Affin’s 1QFY17 net profit in line with expectations
KUCHING: Affin Holdings Bhd’s (Affin) first quarter of financial year 2017 (1QFY17) net profit was in line with expectations, but some analysts believe that the group will still face challenging times ahead.
In a statement filed on Bursa Malaysia, Affin reported that the group’s profit after tax grew 4.6 per cent to RM123.2 million for the quarter ended March 31, 2017, from RM117.8 million in last year’s corresponding quarter.
Affin’s net profit of RM120.2 million was within the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) and consensus’ expectations at 22.9 per cent and 21.4 per cent of respective full year estimates.
“We believe that it was a good performance by the Group,” MIDF Research said. “We believe the result highlighted that the groups’ transformation program has been effective.”
The research arm thus made no change to its forecasts given that the result was within expectations.
The group’s first three months of 2017 (3M17) core net profit (CNP) was also in line and accounting for both the research arm of Kenanga Investment Bank Bhd’s ( Kenanga Research) and consensus’ estimates at 21 per cent
As results were in line, Kenanga Research’s FY17 forecast earnings were also maintained at RM567 million.
On the outlook, Kenanga Re- search still viewed that growing the group’s loans book could be challenging for Affin given that 41 per cent of loans are from individuals and consumer sentiment could slow in FY17 considering rising cost of living.
The research arm noted that Affin’s net interest margins ( NIMs) might see better yields ahead as loans growth remains subdued, as deposits intake unlikely to see intense competition.
As fee based income has been trending south quarter on quarter (q- o- q), the research arm viewed that it will be challenging to repeat the group’s fee based income performance in FY17.
On a more positive note, MIDF Research opined that opportunities remain for Affin in FY17.
“As previously stated, management estimates loans growth of lower-to-mid single digit for FY17. However, we have seen loans growth trending higher for the sector,” it said.
MIDF Research believed that despite the group’s selective and cautious approach towards asset growth, loans growth will accelerate.
Additionally, the research arm believed that the group will be in a good position to take advantage of any upswing in conditions with transformation instituted at Affin Bank and Affin Islamic Bank.
MIDF Research continued to be encouraged by the group’s future prospect.
“As previously stated, we like the fact that the group is focusing on mortgage for affordable housing segment given the high demand for this property segment.
“We believe that the group is building its niche and this will ensure profitability,” the research arm said.