Analysts pleasantly surprised by Affin Bank’s FY18 result

KUALA LUMPUR: Affin Bank Bhd's (Affin Bank) financial year 2018 (FY18) result has garnered positive reactions from analysts as they underestimated the group's write back.

As per the group's media release on Bursa Malaysia, Affin Bank's profit after tax (PAT) increased to RM527.4 million for the financial year ended December 31, 2018, from RM424.4 million of the previous year.

“We were pleasantly surprised by the group's FY18 result.

“It came in above our expectations at 110.9 per cent of our full year estimate,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research).

“The variance was due to our underestimation of its write back which came in more than we had expected.”

MIDF Research noted that the group's earnings for FY18 grew 20.4 per cent year on year (y-o-y).

“However, we view that a better comparison will be with Affin Holdings Bhd following the group changing its composition, following from the reorganisation exercise.

“Consequently the group net profit declined 2.4 per cent (y-oy) due to lower income.”

Earlier, MIDF Research had observed there bound in earnings growth in the third quarter of FY18 (3QFY18) and expected it to continue in 4QFY18.

However, the research arm did not expect it to come this strongly and as such, was pleasantly surprised by the magnitude.

“We were especially pleased by the resolution of one impaired account.

“We believe that the work that had been put in FY18 will be give the group a better footing to grow in FY19.”

“In addition, we believe that earnings will recover full in FY19 as the group continue to resolve its asset quality issue.”