Affin Bank’s net profit falls to RM123.5 mil in 1Q

KUALA LUMPUR: Affin Bank Bhd recorded a lower net profit of RM123.57 mil in the first quarter ended March 31, 2020 from RM137.23 mil in the same period last year.

The decline was mainly due to additional allowance for credit impairment losses of RM117.1 mil compared to a writeback of RM9.9 mil in the preceding year’s corresponding quarter, as well as higher overhead expenses of RM27.7 mil.

“However, these were cushioned by higher net gain on sales of financial instruments of RM136.1 mil and higher net fee and commission income of RM13.7 mil,” it said in a filing with Bursa Malaysia today.

Revenue in the quarter, however, rose to RM630.37 mil from RM472.52 mil previously.

Meanwhile, in a separate statement, Affin Bank said its net interest income in 1Q20 was reduced by RM15 mil, or 7.9%, from the same quarter in 2019 in line with the reduction in financial investments by RM692.2 mil, as well as the gross loans, advances and financing by RM477.5 mil.

“For 1Q20, the group’s total gross loans, advances and financing were reduced by 6.2% year-on-year (y-o-y) to RM45.5 bil due to the restructuring of loan portfolio, focusing on consumer and small and medium enterprise banking business,” it said.

In line with the reduction in gross loans, advances and financing, the bank’s customer deposits has also been rebalanced by 16% y-o-y to RM48 bil, shifting away from high cost fixed deposit and focusing on retail deposits.

“The bank has recorded steady growth in current account savings account (CASA) of 3.4% y-o-y to RM9.1 bil,” it said.

Affin Bank said the group also posted a higher other operating income of RM337.3 mil, an increase of RM150.5 mil or 80.6% quarter-on-quarter, amidst the challenging external environment.

The bank’s earnings per share for the quarter was down to 6.22 sen versus 6.94 sen in the same quarter in 2019.

On outlook, the bank said it expected this year to be an exceptionally challenging one for the banking sector due to the global economic environment and the ongoing Covid-19 pandemic with the risk of contraction in credit growth and deteriorating asset quality.

“The sector is likely to record lower loan growth this year compared to 3.9% in 2019.”

Affin Bank said the weak domestic and global economy, the pandemic, loan moratorium and prolonged Movement Control Order (MCO) would cause the banks’ loan growth to decline and non-performing loans to spike.

The banking sector loan growth would also be impacted by the negative sector outlook mainly in the residential and commercial properties, automotive, trade financing, oil and gas, as well as retail sectors, it added.

“A few key banks’ exposure to the oil and gas sector may also pose downside risks as the oil price stays low. Banks are more likely to focus on active restructuring and rescheduling borrowers’ loans impacted by the pandemic,” it added. – May 29, 2020, Bernama

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