Affin Bank misses estimates as provisions rise, says CIMB Securities
KUALA LUMPUR: Affin Bank Bhd’s first-half 2026 core net profit fell 1.7 per cent year-on-year (YoY) to RM263.0 million, coming in below CIMB Securities Sdn Bhd’s expectations as higher provisions weighed on its second-quarter performance.
KUALA LUMPUR: Affin Bank's second quarter earnings fell short of expectations, with core net profit down 1.7% year-on-year to RM263.0 million. Higher provisions, rising to 142.2% year-on-year, hurt the bank's financial performance. Net credit charge (NCC) increased significantly to 38 basis points, surpassing the 13 basis points expected for the year.
The bank's second-quarter net profit declined 11.1% year-on-year due to a 12.5% drop in non-interest income and a 14.4% rise in provisions. Affin Bank's loan growth remained robust at 13.6%, driven by corporate, enterprise, and community banking. Net interest income (NIM) improved by three basis points to 1.52%, while the cost-to-income ratio fell to 63% from 68.9%.
However, provisions rose by another 14.4% in the quarter. The bank now expects NCC to stay above the previously estimated 13 basis points, due to ongoing credit issues like Covid-19 mortgages, hire-purchase loans, and credit card delinquencies. Consequently, earnings forecasts for 2026, 2027, and 2028 were reduced by 7%, 5.6%, and 11.5%, respectively.
Affin Bank's stock was downgraded to "Hold" from "Buy" and its target price slashed to RM2.30 from RM2.82.
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