Affin Holdings’ Q3 hit by higher overhead expenses

PETALING JAYA: Affin Holdings Bhd’s net profit for the third quarter ended Sept 30, 2017 fell 47.54% to RM73.26 million from RM139.65 million a year ago due to higher overhead expenses and allowance for loan impairment.

In a filing with Bursa Malaysia, the group said its overhead expenses and allowance for loan impairment increased RM232.3 million and RM66 million respectively while share of profits in associate was lower by RM9.8 million.

The group said the increase in other operating income, Islamic banking income and net interest income totalling RM236.5 million and the reduction in allowance for securities impairment of RM17.7 million were not sufficient to cushion the abovementioned increases.

Revenue for the quarter rose 8.38% to RM546.66 million from RM504.40 million a year ago.

For the nine months ended Sept 30, 2017, net profit fell 12.93% to RM341.84 million from RM392.61 million a year ago while revenue rose 16.80% to RM1.64 billion from RM1.41 billion a year ago.

Affin’s commercial banking arm, Affin Bank Bhd (ABB) Group reported a lower pre-tax profit of RM327.2 million during the period, during which it made provision for the voluntary separation scheme of RM48 million and recorded higher allowance for loan impairment.

Its wholly owned subsidiary, Affin Islamic Bank Bhd (AiBB) recorded a lower pre-tax profit of RM87.3 million for the same period. As at September 2017, AiBB’s Islamic Financing portfolio stood at 32%, with the aim to grow to 40% by year 2019.

Affin Hwang Investment Bank Bhd (Affin Hwang IB) Group reported a higher pre-tax profit of RM139.2 million during the period due to improvements in the fee, brokerage and investment income lines.

Its 70% owned subsidiary, Affin Hwang Asset Management Bhd, recorded better pre-tax profit contribution of RM58.4 million with total assets under administration growing to RM43.5 billion as at Sept 30, 2017.

In the insurance segment, AXA AFFIN Life Insurance Bhd registered a pre-tax loss of RM15.6 million while AXA AFFIN General Insurance Bhd (AAGI) registered a lower pre-tax profit of RM92.6 million for the same period.

AFFIN Moneybrokers Sdn Bhd delivered a higher pre-tax profit of RM1.3 million for the period.

As at Sept 30, 2017, Total Capital ratio for ABB and Affin Hwang IB stood at 20.1% and 38.4% respectively.

ABB is targeting a loan growth of 6-7% by end of 2017 and is on track to reduce its impaired loan to a level of 1.6-1.7% by year end. For investment banking, the group expects the investment bank and asset management to benefit from the overall improved market sentiments.

In terms of insurance, AAGI’s strategy is to consolidate its operations by focusing on selective growth (diversification) and efficiency projects.

Affin’s share price fell 2 sen or 0.83% to close at RM2.39 with a total of 266,000 shares traded.