Affin’s 1Q profit dips 5.4% on higher overheads, loan impairment

by **Cals** Wed 21 May 2014, 01:45

Business & Markets 2014

Written by Charlotte Chong of theedgemalaysia.com

Tuesday, 20 May 2014 10:15

KUALA LUMPUR: Affin Holdings Bhd reported a net profit of RM142.73 million for the first quarter ended March 31 (1QFY14), which came in 5.4% lower year-on-year, dragged down by higher allowance for loan impairment and overhead expenses.

Revenue for 1QFY14 rose 4.38% to RM764.89 million from RM732.76 million. Earnings per share fell to 9.55 sen from 10.09 sen a year earlier.

In a filing with Bursa Malaysia yesterday, the banking group said the lower profit was largely due to higher allowance for loan impairment of RM6.8 million and higher overhead expenses of RM8 million.

It added that the increase in Islamic banking income and share of profit in associate of RM1.8 million and RM1.9 million respectively were offset by share of losses in jointly controlled entities of RM3.2 million as compared with share of profits of RM500,000 a year ago.

In a statement yesterday, Affin said it registered loan growth of 9.2% for 1QFY14 primarily in the segments of bills receivables, revolving credit, claims under acceptance credits, syndicated term loans or financing and overdrafts.

The group’s gross loan or deposits from customers (LD) ratio stood at 82.8% as at March 31, 2014 compared with 79.1% as at Dec 31, 2013.

Additionally, the group registered growth in its consumer segment for 1QFY14, hence improving its ratio of consumer to corporate deposits from 28.8% as at Dec 31, 2013 to 29.4% as at March 31, 2014.

[You must be registered and logged in to see this image.]
Mohd Zahidi is confident the company can maintain growth momentum.

[size][color]
“In line with stringent credit policies and prudent risk management, the group’s gross impaired loan ratio improved to 1.92% as at March 31, compared with 1.98% as at Dec 31, 2013, a reduction of 6 basis points,” said Affin.
The net impaired loan ratio also reduced by five basis points from 0.92% as at Dec 31, 2013 to 0.87% as at March 31.

On its commercial banking segment, it said Affin Bank Bhd registered a lower profit before tax (PBT) of RM175.3 million, a drop of 5.29% from RM185.1 million a year ago, mainly due to reduction in other operating income of RM6 million and the increase in allowance for loan impairment of RM5.8 million, net of higher Islamic banking income of RM1.8 million.

Affin Islamic Bank Bhd also registered a lower PBT of RM21 million from RM22.5 million.

Affin Holdings said its investment banking arm, Affin Investment Bank Bhd, also reported a lower PBT of RM13.9 million from RM16.6 million in 2013. This was as overhead expenses increased by 33.2% or RM8.1 million mainly attributable to the write-back of provision for litigation losses of RM4.3 million in 2013 and higher personnel cost of RM2.5 million.

Affin Holdings chairman Tan Sri Mohd Zahidi Zainuddin said, “We believe that there is an upside prospects for cross-synergies between our various business units and we will put more efforts to ensure that we seize opportunities in the market.

“As we move ahead in 2014, we are confident that we will be able to maintain our growth momentum for the rest of the year.”

This article first appeared in The Edge Financial Daily, on May 20, 2014.[/color][/size]