given the challenging macro and geopolitical environment, the bank remains cautious.

“We are continuously ensuring our liquidity, credit quality and Capital Reserve Levels remain sufficient to weather these uncertain times,” he added.

He also noted that the bank will be introducing new and enhanced services including a new mobile banking app scheduled to be launched in October 2022.

At the time of writing, Affin Bank’s share price fell one sen or 0.48% to RM2.09, giving it a market capitalisation of RM4.62 billion.